Their First CIO

When FFF Enterprises Inc. grew sales by 400% in four years, the need for IT to support this rapid growth began mushrooming out of control. So executives sought out an IT leader to restore order. "We called in the Marines," laughs Kit-Bacon Gressitt, FFF's vice president of marketing.

Specifically, they hired Bob Coates.

Coates became the first technology executive at the Temecula, Calif., distributor of biopharmaceutical products. The ex-Marine even exemplifies the basis for the company's name: the Latin fortuna favet fordibus, or fortune favors fortitude.

Now, a little more than a year into his tenure as vice president of technology, FFF estimates that nearly a dozen new IT initiatives contribute to the firm's continuing growth of about 20% per year. That's no small feat in an industry besieged by supply shortages and widely fluctuating pricing, not to mention the threat of drug counterfeiting.

Early on, Coates brought business intelligence to FFF, whose primary business -- the distribution of human plasma products -- is most susceptible to those threatening market forces. He pioneered an electronic tracking application that demonstrates the integrity of the supply chain through which FFF distributes those products. He engaged technology with many familiar industry acronyms: CRM, HRIS, VoIP. He brought discipline to the process of evaluating technology offerings. Yet Coates is no drill sergeant. Colleagues attribute his success to listening, teamwork and process. CEO Patrick M. Schmidt calls him "indispensable, innovative and essential."

Here's how FFF embraced this technology executive and empowered him to succeed.

Tackling The 'To Do' List

Bob Coates arrived at FFF Enterprises Inc. in March 2004 to find a long list of technology objectives awaiting him. Choosing what to do first and how to do it was a collaborative effort with the business executives who had built the list. They knew in essence what they wanted, but they needed help. "We realized that we had to have someone at the executive level who could help us realize our vision by supporting it with technology," says Kit-Bacon Gressitt, vice president of marketing, whose projects included an intranet and patient-facing systems. That someone was Coates. "In his very subtle and humble way, he makes his recommendation based on his extensive knowledge of the product or the process or whatever it is. He also takes it to the next level -- 'well, if you added this and this, x is what you would get' -- and then we all scramble and look for the budget," says Chris Ground, senior vice president of national accounts. Ground has gotten a CRM system (salesforce.com), a business intelligence tool to track key performance indicators such as sales (Qlicktech Inc.'s Qlikview dashboard) and BlackBerry handheld devices, which sales reps can use to enter data into salesforce.com via an application from Cendia Software Inc. So how did the group get their mission accomplished? "What we counted on Bob for was to listen to the need, identify the options and cost -- and cost is of course always a factor -- and guide us toward prioritizing [what we wanted]," Gressitt says. "It's not a paper matrix in our heads, coming up with just the priority list, because we wanted so much. There was both an art and a science to it. And Bob led that process very well and helped us home in on our where we could best invest in technology to achieve our end goals." Jumping into the HR project, where software selection was almost complete, Coates created the process that the organization now uses to evaluate any technology project. That includes selecting a project team and both a project owner and sub-owner. It involves vetting a host of choices and, as with the CRM project, on-site demos and trials, with a user vote picking the winner. These steps have made technology selection take longer-with the HR project, winner Employease Inc. wasn't selected until October, and it just went live in January -- but it ensures buy-in from the beginning. Coates is now invited to meetings of all kinds. "One of the benefits Bob brought was putting us through a rigorous decision-making process that both got us invested in the end result, but also gave him time to better understand what the people on the ground needed," Gressitt notes. Yet in typical humble fashion, Coates gives credit elsewhere -- to the business execs. "They downplay their abilities when it comes to technology, but believe me, I live with it on a daily basis," he says. "They're always asking questions about stuff that throws me for a loop. They know what they want, and that's what drives it." --A.M.

