This month our series of ‘Five Solid Questions continues with an interview of Ron Frissora, CIO of M/I Homes, and a leader in the Central Ohio IT community discussing ‘Driving Business Value’. Our interviewer is Steve Gruetter, Director of Market Strategy at Expedient and dedicated supporter of TechLifeColumbus and the Central Ohio IT community.
RON FRISSORA: I started as a business analyst here at M/I Homes, and put in the mortgage system for our mortgage company, and I got to know the president of the mortgage company very well. He’s a native New Yorker, like me, so we hit it off fairly quickly. I bonded well with him. He has been my mentor for 22 years and helped me get to where I am today. We go to lunch frequently, we talk about a lot of things and he’s helped me build myself, my career, how I work with executives, and that type of thing. So he’s been really helpful in my career path here at M/I Homes.
STEVE GRUETTER: On a national basis, the average CIO career at one location is about 24-30 months; you’ve been doing it for 23 years at M/I Homes. What do you attribute your longevity to?
RON FRISSORA: Good question. I think is because our team makes a difference. I’ve built a strong team around me that delivers value to the company. We’ve come a long way from where we started 23 years ago.
I’ll just be perfectly honest with you. When I first took the job, everything was tactical – there was no strategic direction at all as it relates to IT. I went to dinner with Bob Schottenstein, our CEO, and I basically said to him, we need to look at IT as a strategic entity, not a tactical keep-the-lights-on, invest as little as we can in the department, and this is what I believe we should do. I laid out the plan, and he agreed. He basically said ‘I don’t understand a lot about technology, but what I can tell you is that I think what you’re saying is correct, and we need to invest in IT to keep the future of this company strong.’
So that got the ball rolling. It’s kind of like a big ship; it takes a while to get it turned and headed in the right direction, but what I think has helped me be successful is that I’ve spent a lot of time with our leadership team and our business units, and listened and understood what they need, what they require technologically to run their business more effectively – and then delivered on that.
And in the past, it used to be that IT would be pushing stuff down on the business, and it was always, ‘We have this great solution; we’re going to deliver it to you,’ and that has changed pretty much 180 degrees, whereas now they come to us and say, ‘Hey, we need to do this,’ we analyze whatever ‘this’ is, and then we determine what we need to deliver strategically to them to solve their business problems.
We’ve done a lot with business intelligence to deliver value to the company. Every time I do a presentation for all of our leaders, they’re always amazed at all of the concise information that we can provide to help them analyze their business, whatever that business is, and make really, really educated decisions.
In the past, they would make decisions based on feeling; if it feels right, I’m going to do it. Now, we support their “feelings” with data, and we’re making better decisions as an organization. It’s been a long road but we are making a lot of progress. I always say that our company is immature as it relates to using data, and we still are, but that’s changing rapidly.
In the past, we’d have our sales reporting, our construction reporting, our financial reporting, and they were all separate. Now, we’re able to bring a lot of this data into one view, and we are able to present information to our business people to make better business decisions. A lot of it is efficiency, too; they had to pull data into spreadsheets, and they would say, ‘Here’s my sales data, marry it up with my margin data, marry it up with my construction data,’ and so they would maintain these big spreadsheets and capture all this stuff, and now, we’re able to just present it to them – some of it is in a dashboard format. That’s what I see is a next evolution for us is to be more data-oriented, rather than report-oriented.
And what I mean by that is we tend to still live in the report world, and it’s slowly transitioning over. We use SharePoint a lot, and SharePoint presents our dashboards, and people are starting to use them now more effectively than what they did before. … We’re trying to show them, just go here and it’s all there; you get the information you need, you can drill down into whatever you want. If you want to get to the detail level, you can drill into it and get the data you need. It’s been a slow migration, but we are getting there… STEVE GRUETTER: So take the technical jargon out of the conversation, and give things titles that make sense to the guy on the street?
RON FRISSORA: Exactly. And every company is different. Depending on the level of sophistication of your executive management team and what industry you’re in. We’re in the home building industry. When I talk to the leaders of the company, we’re talking about sticks and bricks, so we’re not talking about business intelligence, but how we build those sticks and bricks and the margins that come in are related to trending that we see in the industry, increases in pricing and things like that; those are things that we can deliver that provide a ton of value.
