Transcript

The following is an edited transcript of a panel discussion of 11 chief information officers (CIOs) in design and construction firms that was sponsored by ENR on March 31 in New York City. The discussion transcript formed the basis of a cover story on industry CIO business issues that appears in the magazine's April 26, 2004, issue (page 26). It is entitled "CIOs navigate rough waters to manage changing technology and corporate demands."

The two hour panel discussion was moderated by construction.com Editor-in-Chief Judy Schriener and by Debra K. Rubin, ENR Senior Managing Editor--Business and Economics. Their questions are in bold face.

DEBRA RUBIN, ENR: How has your role changed in the time you have been at your firm? What role do you serve in decision-making?

JOE PUGLISI, EMCOR: I think it speaks to the role of technology within EMCOR Group. The position of CIO was created in January of 2000, and I was hired for the express purpose of looking at how technology was applied across the then-43 companies, and developing some sort of strategy. There was a recognition by [management] that technology would increasingly be an important part of this industry, and they wanted to make sure we had the best.

VINCENT LAINO, Weston Solutions: At Weston the chairman says, "This is where we are headed." That sets the context. Then the technology group has to step up and deliver to prove to the rest of the senior management team that there are some values generated there. And once that happened, frankly, the seat at the senior management table was kind of de facto: We are an integral part of the planning process now.

DAN WOLGEMUTH, HNTB Corp.: A number of years ago, HNTB felt like they would look at key hires outside of the engineering practice to create some momentum in some areas that wouldn't necessarily have been spawned within the organization. Speaking in business vernacular is what earned us a place in the boardroom and the right, not only to weigh in on issues related to technology, but also related to our core business.

DEAN KERSHAW, Titan Facilities Inc: I'm not a CIO. I am the president of a small subsidiary of the Titan Corp. Titan is a global IT company, and when they, through acquisitions, acquired an engineering construction capability, I was hired specifically to introduce technology into those areas in order to bring it into the 21st century and differentiate it in the marketplace.

JAMES BROGAN, Kohn Pedersen Fox Associates: At KPF my position was a new one. It was created about three years ago. The focus at the time was to have more of a strategic direction on global connectivity or global solutions. It's a very creative environment at KPF, and having the right tools and to be always exploring new tools from whatever industry is critical for us. So we're always looking at that, again, with this big picture and strategic direction in mind.

KEITH AUTHELET, Gilbane Building Co.: We had all these disparate organizations, and we all went through centralization. And the next part was collaboration, not only within the organization itself, but with all these other people. The only way to really collaborate is through the technology. You have people and you have processes. So you need tools that are probably leading the industry now in collaboration and processing.

Once you sit across the table from the executive team, they realize that for almost every problem we have, they need the IT guy there. All of a sudden you end up at the executive meetings, and that did change in the time that I've been there.

ALLEN ANDERSON, C.W. Driver Contractors,: I joined Driver after a three-month period where I did a systems audit for them. I suggested that the position be created and called CIO. I'm not a part of the executive team, but I do report to the president. His understanding of where he is going in terms of IT, is left to me. As some of you have mentioned, it's important to have that business knowledge. I came up through construction, and being able to use analogies that everyone can understand in terms they use every day, I think has really helped significantly.

VIC GULAS, MWH Global: I'm a lifer at MWH -- 23 years. I had the opportunity to work globally in the organization. Our CEO, gave me basically the footprint of what I needed to do. He wants to be a global leader in our core areas and deliver products anywhere in the world. That really allows us, from a knowledge management framework, to begin laying some groundwork. To be at the senior management table -- and I report directly to -- is part of the business; it's essential to the business.

PATRICK THOMPSON, The Shaw Group Inc.: I report to the CEO, CFO, COO and the operating presidents. There are three large pillars in the Shaw Group that comprise the executive committee. I was hired to integrate the business because Shaw acquired these large organizations, and I work with all the different departments to carry out that mission.