Call of Duty

Midmarket organizations like FFF often go for years without an IT leader, slowly adding IT staff as the number of employees and systems grows. It's after four or five years of active growth or when revenues grow beyond $200 million a year that they start to think about a CIO, says Dan Gingras, a five-time CIO who is now with consultancy Tatum Partners. That's the point at which technology becomes more complex, more pervasive and, critically, more strategic to a company's corporate health. (The other primary reason: to recoup from a technology disaster, Gingras says.)

Yet giving a person the CIO title or related vice president/ CTO status doesn't always mean a company seeks a truly strategic partner. Among firms with $500 million or less in annual revenues, only 10% to 15% have true IT executives who engage in strategy. That number rises only to about 50% in companies with revenues up to $1 billion, according to analyst Mika Krammer of Stamford, Conn.-based Gartner Inc. The balance can be little more than IT caretakers.

Part of the problem is that business executives often don't know what to look for, and thus post job descriptions littered with technical certifications. "They don't understand [the difference between] infrastructure computing and technology for competitive advantage. They're focused on running the computer infrastructure," Gingras says. "To succeed [in a strategic role], you must be extremely good at an antithetical role, and that is the role of salesman."

Using IT to Accelerate the Business

At FFF, a relaxed, Southern California dress code and a spunky, collaborative culture underlie a passion for helping the sick. The company already had a capable IT staff and even an ERP system before Coates came on board. What it lacked was a team player to bring a vision of how IT could accelerate the business. "We knew where we wanted to go, technologically, but we didn't know how to speak the language; we didn't know what things were out there; we didn't know how to put it in place," says Chris Ground, senior vice president of national accounts. "We didn't have the horsepower to do that."

Ground himself had arrived in 1999, when then 11-year-old FFF changed its distribution model and saw its sales spike. "We got into large group purchasing organization contracts," Ground says, and "our volume went up quantumly," from about $100 million that year to about $500 million in 2003. "That's like 0-60 in about three seconds."

Growing pains ensued. For example, the company had to upgrade its ERP system, a massive effort that "took a toll on a lot of things," Ground recalls. "It became very apparent that technology was here to stay, and therefore we needed somebody to really weave a common thread throughout, to take a really high-level view of all the different divisions and to put a vision of technology together."

At the time, Coates, a former CIO at cinema chain Edwards Theatres Inc., was working as a lead engineer on Navy C41 systems at defense contractor Titan Systems Corp. He'd retired from a full career in the Marines after 21 years of service in 1997. Tall and soft-spoken, deeply knowledgeable yet quick to credit others for their contributions while downplaying his own, Coates had set out to become a fighter pilot. He landed in information systems when his A6 Intruder jet training abruptly ended after an eye exam revealed a form of colorblindness. It was a crushing disappointment for a 22-year-old. "As a lark I [put in for] the systems route, and I ended up getting it," he says.

Thus began his career in IT as a data systems and communications officer, during which he designed all manner of systems in military and, then, civilian life. He learned of the opportunity at FFF when a co-worker and fellow ex-Marine heard about it via the Marine Executive Network, a networking and jobs board.

At first, FFF's ambitious technology agenda concerned the cautious Coates, who employed strong listening skills to make up for his lack of a health care background. "When I first came here, I didn't think I'd be here very long. I thought, 'What can I contribute?'" Coates says. "During the first six weeks here, there was a lot of angst on my part."

Some projects were not industry-specific, however. Early on, Coates met with human resources, which was looking for a software package and had pretty much settled on one. But Coates recalled that CEO Schmidt had mentioned a need for "process" during his job interview, and so he offered to evaluate some competitive offerings. By the time the company selected a system from Employease Inc. some months later, he had developed a project template. It included choosing a project team and appointing a project owner and subowner.

Yet for an organization that has just hired its first CIO, nearer-term wins are essential to build faith among business colleagues, observers say. These low-risk, high-visibility projects should be completed in the first 30-60 days.

Coates had a project that fit this bill. It involved FFF's core business and key differentiator: supply chain integrity.

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