IT Strategic Plan Part 1

Chapter Fourteen: Office of the CIO[*]

Makarand Utpat

OVERVIEW

Today we find that certain trends, such as globalization, mergers and acquisitions, competition for market position and market share, regulatory compliance, and maintaining strategic advantage, have become cornerstones in radically shaping business dynamics.[1] Agility, having a holistic view of the enterprise, doing more with less, and lean methodologies have become more than just buzzwords in the corporate IT world. As a result, CIOs and their leadership teams are demanding that IT investments be spent wisely and that there is a compelling business case that demonstrates why they need to approve and fund new IT projects and justifies the risks and rewards.

Many global corporations have launched dedicated efforts and/or disciplines by forming enterprise architecture departments, program management offices, or strategic planning groups.[2] These disciplines exist at various levels of maturity ranging from intermediate for some to advanced for others. These disciplines typically work in concert with each other. The goals are many, including, but not limited to, rationalization of the IT landscape; building the next generation of the core competencies; leveraging real-world guidelines and applying industry best practices; and identification, prioritization, and management of portfolio investments in order to assess value, increase efficiencies, and realize long-term gains.

The content described in this chapter represents the results of such rationalization efforts for a global corporation, which led to: the key recommendations in the form of the creation of various project proposals and business cases; provision of project oversight by establishing cross-functional organizational structures, processes, and governance mechanisms to maintain alignment over time; adoption of standard software suppliers; and creation of integration competency centers (ICCs).

[*]Acknowledgments: The author is proud to have worked with competent individuals and would like to thank them for their contributions in creation and implementation of the strategy: The vice president of architecture, governance, and strategic IT services for the sponsorship, acting as a project champion, and for the overall leadership related to IT leadership and business leadership committee aspects; cross-functional team members for the successful delivery of the strategy; Scott Seifried (Informatica) for demonstrating the strategic partnership skills; and Drew Wright (Technology Finance Partners) for collaboration and guidance on the data integration business case, and for introducing the author to The Office of the CIO.

[1]Tony Murphy, Achieving Business Value from Technology: A Practical Guide for Today's Executive (Hoboken, NJ: John Wiley & Sons, 2002).

[2]Based on the author's personal experiences with global corporations, such as Johnson & Johnson, Merck, and F. Hoffmann-La Roche AG from 1998 to 2009.

SITUATION

For the aforementioned global corporation, the information landscape was comprised of the multifaceted portfolio of tools, applications, and projects across data warehouses (DWs), data marts, master data management, extract-transform-load (ETL), and business intelligence (BI) areas.

The peculiarity of the portfolio was characterized by the complexity; geographical diversity; and heavy investments in projects, operations, and maintenance. These investments were primarily driven by functional organizations and affiliate sites dispersed across the corporation's worldwide regions and countries. The portfolio evolved over time in a stepwise manner and was highly disjointed, consisting of an array of fragmented functional implementations with partial integration and no standardization across the enterprise.

Coupled with this, the DWs and data marts were widespread and growing rapidly. The corporation owned multiple supplier software solutions in the BI and data integration (DI) areas, giving rise to the redundancy of functionalities. Enterprise-wide mechanisms to govern the creation and management of DWs, to provide the direction around tools, and to harmonize technology were all lacking. The corporation's cross-functional and/or global needs were being compromised due to lack of production of the integrated views of the data, complex DI issues, and a weak information culture. A few examples of these needs were:

1 Exploratory and confirmatory analysis of clinical trial data

2 Reporting on cross-study data that required integration across preclinical, clinical, and safety functions

3 Reporting physician spend to regulatory authorities

4 Generation of a full view of the customers (doctors, patients, key opinion leaders, and key accounts)

The corporation could not transform these needs into a strategic advantage with the implementations that were in place.

Overall, this fact gave rise to critical challenges:

· The current environment was seen as heterogeneous by users. As a result, a holistic (360-degree) view of the underlying information could not be achieved.

· Data redundancies and reporting redundancies gave rise to data quality and metadata issues and users being less confident in the data, which affected business users' decision making.

· Organizational silos limited the reuse of know-how and skill sets.