STEVE GRUETTER: Measuring the success of your IT organization – you talked about the communications back and forth; you talked about your deliverables that you’re doing for them. How do you establish key metrics for yourself on where your success is?
RON FRISSORA: So it’s probably not metric-driven, but I’ll talk about what I see as success.
I visit the divisions regularly, and my metric for success is typically how well those conversations go with the divisions, and I think part of that is just the demand for our services, and what I mean by that is there wasn’t always demand for our services; there was a need for our services, but not a demand for our services. That’s changed a lot, and so we know now that we’re providing business value because people are constantly asking for more, and that’s been a difficult thing to keep up with and manage the demand, but it’s a true sign that we’re making a difference, and that’s really where I see us making a difference. What I see is when I work with the management team – our vice presidents of sales, our marketing leaders and our division presidents, they speak very highly about what we do. I have a region president who tells everyone under the sun how great we are.
STEVE GRUETTER: That’s nice to have on your side.
RON FRISSORA: That to me is the measure of success. When people are saying, you hear all these horror stories about IT, that they’re a barrier and things like that, and we hear quite the opposite. We’re an enabler, and we try to listen to what the business needs are and then deliver value to them.
STEVE GRUETTER: Well, at this point in time, let’s face it, there are shops out there that exist still, and we run into them, that are – they call it the “stiff arm.” IT, you stay over here; we’re the business. You stay over there and you just be a cost center, and just tell us what you do and leave the lights on and the whole bit, but if the executive management think – well, you’ve got outstanding executive management support – if you’re not using that as an enabler, you are falling behind in your business.
RON FRISSORA: There’s no doubt! That’s kind of what I’ve seen here – I’d say we’re helping to drive the business forward, although I can’t say we’re the key enabler to drive the business forward, but we are definitely helping to drive the business forward, and that’s apparent every day.
STEVE GRUETTER: It sounds like you’ve got outstanding communication into everybody; is that the basis of that, or do you think that it’s just that they’re open-minded and just want to leverage as much as possible?
RON FRISSORA: Absolutely, communication is critical. I’ve formed a good relationship with Executive Management. But yes, absolutely, communication is the key, and then I think the other thing is just delivering business value, and I keep coming back to that, that we deliver business value, and I think those guys see it, and that’s why they respect it, they respect what we’re doing.
STEVE GRUETTER: You mentioned that you have numerous projects going on. What drives your projects? We see a lot of projects out there: Risk mitigation and compliance drives them, growth drives them, and the need for agility drives them. You mentioned business analytics, business intelligence projects. What drives your projects?
RON FRISSORA: There’s a lot of different things, and I’m trying to group them into one.
I think meeting the business needs is probably the overarching factor, so a lot of the things that you just mentioned are very true. We’re a public company, and we own a mortgage company, we own a title company so we have to deal with compliance on a daily basis.
STEVE GRUETTER: So the need for compliance is key?
RON FRISSORA: Right, exactly, compliance has been driving a lot of things that we do on the security front, on Personally Identifiable Information (PII) data and protecting PII data – so it is Social Security numbers, bank accounts, credit cards, that kind of thing. So we don’t take credit cards, we don’t allow people to pay with credit cards, so we don’t have to deal with PCI compliance, but we’re a bank basically, so when you think about the information we gather for a mortgage, all the information – you’ve bought a house before – you have to divulge your whole personal background in order to get a house. We store that data, so we are a target for companies that want to come in and steal that data we have to protect our shareholders. We get audited every year. We work with some external security companies, and what we try to do is build our compliance to a higher standard, and really to PCI compliance levels.
Compliance is absolutely driving our projects; growth is driving our projects. Three or four years ago, we were in nine or 10 markets; we’re in 15 markets now. We just acquired a builder in Minnesota; we just closed on that deal December 1. And that brings challenges to integrate them into our systems and migrate all their data – just getting a new company to follow your standards is very challenging. We also opened a Sarasota division in July.