CHRIS STOCKLEY, Skanska USA Building Co.: Skanska found itself owning a series of well-run companies with independent or separate IT initiatives. And as part of its consolidation of those resources, they felt it was important to have somebody at the helm to help guide it along its way. Interestingly, the consolidation of the company started with IT. The role was primarily an integration type role and is now becoming much more of a business function role. If you go around the room, we were all brought in to fix some problem and ultimately the problem led to opportunities for us to fix more problems. That's what most of us do.

GEIR RAMLETH, Bechtel Group Inc.: Technology in itself isn't really a boardroom activity. I'm not a member of the board, but it is a senior position within the company. The company doesn't really thrive on technology, even though it uses it every day. It is frankly very often looked upon as a necessary evil, rather than actually a driver. My biggest challenge has been to really get the costs under control so that I don't have my other senior manager saying, "I don't know what you do, but it costs too much." The real challenge we have, being a company with a portfolio of business units, is really how you drive out a common service level to an acceptable cost structure, at the same time having enough agility to be able to serve these various business units that have very volatile business cycles, and very short ones. That's where we are focusing at the moment.

JUDY SCHRIENER, construction.com: Is your focus more on your processes or on technology, or on helping your company be competitive through the advantages you can bring with technology, or on helping people with change management?

ANDERSON: When I joined Driver, the infrastructure wasn't there, so I spent the last three years really sort of building infrastructure and understanding. It sort of evolved from plugging in wires to making sure that all of that freeway infrastructure is in place, to now we can drive fast on that freeway. Now we can help people to understand that there is a common place that you look for things, there are not five or six different databases, there are not 30 spreadsheets for each project manager to turn in for his weekly or monthly report.

PUGLISI: I view this as less of a technology role and more of a business role. Part of the challenge is to rise above suboptimization and the myopic view that companies take regarding decisions that are made because they may be the best thing for that particular company. But if you step back and look at activities in the aggregate, there certainly are economies of scale or efficiencies to be gained by centralizing, standardizing and consolidating, in many instances. So we try to do that as much as possible, always keeping in mind that we would never want to lose or even compromise the entrepreneurial spirit and the connectivity to the local marketplace that the companies have.

RUBIN: So many people have come in to be integrators or watch the spending. How do you balance that with IT as an entrepreneurial area now in terms of trying to drive a new product line, a profit center?

PUGLISI: At first the reaction of the chief financial officer at one of our major companies was, "Get lost; we are perfectly happy with our mail system." Two years later, this individual quite literally put his arm around my shoulders and asked, "What else can you do for us?" You want to take away some of the pain. They don't make any money when they are working on fixing their mail system.

WOLGEMUTH: The problem is that while you want to feed the entrepreneurial spirit, you get the sense that you're feeding the black hole. What we need to be able to say is, we want to spent more money here and less here and have that make a difference, instead of throwing money into something that's way too broadly defined to actually impact the business.

LAINO: On the infrastructure or overhead side, the IT group is the change agent for the company. They are the ones that know how to manage change through a process by introducing technology and push the process along.

AUTHELET: When someone comes in and asks us to do something, you turn around and say, okay, you go and talk to a business process person for us. They look different than an IT person. They work on the business process, and then you come to us and you talk to us about the refinement of that process. That's versus IT folks coming in and applying the solutions.

BROGAN: I think part of the challenge is to balance that technology with the new technology that's out there, or what we have established and balance it with the process. How does it integrate with the business and how we do things? It's a critical part of my role, I know, to try to mitigate those two almost disparate ideas. If I go in from a technology point of view and say, this is the way we should be doing things: 3- D modeling, use this tool, it is not going to work. It cannot be driven by me only. Bringing in the whole other side --.the architects, users, managers and such -- and integrating them is really what our role is.

SCHRIENER: Does that mean that there are a lot of hallway conversations? Do you see your job as selling?

BROGAN: Hallway conversations and lots of walking around. A long time ago, I would sit downstairs with the IT folks and kind of just do my thing, and it's absolutely the wrong thing to do. Now, I'm out there involved with all the projects with the folks that are working and really understanding their pain as well as how we can push things further.

