IT at the heart of the business

It’s an exciting time to be going into IT, said Avnet CIO Steve Phillips. “The stakes have changed. IT is now at the heart of the business.” Information systems leaders are part of the senior management team at Avnet and many other companies, helping to develop strategy as well as implement it. Phillips spoke at the 2014 Association for Information Systems Student Chapter Leadership Conference and Competition, which was hosted by W. P. Carey School’s Department of Information Systems and the student DISC club.

In the midst of the 2013 holiday shopping season, Target discovered that hackers had broken into its systems and had stolen the credit and debit card information of as many as 110 million customers. The breach cost the retailer dearly. Due in part to this incident, profits for fourth quarter 2013 fell nearly 50 percent when compared with 2012. “Target’s long term problem is that they have now lost some credibility with customers,” said Avnet CIO Steve Phillips. “If you go into the IT profession, the credibility of you and your team is fundamental. And information security is core to that credibility. That’s why we are almost obsessive about IT security.”

Phillips was speaking at the 2014 Association for Information Systems Student Chapter Conference, held in Tempe on March 21 and 22. The W. P. Carey School’s Department of Information Systems and the student DISC club hosted the event, attended by 155 students and 52 faculty members from 28 business schools. It’s an exciting time to be going into IT, Phillips said, because “the stakes have changed. IT is now at the heart of the business.” Information systems leaders are part of the senior management team at Avnet, Phillips said, helping to develop strategy as well as implement it. Avnet, with its headquarters in Phoenix, is one of the largest distributors of technology products in the world. It sells everything from chips to mainframe computers. And, Phillips explained, Avnet does more than ship technology products: it is a provider of technology solutions: hardware, software and engineering/technical services.

The company is truly global, with operations in North and South America, Europe and Asia. It employs 18,000 worldwide, of which 800 are part of Phillips’ IT team. Avnet has been named to Fortune’s list of most-admired companies every year since 2009, he said. Avnet’s business is highly competitive and low margin, Phillips said: “we maintain a profitable business with engaged employees and customer focus, all supported with innovative processes and high levels of system automation.” “There is a sharp focus on IT at Avnet,” he said. “It’s terrific when IT is at the core of the business, but it also puts a lot of pressure on the IT team.”

How IT has changed: Guardians at the gate?

Companies have always collected information, Phillips explained, but widespread use of IT systems means that are collecting large amounts of data. The knowledge gleaned can be used to find ways to drive profitability. But where there is value so will there be criminals like those who broke into Target’s records who will continue to try to obtain data. In the past, Phillips said, the bad actors were more typically insiders. No longer: many attacks are coming from outside, and maybe even from states rather than individuals.

One example is the use of phishing emails. The criminals that send fraudulent mail have become much more sophisticated since the days of fake letters from fictitious ‘Nigerian Princes’. Phishing emails are now crafted to closely mimic real business correspondence, and this places a greater burden on employees to be savvy. Phillips said Avnet runs bi-annual tests to measure how careful employees are about email. An outside vendor crafts a fake email, taking pains to make it look legitimate. Then Phillips’ team sends it to 200 randomly selected employees. A few years ago, up to 30 percent of the test group opened the bogus messages, which Phillips said was “a call to action.” Fortunately that number has dropped to 3-5 percent in more recent tests, he added.

Curiously, 67 percent of those who bite are middle aged, mid-career men. “Our main goal is to educate our employees about phishing emails such that they hesitate before opening that email that’s ‘too good to be true’,” he said.

How IT has changed: What’s different in the environment?

Even as information systems have grown in importance, the IT department itself is no longer in charge of all technology at a company, Phillips said. “The role of IT is changing; the stakes are high and it’s never been more relevant to business,” Phillips said. But ironically, ITs role as gatekeeper is dwindling. “Those of you who have worked in IT, you know we’re used to being in charge of all of a company’s systems. But things are changing.” No longer do IT shops house all of their systems in their own data center; IT will have a data center, but not everything will be hosted there.

The IT department will not always develop apps from scratch, and it won’t always buy software off the shelf. And the cloud has liberated employees to use apps, he said. An example of this development is a trend known as BYOD: bring your own device. Until eight years ago, Avnet employees were required to use company-issued Blackberries to conduct business. Today, Avnet owns no smart phones, he said. Employees are offered corporate deals for carrier service and they can get any phone they want. Avnet’s smart phone costs were reduced 30 percent and employees are happier with the device choice they have. BYOD is part of a bigger trend: the “consumerization” of IT. Highly informed employees are accustomed to going to the app store, downloading an app and using it, he said. Gone are the days of going to training to learn the latest software.

Employees expect the tools they find in the workplace to be as intuitive as those they find in the market. The focus is actually shifting away from the technology itself and toward services. The Avnet IT team now manages about 300 IT services across the company. Once a year the team puts all of them through a “feed, weed and seed” review. If found to be working, the company will consider investing more; those that are no longer useful get weeded out; promising services may be planted within the company to see if they catch hold. Then there is all that data: the IT team is integral to the utility of that data to the business. These shifts can be uncomfortable, he said: “Change is hard.” IT focus must shift from the technology itself to the business, and some IT leaders resist, but Phillips warned against being slow to adopt.

“We need to lead the way,” he said, “or someone else will.” All about the business There are no IT problems – just business problems, Phillips says. The IT department must be aligned with the business, and must talk the language of its managers. IT leaders are now part of top-level strategic planning, he said, and when they leave the table they face a dual challenge: preparing for the next strategic move while assuring that IT systems and services support the business today.

Bottom Line:

Phillips shared three bits of personal advice that he has found valuable throughout his career:

• Be yourself.
• Live by your core values.
• Look for the tough assignments and volunteer: whether you succeed or fail, he said, your organization will value you as a result.