So growth is absolutely something that M/I Homes wants to do, we want to be in more than 15 markets, and we’re going to continue to grow.
STEVE GRUETTER: I’m familiar with how Expedient chooses a market. How does M/I figure out which one will be the next market for you?
RON FRISSORA: There are some companies out there – consulting companies – that help us in this, and we look at various factors in marketplaces: job growth and population growth are keys that help us to decide which markets to target. We also look at things like how many national builders are there; if there’s not that many national builders and good metrics, it’s a good opportunity for us to go in and potentially make a dent into the market fairly quickly.
If there’s every national builder under the sun there, it might not be that appealing to us unless the marketplace is really hot and we think we can still make money despite the stiff competition.
We are primarily a move-up buyer, but we do first-time home buyers, move-up buyers, and then luxury buyers, so we cover all three segments, but our sweet spot is really in the move-up buyer; that’s really where we want to be. You get out of college, get a job, they got their first home, that was an existing home and now they’re looking to move up – they got a promotion in their career and they want to get to the next level. Having some kids, a nicer neighborhood. They might need more space, whatever it is; that’s kind of where we do the best.
Minnesota is a great example. We bought a builder there who was a top-end builder, but when we looked at the marketplace, there was one national builder there who was really dominating the marketplace, and we felt like we could get a head start by buying someone, and then invest more to grow market share. I mean, the prior ownership was was not investing into the business anymore because the former owner was ready to retire. We’re their bank now, and we’re going to fund new land purchases and new land development, and we’re going to start cranking out homes there. We think we can be a top five builder fairly quickly.
One of the challenges that I have is that we are very entrepreneurial in our divisions, and what I mean by that is we hire someone, a leader in the marketplace, and we typically like to hire a leader in the marketplace who has knowledge of the market.
It’s a very local business. If we’re in Tampa, you have to know the Tampa market, and a leader has to know the Tampa market and what’s available there, what drives activity there, etc., but we also give them the keys to the kingdom, and we say to them you have this market and you’re going to run it the way you see fit. You’re going to use our CRM system, our accounting system, but you can use it the way you see fit. So it’s not a top-down approach; definitely not saying ‘you will do this our way, the corporate way, or don’t work for us’. That’s not our approach one bit.
So that leads to a lot of challenges for me, because standardizing things across divisions is a big challenge, and the way I try to do that is to try to share successes that other divisions have had.
So I’ll give you an example. The key driver is efficiency, and that’s kind of the third pillar for us – how do we become more efficient through the use of technology. And that’s where I think we’ve really excelled in our company, and I’ll give you a short example. In our heyday, the biggest we’ve ever been is we’ve closed about 4,300 homes. We had over 1,300 people at that point. Last year, we closed 4,100, and we had 975 employees. IT played a big part in that because we’ve created a lot of efficiencies in the company that allowed us to build more homes with less people. Housing activity has gone up and down pretty dramatically over the past 10 years, and we continued to invest through the downturn, and that, I have to give my boss, who’s the CFO, a ton of credit. We didn’t mothball any projects; we didn’t stop any projects. After they were done, we slowed things down but we continued to invest through the downturn to get the operational efficiency that we needed so that when the marketplace came back, we didn’t have to hire as many people back. So it’s made a huge difference. My boss deserves a lot of credit because he continued to allow us to finish things that we started.
We have wanted the divisions to be very efficient as it relates to budgets; we look at every stick and brick that goes into a house, and we price it out, so that’s how we make money. We know what our costs are going in to a home when we’re going to build it, what the land costs are, etc., etc., and you say this is what it’s going to cost, and then we put a price on top of that with our margins and everything else, to say if we do it at this price, we’re going to make some money. And with that is a lot of detail, but the detail can feed over into our construction scheduling system and, ultimately, drive payment of invoices.
