Restaurant CIOs Playing More Strategic Role

The role played by CIOs in restaurant and foodservice companies is shifting, from overseeing the technical business of data processing to a more broadly strategic position.

This was the view of four restaurant and foodservice CIOs who spoke at a panel discussion titled, "The New Role of the CIO," held at the recent FS/TEC conference in Dallas.

In a wide-ranging discussion, they also addressed outsourcing, ecommerce and other key issues they will be facing over the next few years. The session was moderated by Debra C. Robinson, vice president and CIO of CMP Media, which publishes Information Week and other technology titles.

The panelists were:

• Martyn Holland, Host Marriott Services, Bethesda, Md., a leading food, beverage and retail concessionaire at nearly 200 airports, travel plazas and entertainment venues worldwide, with revenues of $1.4 billion.

• Tony Shearer, Compass Group North America, Charlotte, N.C., a $3-billion company that provides contract catering and foodservice to large corporations.

• Mike Dillard, ClubCorp International, Dallas, an $851-million company that operates 243 exclusive clubs worldwide, including the well-known Pinehurst, Firestone, Mission Hills and Indian Wells clubs.

• Jodie N. Ray, Brinker International, Dallas, a $2-billion company that owns or franchises 900 restaurants under the names Chili's Grill and Bar, Romano's Macaroni Grill, On the Border, Mexican Cafes, and Maggiano's Little Italy. Ray was formerly CIO of Texas Instruments.

The following is a transcript of the panel discussion, edited for length and clarity.

Question (from moderator): What role do you play as CIO when your company is formulating its business strategies?

Holland: I'm involved in the planning of systems that can enable change. A few years ago, my success as a CIO was measured by whether the technology I implemented was successful. Now, I'm judged on whether the technology has helped make the business successful—so it's critical that I understand business issues, not just technology issues.

Ray: When I plan systems today, I do so as an insider and strategist within the senior management team. That wasn't the case a few years ago.

Shearer: I find the most important role I can play as a CIO is to be a very good listener. In the past, I think CIOs were a little pompous, telling people what we felt they should have. Today, operational executives in our businesses are embracing technology. It's important to listen to them and find solutions based on what they're saying.

Question: How has your life as a CIO changed in the past two to three years?

Holland: I certainly have become an expert in something I never thought I would need to be expert in, and that's the Y2K problem. Unfortunately, that's meant spending a lot of time on an issue that fundamentally doesn't add any value to the business. I've also needed to greatly increase the time I spend on human resources—making sure my people are having fun doing what they're doing, so they won't want to leave.

Dillard: I'm finding myself much more closely involved with our company's end customers—the 500,000 members and guests of our clubs. Within our IT organization, we spend a lot of time asking ourselves how we can make life better for these members and guests, who are the ultimate source of our revenues. In that respect, my role has become much more aligned with marketing than it has been in the past.

Shearer: The Y2K problem has been the greatest excuse ever to spend money on IT, and I'm pleased to say I'm one of those who has taken advantage of it. Over the past few years, I've been able to put in place some great platforms to grow on.

Question: What are the top three issues that CIOs in foodservice will face over next two years?

Holland: Number one is profits and controlling costs. Number two is customer service, which is the main way—more so than food—that restaurant and foodservice operators can differentiate themselves. Number three is delivering systems against expectations.

Ray: People development will be the biggest challenge, both for the business units and the IT organization. That doesn't mean just retention, but also taking the people we have to a new level of business value.

Dillard: The quality of software products in the industry is an issue. I find many software companies I deal with are financially weak, and their products are not that strong. We need to seek out the vendors that are providing good products.

Shearer: Our biggest challenge is to provide technology appropriate to the skill sets and needs of our users. Not every user needs to have Internet access, for example.

Question: Compared to other executives, CIOs tend to have a relatively short tenure at companies. What is the reason for this?

Holland: The problem is airline magazines. CEOs read them and learn all about the solutions that can be implemented quickly, and for about $37. They then wonder why their CIOs aren't finding those solutions. Also, we're in a segment of the business where risk is simply part of daily life. If you don't take risks as a CIO, you won't be successful. But if you take risks, there are times when you'll be unsuccessful. So you've got to be prepared to take risk, and sometimes it doesn't work out.

Shearer: Sometimes CIOs fail to involve operational executives in their projects. When that happens, they can take complete credit when a project goes well, but they also must take complete blame when it doesn't. I just survived an SAP implementation. Because my company's operational executives were involved, if significant problems had developed it wouldn't have been my issue alone.

Question: How have you been able to get your IT organization viewed as strategic?

Dillard: By getting our internal help desk to be responsive. When I first arrived at ClubCorp, the IT department was very poorly rated because, half the time, no one at the help desk would answer the damn phone. Today, the IT organization is run with the same best practices as our clubs. We've taught the importance of delivering quality and being responsive to those who need service.

Ray: I agree that gaining respect for an IT organization begins with having your services and support arm at least meet, if not exceed, expectations. Only then do you have a right to ask for additional investments.

Question: What will be the impact of ecommerce on your companies?

Ray: We're working with electronic inventory replenishment. Also, we build about 100 restaurants a year, and that takes a lot of collaboration between real estate, legal, architectural, purchasing, construction, and so on. It's a huge endeavor, and we're automating a lot of the information-sharing that goes on among these different disciplines.

Dillard: We're in the process of negotiating with each of our vendors so we can order from them through an extranet. Oracle is our financial system, and we want to link our procurement into it so ordering and paying can be automatic.

Holland: We're looking to limit the number of suppliers we deal with and then leverage our buying power and their potential for interfaces to take advantage of ecommerce.

Question: How is the trend toward increased application outsourcing and hosting affecting you?

Dillard: Our outsourcing has not been that successful. In general, we're backing away from it. A few years ago, I was a big proponent of outsourcing, but the cost doesn't seem to be worth it.

Holland: I concur, but I'm excited about the potential of application service providers (ASPs) to allow me to delegate some of the responsibility for running systems while still having flexibility and accessibility to data. I know that's an emerging market, but I believe it could be a solution to some problems we have.

Shearer: Outsourcing is so expensive, it's ludicrous. It's only of value for commodity projects, like PC implementations or telecom. Anything involving intellectual capital should be kept in-house.