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More than a year ago, Jodie Ray had a problem. The senior vice president and CIO of Brinker International, which owns and operates a network of restaurants that includes Chili’s Grill & Bar and Romano’s Macaroni Grill, was facing a severe delay in the rollout of a wide area network across 800 of the company’s locations. n The WAN project was vital to the Dallas-based company. Its successful completion would mean improvements in areas ranging from reporting sales figures to authorizing credit cards in stores. But a bandwidth supplier’s network outage had stopped the project cold, and predicting a time when the project could resume was difficult at best. Ray knew that the holdup was not his fault—the supplier had caused it, after all—but he took responsibility. “We [in IT] took ownership for it because it was a supplier we had selected,” Ray says. n Brinker’s WAN project succeeded largely because the company has a strong alignment between its IT operation and other departments in the organization. IT-business alignment remains a major concern for many CIOs who feel either underappreciated or not fully empowered in their positions. Complaints remain that business executives do not consider IS a strategic partner in serious corporate decisions, despite the rush of e-business initiatives the Internet has inspired. Alignment, though, is not a one-way street, and IS credibility is critical within any well-aligned organization.
But Brinker is getting alignment right. How? In part, the company’s success stems from a business structure that treats IT as a business function, not as a technology sideshow. But more important, Brinker’s IS department moves well with the rest of the machine because IS executives have established credibility with their high-level counterparts. And they’ve done so not just by taking responsibility for project snafus such as the WAN example, but also by serving as more than just propeller heads. Brinker’s IS staff members are communicators, advocates and decision makers in the company. The moral of Brinker’s story is that solid IT-business alignment has as much to do with the versatility of its IS executives as it does with other executives taking IT seriously.
Calling All Stations
Ray helped establish the department’s credibility during the implementation of Brinker’s WAN. With the project hanging in the balance, he and four fellow vice presidents of IT set into action an IS team that not only pressured the supplier to rectify the problem, but also kept in close communication with everyone involved in the project. The team placed phone calls to everyone from top executives to restaurant managers to provide updates on the delay and spell out contingency plans.
“[We had] to be right there with them, telling them what the problem was, making the best decisions, telling everybody right down to the store manager what was going on,” Ray says.
IT was not alone in keeping key players updated. Ray worked in tandem with a business champion, the president of one of the company’s restaurant chains, who also played a lead role in disseminating updates, especially to other executives.
The delay added two months to the project, throwing off an important ROI schedule and costing the company a considerable sum. But shared responsibility for the delay softened the blow. “We had the businesspeople right there with us, so they owned the problem as well,” Ray says.
Ultimately, the whole team owned a successful project. Although key ROI goals fell through early on because of the setback, the project paid off in ways Brinker had never imagined. Not only did the company reach its goal of being able to download sales figures daily from its restaurants and have those figures on executives’ desktops by the next morning, but it also improved efficiency. Managers used the WAN to download training materials from the corporate office and send them to employees, scrapping an expensive and antiquated paper-based distribution process. Most important, the WAN cut customer credit card authorization times from 30 seconds per card to just three seconds. That development led to fewer waiters waiting in line to process cards, which in turn led to faster table turnover in restaurants during peak hours. And faster table turnover has translated into increased revenue.
“We knew there were some risks,” says Doug Brooks, the company’s president and COO. “There was constant communication. The end result was spectacular.”
All for One, One for All
Brinker is by no means a simple organization. In the past 17 years, the company founded by mogul and Chairman Emeritus Norman Brinker has grown into a multinational organization that includes more than 90,000 employees worldwide. The company operates nine restaurant “concepts,” as they’re called in the industry, which include Chili’s Grill & Bar, Romano’s Macaroni Grill, On the Border Mexican Caf¿nd Maggiano’s Little Italy. Brinker owns 70 percent of its restaurants; 30 percent are owned by franchisees. (For information on Brinker’s industry standings, see “Very Palatable Results,” Page 158.)
Brinker works hard to give each of its concepts a unique personality while including them all under the corporate umbrella. That idea carries over into IT as well. Ray says the company generally tries to implement corporatewide IT projects while customizing software for individual restaurants as necessary. The one-for-all practice is common at Brinker. “If we can save some money and some time once, that’s better than having to do it nine different ways,” Brooks says.
Sometimes that practice is more easily described than executed. With nine nearly autonomous businesses all reaching out to IT for different needs, pressure could mount on Ray to make some politically sensitive choices. But it usually doesn’t, largely because of Brinker’s innovative structure. Andy Barish, a San Francisco-based senior restaurant industry analyst at investment bank Robertson Stephens, says Brinker was a pioneer in setting its affiliated concepts free.
