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CIO Straight Talk Issue 4
1. www.straightalkonline.com Issue Number 4
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2.
3.
4. Cover Article
7 Things CIOs Are Doing to Get Ahead in the
DIGITAL ECONOMY
• Experience Talks
• The End of IT Innovation
• The CIO’s Choice
• Other Voices
Straight Talking
06
Content
14
Crossing the Finish
Line Together
Patricia K. Poppe, VP, Customer Experience and Operations, and
Mamatha Chamarthi, VP and CIO, Consumers Energy
24
34
Innovation by Amateurs
Scott Blanchette, SVP and CIO,
Vanguard Health Systems, and
MIT Sloan CIO Award Winner, 2013
20
28
SAP Runs SAP:
How Technology Made It Happen
Michael Golz, SVP and CIO,
SAP Americas
Business-Driven IT
and IT-Driven Business
William E. Klitgaard, Corporate SVP
and CIO, Covance
When Efficiency and
Flexibility Trump All
Mathew Jackson, Services Director,
UK Asset Resolution
Plus:
5. Spotlight
39
44
Subject: IT-Marketing Collaboration
From: Chief Information Officer
To: Chief Marketing Officer
Cc: Head of Sales
Being a CIO: It’s Not a Job,
It’s a Lifestyle
John Halamka, CIO, Beth Israel Deaconess Medical
Center, and author of Life as a Healthcare CIO blog
Points of View
Always On, Always in Context
Robert Scoble, Startup Liaison Officer,
Rackspace, and author of the blog Scobleizer
The CIO-CMO
Dream Team
The Rise of the Chief
Marketing Technologist
Scott Brinker, author of the “Chief
Marketing Technologist” blog
Double Duty: Living the
CIO–CMO Convergence
Rom Hendler, former CMO and
Interim CIO, Las Vegas Sands
New-Age Outsourcing
Five outsourcing advisors describe
emerging models
View from the
Technology Blogosphere
54 58
Issue Number 4
I wanted to share with you some thoughts that I believe are relevant as our company transforms itself – or is trans-formed,
like it or not, by the business environment – into a digital enterprise.
First, a few observations about your customer – our customer – in this context.
I’m not telling you anything new when I say that customers have changed, as has their purchase process. It’s no longer
enough to create a great television spot or print ad, then sit back as the customer walks into the store or calls a toll free
number. For that matter, it’s no longer enough for us to hire a top-notch sales force as a means of generating revenue
growth from our business customers. The leverage that you – or Sales – once had over the customer in terms of control-ling
the interaction is quickly becoming irrelevant.
Today’s buyer is smart, resourceful, and connected through social media, someone who does his or her own research
before entering the formal marketing and selling channels. What Google breathlessly calls the “zero moment of truth”
– when a buyer goes online to learn about a product or service, usually before any interaction with the company that
offers it – is reversing traditional information asymmetry, in favor of the buyer. Whatever you think of the term, a
marketer that is able to positively interact with or influence a potential buyer at this moment will regain some of the
power that has migrated to the customer.
Next, a few thoughts on technology:
Influencing a buyer online is a very different undertaking than influencing a buyer in the traditional way. Smart CMOs
like you – and, if I may, business-savvy CIOs like me – are seeing opportunities to influence customer behavior through
technology. This is ushering in an era of marketing and technology convergence, as marketers try to grow the top line
by leveraging customer data – much of it “big data” – and using technology to enhance the customer experience.
Again, you probably already know most of this. Here’s something you may be less familiar with. Marketing technologies
are proliferating at a dizzying rate. According to my last count, some 350 different companies are offering marketing
technology services in five broad areas: digital marketing channels, marketing automation, analytics, data integration,
and product extension. Some people predict that we’ll soon see a new position – in fact, a new profession – on your
team: the marketing technologist.
Hence, the oft-quoted Gartner prediction that, by 2017, the CMO will spend more on information technology than the
CIO will. Well, I want to be clear about this: I don’t care who spends the money. But I want to be sure it is spent intelli-gently.
Collaboration between the two of us can help ensure that happens.
Attached are several interesting articles I’ve collected on this topic. Let’s talk when you’ve had a chance to look at them
– a conversation that I hope will be the first of many. Working together would benefit both of us – not to mention the
enterprise!
I’m happy to swing by to chat about this, if you want to suggest a time. In the words of a famous actor, “I think this could
be the beginning of a beautiful friendship.”
Memo to the
Chief Marketing Officer
From the CIO
7. Highlights
from
sIsue Number 3
Big Data: A Rare Business Leadership
Opportunity for CIOs
Plus:
Pullout poster (“Welcome to the Big Data Zoo”)
“A Very Short History of Big Data”
Straight Talking
Actionable insights from
the CIOs of Lafarge, Land
O’ Lakes, EMI Music, and
other forward-looking
companies
Also in the issue:
Big Thinking
Bill Inmon, the “father
of data warehousing,”
on big data
Trends 2013
Seven HCL experts on
2013’s top IT-related
developments
Go to: magazine.straighttalkonline.com/issue3
8. Cover Article
7 THINGS CIOs
DIGITAL ECONOMY
Are Doing to Get Ahead in the
08 CIO Straight Talk
9. We convened a “virtual focus group” of IT leaders
to find out what kind of moves CIOs are making –
what steps CIOs should be taking – in order to
succeed in today’s brave new digital world. Here is
the group's list of must-do's for their CIO peers.
What’s a CIO to do?
A growing chorus is telling IT leaders that they are on the
verge of extinction. They stand in the way of progress, fail
to understand the needs of the business, and fall hope-lessly
behind in meeting the challenges of new and
exciting digital business opportunities.
To prevent their role from becoming irrelevant and
the IT function from disappearing, CIOs are told they
should “seize the initiative” and “change the conversa-tion”;
they are admonished to “collaborate” and “stay
relevant.” Mostly, they are urged to “innovate” and keep
the IT infrastructure humming — to lead and be creative
while at the same time managing cost efficiently and
controlling unobtrusively the information technology
framework that supports the ever-changing needs of the
enterprise. (See the sidebar “The CIO’s Choice.”)
All good suggestions. And certainly all senior execu-tives
should have mastered multitasking by now. Here,
however, we would like to offer some more down-to-earth
advice, the first draft of a must-do list for CIOs in
the digital economy, drawn from steps IT executives are
taking today to upgrade their roles and transform the IT
function into one that has a direct and profitable impact
on the business.
To begin compiling our list, we assembled a virtual
focus group of seasoned IT executives, all of them mem-bers
of the CIO Straight Talk Interactive group on
LinkedIn. We talked to Ann Alrich, former CIO of Asia-
Pacific and various business units at DuPont; Scott
Blanchette, Senior Vice President and CIO at Vanguard
Health Systems; Ed Jurica, former Senior Vice President
and CIO at the fashion clothing company Fossil; Alexan-dre
Kozlov, CIO of the Extruded Products Division at
Norsk Hydro, an aluminum and renewable energy
company; Isaac Sacolick, CIO at McGraw Hill Construc
tion, the McGraw Hill Financial company that helps
connect people, projects, and products across the
construction industry; and Stephen Thurlbeck, Vice
President of R&D at Complete Innovations, a leading
global provider of technology solutions for mobile work-force
management. (Learn more about their
backgrounds in the sidebar “Experience Talks.”)
The picture that emerged from our talks with these
leaders is of an IT function that is both stable and innova-tive,
fault tolerant and fast learning, reliable and experi-mental.
It is an environment characterized by paradox:
safe is risky, stable is dangerous. Conversely, constant
change ensures resilience, experimentation safeguards
continuity. These IT leaders work to seamlessly integrate
IT with the business and find ways to innovate while
“keeping the lights on.”
The conversations also revealed that the IT function
is looking more and more like a web-native company
such as Google or Amazon — call it the Google-ization of
IT. Organizations that want to take advantage of the
opportunities presented by the digitization of everything
increasingly infuse information technology into every-thing
they do — their operations, their products and
services, the way they go to market, their interactions
with customers and prospects. IT no longer drives the
business. IT is the business.
IT is also innovative. Contrary to the widespread
belief only ten years ago that IT’s innovative days were
over, new ways to practice enterprise IT and new tools
and technologies emerge all the time. The greatest and
most radical changes over the past decade happened in
web-native companies, where the complete fusion of IT
and the business has driven IT innovation on an unprec-edented
scale. (See the sidebar “The End of IT Innova-tion?”)
09 CIO Straight Talk
10. The CIOs we talked to highlighted specific actions
they have taken to bring some of the characteristics of
web-native companies to their organizations — in some
cases with a twist or two of their own.
The list we present here is tentative and
probably incomplete. We invite you to refine and
expand it by joining the conversation on the
CIO Straight Talk Interactive group on LinkedIn. (Visit
http://partner.linkedin.com/CIOStraightTalk to request
membership in the group.)
1. Never “work with the business”
Web-native companies have built their businesses on IT
innovation. Engineers and product managers in these
companies are technologists, many of
whom are involved in developing and
maintaining a vast IT infrastructure.