RAMLETH: We found a common ground in how you actually get some of these change
agents to really respond, and that was by the corporate acceptance that Six Sigma should be the way we operate. So you don't drive it from the technology side.

STOCKLEY: Change agents, who are really IT representatives, live in the business units. What that has done for us is similar to what Keith said. It doesn't give the feeling or appearance that change is being driven by IT. We try to support the goals of the organization. We try never to have initiatives, ever.

PUGLISI: You really put your finger on something, Chris. You have to be able to pick up the phone and talk to these senior management. And equally important, if not more important, they have to feel comfortable picking up the phone and calling you. You don't want to spew a bunch of three letter acronyms or technobabble at them. You have to be able to speak in clear and concise English terms, or construction terms, whatever the case may be.

RAMLETH: That's the beauty of being in construction, because you can throw the same vocabulary back to them. Building software systems is like building a building. You go through the same methodology on the same macro level and analysis.You design this, you go down to the detail design, you test it, build it.

WOLGEMUTH: Judy, you asked if we sell and I would tell you that I think that's part
of what has created a bad reputation for us. We ought to be listening and not selling, and to the extent that we have sold without understanding problems, then we've earned a reputation that says we don't connect.

RAMLETH: I don't think we sell; I think we market. And by doing proper marketing,
you do a lot of listening.

KERSHAW: I don't have an IT department because I didn't want technology to drive what we were doing. I wanted it to be the other two legs of the stool, and that's people and process.

GULAS: We are so decentralized. Every office seems to have their own IT specialist in it, and they all seem to develop things that will tap into the infrastructure. There are skunk works everywhere. Just this past year we set up an investment management process where anything over X amount of dollars, we have a representative from every major business unit sitting at a table and one IT person, which is me, theoretically. We make decisions regarding the organization. Invariably it's the cost. The costs are going up, but the business end realized that they are making the costs go up, in many cases.

SCHRIENER: Geir and I had a conversation a few days ago and one of the things that he mentioned was that a lot of their requests and ideas come from the bottom up. Are you finding that in your companies, especially if you are very decentralized?

ANDERSON: I walk around and ask a lot of questions. I find out an awful lot of scuttlebutt. Every so often from the president or from the board I will get a request, but most often it comes right from walking around and talking to people, sort of gluing them and getting them to talk.

RUBIN: Do you see yourselves the glue in the sense that brings together the business units? Is there a lot of that going on in companies or not enough of that?

STOCKLEY: The CIO role is a very unique role in that everyone in the organization knows and looks at us, whether it be an issue that we caused or our technology caused. Visibility in the role is unlike probably the CEO. You almost can't walk in a building and not have people know who you are and what you do. We (in the Office of the CIO) have done a pretty good job of building relationships and really building a transparency in our group.

RAMLETH: Our job is like being a soccer keeper. Nobody knows about you until you let one in. When you screw up, then they all scream. When it all works, you never hear anything. I'll never hear, "You know, the e-mail system is working really well."

THOMPSON: Well, I'm on the M & A front, and that's all I've been doing for the past two years for the Shaw Group. We literally had to get to a single platform in about nine months, with about 17,000 employees. We had five different ERP systems. Our IT spending was cut in half because of it, so we had to get there for that reason. We didn't have a choice or the luxury of getting more of the business line involved. Now that we have turned that corner and finished that project, we have been a little nicer about approaching the business lines to get involved in some of the other technology initiatives.

RUBIN: When you are doing an integration as part of a merger, this is the first line where you are having an impact on the culture. What impact does that have? Does it change it drastically?

PUGLISI: We did two major acquisitions and have doubled in size in the last four years. It's an absolutely remarkable, dramatic difference in the attitude of the management of the firms that were acquired, because to them the EMCOR net was just what EMCOR did when they were purchased. You talk about the cultural impact. This was becoming a part of EMCORI. t was a tangible change and it had made them feel a part of it.

