Business Analytics and Predictive IT

As vice president and CIO of IBM, Pat Toole focuses on advancing the company’s transformation agenda and aligning IBM’s information technology investments to the business strategy. Business analytics and predictive analytics play a big role in how his IT organization works with business stakeholders in the enterprise.

Likewise, making sense of massive amounts of data is instrumental in the day-to-day functions of Toole’s global IT operation. While company policy prevents Toole from revealing his total IT headcount, he stresses that his organization’s role is to understand the skills of the 400,000 IBM employees around the world, and how best to apply those skills to projects that will deliver real business benefits.About two years ago, IBM created the business transformation and technology shared services operation that Toole now oversees.

“We’re organized fundamentally into three main missions,” says Toole. “The first is to run the operations of IT. The second is to lead and manage transformation projects to drive better outcomes. And the third [involves] an integration team to understand the needs of the business.” This is set up on a global, centralized shared-service organization. Toole leads a team of nine vice presidents worldwide and reports to Linda Sanford, senior vice president enterprise transformation.

In November 2009, the company announced Blue Insight cloud, the world’s largest private cloud computing environment for business analytics. Blue Insight cloud consolidates information from 100 different warehouses and data stores, providing analytics on more than a petabyte of data. It’s used to provide insight that helps IBM sales teams and developers meet the needs of clients worldwide. The solution is expected to deliver tens of millions of dollars in savings over a five-year period.

Toole spoke with CIO Insight Editor in Chief Susan Nunziata about the dynamics of his IT operation, how Blue Insight is influencing both internal and external data analysis, and the ways in which he sees business analytics transforming the role of the CIO in the next 12 to 24 months.

Pat Toole: We went from having service-level agreements (SLAs) for specific applications to having SLAs for business processes. That incorporated 15 process owners who cut horizontally across the organization. The important thing to us is to make sure that the processes are working and effective, and deliver the outcomes that are required.

The structure allows us to set up portfolio managers based on business process, so we can understand intimately, from the business person’s perspective, what the meaning of success is. For example, if we were babysitting applications, and an application upgrade was undertaken that required the app to be out of service during a period when the business-side’s needs were critical, then you would not be meeting the needs of business process.

We try to look at what we need to benefit business owners, what they need to have running, and when it needs to be running. Then we measure ourselves against those criteria.

How do you lead and manage transformation projects while still handling the day-to-day demands of IT?

Toole: It’s essential for all CIOs to manage but also have initiatives under way to accelerate the business. We develop a list of transformation projects. Those tend to split fifty-fifty between projects to drive revenue growth and productivity projects to drive business processes and make the operation more effective and efficient.

That ratio has changed over the years. In general, shared services has focused on cost reduction. But we made a fundamental shift to look at what is required not only from [the standpoint of] productivity savings, but from revenue growth as well.

A simple example is being able to create software-as-a-service (SaaS) cloud environments, so clients who want to buy that way now have that opportunity. We’ve ramped up environments to support that. It’s an efficient allocation of resources, and how you apply those resources. We’ve worked to understand what the market opportunity is, where the market is growing, what we need to do to understand the skills of our 400,000 IBM employees around the world, and how to apply those skills.

Who has a seat at the table when it comes to creating transformation projects?

Toole: Depending on the culture of your corporation, you have to have a strong governance model. We have a number of formal settings where we talk to stakeholders about priorities and business process and what’s going to drive value.

We meet formally with process managers; we meet with business owners. We also meet with our peer shared-services organizations on a monthly basis. Each company has to take a hard look at the governance model and make sure there’s a closed-loop system in place to prioritize processes and make sure the outcome of those projects is made manifest.

The CIO sits in a unique position to see the entire company end-to-end from a process perspective. So if you think about who is in a good position to build collaboration and strong governance, the CIO is in a position to do that. The CIO has access to the data and understands where all the data resides, and has fiduciary responsibility to shareholders to make sure that data is a trusted source.

We’ll return to that question of managing data, but first tell us more about how your integration team operates.

Toole: It’s another good example of a key component of our overall governance model. When we created shared services, one of the key concerns on the business side was whether or not IT would become disconnected from day-to-day business needs. Through our integration team, we have people who can participate on a day-to-day basis with the needs of business units and maintain good insight into what those business needs are. They can translate and articulate to the CIO’s office what is needed.

We work very closely with the office of the controller to have a rigorous business case development model. What’s more, we have an independent source to work with my team and a business unit to make sure that any benefits are clearly articulated in the business plan for that particular unit. It helps us across the corporation to have a uniform way to measure these projects.