· Creation of cross-functional views was time consuming. It required a great deal of coordination in the form of copying the data from one environment to another and led to unmanaged data and multiple copy chains.

· High operational overheads resulted, due to the substantial redundant investments in projects, tools, and the infrastructure.

· There was an increased total cost of ownership due to: lack of enterprise-wide maintenance terms; multiple invoices to multiple locations with multiple points of contacts; tactical projects consistently lacking budget, leading to opportunities lost or reverting to manual coding efforts; and absence of cost-effective procurement structure.

Maintaining the status quo had become increasingly problematic. The huge footprint hampered the corporation's ability to respond to changing business needs in a timely fashion and to maintain a competitive advantage. The aforementioned challenges were shared universally by the business and IT. However, since the business was siloed, the corporation faced difficulties in receiving the singular business sponsorship. A fundamental overhaul was necessary via enterprise-wide IT strategy creation, delivery, and implementation that would achieve a sustainable business impact from people, process, and technology perspectives. The IT leadership committee (included the global CIO and direct reports) recognized that further derailing was no longer acceptable and thus decided to sponsor this effort.

IT STRATEGY CREATION PROCESS

The vice president of the architecture, governance, and strategic IT services group acted as the sponsor and appointed the author to lead this effort. The challenges were enormous and the expectations were high with the IT strategy affecting the corporation's five worldwide regions, which included over 30 countries.

The goals were:

5 To deliver an overarching strategy that will consolidate and harmonize the complex data warehousing, BI, and DI landscape without compromising the underlying information needs.

6 To define future architecture vision and create a long-term road map that will harness the value of information the corporation possesses and leverage the corporation's investment in the operational systems.

7 To embrace a federated approach that will promote integration of various DWs in a coherent manner in alignment with the functional area road maps and portfolios. The goal was not to pursue a big-bang approach (e.g., creation of a single, monolithic, enterprise-wide DW) but rather to adopt an evolutionary approach.

8 To deliver the guidance for the decision makers and governing bodies on how to respond to new data warehousing, BI, and DI project requests.

9 To deliver the key recommendations that, if approved, would lead to concrete actions whereby the aforementioned road map would be executed in the form of creation, execution, and monitoring of specific projects, programs, and/or foundational capabilities.

The formation of a cross-functional task force was proposed to ensure that each of the key constituents had a seat at the table, that their subject matter expertise could be leveraged, and that their needs and pain points could be understood in order to come up with an optimal future direction. The IT leadership committee approved this approach. Some key constituent groups (stakeholders) that had representation on the cross-functional task force were supply chain and finance; human resources; clinical development; sales and marketing; infrastructure; and supplier management.

This cross-functional task force delivered the rationalization in the form of:

· A comprehensive assessment of the current environment (the fact base) in the form of inventory of the number of the DWs, BI tools, DI products, underlying subject areas, data sources, user base, geography, and licensing and maintenance costs for various supplier products and platforms

· Rationale for the change including the pain points, missed opportunities, and suboptimal activities

· Construction of the guiding principles for important areas, such as data warehousing, BI, infrastructure, validated versus nonvalidated environment, governance, and supplier management

· The characteristics of the future state environment with the focus on people, technology, and process aspects

· Articulation of the envisioned future state landscape in the form a long-term road map

Identification of the standardized tools for back-end DW, front-end BI, and DI to support the future-state landscape Concrete recommendations that produced actionable results

CREATING PROJECT PROPOSALS AS A RESULT OF DRIVING AN IT STRATEGY

IT strategy was driven from various fronts that ultimately led to the creation of project proposals, business cases, and organizational structures (e.g., cross-functional programs and integration competency centers). Some of the key elements (not in any particular order of importance) that constituted the successful conclusion of IT strategy were:

10 Active communication between cross-functional team members and stakeholders. The cross-functional task force was global in nature. The stakeholders were located across multiple geographies that operated in different time zones. Communication took the form of weekly teleconferences, e-mails, and video conferences, with additional meetings coming in the form of face-to-face facilitated workshops. The goals of these meetings were manifold in nature, namely listening and understanding the pain points of the IT stakeholders, leveraging their subject matter expertise, generating a comprehensive understanding of the current environment, and devising recommendations.