STOCKLEY: We found that some very similar acquisitions leave organizations cultureless. They don't intend to, but all organizations have to, any time there is that much change, re-sort themselves. I think the systems do play an amazing role in giving the organization a way. If nothing else, I don't think it gives them culture, it gives them a way to communicate and a way to talk. I think ultimately people have to re-establish culture. I don't think systems or technology can.

RAMLETH: We are not really doing a lot of mergers on a corporation level, but we do
the equivalent all the time. A great portion of our projects are joint ventures, and when you have a joint venture, it is really a temporary merger of a temporary enterprise. We are all in an industry that is extremely competitive. We have all profit margins that are down there, competing with the grocery stores, and we cannot allow the cost of too much democracy into the IT side of it. There are other things that drive our businesses. We are parts of it, but we are not the key driver. Therefore, we should be a risk avoider and not a risk attractor to these projects.

WOLGEMUTH: To a large degree, the tailoring of the "what" has gone away because it is expensive, but the delivery of the "how" is really up to us, and that's part of where you blend process along with the technology, because technology no longer is sort of the ultimate deliverable. It's the "how" that gets us there, that tells the organization about the culture.

GULAS: I just find the discussion about culture really fascinating. I don't see IT driving much culture. I think it drives processes and discipline. When we talk about culture and people working together, we talk about it in terms of knowledge transfer. How do you transfer the right knowledge so it can be applied to the client at the local level? IT helps in the collaboration, but it doesn't change the culture.

BROGAN: To take that one step further, how about collaborating temporarily with
other companies? This is a constant challenge. Here comes a new project; here come 20 consultants, maybe 30; here comes 15 different versions of Microstation, AutoCAD, Revit, CAD software and again very disparate data sets and mentalities. How do you bring all of those together?

KERSHAW: That's where we look to professional societies like the AIA and the ASCE, to establish standards that we can all subscribe to.
RUBIN: How do you be more collaborative with each other and clients when there
is this whole push for security?

RAMLETH: Security is an intrusion and what comes from the external of that has some form of evil flavor around it. And as to the security around privacy and identity management, when you go into these temporary enterprises, you have to understand what is private to each of those parties. I have a few thousand people sitting on my network that are not our employees. Many of them are actually employees of my competitors. You talk about being nervous about security. I think we have good system, but one little blip there and I'm the goalie again. I think we as an industry have to really take on security on the broadest basis, really as a group.

STOCKLEY: Security and collaboration have no correlation. I think collaboration is a funding issue.

THOMPSON: It's funny you sat me at this table with these two (Ramleth and Stockley). They procure our services on the far end and we also use Skanska as a pretty major subcontractor, and we do collaborative technology with both of them. There is a trust factor that has to go into these relationships when you're dealing with security. At the end of the day, it is about trust and a lot of times you get trust through contractual means.

RUBIN: You work for different owners, you may have different IT requirements that you have to deal with. Owners may be putting other security requirements on you. How much is that changing; is it getting tougher to deal with these days?

STOCKLEY: Today there are more tools. I don't know whether that makes it easier or not.

PUGLISI: It's also an order of magnitude, more attacks, an increase in the sophisticated type. I don't know that the owners are driving us, or the industry is necessarily driving us, but certainly legislation is driving us. With Sarbanes-Oxley holding us accountable for the integrity of the data coming from systems, the spotlight is now shining on the integrity of the security around those systems. Certainly, that's the one that has landed on my doorstep.

AUTHELET: From our standpoint, it would be easy to lock down the entire environment. We could at any time decide that we are going to decide on every single person that is going to hit your mail. We are going to get rid of this whole thing. No filtering. You are going to decide who can get it in. No one in the world can get in unless they have your ID. One of these days, folks, we are going to do that.

ANDERSON: We are seriously talking about that right now. We are talking now about locking down the entire environment and up to this point, we have been fairly lenient. It's just an avalanche of spam, people hitting our networks. We may create a list of people that you can only receive e-mail from. It is your address book basically, and Web sites, you can only go to a certain number of Web sites. Obviously, we have security in all sorts of other ways.