“The decentralization of their management structures by concept was really an important move,” Barish says. Previously, he says, “when one concept was having difficulties, all the resources were focused on one concept. The other concepts tended to suffer. The restructuring really freed up the management to be able to more quickly make changes and focus on the market opportunities and the consumer. The industry has adopted those philosophies for the most part.”
Needing the Dough
In the past, Brooks says, individual concepts would go directly to IS with requests for new projects. But that system left IS trying to feed nine mouths from one corporate bowl. The lack of communication within the company resulted in redundancies and cost overruns. So Brinker rethought its strategy. In the mid-1990s, the company began calling its nine concept presidents together for monthly meetings. On top of that, Brinker’s IS organization assigned a liaison to each concept as well as a liaison to the franchisees. The liaisons report back to corporate IS with the requests and needs of a particular concept.
“We wanted to try to be proactive in the way we interacted with our concepts,” says Sarah McClenaghan, senior liaison for Chili’s. McClenaghan serves as a representative of both corporate IS and Chili’s. In weekly meetings within the IS department, she relays the IT needs at Chili’s. And in weekly concept meetings with restaurant executives, she explains IS’s priorities and the status of projects requested by Chili’s within the organization.
“My job is to be the grapevine,” she says. “I get to be in both places. When I’m in the IT department, it’s my job to help them understand Chili’s is working on [a project]” and vice versa.
The information McClenaghan and her fellow liaisons gather helps Brinker prioritize its IT projects. Problems with potentially devastating side effects—such as a snafu that could cause a restaurant to close or significantly decrease productivity—get primary attention. Beyond that, Brinker’s IT brain trust looks at which projects will bring the most financial benefit to the organization. Anything that will have a material effect on “hard costs”—factors involving measurable dollars and cents—gets top billing. But some projects that deal more with “soft costs,” such as improving customer service or employee morale, also get attention. Ultimately, each project ends up in Brinker’s IT pipeline—a list, compiled monthly, of companywide projects, their goals and their costs that is accessible to anyone in Brinker’s corporate office. A copy of the list is even posted on a wall inside the company’s headquarters.
But IS is not always the final arbiter of how technology money gets spent. In cases of disputes, Brooks and his operations staff can step in. And because a business champion from outside of IS shares responsibility for every IT project, non-IS executives are well versed in what’s going on with new technology undertakings. In that sense, Brinker has a network for justifying IT projects. IS has its say, but operations can act as a final arbiter when necessary. And everybody shares responsibility for the results, from IS executives to business executives to concept presidents.
“All of them have stock options that are Brinker International stock options,” Brooks says of the compensation plan that helps quell political infighting among departments and concepts. “At the end of the day, they all love each other.”
There is a difference, however, between shared responsibility and passing the buck, and IT projects get no special treatment in the organization. IT has to prove up front that its major projects can meet the same hurdle rates that efforts such as building new restaurants must meet. Chairman and CEO Ronald McDougall says Brinker’s hurdle rate is a 25 percent return on investment, meaning an IT project that costs $12 million must generate $3 million a year in hard cost savings or revenue. However, Ray, who reports to McDougall indirectly through a chief administrative officer, is not left alone to figure out the dollar values involved with projects. Business champions can help in that effort. Costs clearly matter, and maintaining promised return on investment is key to IT’s credibility. “It’s very important to build that kind of credibility because it’s really easy to pull the plug and have short-term benefits,” says Brinker CFO and Executive Vice President Russell Owens. “CIOs have to convince CFOs that their long-term vision and plan is consistent with the company’s strategy—it’s not just the CIO standing there saying, ’We have to have this.’”
But in Brinker’s case, it really isn’t just the CIO standing there. Ray stands with business champions by his side and with operations executives and other high-level personnel backing up his projects. The Brinker system, therefore, reassures financial executives of the company’s investments, Owens says.
“It may be the head of purchasing or the head of a concept saying, ’We have to have this,’” he says. “The person who is really going to make the difference is there.”
Furthermore, Owens says the company is not likely to yank the financial rug out from under any project too quickly. While every project the company undertakes must meet McDougall’s hurdle rates, including those in IT, if they don’t pan out at first, they often get second or even third chances to succeed. Owens believes in trying to improve a project before scrapping it, a strategy he says is effective because Brinker’s multifaceted project teams can “will” projects to work.
