As the CIO and later Vice Chairman of Technology of\n brokerage Charles Schwab from 1993 to 2003, Dawn\n Lepore was among those pioneering IT executives who became\n strategic business leaders. In 2004 Lepore parlayed the\n lessons she learned as a member of Schwab\u2019s executive\n team to become president, CEO and chairman of drugstore.com.\n MORE ON CIO.com\n \n The Evolution of IT\n \n Key IT Developments, 1987-2007\n \n What's Ahead in IT: 2007-2027\n \n The CIO Hall of Fame\n At Schwab, Lepore rode high through the dotcom boom. In\n 1995, she launched Schwab.com in a matter of weeks. It was the\n first customer-facing website for the company that was then a\n worldwide leader in electronic trading by its brokers, and it\n helped Schwab preserve its competitive position as a discount\n broker against upstart E*Trade. For her achievement as a\n technologist who created a strategic role for IT, CIO chose\n Lepore as a member of our CIO Hall of Fame.Dawn LeporeLepore left Schwab for drugstore.com as Schwab\u2019s\n fortunes waned (then-CEO David Pottruck was fired in 2004). The\n online health and beauty retailer had turned only one\n profitable quarter since it was founded in 1998. Sales were\n sagging. Turnover was high. And company shareholders were\n growing restless. Lepore was hired to turn things around.So far, the road to profitability has been challenging.\n Although revenues are rising, drugstore.com ended the second\n quarter of 2007 in the red. But Lepore is betting that\n fundamental business and IT principles will change that.For example, she performed a comprehensive strategic review\n of the company\u2019s business segments to evaluate the\n profitability of each customer order and partnership, then\n eliminated or adjusted the price on several thousand\n over-the-counter products. Among other accomplishments, she\n also reduced net shipping costs by introducing weight-and\n location-based surcharges for certain customer orders and nixed\n an unprofitable relationship with a pharmacy benefits\n management company.Furthermore, applying the lessons she learned while selling\n her colleagues at Schwab on the importance of the Internet as a\n business tool, she has clarified the role of IT at\n drugstore.com as one of strategic business partner. \u201cThe\n role of IT as a strategic partner, especially when I was CIO in\n the 1990s, was not entirely the norm,\u201d she says.\n \u201cToday I think it\u2019s clear that no company [can\n succeed] without defining a role for IT and how IT can operate\n within that role to improve business strategy.\n Drugstore.com\u2019s IT team is a strategic partner in our\n e-commerce business. The business works closely with IT to\n identify top priorities and to analyze the ROI of initiatives\n based on revenue, profitability and customer\n satisfaction.\u201dLepore recently spoke with contributing writer Matt Villano\n about how her past IT experience helps her analyze and evaluate\n business decisions.CIO: Is drugstore.com a technology company or a\n retail company? And what does your answer tell us about the\n\n role of IT?Dawn Lepore: When I got to the company,\n that was a raging debate. I could answer that question the\n first day I was there. We\u2019re a retail company where\n technology\u2019s absolutely critical.There\u2019s a subtle difference in whether you think of\n yourself as a retail company or a technology company. That\n doesn\u2019t mean that the technology organization is not\n crucial to our success. It is absolutely crucial. But if you\n understand that we\u2019re a retail company first\u2014that\n technology needs to be used to enable e-commerce and enable our\n customers to shop\u2014you look at technology slightly\n differently.As I learned when I came aboard, the world of retail is a\n world of razor-thin margins. The good news is that keeps us on\n our toes; we have to watch every penny. The bad news is that we\n can\u2019t really make mistakes. It\u2019s very hard to make\n big investments that don\u2019t pay off. Companies which have\n higher margins can make three or four bets, spend a fair amount\n of money and then decide which one works. We have to be a\n little more cautious in where we make bets [with IT] and how we\n do that.Separately, being an e-commerce company presents some unique\n challenges. With other types of businesses, customers can have\n multiple ways of experiencing you. With our business, the only\n experience our customers have of us is through the website.\n That puts an added burden on us\u2014a burden to maintain a\n positive experience all the time. We\u2019re not perfect, but\n hopefully we can be over time.How is turning around a company different from\n jump-starting an IT department as you did at\n Schwab?Lepore: There are a number of differences.