RAMLETH: We started a year ago writing a new e-mail policy, and we are still writing it, because the environment is changing so fast that you don't know what to put in it. It started out to be a nice two-page document, now it's 23 pages. We are wondering how we can get it smaller again. It's a very complicated environment. We talk about all of these fancy systems, but we really have to look at e-mail. It's the only thing that everybody is using all the time.

SCHRIENER: I want to know from all of you two things. What keeps you awake at night now, and how do you see your jobs in five years?

RAMLETH: What keeps me awake -- with all the changes around technology and changes in the almost socioeconomic structure, will we have the people available and ready to do the job that we will be required to do in the future? We see a very clear demand from our customers, the owner-operators, that they want more of the work for their projects to be executed closer to where they have their base. That means that we have to have a ready, willing and able workforce in that new location. People are willing to deploy to these locations very early in their career or very late in their career, but you can't get the people you really want. So how can I draw out the knowledge of the people that can do that today so that they can deploy that to the people in the future so that I can send out maybe a five-year veteran rather than a fifteen-year veteran? That's the piece, the people side, is the one that worries me more than security or collaboration or all the other pieces out there. It's really, really on the forefront.

STOCKLEY: We call that the pursuit of the virtual organization. It's creating an environment that allows for and has the methodologies such that any employees that Skanska employs there, with the support of the whole organization, can do the job for the customer. So I think you have to create systems, and I think that concept keeps us awake.

THOMPSON: Well, having the additional responsibilities of facilities and risk management, which really entails bonding and maturity, the diversity of that responsibility is stretching me pretty good, from a CIO perspective. That probably keeps me awake the most.

RUBIN: For anybody else that has multiple responsibilities? Is that a help or a hindrance when you have that extra duty?

LAINO: There are a lot of circumstances where it helps, but a lot of times where
you get overwhelmed by one piece of your functions where it totally takes you away from the technology side. It's spinning really fast. You step away from it for awhile and you have to sort of readapt to it.

KERSHAW: To dovetail what Patrick was saying, I'd say, everything keeps me awake more than IT right now because it's the future of our business. In the IT arena, it's certainly, as Vince was just saying, the rapid change in assimilating that, and the security issues that go along with that becomes a focus. WOLGEMUTH: I think what keeps me awake is the sense that technology has been, in our organization, a real differentiator. We believe that we have won work and creative relationships because of technology. For me it's the separation of necessity is the mother of invention, and if we separate those two, then we lose the invention. If necessity is out here and it's got no brain trust with the invention side, we have married those two things and then we start losing things that make a difference, when this work would get us a deeper relationship.

GULAS: What keeps me up at night is being able to respond. Most of us are internal organizations serving our clients, our businesses. The reality is, there is a lot of creative talent in those businesses and they have all the ideas in the world. And to be able to respond to the ideas that they are selling to their clients and to be able to put an infrastructure in place and a system that responds to that, is the challenge. As soon as they start putting unique things, those costs are going to go skyrocketing.

RAMLETH: I think some of our best pieces have come out of skunk works. How do you not let the skunk works disappear because that is really driven by the mother of necessity. But how do you get that under control before it goes out of control?

GULAS: It's exciting to see what these guys will come up with. Then you think, we could do that, but then you start to think, how do we put it into our process that translates across the organization? I think in many ways, this is the role a number of us play. How do you take an idea, translate an idea across an organization, how do you take it and spread it in a uniform way, in a process way so that it imbeds? To me it keeps you up at night, but in a fun way.

AUTHELET: What keeps me up is probably the qualification that you were talking
about earlier, and that's probably -- you have got the cost standpoint to make sure people understand what we are doing and why we are doing it. It's a constant question.

BROGAN: Folks coming out of schools are incredibly sophisticated, where technology can be quite stimulating and have great potential. How do you balance that? A lot of folks are coming in and saying, try this software, try this methodology. But it is balancing all that, that continual from the lowest level to being innovative.