Outside of the websphere, leading
companies are moving toward a seam-less
integration, even a fusion, of
business and IT. “The paradigm of
there being a business and there being
an IT department trying to drive an
alignment is antiquated,” says Scott
Blanchette. “You’ve got to do more
than just ‘work with the business’ —
really, I’m offended by that term,
because we’re as much the business as
anything else around here.”
Ed Jurica found a creative way to
drive home that point, one that his
team members recalled years later. He
told them, “When you find yourself
saying ‘the business,’ hold your tongue
with your fingers and say ‘IT is the
business.’ It drives home the point that
we are as important as the business
and completely integrated with it.”
At Vanguard Health Systems,
Scott Blanchette,
Senior Vice President and CIO,
Vanguard Health Systems
“'Work with the
business' — really,
I’m offended by that
term, because we’re
as much the
business as anything
else around here.”
Blanchette took the idea to its practical
conclusion, embedding IT in the
business units. “IT is no different than
the finance function or the service
delivery function or the clinical function,” he notes. “I
come from Northern California, and that is just the way
companies in Silicon Valley are run.”
True to his roots, Blanchette believes IT should allow
for “some level of chaos” but also provide mechanisms
for supervising it. (See “Innovation by Amateurs,” page
34.) It’s a cross-enterprise role that has multiple dimen-sions,
but its essence is the technology expertise and
experience that resides in IT and is embodied by the CIO.
These are skills and know-how that are more important
than ever to the management of any enterprise.
Being part of the business means taking initiative.
And if IT is seamlessly integrated with the business,
there is no reason why a CIO should not help lead
enterprise-wide change, innovation, and transformation,
just like other senior business executives. As Alexandre
Kozlov argues, “CIOs shouldn’t wait to be invited to the
table; they should make themselves relevant to the
business and contribute to generating revenues.” Ann
Alrich agrees: “It’s absolutely imperative that the CIO is a
member of the senior business team so he or she is
involved in developing the future plans and the strategy
for the business.”
Stephen Thurlbeck has done just that at Complete
Innovations. “Oddly enough from someone focused on
technology, I’m pushing the balanced scorecard
approach throughout the business,” he says. “This is a big
change: I’m pushing from within IT, but ultimately it’s
going to benefit the entire company.”
2. Learn fast, but contain failure
In a 1982 paper, the late computer scientist Jim Gray
wrote about “fail-fast” in the context of
applying hardware fault-tolerant
principles to software engineering —
each hardware or software module
“either does the right thing or stops.”
By insulating each software module
from the others, Gray and other
experts in fault-tolerant systems
achieved what they called “fault
containment,” ensuring a quick detec-tion
of errors without impacting the
entire system.
Since then, the Agile Software
Development movement adopted and
promoted the concept, which is
probably how the fail-fast idea perme-ated
the culture of Silicon Valley and
became a business philosophy. Now
it’s one that IT organizations are using
to become an indispensable part of
their companies’ product development
efforts.
Many IT teams today are using
Agile practices, including constructing
experiments to see whether something
fails or succeeds. Isaac Sacolick points
out that his team has been doing that
through “spikes,” projects of short
duration used to research a concept or
create a simple prototype. “If I have to integrate with a
new API and we are not sure how complex it is, we are
going to try to experiment with that,” he says. And if the
experiment is a failure? That’s OK.
Speed, the “fast” element of “fail fast,” also offers
crucial benefits. As Stephen Thurlbeck points out,
“Everybody is on the same page at the same time. We are
making changes when we can and as we should, rather
than going into the development black box for months
and months and coming out with something that either
didn’t have the right specs or was not produced
correctly.”
Scott Blanchette cautions that fail-fast is fine as long
as it doesn’t become “fail fast and often.” Sometimes the
approach can “morph into a justification for not doing
sufficient due diligence or sufficient planning,” he notes.
The key to fast learning is failure containment. If you
design your experiments carefully, you ensure that
10 CIO Straight Talk
11. innovative ideas get a well-defined test and do not affect
ongoing work, and that lessons are analyzed quickly to
identify the next step.
3. Cut time spent "keeping the lights on"
How do you make time for experimentation? As the
pointy-haired boss in a Dilbert cartoon tells his team, “If
you come up with a good idea, I’ll let you take on the
project in addition to your existing work.” But according
to the CIOs we talked to, it is possible to find ways to
channel the energies of IT staff beyond day-to-day work.
One approach is to take a close look at routine and
time-consuming tasks. Ed Jurica notes that his organi-zation
set a goal of reducing by 10% the time and effort it
would devote to production support, thereby freeing up
15 FTEs for work that could generate more business
value. “If it’s a tedious task that has to be done over and
over again,” he says, “perhaps a small investment in a
tool or developing a utility in-house could alleviate the
time spent on it.”
Issac Sacolick has also found ways to separate ongo-ing
support from experimental and innovative develop-ment
work, directing a lot of routine maintenance work
to outsourcing partners. In addition to using “spikes,”
discussed above, he dedicates small groups for four to
eight weeks to larger experimental projects. “I make
these opportunities very transparent,” he says, “creating
in the process a culture of innovation. I make it transpar-ent
because you don’t know who is going to respond to it
in your group and because you want to use the opportu-nity
to find business sponsors who want to get involved.”
4. Adopt a few digital natives
Once you make time for experimentation and inno-vation,
what are some of the sources of new ideas? It
may be worthwhile to think about this in demo-graphic
terms. Here are some fairly well known statis-tics:
The median age at Google is 29; at Facebook, it’s 28.
These companies are leading indicators for the changing
face of the global workforce over the next decade. In the
U.S., where the overall median age of workers is 42.3,
there are an estimated 80 million young Americans who
belong to the so-called millennial generation, roughly
ages 18 to 35. By next year, millennials are expected to
constitute 36% of the U.S. workforce, and by 2020, they
will account for nearly half of all workers.
Scott Blanchette has seen this demographic shift in
action: “A big percentage of our workforce, especially the
clinical workforce — nurses and doctors — are very
young. They are not technologists, but they have a
tremendous portfolio of technical competencies that we
want to tap into, because they are always finding new
ways to solve old problems.”
Many CIOs are not targeting young professionals who
were “baptized in technology,” Blanchette notes, in large
part because of structured R&D approaches, which are
hierarchical in nature. “But we spend a lot of our time and
effort tapping into the power of the base of the
pyramid.”In addition to offering innovative ideas on how
Experience Talks
The six senior IT leaders we interviewed for this
article have among them at least 120 years of
experience, mostly in managing IT operations and
innovation in a variety of industries and types of
businesses.
Ann Alrich is the former CIO of Asia-Pacific and
various business units at DuPont, one of the world’s
largest chemical companies, which is headquartered
in Wilmington, Delaware.
Scott Blanchette is Senior Vice President and CIO of
Vanguard Health Systems, an operator of hospitals
and other medical facilities in five U.S. states. The
company, which recently agreed to be acquired by
Tenet Healthcare, also an operator of hospitals, is
headquartered in Nashville, Tennessee.
Ed Jurica is former Senior Vice President and CIO of
Fossil, a global design, marketing, and distribution
company that specializes in consumer fashion
accessories, with more than 400 retail and 4,000
wholesale locations worldwide. It is headquartered in
Richardson, Texas.
Alexandre Kozlov is CIO of the Extruded Products
Division at Norsk Hydro, a global supplier of
aluminum with activities throughout the value chain,
from bauxite extraction to the production of rolled
and extruded aluminum products and building
systems. It is headquartered in Oslo, Norway.
Isaac Sacolick is CIO at McGraw Hill Construction,
which provides data, news, and intelligence to
construction professionals. It is based in New York.
Stephen Thurlbeck is Vice President of R&D at
Complete Innovations, a leading global provider of
mission-critical fleet, asset, and mobile workforce
management solutions. It is based in Markham,
Canada.
11 CIO Straight Talk
12. Alexandre Kozlov,
CIO, Extruded Products Division, Norsk Hydro
to use IT to achieve business goals, digital natives also
help change the way IT does its work, especially in the
area of training and documentation. Ed Jurica observes
that digital natives, who grew up immersed in Nintendo
and PlayStation, approach learning in an entirely new
way. “There are no instruction manuals, there is no ‘take
a class,’” he observes. “It’s all emergent: ‘Give me the
environment and let me play. If I have questions, I will
open up three different chat tools and I will pull other
people in to look for FAQs and shortcuts. I will learn by
doing.’” Consequently, the training materials these
professionals like to consume are more like games, allow-ing
users to experiment and play with the technology.
In addition to doing the obvious to engage digital
natives — reaching out through social media — you may
want to appoint a member of your management team to
be the “digital natives czar,” responsible for soliciting
innovative ideas from 20-something employees through-out
the enterprise and addressing their specific IT needs
and requirements. That czar could also create a “digital
natives council” with representatives from various
departments and functions who meet on a regular basis to
provide input to IT.
5. Hire some business-savvy seniors
Young people are not the only source of new ideas and
fresh perspectives. Experienced professionals can change
the dynamics of any team, increasing its creativity
through a diversity of views based on deep knowledge and
extensive experience and serving as mentors to senior
executives. As one of Stephen Thurlbeck’s senior people
told him, “I’m going to hire someone who is better than
me. I love to mentor my people — but who’s mentoring
me?”