“We don’t necessarily close a restaurant if it’s not hitting expectations,” he says, drawing a parallel with an IT project. “If it’s improving returns, we would put that in our experience database and try to learn from it going forward. If it’s actually costing us money, then we would shut it down.”
The Importance of Intangibles
Less tangible than dollars and cents, but no less important to the company’s executives, is Brinker’s corporate culture. CIOs who complain about not having access to executives would likely embrace Brinker’s informal office atmosphere. Though it’s a 17-year-old restaurant company, it has some of the telltale signs of a technology startup—a casual dress code at the corporate headquarters, open doors to executives’ offices and loads of team-building activities. For example, every Brinker employee has lived life at the heart of the company’s business. For two days every five years, corporate employees are required to work in one of the company’s restaurants, and new personnel start their terms with a stint in a concept. And Brinker people get the genuine experience. They don’t just observe; they cook, bus tables, wait on customers and clean kitchens. The practice is tied to several coveted benefits, including complimentary meals.
That exposure is important from an IT perspective, because IT implementations can succeed only with support from the people who will use them. “You have to get the people who use the technology each day involved in determining what those processes are,” says Richard DiLonardo, director of business development at Delphi Group in Boston. “It can’t either be an IT decision or a strategic decision. That gets more crucial the larger the organization.”
So how does slinging fajitas at a Chili’s translate into driving IT and business alignment? In the long run, it’s part of the company’s effort to keep every employee focused on the restaurant business rather than let employees get bogged down in their individual functions. That type of focus translates into a collaborative culture that emphasizes spontaneous chats over scheduled meetings. Brinker executives insist that the rather ambiguous notion of an open culture actually translates into business success and increased efficiency.
“The best decisions get made in the hallways, not in meetings,” Brooks says.
Ray agrees, noting that projects get under way more quickly at Brinker than at the large electronics company at which he was a 30-year veteran before moving to his current position four years ago. The open-door policy, he says, is one of the factors that attracted him to the company. As a CIO, Ray not only has the ears of top executives, he says, but he also has them whenever he wants to share a new idea. And sharing is important. One of Ray’s strengths, his colleagues say, is his willingness to communicate and teach his IT staff to do the same.
McDougall says IS’s ability to both measure success and learn from mistakes is critical. In the past, he says, IT initiatives were often poorly explained and crudely justified. Those that failed cost the company money without teaching it any real lessons. Now, he says, even projects that do not meet expectations can at least carry some benefit because lessons learned from them are effectively communicated by IS. “Everything we do with IT has business relevance,” McDougall says. “You don’t just let [a project] happen and then wind up in a ditch.”
Upper management also invests in more than just IT projects. Recognizing the importance of IS-business communication, Brinker sends lower-level IS managers to management training classes. The goal, McDougall says, is for IS staffers to follow Ray’s lead and become excellent communicators. “It helps if a whole team is doing [management training] and is brought up to speed at the same time,” he says.
Brinker has made many of its IT employees better managers through its training, which includes tips on when and how to contact restaurant managers. IT professionals learn, for instance, that it is important to update managers individually on projects—but not to do so during lunch or dinner times, when managers are swamped.
“Communication is always a huge challenge because restaurant managers have a zillion things on their list to do, and a message from the IT department at the home office is probably at the bottom of that list,” McClenaghan says. “It’s always a challenge to make sure [IS employees] don’t overcommunicate. The biggest thing that I think about all the time is if I’m going to send something to restaurant managers, it’s important that all levels of our organization get consistent information. I tell them this is how [a project] is going to affect [them].”
Even with the open-door policy executives practice and the investments they are willing to make in IT, Ray realizes that he is the real key to successful IT-business alignment. He has built credibility by working with business leaders to complete successful projects such as the company’s WAN. He has kept the lines of communication open between himself and other parts of the business. And he has provided information up front about the costs and benefits of projects. Ray’s colleagues have noticed.
“When IT comes to the table with an initiative and they’ve got a consensus and a business partner or partners with them, this group can will things to work,” Owens says. “Everybody puts their reputation on the line. Jodie has done a great job of taking responsibility and segregating it.” McDougall agrees: “In business terms, [IT projects] all have something we can identify with. Jodie has done a very good job of getting it into terms we can understand.”
For Ray, the motivation is both personal and professional. Compensation for IS employees is tied in part to the success of IT projects. But beyond that, Ray knows that even the most benevolent executive board will struggle with alignment if the CIO does not do his part. “[IS workers] made a career out of saying you can’t do stuff,” he says. “Now we’re catalysts for change. If you want a seat at the table, you’ve got to be accountable.”