May 14, 2001, 12:50 PM — FINANCIAL SERVICES GIANT Charles Schwab is a leader in online trading and benefited greatly from the early adoption of online services for its customers. InfoWorld Features Editor Owen Linderholm spoke to David Pottruck, CEO of Schwab, and Dawn Lepore, CIO, about the role of IT and the value of IT for the company and in general.
InfoWorld: Does IT provide a real business value to Schwab and to a modern business in general, and if so, how can that be measured?
Pottruck: One of the simple things we look at as a core measure of our company's efficiency is the revenue per employee: We look for the revenue per employee to go up each year. We also have the notion of the revenue per unit of work, and oftentimes the revenue per unit of work goes down because of price competition. That means if you want revenue per employee to go up and revenue per unit of work is going down, units of work per person have to go up dramatically. Technology is indeed how we do that. So we attribute most of our improvement in revenue per employee to the employment of technology to automate work or eliminate work or simply make people more efficient and more effective.
InfoWorld: In terms of the relative importance of IT to Schwab and businesses in general, is it more on day-to-day operations, day-to-day revenue generating, or business strategy?
Lepore: I think it's both. In some companies one person has the day-to-day operations and the other person has long-term strategy with technology. I've always been a believer that one person should have both of those roles. You build your credibility and your right to have an opinion on the strategy by delivering on a day-to-day basis. You really have to do both because technology has to further the strategic goals of the company and sometimes even drive the strategic goals of the company. It also has to be able to deliver on behalf of your clients and your customers. It's too easy to get too disconnected from what it's like to really serve clients on a day-to-day basis with technology, so I really do think that both sides are exceptionally important.
InfoWorld: How much understanding do business executives need nowadays about information technology? And how much should IT executives know about business?
Pottruck: One of the things we are working on at Schwab is training our businesspeople to better understand and work with tech people. The ability of businesspeople to completely appreciate the challenge of technology people and how to work with them is crucial.
Having been a technology person in my earlier business career, I have a great deal of respect for how hard technology people work to understand the business that they are building technology for. Because you have to; you have to understand the customer, how they segment, you have to understand the products, you have to understand the rules of the business, oftentimes at a granular level that is more than the businesspeople even understand. The businesspeople understand how the business works most of the time, but they may not even realize in that 1 percent of the time people take care of it three levels below you and you don't even know what's going on, frankly. So technology people, by the nature of what they do, must understand every detail of how a business works, how it's measured, how it's run, and the good ones enjoy the immersion into that level of information and do that very well. The problem, as I understand it, is that the effort to come to that level of understanding requires the IT people to ask questions of the businesspeople at a level of detail and a level of granularity that the businesspeople simply either don't know or don't have the patience or the discipline to work through.
It is important for business people to understand why that situation exists and to respect and appreciate it and not make that experience painful for the systems people. If you want to get a good quality system you have to understand the challenge of the systems person just as they have to understand the challenge of the business person. And I think the failure is so often on the side of the business people who don't want to put the time and effort into the projects.
Lepore: They don't need to code, but I think they need to know a fair amount about technology. One of the things I am very proud of about all my colleagues at Schwab is that they have a lot of technical savvy and know how to ask good questions and think about technology early in the business strategy cycle. I think that's important.