“Our senior people are looking for people who have
different experience,” Thurlbeck says. But “different
experience” means not just experience with technology.
“My preferred job description right now is ‘We are
looking for a .net artisan who will be missed by both their
technology and business colleagues when they leave their
current employer,’” he says.
Business savvy is a top hiring criterion for Ann Alrich.
“If I could have ten people on my team who know every
thing there is to know about IT or ten people who under-stand
various aspects of the business, I would take the
business people any day,” she says. “You can buy the
technology and the knowledge of the technology, but the
ability to connect with the business and have a business-level
conversation is absolutely crucial. When I interview
people I always look for the softer skills — I try to find out
whether they have a customer focus, if they care about the
fact that this is a business we are running. What we do is
not just technology for technology’s sake; it is applied
technology.”
The business experience does not have to be
industry-specific. Observes Alrich: “IT skills are transfer-rable
from one industry to another. I’ve seen people
tremendously successful in an area where they have never
worked before, because they were willing to adapt and
they had a well-rounded skill set, including soft skills.”
Stephen Thurlbeck agrees. “It doesn’t matter to me if
you are in our industry,” he says. “A smart person who
cares and wants to make a difference is worth ten indus-try
insiders.” Alexandre Kozlov knows this from experi-ence,
having been hired at Norsk Hydro after a long
tenure as a CIO in the consumer goods industry. “Fortu-nately,
the executives who interviewed me saw that my
lack of immediate hands-on experience in the aluminum
industry was not a showstopper in my case. There are
several important leadership skills — for example, how
you position IT in relation to the business — that can be
easily ported from one industry to another.”
6. Understand those business buzzwords
Learning is a key to innovation. The CIOs we interviewed
stressed the importance of business learning, in particu-lar,
for developing the careers and skills of IT employees.
“IT people need to enmesh themselves in the area of
the business where they are working and take advan-tage
of business-related educational opportunities
inside and outside the company,” Ann Alrich says.
An IT employee working in supply chain manage-ment,
for example, could attend a conference on that
topic, she notes. Alexandre Kozlov is also adamant
about the value of business education for IT but
urges people to look outside their own areas:
“Attending gatherings that are not directly related to
Ed Jurica,
Former Senior Vice President and CIO, Fossil
“We hoped that a couple of lightbulbs would go
off and that the event would help [business and
IT] innovate together.”
“CIOs shouldn’t wait to be invited to the table;
they should make themselves relevant to the
business and contribute to generating
revenues.”
12 CIO Straight Talk
13. Stephen Thurlbeck,
Vice President, R&D, Complete Innovations
“It doesn’t matter to me if you are in our
industry. A smart person who cares and wants
to make a difference is worth ten industry
insiders.”
your industry might even spark better ideas because
you find things that people do in other industries
and it may force you to think. The wider the
spectrum, the better.”
But in an era of tight budgets, it’s important to
get a return on the investment in outside events and
training. Stephen Thurlbeck does that by requiring
people to present what they learned at conferences
to their teams and to use it to develop a plan for a
change in the organization. Ed Jurica manages the
costs of attending conferences by focusing on local
events, where he sends both an IT manager and his
or her business partner. “That can be cost-effective,
and it can cement those relationships,” he notes.
Learning can happen in a variety of ways, includ-ing
the do-it-yourself kind. At Fossil, Jurica’s IT
organization put together a business conference for
the entire company, in which IT employees gave
presentations and demonstrations and answered
questions about new tools and applications. He
defrayed the cost of the conference by asking IT
vendors to sponsor it. “The intent was not to use
three-letter acronyms or talk about feeds and speeds
but to talk about our company, what we could be
doing, and to encourage discussion with our
business partners,” he says. “We hoped that a couple
of lightbulbs would go off and that the event would
help us innovate together.”
7. Raise your visibility outside your organization
Web-native companies have broken the boundaries
between the “corporation” and the outside world, allow-ing
and even encouraging employees to be externally
visible through blogs, conference presentations,
interviews, and social media. That visibility goes hand in
hand with communicating and promoting what the
company does and what it’s all about.
This attitude is now more prevalent in traditional
companies and is even changing what they used to regard
as one of their most insular positions — that of the CIO.
“Speaking at conferences may not necessarily be the best
way to make sure that you are driving every dime you can
out of your operating budget,” says Scott Blanchette.
The CIO’s Choice
These are the best of times and the worst of times for
CIOs. Information technology is omnipresent, exerting
a significant and growing influence on the way we live
and work. What CIOs have been doing for a living for so
many years — managing digital data and information
— has become an integral, sometimes crucial,
component of business success, improved government
services, disease prevention, and help for the disad-vantaged.
It has permeated all aspects of our lives,
including playing a prominent role as a required
companion for most of our leisure activities. Data is
now talked about as the “oil” that fuels the digital
economy.
Data’s new status means, however, that there are
many new players interested in owning, excavating,
and managing it. Chief marketing officers (CMOs) are
investing heavily in IT tools to collect and mine external
data, in some cases poised to overtake the CIO in the
scope and depth of their responsibility for IT resources.
CEOs who want to make sure their companies thrive in
the digital economy, or are simply annoyed by their
competitors’ successful data mining exploits, are
appointing veterans of the web as Chief Digital Officers
(CDOs), in charge of all the digital assets of the
business and responsible for identifying and pursuing
new data-driven revenue streams. Data scientists and
data entrepreneurs are distinguishing themselves in
business, government, and nonprofits as the new go-to
experts for everything related to data and its analysis.
IT is everywhere, and “gigabyte” is something most
people understand and talk about — which means that
everybody is now a CIO. Says Alexandre Kozlov, CIO at
Norsk Hydro, a global supplier of aluminum: “It’s very
difficult to explain to an executive that it takes so many
days to get a new computer installed when he says,
‘My nephew, who is ten, configured and installed my
new iPad in minutes. How come you guys with
university educations and so many years in the
industry are telling me that it takes all this time to get
a standard image for a Dell laptop?’”
CIOs everywhere face a career-defining choice.
They can aspire to be indispensable facility managers,
“keeping the lights on” and making sure the “trains
run on time,” and let others turn data into an opportu-nity.
There’s nothing wrong with that approach; in the
digital economy, maintaining a robust and efficient
information infrastructure is bound to become
ever-more important. But CIOs can also leverage their
expertise in managing and refining the new oil to lead
their organizations in benefitting from the data deluge.
13 CIO Straight Talk
14. Isaac Sacolick,
CIO, McGraw Hill Construction
“I’m not sure blogging is for every CIO, but I
think it’s important to find . . . what you are
good at and find a way to express that.”
“But if you’re focused on things like innovation and
transformation and moving the business in a different
direction, I think those types of engagements are things
you have to participate in to be successful.”
Of course, social media increasingly is the method of
choice for raising your profile. In addition to performing
his duties as CIO, Isaac Sacolick is a prolific blogger and
Twitterer. “I’m not sure blogging is for every CIO,” he
says, “but I think it’s important to find what’s important
to you, what you are good at, and find a way to express
that. In my case I do that through blogging, through the
articles I tweet, or giving public presentations.”
Sacolick’s social media prowess increases not only his
own visibility but also that of his company, McGraw Hill
Construction. “We are not a technology business,” he
explains, “but we sell technology and data to contractors
and manufacturers in the construction industry — they
need to understand that we develop great technology. I
blog, I write articles for our magazine for construction
engineers, I participate in events, I run a council for
construction industry CIOs. Part of my job is to be
customer facing, provide thought leadership, be outgoing
and engaging with our community.”
Raising your profile outside your organization can
bolster your position in it. External exposure — through
an active blog or by attracting hundreds of Twitter
followers — can give you newfound credibility internally,
validation in the public forum that will subtly change
people’s perception of you in your organization.
Furthermore, it can be easier to gain the support of
those who are skeptical about IT when you meet them
“off-site,” on the neutral turf of a social network. “Find
content that’s relevant and valuable to a business person
in your company who is negative about IT and share it
with him,” Ann Alrich suggests. When you make your
next IT presentation, she notes, that person may be a
proponent instead of an opponent. As more and more
companies infuse information technology into their
product and service offerings, we could expect to see
more blogging CIOs, more visible CIOs. Social media,
however, is not only a platform for creating content
The End of IT Innovation?
Ten years ago, in the aftermath of the technology bubble of the 1990s, IT didn’t seem ot matter anymore. There was a
widespread reluctance to fall again for the hype and overselling by IT vendors and a movement to contain and
control IT, to focus its role on maintaining an efficient infrastructure. According to this view, innovation — and the
competitive advantage resulting from it — was to be found somewhere else.
Today we can see how wrong that conventional wisdom was. Server virtualization, just one example of the
recent impact of IT innovation, not only has made IT infrastructure much more efficient but also has made it
possible for the IT organization to be flexible and responsive like never before, effectively supporting new strategic
business initiatives. Without virtualization, there would be no cloud computing, yet another significant develop-ment
in IT delivery. Instead of spelling the end of the IT organization, as some predicted only a few years ago, cloud
computing has provided new opportunities for CIOs to manage resources more efficiently and has freed up
internal IT resources for more strategic work.