\n The scale is certainly a little bigger. Also, because\n we\u2019re a public company, I must be accountable to our\n shareholders, which is something I didn\u2019t have to worry\n as much about at Schwab because I was running the IT\n department.When people have put money into your company and\n they\u2019re depending on you to lead a team to turn the\n company around and deliver on their investments, there\u2019s\n a huge sense of responsibility that goes along with that. And I\n definitely feel that every single hour of every single day.\n It\u2019s not really something I\u2019d say I focused on as\n heavily as a CIO.Of course there also are lots of similarities. The idea of\n having to take a step back, look at where you are today and\n take a real strategic assessment of what are the strengths,\n what are the weaknesses, what are the changes that need to be\n made\u2014that\u2019s all the same. Really, both situations\n are a lot about leading change and a lot about making the right\n strategic decisions, having the right people in the right jobs\n and building the right culture.I always strive to do my job while staying true to two\n personal valuesmade\u2014managerial courage and generosity of\n spirit.What has been your biggest challenge so\n far?Lepore: One of the things that\u2019s\n always challenging when you come into a company to turn things\n around is to respect the past and the team that got you where\n you are, but at the same time be very objective about\n what\u2019s working and what\u2019s not, what\u2019s good\n about the strategy and what has to change. It\u2019s a\n balancing act, because you want to be respectful and supportive\n of the people who built the company to the point where you\n joined it. They put their heart and soul into it. They made the\n best decisions they knew how to make.Another big challenge is always keeping the customer in mind\n as we make changes to the way we do things. I\u2019m on our\n site every day trying to gauge what the customer experience is\n like. It\u2019s constantly a challenge for IT organizations to\n remember that the customer is really the center of things and,\n as we act, to ask ourselves what our efforts are going to be\n like from a customer experience. That was the case at Schwab,\n and because of the situation we\u2019re in, focusing on\n customers is even more the case now.How does your experience as a CIO influence how you\n communicate your expectations to Luke Friang,\n drugstore.com\u2019s vice president and CIO?Lepore: There are positives and negatives\n about me coming into the CEO position with experience as a CIO.\n The positive is that I truly understand how hard his job is. I\n truly understand the challenges he\u2019s dealing with because\n I\u2019ve lived them. The flip side is that in some ways that\n makes me even more demanding because I know what the issues\n are. I\u2019m going to ask an awful lot of detailed questions\n just because I\u2019ve got experience.When I was CIO at Schwab, one of the things that I know my\n CEO appreciated is that I never emotionally blackmailed him. I\n never said, \u201cOh, well, I can cut costs but, you know, in\n exchange we\u2019ll have to lose X, Y and Z.\u201d And the\n good news is that my CIO never does that, either.Luke understands that everything is a business decision. He\n gets that the business case can be about enabling future\n change, lowering cost structure, keeping our technology\n innovative or just about anything, as long as it\u2019s\n expressed in terms of business value. He sees that he\n can\u2019t just walk in and say, \u201cWell, you have to\n trust me.\u201d That makes the decision-making process for IT\n investments easier.So what do you look at when you evaluate purchasing\n decisions?Lepore: We\u2019ve recently implemented\n drop shipping [so that inventory is maintained by the\n company\u2019s wholesalers]. We put in a new internal search\n tool [for customers to search the site]. We also implemented a\n new prestige beauty site, Beauty.com, which is a key part of\n our strategy to refocus on profitability by selling products\n with the highest margins. Down the road, we\u2019re looking at\n a major investment in terms of rewriting a piece of our\n platformmade\u2014if the technologists decide it is more cost\n effective to move from proprietary software to an off-the-shelf\n package. As we evaluate all of these projects, we\u2019re\n looking at how they are going to support things like revenue\n growth, cost reduction, retention of employees and speed to\n market.We\u2019re also looking at all kinds of [new] technology.\n But the argument that people don\u2019t like working on old\n technology doesn\u2019t fly. For us, it\u2019s got to be,\n \u201cHere\u2019s the investment. Here\u2019s why it makes\n sense. Here\u2019s the payback. And here are the specific\n benefits.\u201d At the end of the day, everything we do must\n be tied to the customer.Matt Villano is a freelance writer\n based in Healdsburg, Calif.