Pepsi CIO Aims to Join New Economy

FRAMINGHAM (07/07/2000) - Steve Schuckenbrock, who became PepsiCo Inc.'s CIO a little more than two years ago and went on to slash its IT costs by more than $50 million per year, is leaving the snack food and soft drink giant to pursue a yet-to-be-determined dream job in the New Economy.

In doing so, he follows several other high-profile CIOs who have recently vacated top information technology posts at Fortune 500 companies to heed the siren song of the Internet. Think former Pacific Gas & Electric Co. CIO John Keast, who is now CIO at Houston-based NetworkOil Inc., an Internet marketplace in the energy industry.

Other big companies, like W. W. Grainger Inc. in Chicago and software maker Autodesk Inc. in San Rafael, California, have tapped their technology chiefs to become CEOs of their own dot-com spin-offs.

So far, Schuckenbrock, 40, has been offered CEO and chief operating officer slots at several Internet start-ups, as well as key positions at some technology vendor companies.

"The options are fabulous," Schuckenbrock said last week in an exclusive interview with Computerworld. But he remains undecided. For now, he plans to spend time with his five children, including newborn twins.

He does know that he doesn't want another CIO stint. Instead, he wants to follow his "passion for e-commerce."

"I've watched the Internet explode around me," he said. Now that the new business models he devised for PepsiCo are in place, he said the time is right to leave, even if it means a gap in employment.

In an internal memo circulated to top executives, PepsiCo Chief Financial Officer Indra Nooyi described Schuckenbrock as an "exemplary leader who has brought a high level of energy and enthusiasm to this job that all of us will sorely miss."

PepsiCo hasn't named a CIO to replace Schuckenbrock. But in late May, it announced that Shauna King, a longtime PepsiCo operations executive, would become president of the Schuckenbrock-created PepsiCo Business Solutions Group (PBSG). Schuckenbrock's last official day on the job was June 30, but he agreed to stay on for an undetermined time to help King's transition into her new role.

Since moving to PepsiCo's Purchase, New York, headquarters in 1998 from the company's Dallas-based Frito-Lay Inc. subsidiary, Schuckenbrock formed PBSG, PepsiCo's year-old shared IT services unit. PBSG is the Dallas-based home to the bulk of PepsiCo's 1,550 IT employees.

He was also at the forefront of a massive $129 million overhaul of the company's IT infrastructure, which is at the center of a sweeping PepsiCo business initiative known as "the Power of One."

The new infrastructure consists of a series of data marts that contain common definitions and systems for all product, sales and customer data across divisions. Because all three PepsiCo companies - PepsiCo, Tropicana Products Inc. and Frito-Lay - now have access to the same data, they can offer merchandising incentives and better service to their largest joint customers, such as Wal-Mart Stores Inc.

"Pepsi is the undisputed category leader in snacks, and they want people eating Tostitos with Pepsi, not Coke. This is the whole issue that their ‘Power of One' solves," said Marc Greenberg, an industry analyst at PaineWebber Inc. in New York. "In terms of IT, they clearly get it."

But Greenberg said he doesn't expect Schuckenbrock's departure to shake PepsiCo off-track from its plans to roll out the same universal data reporting to its smaller customers, such as convenience stores.

"A key person like this leaving has got to hurt, but this is an [IT] organization with a very solid bench," he said.

But getting PepsiCo to where it is today wasn't exactly a frictionless process, according to Frito-Lay North America CIO Tom Nealon, who has worked closely with Schuckenbrock.

Especially challenging for the divisional CIOs was the creation of a shared IT services group, which essentially took over much of each CIO's previous domain.

"Suddenly, three-fifths of the [IT] organization didn't report to them anymore," Nealon said. "But for me personally, the way it panned out has been incredibly positive." I'm not worried about help desk service-level agreements or accounts receivable. I worry about supply-chain issues and the implications of the Internet. It's been very liberating."

Adopting shared IT services has also worked out well for PepsiCo, which estimates it will save $54 million per year under the arrangement. On that schedule, it should recoup its $129 million IT investment in three to five years.

As for Schuckenbrock, he said he feels the same way a successful starting pitcher might as he turns the ball over to a closer in midgame. "It's been a great game, and we're up," he said. "It feels great."

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