The space where IT innovation has really exploded, however, has been web-native companies, which derive
their competitive advantage from IT. These companies — the likes of Amazon, Google, and Netflix — have
demonstrated through their innovative infrastructures and use of IT that IT-spurred disruption and the transfor-mation
of entire industries are far from over.
14 CIO Straight Talk
15. Ann Alrich
Former CIO, Asia-Pacific, Dupont
“Find content that’s relevant and valuable to a
business person in your company who is
negative about IT and share it with him.”
but also a tool for filtering it and finding what’s most
relevant for one’s job. LinkedIn has emerged in
recent years as an important source of experience-based
advice and opinions, through the personal
networking it facilitates as well as content from
established content producers.
“There’s so much that you can learn by reading
the articles on LinkedIn or by searching for people
who have certain characteristics in their profile,”
Ann Alrich says. The social network “can add a level
of enrichment to a person’s professional develop-ment
that they may not realize.”
Scott Blanchette also finds his LinkedIn network
to be a valuable mechanism for filtering informa-tion.
“It’s not just the interpersonal aspect but also
the general content that tends to get socialized
through the network — there are key groups, key
companies, key people that I follow pretty exten-sively
and regularly look at their circulation of
relevant material.”
So that’s the consolidated view of our virtual
focus group. Now, what do you think? Have we
missed any items on our list of CIO must-do’s? Are
there some clunkers among the items we’ve
included?
Tell us. Or, rather, tell your IT peers by joining
the CIO Straight Talk Interactive group and sharing
your thinking with group members. Your addition
to our list — a piece of wisdom hard-earned from
your own experience — may end up being exactly
what a fellow group member most needs.
Other Voices
The advice in this article comes from members of our virtual
focus group, drawn from the CIO Straight Talk Interactive group on
LinkedIn. But in conversations with other IT leaders, we frequently
ask what sorts of things CIOs should be doing to ensure their
success in the digital economy. Much, but not all, of their advice
echoes the prescriptions of the virtual focus group:
“The investments we made in IT strengthened Covance’s
technical profile. But they also did more than that — they opened
up entirely new business opportunities…The technology capabili-ties
allow us to offer a different set of services than our competi-tors
and to differentiate our services in a way that becomes
compelling.” — William E. Klitgaard, Corporate SVP and CIO,
Covance
“You can't just look at your own industry to measure yourself.
You have to look much more broadly to consumer technology.
Beyond that, more and more technology is being delivered by
smaller firms. Software delivery approaches are increasingly
being influenced by technology start-ups. CIOs who want to
differentiate themselves must look beyond the boundaries of
corporate technology and embrace the ideas coming out of
smaller firms.” — Richard Roberts, Head of Client Access and
Electronic Distribution, Deutsche Bank
“[Our 12-step recovery from fear of failure program] is about
small failures early in the development cycle, quickly learning
from them, and teaching the rest of the organization about these
failures so that it can learn and not repeat the mistakes and be
more agile. That same model also fits into an environment where
you have to have stability. It is the small mistakes that are made,
that are covered up, that are not brought to light and pile up and
eventually cause stable environments to crash. This fear hurts not
only IT but also all facets of the business.” — Mike Benson, EVP
and CIO, DirecTV
“It is okay to be making some mistakes, but we want it to be
more of a fail-fast environment. Do not wait to the end of a very
long project to find out we made a mistake; find out right away.”
— Annabelle Bexiga, EVP and CIO, TIAA-CREF
“If you demonstrate to top management that you can give
them something that they like to use, that is valuable to them
personally, it generates a different conversation about what’s
possible and creates a positive perception of IT‘s role. We’ve done
this with several mobile analytics apps that we’ve deployed all the
way up to the board level, and that generates a new conversation
about a) what’s possible and b) what is IT’s role.” — Michael Golz,
SVP & CIO, SAP America
“CIOs have a bad rap. By blogging, you hope that people see
that you are human and that you suffer the same challenges as
everybody else.” — Dr. John Halamka, CIO, Beth Israel Deacon-ess
Medical Center
“Don’t be afraid to adopt best practices from other industries.
People always told me that you couldn’t use IT approaches from
other industries… But you can and you should.” — Simon Hollins,
CIO, EMI Music
“How do you institutionalize the IT function’s adoption of a
more sophisticated business perspective? One way is to create
career bridges between IT and the rest of the business.” —
Jean-Marc Chicco, Chief Group ERP Program and Information
Officer, Lafarge
15 CIO Straight Talk
17. CROSSING THE FINISH LINE
TOGETHER
Several successful initiatives at Consumers Energy vividly
illustrate the importance of IT-business collaboration in
driving customer value and corporate performance
A conversation with
PATRICIA K. POPPE
VP, Customer Experience & Operations
Consumers Energy
MAMATHA CHAMARTHI
VP and CIO
Consumers Energy
17 CIO Straight Talk
18. Serving the state of Michigan for more than 125 years, Consumers
Energy is one of the largest combination utilities in the U.S., provid-ing
electric and natural gas service to nearly 6.6 million residents. It
has recently been making significant investments in energy efficiency,
renewable energy, environmental and customer service enhance-ments,
and advanced meter infrastructure.
As with other utilities today, a large part of this investment is in
new technologies, including upgrades to the IT infrastructure. At
Consumers Energy, IT-based improvements and new services have
been driven by a customer-focused strategy. The hallmark of its
implementation has been an exemplary collaboration between the
Vice President and CIO, Mamatha Chamarthi, and the Vice President
of Customer Experience, Rates and Regulatory Affairs, Patricia
Poppe. (For a variety of perspectives on the potential for collaboration
between CIOs and Chief Marketing Officers, see “The CIO-CMO
Dream Team,” page 44.)
The following is an edited transcript of Chamarthi’s and Poppe’s
conversation with CIO Straight Talk Editor Paul Hemp.
How has the new customer-focused strategy evolved?
Patrica Poppe: I would suggest that Consumers Energy has always
been customer-focused but has not had a distinct strategy for trans-lating
that aspiration into the delivery of safe and excellent operations
to the customer. Our CEO, John Russell — who comes out of the
customer side of the business, including distribution and call centers
— is a true champion of the customer, and our senior leadership team
would like to make Consumers Energy a very customer-centric utility.
Our brand tag line is “Count on Us,” and Mamatha and I were hired
specifically to make that vision a reality and improve overall customer
satisfaction.
Mamatha Chamarthi: I was hired as the first CIO in the history of
Consumers Energy — we had an IT Director before — and I thought
that it would take me years to get the senior leadership team to under-stand
how technology can help Consumers Energy serve customers
better. To accelerate this learning process, I decided to immerse them
in the technology Mecca: Silicon Valley. My objective was for them to
observe firsthand how technology is driving value to the bottom line
of companies there.
Poppe: Three years later, they still reference that visit.
Chamarthi: About ten of us went for a weeklong visit to Apple, Google,
HP, Cisco, and SAP. We did a debrief at the end of the trip, and many
on the senior leadership team, including our CEO, made the point
that our customers are being served by the likes of Apple and Google.
Would they expect anything less from us in the quality of the services
we provide?
Poppe: I think this is especially important for a utility, where technol-ogy
applications have tended to be more for generating plant
emissions controls, gas infrastructure inspection, or distribution
equipment — not for customer-facing experiences. It was important
to open the eyes of our senior leadership team to what was happening
in technology-driven innovation outside the utility space, a great
platform to gain support from the senior management team for
technology-driven innovation.
Mamatha Chamarthi
POSITION: Vice President and Chief
Information Officer
COMPANY: Consumers Energy
WORKS FROM: Jackson, Michigan
PROFESSIONAL BACKGROUND: As
Vice President and CIO for CMS
Energy and its principal subsidiary,
Consumers Energy, Chamarthi
oversees the company's information
technology systems and is responsible
for engaging with other CMS Energy
executives to promote innovative
technology practices. Her career
spans more than 16 years, and she is
viewed as a thought leader in the
implementation of new technologies,
systems, and processes. Besides her
MBA from the Kellogg School of
Management, Chamarthi holds
master's degrees in computer science,
software engineering, and English
literature. She serves on the boards
of the Michigan Council of Women in
Technology (MCWT) and Midwest
Technology Leaders. She is a member
of the Wall Street Journal Executive
Task Force for Women in the
Economy and serves as an Elevate
Mentor for the “We Build Character”
Mentoring Program. In 2005,
Chamarthi was recognized as a
“Technology All Star” by the Women
of Color in Technology Institute. In
2012, she was selected as one of
Computerworld’s 2012 Premier 100
IT leaders and was appointed to serve
on the Michigan Asian Pacific
American Affairs Commission by
Governor Rick Snyder.
EDUCATION: MBA, Kellogg School
of Business, Northwestern University
18 CIO Straight Talk
19. Patti, what were you asked to do when you were hired?
Poppe: Like Mamatha, I had a newly created position. In many
companies you’d call it Chief Marketing Officer. Chief Customer
Officer might be more appropriate. I oversee customer-facing opera-tions
such as call centers, billing services, business customer
accounts, market research. But I’m not a marketer; I’m an operator by
training. I ran power plants for DTE Energy for five years, and before
that I ran assembly plants for General Motors for 15 years. I am an
industrial engineer by training.
