From Cost Center to Profit Center: The New IT
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Technology has significant business value, but CIOs often struggle to show the value IT delivers to the entire organization. One CIO changed that.
Group Health Cooperative offers care system, care delivery and insurance coverage in order to achieve one goal: affordable, quality health care for all. Founded in 1947, the company now consists of 25 medical centers within Washington and northern Idaho. The company's focus is on preventive care, combined with medical education, a charitable foundation and a nationally recognized research institute.
Don Lewis is the vice president and CTO at Group Health, and as he discusses with CIO Insight contributor Peter High, technology plays a significant role in ensuring that the company serves its customers while maintaining efficiencies.
CIO Insight: You have focused on turning IT from a cost center to a profit center at Group Health. How have you done so?
Don Lewis: We are working to improve the visibility that other business units have into what is going on within the entire IT environment. The goal is that IT serves as the caretaker for IT systems and applications, and as an advisor and expert collaborator on how technology can help grow the overall business.
While it's true there are expenses associated with IT, there's also value. However, that value does not always accrue within IT, which means there isn't a true revenue side within IT. The value instead is what accrues across the entire business. So we work closely with the other business units to put in place strong business cases that clearly call out where that value accrues. If it's in the health plan part of our business, the cost may all be within IT, but the value accrues with the health plan, that's fine because from an overall organization standpoint, that's what we're looking for.
We focus on having those conversations with the business leaders and demonstrating the value technology delivers to the entire organization. We know technologies we implement generally have significant business value, but we haven't always been good at capturing that. Now we have a more formalized process to do just that.
CIO Insight: You have also focused on more tightly aligning IT strategy to business strategy. What methods have you employed to do so?
Lewis: One example is how we rolled out an enterprisewide service management platform, in this case a service made possible through a vendor relationship with ServiceNow. We started the implementation with IT about a year ago, and we've led its rollout to other parts of the business including HR and purchasing. Serving as a model for how to implement and use technology to improve business processes is not a new role for IT here, but we are being more deliberate and collaborating more closely with our business partners. We're showing first-hand how we use technologies, and educating our colleagues on how their areas of the business can realize similar benefits.
The HR implementation was actually part of the initial plan. We included HR in our early discussions about which ESM tool to go with because HR was on a platform that was not serving them well and causing them a lot of pain. Implementing the solution for purchasing sort of came in through the side door because they noticed we were using the ServiceNow solution and asked if they could realize similar benefits.
We experimented with a couple different models for how to best convey this information to the business units. We have created a set of policies and procedures that are working for us, such as assigning several IT team members to be official IT liaisons to the other business units. They sit in on meetings and work directly with their colleagues to address and solve issues or discuss how to improve business processes. This direct interaction has proven to be much more effective than various models including iterations of an IT strategy council or steering committee.
CIO Insight: What are some of the major ideas that are a part of your current strategic plan?
Lewis: We didn't previously collect and analyze data across our entire IT infrastructure; it just was not feasible because of the disparate legacy systems we had to manage. We implemented the ServiceNow IT service management (ITSM) solution in order to gain that visibility into all our processes and infrastructure through a single system of record for IT. This consolidation and automation of service management processes eliminates a reliance on manual, redundant tasks and significantly improves our capability to report on how IT is helping the organization achieve its goals for providing our customers with the highest quality of health care in an efficient manner.
We recently had to make a major decision around the architecture of our mobile application, and historically the business units would take a relatively hands-off approach. But this time there were capability implications, so the IT liaisons for the different parts of the business spent a lot of time working to help our colleagues understand the implications of this technology—how it will change what they can offer our customers today, and what new capabilities it may offer in the future. By the time everyone had to make a decision on the architecture, that decision was essentially already made. Educating everyone during the early stages was key for us to be able to broaden the understanding and made the entire process more efficient and collaborative.
CIO Insight: You also focus on monitoring and communicating progress against key performance indicators. Which ones do you keep, and how do you develop your scorecards to demonstrate progress against these success metrics?
Lewis: We divide the KPIs into three main groups:
1) Internal IT KPIs—speed of answer for the service desk, number of major incidents and we measure and work to improve on them all the time. Those remain fairly difficult to tie a value back to, but we do find the process helpful.
2) IT tied to specific business initiatives. For example, we want to be able to show that how implementing a technology product will lead directly to bringing in a specific number of new customers that will represent a specific range of new revenue dollars. Another bucket is customer service scores: how does implementing a technology tool reduce customer wait times in call centers that will lead directly to improving customer service scores by a certain percentage.
3) Quality or outcome of care we provide. That's much harder to measure but there are standard industry measures that we use here.
CIO Insight: You have been an IT executive at a variety of health care organizations. How has the value derived from IT changed across your nearly 25 years in healthcare IT?
Lewis: When I started in IT, we were not IT, we were data processing, and that's what we did. We processed the data and gave it to other people. We took orders, prepared reports and our value proposition was basically fulfilling those orders.
There's still a part of that today, but today it's much more broad and much more collaborative. The business now understands that everything they do has a technology requirement or implication, and the conversations start much earlier. We're at the table when new business concepts are being discussed such as breaking into a new market or developing a new product. That makes a big difference because our role is more consultative and collaborative than being reactive order-takers.
CIO Insight: What trends particularly excite you as you look out a few years?
Lewis: Moving more towards software as a service/platform as a service will continue to accelerate, and for many organizations including ours, those will be solutions to a number of smaller challenges.
From a health care-specific standpoint, the industry is facing change—individuals will have more control over where they receive health care and get insurance, and will change how consumers look at these providers and demand more from them. Just as we see in the retail space, you want online access via your preferred channel 24/7, and we're going to be responsive to that. Health care has not had to deal with that high level of demand in the past, but that's changing rapidly. SaaS and PaaS will help us be more responsive, although maybe not in the initial implementation but more with staying current with the technologies. We're typically good at implementing new technologies, but struggle to maintain it. SaaS- and PaaS-based services and platforms remove that responsibility from our shoulders.
Peter High is President of Metis Strategy, a business and IT advisory firm. His latest book, Implementing World Class IT Strategy, has just been released by Wiley Press/Jossey-Bass. He is also the author of World Class IT: Why Businesses Succeed When IT Triumphs. Peter moderates the Forum on World Class IT podcast series. Follow him on Twitter @WorldClassIT.