So now, a person clicks on a button that something’s finished, framing is done for example, and it sends it back to our ERP system, and the framer gets paid, whereas before, every week, a construction supervisor would come into the office, they’d have a stack of invoices, they’d sign them, and then someone would take them and sort them, and then key them into the system. All of that has been eliminated, all that wasted time, and that’s where I think we’re driving efficiency through the use of technology. Every single house had hundreds of invoices, hundreds, literally hundreds of invoices that come in – so multiple that by 4,000 homes built. You can imagine the volume of work that has been reduced!
So just to make that process more efficient, and again, for me, going back to the decentralized mode, we find champions and we work with the champions to say this is the value that we cancreate, here’s our vision, and they share the vision, and then we go and do it. And then we share that vision with someone else, and then someone else then goes and does it, and then it becomes a snowball effect. It’s, like, oh, what is Charlotte doing, what is San Antonio doing that’s making them so much more efficient, and their margins have increased, and they’re selling more homes?
STEVE GRUETTER: What is the best part of working in Central Ohio and the biggest challenges of working in Central Ohio?
RON FRISSORA: I’m a native New Yorker – so it was definitely a challenge when I first moved here, but I’ve been here for 23 years now. I think one of the challenges I see is finding talent. We all know the statistics on the marketplace as it relates to IT, but I think just finding people is really hard, and so for me, a lot of it’s just networking, I mean, talking to people, understanding who’s out in the marketplace. I almost never find people through job placements. It’s usually through the CIO network. I’ll say, ‘Hey, I’m looking for X position, and does anyone know anyone who’s in the marketplace,’ and typically, then I get referrals from people, and many times, that’s where I hire people.
You win with people, and it’s so important. I learn that seemingly every day, just with my team, and you always have your challenges that you’re dealing with, but I’m always amazed at how, like, someone new coming in with a fresh attitude, fresh ideas, fresh approach, just come in and make a huge difference. I think fairly quickly you know what you’ve got after someone comes in and – we just hired a guy recently, I mean, just his demeanor, his approach toward people, the business, attitude is just great, and he’s knocking things out, making a difference. And when you make a difference, that’s what makes you feel good about yourself.
STEVE GRUETTER: You are exceptionally involved in the Central Ohio community. Why do you invest your time?
RON FRISSORA: I love to give back. It’s my personality, and my personality is I love to help people, is probably the best way to say it. I was voted the Most Friendly Person in my high school. That’s because I just love to interact with people, and I feel like I’m always nice to people, no matter what and no matter who they are; it doesn’t matter if they’re the janitor or the executive of the company. I don’t treat anyone differently; it doesn’t matter who they are in the company, and that’s, I think, helped me be successful.
But I think giving back is important to me. I enjoyed working with the start-ups and with the CIO Forum for two reasons: number one, I learned about technology that was coming through Columbus, which I thought was so cool. I hear about things and I read about things, but I never knew the level of start-ups that were coming through TechColumbus, and it was fun. We spent a significant amount of time there; it’s fun just to see everything. And I knew this much of it, but then my knowledge base expanded quite a bit. So it was fun for me, but it was also fun for me to help people
I think Angelo’s (Angelo Mazzocco, leader of the Central Ohio CIO Forum) certainly been an influence on me; I’ve watched what he’s done over the years, and the passion that he has for the community, and the CIO group, and just keeping that group together. I mean, I tried to keep it together while he was in his CEO role over at Pillar but I don’t compare to him!
STEVE GRUETTER: And that’s really impressive, on his part. He is the alpha dog, and then he says, ‘Well, now I’m a vendor so I can’t do this,’ and he steps out. Thankfully, he’s still Angelo. And his insights are valuable, but he kept out of it. Now, of course, he’s with Primary Care Physicians, so he is back in the CIO Forum.
RON FRISSORA: Oh, it was funny, because when Tech Columbus backed out of managing the Columbus CIO Forum, I stepped up and kept the group going for three and a half years or so, and as soon as Angelo said he was back in a CIO role, I was like, ‘OK, Angelo, we’ve got to talk. Are you ready to take it back over?’ He’s got great contacts, I’ve watched him, I’ve respected what he’s done, and to some extent, follow in his footsteps, And I just enjoy it; if I can help someone, then I’ve done my job.