So why were you hired to do this job?
Poppe: Before I joined Consumers Energy, the leadership team had
combined many of the customer-facing organizations within the
utility under one umbrella, whereas before they were distributed
throughout the company. I came in January 2011, and in August of
that year I presented to the board of directors our new Customer
Value Initiative.
I think another reason I was hired was because they liked the
operator’s mind-set and a data-driven, rather than opinion-driven,
approach to customer value. Because of my experience, that’s what I
brought to the table.
Was it obvious that you were going to need to work
with the IT team?
Poppe: Without a doubt. Early on I could see that we were behind the
curve in implementing customer-facing technology solutions. It was
clear that we were going to have to partner very closely to change that.
The Smart Energy program, for example, became a major focus of
collaboration between Mamatha’s team and my team. Smart Energy
transforms the customer experience. We think of it as the
re-introduction of Consumers Energy to our customers, with a new
level of service that they can now expect from us.
As part of this program, we will install 1.8 million new electric
meters and 600,000 gas meters with existing customers. When their
power is out, we will know. Today, we don’t know — they have to call
us. Customers will also have a 98% accurate meter reading. Today, it
is totally dependent on weather and the availability of our personnel
to read meters manually.
All these things that customers naturally expect are technology
enabled. We could not do it without Mamatha and her team. They are
the backbone of our Smart Energy program. What used to be purely a
meter exchange program is now a technology-based project.
Chamarthi: Together, we made a joint commitment to implement the
Smart Energy program. It was not Patti saying, “Well, here is my
commitment,” and then me saying, “Here is mine in support of Patti.”
It was a joint commitment to the company about what we were going
to work on together.
Poppe: We sit side by side on all decision making and all program
commitments. Neither one of us can sign without the other signing.
It’s a mutual ownership.
Patricia K. Poppe
POSITION: Vice President, Customer
Experience, Rates and
Regulatory Affairs
COMPANY: Consumers Energy
WORKS FROM: Jackson, Michigan
PROFESSIONAL BACKGROUND: In
her role as Vice President, Patricia
Poppe oversees customer service,
marketing, Consumers Energy’s Smart
Energy program, quality, and rates
and regulatory affairs. Before joining
the company, in 2011, she worked as
director of DTE Energy’s North Region
power plants, overseeing 3,000 MW at
five generating facilities.
EDUCATION: MBA, Kellogg School of
Business, Northwestern University
19 CIO Straight Talk
20. Smart Energy appears to be a success, and the credit
goes to both of you. But what happens when things
don’t go that well?
Chamarthi: With our new CRM project, we both put our
necks on the line. The project had been initiated by IT
before we both joined, and the business case for it wasn’t
clear. So we put the project on hold and said, “Let’s
understand why it is we’re doing this. Let’s understand
the business value of this and decide if it’s the right thing
to do.”
And then you decided to proceed?
Chamarthi: Yes, and that was a significant step in our
partnership.
Poppe: It was an agreement that we are going to do this
together. That little phrase sounds small, but it was
significant. It wasn’t that IT is going to do this, and we
will then make it work.
Chamarthi: I would say the
partnership only became stron-ger
because of the hardship we
went through.
Poppe: That project actually
didn’t go very well.
Chamarthi: And when the
project did not go as expected,
we never once pointed fingers at
each other. Instead, we said,
“Let’s come together and lead
the team.”
Together, we made a joint
commitment to the company
of what we would do for the
Smart Energy program. It was
not Patti saying, “Well, here is
my commitment.” And then I
saying, “Here is mine in
support of Patti.” It was a joint
commitment, about what we
Poppe: I think there’s a lesson
here that can be applied to any
business in any industry. You
can be great partners when
things are going well, but when
trouble happens, does that
partnership stand the test?
There was no benefit in us not
supporting one another. I was
heavily reliant on Mamatha and
her technological expertise. She
was very much reliant on my ability to motivate and align
my organization around changes in business practices. I
think we both learned that no technology project can be
implemented without people, process, and technology. I
own the people and a big chunk of the process, and all
three of those things have to come across the finish line
together. If they don’t, the technology solutions don’t
succeed. The CRM project was not our favorite imple-mentation,
but we learned a lot.
were going to work on
together.
Chamarthi: We learned so much about the teams and
their expertise. There were vendors that tried to play
Patti and me against each other, but no one could touch
our partnership.
Poppe: And this attitude then trickles down into the
organization. We didn’t have people feeling like they had
to fight with one another. We were very publicly and
privately in support of one another, and we wanted to
cross the finish line together. That was the goal. There
was no advantage to one of us crossing without the other.
The only victory was if we could cross that finish line
together, and I think that was a strong theme that perme-ated
the organization and set the stage for the next
several technology projects.
Give us an example of another successful
collaboration between the two teams.
Poppe: Well, here is a story with some real takeaways for
any kind of technology implementation. A critical touch
point for our customers is how we communicate with
them during power outages. We had on the books a plan
to launch an outage map, but
when we started looking at the
plan, we realized that the
outage map is only an online
representation of estimates
from the field. It is only as
effective as the reliability and
accuracy of the estimated time
of restoration, as delivered by
our field organization.
Chamarthi: We actually had
two distinct projects. One was a
technology project to develop
and launch the outage map,
and the other one was a process
project to correct the estimated
time to restore.
Poppe: But they were initially
decoupled from each other. Our
VP of energy delivery had a
project on his radar to improve
our estimates, but this was
unrelated to the project to
implement an outage map. We
had formed what we call the
Customer Council, a group of officers responsible for all
the key customer satisfaction drivers. In a meeting of the
council, we discovered the two previously decoupled but
very much related projects.
While the input from our customers was very clear —
they would cut us some slack on getting the power back
on after a major storm, but they wanted to know when
the power would be restored — it turned out this was
never communicated to the field organization. So the line
crews did not think it was worth their while, when they
were busy trying to fix the problem causing the outage, to
take a few minutes to input their estimates for the time of
20 CIO Straight Talk
21. power restoration. When they found out how important
these estimates were to our customers, the line workers
changed their behavior. You know, “I’m up on the pole,
I’m the only person in the world who can estimate when
this power will be back, and I guess it’s worth it for me to
take three minutes to call dispatch or enter it in my
on-truck device.” Previously, they put in their estimates
in only 20% to 30% of cases, but now that happens 80%
to 95% of the time. We now have accurate estimates, and
we can communicate to the customer a one-hour window
for when the power will be restored.
Chamarthi: And the outage map is now available on
smartphones. Computers don’t work in a power outage,
and customers have to rely on their smartphones. They
can also access our social media, where we show
estimated power restoration times for their region. If we
had gone just with the outage map project, and imple-mented
only the technology, customers would be looking
at bad information, the wrong estimated time to restore.
They would be even more unhappy with us. I think it was
Bill Gates who said that when technology is not imple-mented
with the corresponding process changes, it only
highlights all the flaws in your process.
What is the key lesson you learned from your
collaboration?
Chamarthi: We have seen huge success when we empow-ered
people and told them they are accountable, but also
insisted on collective responsibility and not letting them
deliver just in their own silos. All our projects have been
measured by how collaborative we are, how well we bring
together technology, process, and people.
Poppe: We have created a technology road map for all
customer-facing projects for the next three years and
have included in that road map the people and process
changes that will enable those technology solutions to
work. That is a huge change for us. This is why it’s not a
stretch to say that the business and the technology team
are completely integrated. We now know how to do this.
We have learned how to combine people, process, and
technology to deliver a solution that creates a new
standard of excellence for our customers.
I think that is a lesson here that
can be applied to any business in
any industry. You can be great
partners when things are going
well, but when trouble happens,
how well does that partnership
stand the test?
The Takeaways
• A successful IT-business partner-ship
requires shared commitment
and accountability – and a refusal to
point fingers when things go wrong.
• For a technology implementation to
succeed, you need to bring together
technology, process, and people. For
example, when technology is not
implemented with the correspond-ing
process changes, it can actually
highlight all of the flaws that exist in
the process.
• Two projects launched in different
organizational silos can undermine
one another – or, if integrated,
reinforce one another.
21 CIO Straight Talk
22. Straight Talking
UKAR is the holding company for the mortgage lending units of two midsize UK banks — Northern Rock Asset
Management and Bradford & Bingley — that were forced into nationalized ownership during the credit crunch of
2007-2008, creating the sixth-largest lender in the UK.
22 CIO Straight Talk
23. WHEN EFFICIENCY AND
FLEXIBILITY TRUMP ALL
Transforming IT for an organization whose mission is to
run down the balance sheet requires strong change
leadership, a great partner, and a lot of nerve.