PUGLISI: This industry hasn't changed enough, and my fear is that the next three, five or even ten years, it still won't have changed very much. I joked recently, "I know construction computers are important on the job site. If the computers go down, somebody will definitely notice within three days." There is a kernel of truth in that. The job would not stop, it would carry on.

KERSHAW: I think we are seeing a shift in the way we do business. Where it used to be the traditional roles where the separate architect, the separate GC, the separate MEP, it's now starting to come together: Total program management, holistic views of buildings, LEED, green buildings, high technology buildings. I'm not just talking about corporate owners, but individual owners demand that sophistication in the end product, which is going to cause a revolution within the industry. We form more joint ventures today than ever before because we want to embrace a partner that gives us that technology or capability that rounds out what we do.

RUBIN: Are you finding pressure for IT outsourcing or sending work overseas? Is that something you are doing; is it a factor at all?

KERSHAW: Don't equate outsourcing with sending it oversees.

RAMLETH: We are not being asked to offshore it, but one way to solve your cost
structure is find how you can find cheaper labor. We have done that in our primary business for 10 years, where we have an engineering center in New Delhi. We are now saying, well, it worked very well in our primary business, why shouldn't it work in our supporting business.

STOCKLEY: I think the most successful outsourcing engagements occur in organizations where the IT budget is fairly substantial to revenue. I think it's a much more intimate business decision than an industry decision. There is a significant difference between what Bechtel does and what Skanska does. And trying to give an answer that is industry-oriented is probably pretty difficult.

KERSHAW: It's a matter of finding the right partner, and then working that relationship. I'm convinced that all business is relationships.

RUBIN: In this industry it certainly is. It has to do with the initial thing about the relationship with the CEO. Do you have a good relationship, are you accepted in top
management? Do you have his or her ear?

KERSHAW: I'm smiling because I'm in the exact opposite position. I'm the president,
I'm not CEO. The CEO is actually from the IT side of the business. I'm in that role reversal: he's wondering why we haven't done more in the technology framework. I get a lot of support for our IT initiatives that way.

ANDERSON: I get great support. When I first came into the company, they asked for this audit and then they asked me to come on board and I said, "Only on one condition, that is I report to the CEO." There was a lot of discussion at the table, and it wasn't answered right away. The CEO and I have a great relationship personally and professionally. I just have to remember how many words I can say to him involving technology before his eyes roll back. That's my major concern.

WOLGEMUTH: I think if you went around the room, we are doing more than technology in many cases. We are getting pulled into decision-making and collaboration that involves more of an operations focus. Not only are we getting that platform, we are getting the opportunity to contribute at a different level. Five years ago, we would have been more technology focused. Five years from now we will be more focused on running businesses.

RUBIN: Are you part of the strategy? Fast enough for you or not fast enough? Are you being brought in enough at a high enough level and being able to contribute so that it creates value?

AUTHELET: Isn't it all about trust? From a business standpoint, it is all about margins. These organizations really have to trust you because regardless of how inexpensive we are relative to the overall revenue in the business, you're spending a whole lot of money, and IT can get out of control like that (snap) and we all know it.

PUGLISI: I think it's how you are perceived. It's the image that you project. Are you a techno person or are you a business person?

SCHRIENER: Are you all finding that your roles are expanding?

STOCKLEY: I think IT at one point was extremely critical, and I think the CEO must always endorse various large issues, but I think most CEOs say the amount of pressure the organization is putting on each of us is substantial enough. What you have to do is use your senior management team, more times than not in prioritizing the issues, not creating them. There are kids coming out of college that are creating issues at a pace that is just unbelievable. And your ability and your finite set of resources to respond are stretched. I think the key is not as much about expecting CEOs to sit and talk IT shop with you, but really try to say that supports and that alliance with this business objective. And this idea aligns with this business objective, and some instances our job is to socialize any IT initiative with the operations initiative.

GULAS: I think at the end of five years if all I had to show for working this area was that I reduced costs, optimized costs, I'd be pretty upset with myself. There is a lot of focus on trying to reduce costs and I think we need to optimize costs. You can't optimize out innovation, so you have to support that.