The Baseline 500: A Special Honor

By John McCormick Print this article Print

A look behind the numbers proves once again that leaders lead the pack of efficient information managers.

The group of companies that make up the Baseline 500 are special—and this year, they are even more so. To determine who makes our annual ranking of the best corporate managers of information, we started, as we did last year, with a list of publicly traded companies. Then we once again determined each company's Information Value-Added score, which is profit left after subtracting the cost of capital invested by shareholders. And then we looked at Information Productivity, or IP, which is Information Value-Added divided by a company's costs—selling, general and administrative expenses. IP scores determine the Baseline 500 ranking.

"The Baseline 500 IP ranking is a unique contribution to the understanding of how transaction costs—people plus computers—create business value-added," says Paul Strassmann. A former top information-technology executive at Xerox, Kraft, NASA and the Department of Defense, Strassmann created the Information Value-Added and Information Productivity metrics.

But this year, to eliminate one-year spikes, we used an average of corporate data from the past five fiscal years. We also eliminated from the ranking any company that had more than one year of fiscal losses, arguing that if a company failed to deliver on its most important metric for two out of the five years, it didn't deserve to be on the list.

The Baseline 500 is truly the ultimate test of information management. As Strassmann points out, it's a reproducible method that makes it possible for every company to do its own calculations to see how, over a period of time, its information-technology efforts have delivered on what matters most: added business value.

And going through the Baseline 500 companies we chose to profile, one will quickly see that adding business value is a constant theme among our 500 information management leaders.

At Chesapeake Energy, for example, which ranked No. 1 for the second year in a row, information systems give everyone at the $4.7 billion natural gas company, from CEO Aubrey McClendon on down, the information they need when they need it.

At Ruby Tuesday, the $1.1 billon casual dining chain, chief technology officer Nick Ibrahim looked at how the business operated and went about supporting every process with information technology—which is now helping the company better track its business, boost customer service and even improve meal preparation.

And at American States Water, a $236 million water and electric utility, information-technology manager David Hefler and his team oversee a system that lets the company get its hands on years of corporate performance data quickly and easily.

Aligning business and information-technology strategies has been a challenge for decades. But the challenge can be mastered. The common denominator appears to be a strong information chief who studies the business, understands it fully, sees where conditions can be improved, and then implements information technology where it can add value.

It still takes a special information-technology leader to make it happen—and a special company to hire, and then follow, such a leader. It's those companies we honor with the Baseline 500.

This article was originally published on 2006-10-15
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