Mathew Jackson
mathew.jackson@ukar.co.uk
POSITION: Services Director
COMPANY: UK Asset Resolution
WORKS FROM: Bingley, Bradford, United
Kingdom
PROFESSIONAL BACKGROUND: Mathew
Jackson is a member of the UKAR
Executive Committee and is responsible
for IT, change, property services, and
procurement. From 2010 to 2012, he
served as Head of Transformation, leading
the integration of Northern Rock Asset
Management and Bradford & Bingley,
where he had worked for 20 years, holding
senior positions in operations, retail,
strategy, lending, and change.
EDUCATION: MS, University of
Huddersfield
PERSONAL PASSIONS: Now that the IT
transformation at UKAR is nearly
complete: spending time with his wife and
ten-year-old daughter, walking,
undertaking DIY projects, and reading the
occasional book
23 CIO Straight Talk
24. UK Asset Resolution was formed in October 2010 with a
unique mission: to wind down the £110 billion of assets
on the balance sheets of two previously independent
midsize UK banks — Northern Rock Asset Management
and Bradford & Bingley — that had been forced into
nationalized ownership during the economic downturn.
Our primary objective is to repay the UK taxpayer the
money we owe. At the time it was £49 billion; that’s down
to £43 billion today. Because of our nationalized status,
we’re not able to lend money, and we’re not trying to
grow.
Once we’ve paid the taxpayer back, probably in 2023,
we’ll have around £20 billion in assets under manage-ment
in terms of mortgages. We’ll still be nationalized, so
we’ll continue the journey to run it off. But it’s possible
that something will change to enable UKAR to generate
growth opportunities. We recognize that we will likely
have to create opportunities for employees, possibly
through a separate operating company, while continuing
to run down the balance sheet.
That is the business and financial context for what
has been a two-stage transformation, nearly complete, of
UKAR’s IT capabilities.
Stage 1: Data Rationalization and Migration
A key condition of state aid was to separate Northern
Rock Asset Management from
the new Northern Rock, which
was subsequently sold to Virgin
Money. The most effective
approach was to combine North-ern
Rock Asset Management
and Bradford & Bingley. This
removed the asset management
business from the Northern
Rock infrastructure and maxi-mized
economies of scale from
the new organization.
Our first task was to migrate
data and people away from
Northern Rock into a scaled-up
Bradford & Bingley infrastruc-ture.
There were £50-plus
Not many UK financial
services organizations have
moved to a completely
outsourced model, so we’re a
great showcase account for
an outsourcing partner that
gets it right.
billion of assets — or around
700,000 mortgages — held in Northern Rock’s legacy
infrastructure, along with all the archive data, the
general ledger, treasury management systems, and so on.
Bradford & Bingley previously had been right-sized and
reshaped from a trading, savings, and mortgage bank
into a mortgage lender and servicer in run-off mode. So
we had to scale that infrastructure up and undertake the
process of transforming, rationalizing, and migrating the
Northern Rock data.
Northern Rock had 33,500 mortgage products; we
reduced that to 3,500. We did the same across all key
areas: general ledger, treasury management, and histori-cal
data. There were over 80 million historical images
that we brought across — probably about ten terabytes of
data.
We were facing an EU deadline to migrate the data as
part of Northern Rock’s original loan agreement — we
had just over 12 months to do what was probably one of
the most complex mortgage book migrations in the UK.
There’s nothing better than having a fixed date to focus
the mind. The executive team had to be recruited and
appointed into roles in the newly formed UKAR organi-zation,
from the CEO on down. We had an open recruit-ment
and selection process across the two heritage
businesses. Once we had a single management team with
a single focus, we made a big effort in the first three
months to ensure that everyone, top to bottom, was
aligned with the mission, the strategic objectives, and the
values of the new business. As a result, we were able to
make decisions quickly.
We retrained our 1,700 colleagues from Northern
Rock on new systems and processes. Everything changed
in terms of the systems and the telephony infrastructure,
so it was a people as well as a technology transformation.
We also consolidated sites, migrating 700 people’s work
from Northern Rock in Newcastle to UKAR in Bingley
and Sunderland.
The heritage Bradford & Bingley IT function was
largely outsourced, with our core retained IT organiza-tion
focusing primarily on architecture and governance.
We didn’t have people experienced enough to manage
what amounted to a £95 million IT program, so we had
to go out and build a team to do
program management. Overall,
Stage 1 was very successful,
taking around 15 months, with
only a two-month delay to the
mortgage book migration to
avoid the year-end reporting
period.
Stage 2: IT Transformation
and the Move to a New
Partner
Given UKAR’s mission, our
primary operational focus is
cost efficiency and effective-ness.
IT was a substantial part
of our fixed cost base. We
needed our costs to be as variable as possible, but we
knew we had to invest in our technology infrastructure,
which was somewhat aged and starting to create service
issues, particularly as we doubled the number of custom-ers
and colleagues.
We reviewed our operating model and reaffirmed
that a primarily outsourced model was right for our
organization. Our first-generation, ten-year outsourcing
contracts — one for servers, application development,
and maintenance services, the other for telephony and
networking — were coming to an end. We went to a
whole market tender and selected HCL as our new
partner.
HCL was our choice for a number of reasons. The
24 CIO Straight Talk
25. work. What was most impressive about HCL was that it
embraced the revised program and didn’t insist on
renegotiating the contract before responding to the
challenge. HCL’s professionals have continued to exhibit
that kind of willingness to work through problems — for
example, compromising on the governance and structure
of the program. This flexibility, unlike anything I’ve seen
with previous suppliers, along with great technical
capabilities, has made HCL an excellent partner.
Although the entire journey has had its twists and
turns, we’ve recently completed the migration with no
significant issues. It takes a lot of nerve to effect this kind
of transformation, from the chairman, the board, and the
chief executive on down. If you don’t have that universal
sponsorship, you will never be able to do something like
this. That’s been one of the overriding messages of the
past couple of years, from the integration to the migra-tion.
The program team had that unflagging support.
The benefits have been enormous. We’re now one
organization — in terms of systems, processes, and
culture — coming from two different heritages. We’ve
reduced our cost base by £50 million. And we’ve got a
platform that offers flexibility to allow for continued
contraction — or growth if we find the right
opportunities.
We had just over 12 months to do
what was probably one of the most
complex mortgage book migrations
in the UK. There’s nothing better
than having a fixed date to focus the
mind.
The Takeaways
• When choosing an outsourcing
partner, don’t underestimate the
importance of the partner’s willing-ness
to be flexible when conditions
change unexpectedly.
• You may be able to position yourself
so that you are an attractive
customer to a service provider for
reasons other than the financial
terms of the contract.
• Undertaking a particularly challeng-ing
transformation requires the
steadfast backing of senior manage-ment.
company’s proposal was much better from a pricing point
of view, and it gave us a great opportunity to variablize
our cost base because of the way the infrastructure was to
be architected. It also included some innovative
approaches and embodied a lot of flexibility in both the
commercial model and a service-level arrangement based
on business outcomes, as opposed to a typical
availability-level model.
Of course, the attractiveness of the offer reflected the
attractiveness of us as a customer. Unlike our incumbent
partners — who I think miscalculated our potential as a
holding company for two failed financial institutions —
HCL saw us as an opportunity. Being wholly owned by
Her Majesty’s government made us an attractive client in
terms of future potential. Moreover, not many UK finan-cial
services organizations have moved to a completely
outsourced model, so we’re a great showcase account for
an outsourcing partner that gets it right.
Benefits and Challenges
HCL built two new UK data centers. We’ve gone from
being about 30% virtualized to about 85%, and we’re
already starting to enjoy the benefits of that in terms of
agility and the ability to scale up and repurpose different
parts of the infrastructure.
The key challenge involved our move to a new service
provider. The original hypothesis was that we would build
the new data centers, clone the existing application
infrastructure, reinstall that, and then undertake the data
migration. But we weren’t able to do that because one of
our former service providers claimed ownership of the IP
around the configuration of the system installation and
wouldn’t give us the access needed to carry out the migra-tion.
So we had to effectively start from scratch,
documenting all the applications in terms of the design
architectures and the installation process, and bring in
third-party vendors to help us through that.
It’s taken probably a year longer than we had antici-pated.
The benefit to me, though, is that I now have a fully
documented infrastructure, and HCL has had to learn the
hard way how those applications are knitted together and
25 CIO Straight Talk
26. Straight Talking
Covance Inc., based in Princeton, New Jersey, is a contract research organization providing drug
development and animal testing services. Spun off from Corning Inc. in 1996 as a public company, it today
has annual revenues of more than $2 billion and 11,000 employees in more than 60 countries. Its central
laboratory network is one of the world‘s largest.
26 CIO Straight Talk
27. BUSINESS-DRIVEN IT
AND IT-DRIVEN
BUSINESS
We know that IT needs to be tightly aligned with the
business. But in a world where IT can drive valuable
new revenue-generating opportunities, the business
may sometimes find itself falling in line behind IT.
POSITION: Corporate Senior Vice President
and Chief Information Officer
COMPANY: Covance
WORKS FROM: Princeton, New Jersey
PROFESSIONAL BACKGROUND: As Senior
Vice President and CIO of Covance, a
provider of drug development services to
pharmaceutical companies worldwide, Bill
Klitgaard leads the Covance Global IT
organization, serves as a member of the
Executive Committee, and chairs both the
IT Investment and the Executive IT steering
committees. Although he has spent the
majority of his career in finance — he
served for almost 12 years as Covance’s
CFO before becoming CIO, in May 2012 —
he has always had a passion for
technology.
