CIO Insight: How does your staffing model reflect this lifecycle?
SPRATT: On our team, we have a group of people who are dedicated to each of our businesses. These employees are highly visible and influential within IT, and are essentially our "account representatives" -- they call on the business unit, which we consider an account. He or she has to understand [each] business unit leader's strategic imperatives, their needs, their plans for the foreseeable future, and the business pressures, issues, and trends. Our representative needs to take those inputs and develop an overall view of IT's role in contributing to that business unit's success. That is an ongoing dialogue that they must facilitate. They also must determine if we are meeting our service level agreements and commitments, and take an advocate role to assure that IT leadership corrects issues and delivers on promises.
They then are the interlocutors between our business units and the service lines that we provide, which might include items as granular as Windows Hosting or as broad as SAP services. These services then have a service manager who is responsible for delivering against service level agreements, specifications, and costs. There is also a product manager who is responsible for managing the roadmap for those services. The service manager and product manager are in constant contact, as you might expect. The product manager needs to reliably predict how the service needs to evolve. The product manager explores leading edge ideas and solutions with the businesses through the relationship manager.
Let me give you an example. Our US Pharmaceutical business is going to expand by a certain percentage, and generics will expand by a different percentage. In order to link manufacturers to retailers to understand demand and take actions accordingly, technology has a role to play. These include some entirely new capabilities (online web capabilities to gather the relevant data, for example). The relationship managers bring in the business leaders to talk about these potential innovations with the product managers, and to craft solutions and experiments. After the idea is implemented, and as these solutions mature, the service manager engineers the production environment and begins the process of eliminating cost wherever possible.
The underlying question to contemplate is, "if your IT shop were a business, what information would you need to run it effectively?" This includes knowing services costs and ensuring that they are competitive with the marketplace, pricing them appropriately. Though we don't have a profit motive, we still need to price our services. To increase the level of transparency with our colleagues, we have an incredibly granular level of billing detail that we provide for our services, and our partners have more confidence in us, as solid business people. It is important to note that without that information, the product managers and service managers would not know what a competitive level of operation is. They can't know if they are as good or better than IBM Global Services, for instance. We need to be able to prove that.
CIO Insight: Given the diversity of the business units, how do you forge innovation across them?
SPRATT: Each year during our CIO Council Meetings, all of the business unit CIOs get together. Each of them present their three-year strategic plan aligned with [the plans of] their business units. Corporate IT then presents ideas for single solutions that can address the needs of multiple business units. By having these common conversations with everyone in the room, more new ideas come to light. This stimulates greater idea sharing, more innovative solutions, and ultimately it also eliminates waste, since the natural tendency would be to invest in or develop a new technology irrespective of what the other organizations need or want.
An example can be found in the call centers. As three of our businesses were growing, they needed to rethink their strategies and their solutions. Each business-unit CIO had conversations with their respective vendors, and three different plans took shape. By bringing these up with the larger group, a single solution was devised. A second example is our mobility task force. Each of the nine business units hired people to develop apps. New ideas and strategies were vetted with the broader group, and we were able to define common tools for all of the business units to leverage. This stimulated cross-business unit innovation and reduced costs at the same time.
CIO Insight: How do you define and measure innovation?
SPRATT: We define innovation as bringing a new capability to the market. You may introduce cloud computing into your organization for the first time, but that does not make it innovative. Many others have done so already. As one surveys a solidly defined roadmap for IT, a good portion of the roadmap includes changes in well-vetted directions. Again, these may be value enhancing, but they are not innovations. It is only that foamy edge at the very beginning of a wave that represents true innovation. Usually, the business strategists and business managers are the innovators; IT's role is to bring proven technologies to bear to enable and drive those innovations.
As for the question of measurement, in order to utilize metrics, one must define the target. This requires deep collaboration with our colleagues in the business units. They know what they will need to be successful. They know what success looks like. We may need to press them on their assumptions, and help guide them in terms of what is realistic, but they must drive that conversation.
Every year we keep our core budget relatively stable. Even though demand for IT is increasing, that demand should be offset typically by the drop in technology prices. On top of that figure, we then work with our colleagues in the business to understand what they are willing to spend to develop new capabilities, new products, and new services. This gives us an idea of the amount of discretionary funds that will be put toward innovation.
About the Author
Peter High is president of Metis Strategy, a boutique IT-strategy consultancy based in Washington, DC. A contributor to CIO Insight, High is also the author of World Class IT: Why Businesses Succeed When IT Triumphs, and the moderator of the podcast, The Forum on World Class IT. He can be reached at firstname.lastname@example.org.
This article was originally published on 10-24-2011