EDUCATION: MS, MIT Sloan School of
Management; BA, University of California,
Berkeley
PERSONAL PASSIONS : Bicycling, hiking,
backpacking, any quiet and beautiful
location
William E. Klitgaard
William.klitgaard@covance.com
27 CIO Straight Talk
28. IT is becoming increasingly important to the success of
our business of providing drug development services to
pharmaceutical companies. So let’s first look at some
significant investments we’ve made in IT over the past
few years.
Building the IT Foundation
Our big investments have been in three areas:
modernization and consolidation of our data center;
modernization of our business platforms — the systems
that run our central labs and that we use in our clinical
business; and modernization of our end-user platforms.
We are moving our applications to modern,
state-of-the art, highly secure, always available data
centers running a virtual environment. As a result, we
expect to lower our risk and have fewer performance
issues due to power or hardware failures, or having
different things on different pieces of technology. We’re
able to reuse or recommission capacity and to blend
workloads.
We’re using architectural designs that are consistent
with the cloud, so we can explore a hybrid environment
as we mature. We expect to be
able to compare our activities
and costs to outside resources,
and to communicate more
clearly with our business
partners about what they’re
consuming. For the first time we
will have transparency. Our
business partners can choose —
and pay for — the level of service
they need.
We’ve built on a reference
We should be able to
compare what we're
doing with what's
available externally —
that's healthy for IT and
it's healthy for the
architecture employed around
the globe. We use data
de-duplicate technology to
reduce our storage footprint.
We’ve increased our speed of
provisioning — for example,
recently we were able to stand
up a server, storage, and
network solution for an internal customer in 15 minutes;
it used to take a month. This speed will increase
reliability and lower incremental costs, and it will allow
us to exploit the cloud over time.
Similarly, we’ve modernized the systems in our
central labs and clinical trial management businesses,
which will improve collaboration, processing, and
efficiency. We are establishing a master file for managing
trial data centrally, with a controlled workflow and only
one file to audit, rather than having it all over the
company; this alone has provided huge efficiencies in
clinical development activities.
Analytics: The Art of Data Science
Informatics, an increasingly important part of our
business, sits on top of this new infrastructure. We made
a strategic decision to hire people exceptionally talented
in informatics and analytics, assembling a team of data
scientists. We’ve built a number of tools that help clients
choose sites for their clinical trials and do trials faster
and more efficiently, among other things. We can look at
the performance characteristics and track records of all
the clinical sites we’ve worked with and then overlay
information about projects in the pipeline to predict
workload and what sites will likely perform best on the
next trial. As a result, we’ve gotten better at site selection
and have outperformed our competitors in the execution
of trials.
Business-Driven IT: Focus on Business Outcomes
All of these investments have been made with the
strategic needs of the business in mind. The idea that IT
has a monopoly on technology is passé. Business leaders
can go out and get services and IT systems on their own.
The CIO who says no is going to get run over.
As a former CFO, my advice to CIOs who want to
elevate the role of IT is this: Show the CFO and other
company leaders the business impact of new technolo-gies
and get them excited about the possibilities. These
technologies have the power to
transform what we do. Start
with the business outcomes
and let the technology be
secondary. Once that connec-tion
is made, the discussion
becomes easier: What do we
want to do and what can we
afford?
Don’t get caught up on cost,
because that’s a losing battle. If
you think about IT as a cost,
you’ve lost. At the same time,
it’s important to have financial
transparency so end users
know what they’re being
charged for and why. We
should be able to compare what
we’re doing with what’s
available externally — that’s healthy for IT and it’s
healthy for the business.
Companies will suffer if CIOs don’t get out in front of
this. What’s alarming is when people act on a rogue basis
and just go around IT. Pretty soon there are scores of
people using some new database or software. Over time
those “uncontrolled” investments can become critical to
operations, but they’ve never gone through a system
development process. They’re full of bugs that IT is left to
fix.
To avoid that, we need to engage much more with the
business about its needs and get out of the role of just
taking orders to install a particular piece of software. We
have to approach things from the perspective of, “Let me
understand what you’re trying to do here — let’s try this.”
Ultimately it’s about transparency, stakeholder engage-ment,
being open to externalizing some parts of IT and
business
28 CIO Straight Talk
29. being able to integrate that into the rest of what the company
is doing.
IT-Driven Business: Create New Revenue Streams
The investments we made in IT strengthened Covance’s
technical profile. But they also did more than that — they
opened up entirely new business opportunities.
A lot of companies haven’t made the kind of investments
we have and may not want or be in a position to do so
themselves. Now we’re considering whether we can offer what
we’ve got to others doing clinical work in a software-as-a-service
or platform-as-a-service model in a private cloud
environment.
If everything comes together, a year or two from now we’ll
also be selling IT services to enable clinical trials. We’re
already selling the provision of those services — clinical trial
processes, central lab work, and preclinical work. And we’re
selling the analytics capabilities to help with decision making
and portfolio optimization. The technology capabilities allow
us to offer a different set of services than our competitors and
to differentiate our services in a way that becomes compelling.
We become a one-stop shop. If you can get from Covance
something that allows you to perform better on your clinical
trials and do the trials faster and more efficiently, and we can
get the capacity to do the work — that’s powerful. The
customer gets high-quality work and the analytics to do the
work more intelligently.
IT is often process-intensive and subject to a lot of
structure — systems development life cycles, releases, testing.
But as we’ve seen, there’s a time and a place to be more nimble
and innovative. We started the informatics group as part of
Resource Management when I was CFO, and we began to look
at predictive models to balance supply and demand. We’ve
approached some of this like it’s a sandbox where we can try
different things and explore what’s possible. It’s about how we
come up with new tools and ideas to better manage our
company.
At the time, I was accused of running shadow IT;
fortunately for us, it’s now all part of the same group. But this
is a cautionary tale for CIOs who aren’t taking the initiative on
innovation.
The Takeaways
• Now that business leaders can
procure technology on their own,
from multiple sources, companies
can end up saddled with ineffective
and incompatible products. CIOs can
head off that scenario by engaging
business stakeholders in transparent
discussions about their needs and
what IT can offer.
• Substantial investments in IT don't
just strengthen a company's technical
capabilities — they can also open up
new revenue streams and
opportunities for differentiation.
• IT is a process-driven, structured
endeavor, but it needs to be an
integral part of initiatives aimed at
innovation and experimentation.
The idea that you have some
space to play…is very healthy,
and that’s something I want to
keep within IT.
Now that Informatics is part of IT, we’re strengthening
that capability and exposing the innovation lab aspect to our
operational people and our IT people. It’s starting to generate
a little bit of a buzz internally. The idea that you have some
space to play — some air to go try things out just for fun and
see how they work — is very healthy, and that’s something I
want to keep within IT.
29 CIO Straight Talk
30. Straight Talking
SAP Americas is a subsidiary of SAP AG, a global enterprise software and services company with
operations in more than 130 countries. SAP Americas oversees the company’s business operations in the
U.S., Canada, Latin America, and the Caribbean.
30 CIO Straight Talk
31. SAP RUNS SAP:
HOW TECHNOLOGY
MADE IT HAPPEN
When the IT function at SAP began rolling out pre-beta
versions of the company’s latest enterprise products for use
across the organization, it moved from a support role to an
integral part of the business.
Michael Golz
michael.golz@sap.com
POSITION: Senior Vice President and Chief
Information Officer
COMPANY: SAP Americas
WORKS FROM: Newtown Square, Pennsylvania
PROFESSIONAL BACKGROUND: As SVP and CIO,
Michael Golz is responsible for aligning IT
strategy with SAP’s business strategy, directing
IT investment, and providing best-in-class
processes and operations for all SAP lines of
business in the Americas. He leads the unique
global SAP Runs SAP program, which highlights
the role of SAP’s own IT function in using and
helping to develop SAP products in areas such as
enterprise mobility, in-memory and database
technology, green IT, and cloud computing. As a
result, SAP Global IT has become the company’s
best customer reference, and Golz frequently
speaks to customers about IT’s firsthand
experiences with SAP software.
EDUCATION: BS, European Business School,
OestrichWinkel
PERSONAL PASSIONS : Tennis (“Especially with
my twin boys — though we have passed the point
where I can still win”), scuba diving, family travel
31 CIO Straight Talk
32. I came to the U.S. in 2002 for a two-year assignment —
and never left. It was a total change in culture, in terms of
both the differences between Germany and the U.S. and
the difference between being at headquarters, where the
concerns are more around corporate functions, and
being out in the field, where there is a direct connection
between IT and the business — in particular sales,
marketing, and field operations.
I learned that you have to bridge the gap between
what you can do from a global perspective and what’s
possible on the ground. We’ve now made that capability
part of the DNA of the entire IT organization, and as a
result we’re able to deliver business results very quickly
with a shorter planning cycle.
Driving Product Development
Three years ago we reviewed what strategic contribution
IT could make within SAP and decided that we could be
at the forefront of using SAP’s own technology and
solutions. So we brought our entire system landscape to
the latest release levels and strategically chose areas such
as mobile and in-memory technology/HANA (for
“high-performance analytic appliance”) to implement
SAP solutions even before they were in beta status. We
now provide feedback to the product teams, and our
feedback makes it into the product release that gets
shipped to the customer.
We’ve learned a lot through this process;
development, global support, and the business have
learned a lot, as well. For example, we were one of the
first companies to do a mass deployment of iPads, very
shortly after they became available. Using the SAP
mobile platform, we proved we could deploy thousands
of mobile devices in a large enterprise — we are now at
more than 50,000 iOS devices — with full connectivity to
corporate systems in a way that is secure and allows you
to provide apps in an enterprise app store. More
generally, our BYOD (bring-your-own-device) program
has made it possible for employees to use a variety of
their own devices in the workplace instead of having to
use a single company-issued device at work.
The iPad program is an example where we started
early, generating traction by sharing our experiences
internally and externally to demonstrate what is possible
with the consumerization of IT and, more important,
how it can provide business value by allowing employees
to become more mobile and efficient. This is a new
business role for us: to make available to the business
side the information we get from those deployments,
including success stories that we can use with customers.
It gives us the ability to talk to the CIOs of our customers
and prospects about how you implement a new
technology or solution, the business case behind it, the
benefits and pitfalls, and what combination of solutions
was an immediate hit with the sales organization, for
example, or what has really proven valuable for finance.
That always sparks a lot of good conversations with our
customers.
Fostering Innovation
We’ve also reserved 5% of our build budget for
innovation that is driven by IT. If we do ten prototypes,
and only three or four get real adoption, and we just learn
something from the rest, that’s fine. You have to be
willing to try a lot of things and accept that not
everything is going to get traction. Normally in an IT
THE THREE PILLARS OF IT VALUE
When we defined our IT strategy, we thought about the things we really need to do well to deliver the most
value to SAP. They fall into three categories.
The first pillar is the
The second pillar is the
The third pillar is the strategic — in
transactional, regular IT
transformational, helping
our case, how do we introduce
business. It’s important to
different units from across
innovation, how do we adopt our
make sure you get the
the company become more
solutions as early as possible,
basics right: doing things
efficient by transforming the
how do we ourselves implement
on a global level, finding
way they operate. Our role is
SAP solutions in order to give
the right standards,
to understand the business
feedback to the development
keeping costs down,
requirements, bring in our
organization and bring these
handling security and
expertise and new ideas from
experiences into conversations with
compliance. If you don’t
a process perspective, and
customers. In some cases, Global
have those under control,
help implement the
IT has been able to contribute ideas
all the rest becomes
right solutions.
to products in development.
almost irrelevant.
32 CIO Straight Talk
33. Where does SAP go from here?
SAP, one of the largest providers of enterprise appli-cation
software, is at a turning point. Although the
company’s enterprise software and software-related
services continue to be critical to the business opera-tions
of thousands of organizations across the globe,
the market for those services is mature, raising ques-tions
about SAP’s future.
A global survey by HCL Technologies of 220 CIOs at
companies with revenues in excess of $1 billion
across industries indicated that the very proliferation
of SAP systems suggests an answer to the question of
where SAP, and its customers, are headed: the
consolidation of the numerous systems found at most
large companies. In many cases, this will involve not
only the integration of existing systems but the trans-formation
of the IT infrastructure through the adop-tion
of a single enterprise platform.
The survey, commissioned by HCL and conducted
by independent research company Vanson Bourne,
found that, on average, large enterprises are running
more than five separate instances of SAP, with nearly
39% of respondents reporting that they were running
more than six. The data showed that the average cost
per user (more than $1,500) for enterprises running
multiple SAP instances is 25% higher than for those
running a single instance. So consolidation could
create huge savings. In fact, across SAP’s more than
22,000 large ERP customers, the potential annual IT
cost savings amount to more than $30 billion globally.
More detailed research of enterprises that had
made the move to a single instance found that for
every $1 saved in IT, the business expects to find $3.4
of leveraged savings. This raises the total global
benefits opportunity to more than $130 billion, on an
annual basis.
While these findings present a clear business case
for consolidating SAP instances, many companies
may run into substantial political and operational
hurdles, preventing them from achieving that Holy
Grail: the single SAP instance. One hurdle is the
seeming cost-effectiveness of integrating existing
SAP, as opposed to investing in a single consolidated
system.
But such a move is unlikely to represent a savings
in the long run. That’s because disruptive trends such
as cloud, in-memory, and mobile computing will
require the transformative creation of a single enter-prise
system.
Some 75% of respondents reported both that they
had implemented cloud services in some form and
that SAP technology played a significant role in their
cloud plans.
Similarly, more than three-quarters of those
surveyed said they planned to deploy in-memory
computing, with its tremendous potential to speed up
existing applications and enable previously unthink-able
applications through the mixing of transactional
and analytical functions within a single application.
Some 80% of respondents said that SAP HANA would
play a major role in their in-memory initiatives.
SAP technology on-premise, on-demand, and
on-device. Certainly, having fewer instances of SAP
will make this journey a lot smoother for many organi-zations.
With Business Suite now available on HANA,
the adoption rate is likely to be even higher.
In the case of mobile computing, more than 90%
said they were planning or already had a mobility
strategy, while more than half of those said that SAP
technology would be the cornerstone of that strategy.
Of course, the challenge for CIOs is how to pay for
these disruptive technologies. The study found that
the savings generated by the consolidation of SAP
instances could be applied to the adoption of such
technologies, which would likely create competitive
advantage for the future.
For details and the entire report of the survey, visit www.futureofsap.com.
33 CIO Straight Talk
34. project you plan it out, you have a deployment schedule,
and you manage risk. These initiatives are different in
that failure is OK.
The biggest challenge at the beginning was to carve
out the budget, time, and resources to get started. Once
we had the process for IT-driven innovation up and
running and could show it was
beneficial, it became almost a
self-funding exercise, because
people liked what they got out of
it.
However, this is one area
Normally in an IT project you
plan it out, you have a
deployment schedule, and
you manage risk. These
initiatives are different in that
that you don’t want to turn over
to the business to prioritize,
because then budgets might be
used to fund the regular
implementation of certain
business priorities. This is a big
challenge for a lot of CIOs:
When demand is much greater
than capacity, it’s not easy to go
back to the business and say,
“Not only do we have budget and
resource constraints for what
you’re asking, but I’m also
withholding some of the capacity that I have in order to
do innovation.” At the same time, we bring the latest
solutions and technologies into our regular
implementation projects wherever possible. Innovation
has become pervasive in our IT portfolio.
Serving as Innovation Broker
failure is OK.
That’s not to say there isn’t a role for the business in IT
innovation — quite the contrary. The CIO has to be in
charge of the big picture and the overall technology road
map — enterprise architecture and implementing and
running the backbone of the company. But the CIO is
also becoming more of a broker for the rest of the
business. In our case, we opened our mobile platform to
the entire company so that employees could develop
mobile apps. IT checks each app for security and then
makes it available to the rest of the company for
download. Basically, our community members “vote” on
the value of the app with their downloads. If enough
people download it, we’ll take it into the IT catalog and
support it.
The traditional way would have been to build out a
mobile road map and not develop anything until a final
framework was defined and we had UI standards and
had made sure it would work with everything else. It
would have been a very lengthy process, and it would
have been 100% driven by IT. But there’s a lot of
creativity out there, and a lot of people now have the
ability to develop solutions. It’s our job to make sure the
best ideas find their way into the official set of IT
solutions that we roll out and support.
This is a different way to think about innovation —
but it shouldn’t be confused with having no controls at
all. With cloud computing, some business users are in a
position to implement something without going through
IT. This is rarely a good idea. IT should be the broker,
making sure the right solution is selected and that it is
configured in the right way for security and reliability.
Many solutions these days are
hybrid, and IT has a key role in
their implementation and
integration.
Consulting with Customers
The last area in which IT has
become part of the business is
in rolling out our new HANA
Enterprise Cloud offering to
the market. Our infrastructure
colleagues have implemented
HANA-based business systems
internally: Our CRM system
runs on HANA, our ERP
system runs on HANA, our BW
(business information
warehouse) system runs on HANA, and many other
systems have been put onto the HANA platform. So it
was a logical move to say that the unit that has been
deploying it for SAP as a large enterprise customer
should be a key part in forming the new offering. This
team merged with other resources throughout the
business to form the HANA Enterprise Cloud unit, which
provides services to external customers in addition to
running and operating all of SAP’s internal systems. I
think it’s a great statement that IT was a key partner in
launching this offering.
The Takeaways
SAP’s IT function has become an early adopter of
the company’s own technology, deploying SAP
solutions, sometimes even before they are in beta
status, and providing valuable feedback to product
developers.
In this new strategic role, IT is able to talk more
effectively to customers and prospects about how
to implement SAP solutions and the business
case for doing so.
The CIO can be an innovation broker, ensuring the
security and reliability of new solutions — no
matter where in the company they are developed.
•
•
•
34 CIO Straight Talk