11 Regular communication with various leadership teams. In addition to the lateral communications, upward communication with the governing bodies (such as the IT leadership committee, the leadership and management teams of individual IT leadership committee members, architecture review board members, and the business portfolio planning committees) took place in the form of submitting status reports, discussing roadblocks, escalation of issues, scope verifications, and doing presentations in the formal forums.

12 Subject area-specific DW design. To design the future data warehousing landscape, the greenfield approach was embraced. The approach here was to go beyond the functional boundaries, adhere to the guiding principles, understand the fundamental information needs, formulate relevant use cases, and then devise the target number of DWs the corporation would need.
The cross-functional task force came up with about 50 key use cases. These use cases were logically clustered to see which use cases fit into which buckets of the subject areas to construct DWs accordingly. The notion of subject areas revolved around the notion of business processes (which by definition were cross-functional in nature). Subject areas were defined as a logically related set of business processes about which the corporation needed information (e.g., subject areas were defined as sales, customer, clinical, supply chain, human resources, finance, etc.).

13 Strategic road map construction. The strategic road map was constructed by prioritizing various project activities and by taking into account the functional area road maps. For example, creation of business-driven cross-functional subject area DWs and data marts; reengineering of existing data warehousing landscape (via integration, consolidation, or retirement of legacy environments); design and configuration of the back-end data warehousing landscape; provisioning of ongoing project support by developing a repository of shared reports, queries, data models, guidelines, and naming conventions; and construction of the financial business cases for and set-up of an enterprise-wide BI and ETL platforms.

14 Work stream creation. A divide-and-conquer approach was followed by creating various work streams for critical areas such as BI, data warehousing landscape, and ETL. The corporation had six software suppliers for BI and five software suppliers for ETL. The primary goal was to conduct rationalization and drive alignment whereby enterprise-wide standards would be chosen.

15 DW and BI software supplier selection process. The process was geared toward making recommendations around the general-purpose BI tools (e.g., querying, analytics, reporting, and dashboarding). Special-purpose BI tools (e.g., visualization, data mining, and predictive analytics) were omitted due to the specialized requirements the corporation possessed. Internal users were approached to understand their requirements and experiences with BI tool usage. Finally, supplier days were organized.

16 ETL software supplier selection process. ETL supplier selection strategy was handled at a later stage due to high priorities associated with DW and BI supplier strategy aspects. Existing ETL capabilities were assessed in terms of the projects, tools, and the requirements of ETL functionality. Current-state ETL landscape was constructed, and gap analysis was performed.
In both cases described (i.e., DW and BI supplier selection and ETL supplier selection), suppliers were asked to present an overview of their capabilities and to explain the product fit (as they saw it) with the corporation's requirements and culture. Research analysts from Gartner, Inc. and Forrester were consulted to understand the supplier landscape in terms of market leadership, supplier road map, associated risks for the corporation, competitive landscape, industry benchmarks, and best practices. Additionally, would-be suppliers were asked to provide references. The task force members conducted series of interviews with these references to validate supplier capabilities. Finally, product rating matrices were constructed that included various criteria with weighted averages. Task force members completed the matrix denoting BI supplier and ETL supplier of his or her choice. An average was derived from each task force member's evaluation, and a strategic recommendation was formulated.

17 Development of financial business cases. Creating a compelling financial business case was vital to obtaining buy-in from the IT leadership committee and other governing bodies. Lists of assumptions, constraints, and rationale were documented, which in turn served as a basis for constructing the business cases for adopting enterprise-wide BI and DI/ETL platforms. Adopting this approach allowed the corporation to set the context for decision making. A number of solution alternatives were articulated that took into account pros and cons in terms of costs, benefits, risks, and complexity. Although the business case benefits were articulated, it was understood that the ability to realize the portrayed benefits hinged on the respective global delivery/implementation teams taking it to fruition.

18 Business case for adopting an enterprise-wide BI platform. The notion here was to create optimistic and pessimistic scenarios and to understand which one was most justifiable. Efficiency gains and savings were calculated for each of the key constituent user groups. On the benefits side, several parameters were identified from different angles, such as full-time-equivalent (FTE) productivity gains, generation of standardized reports, reduced manageability costs, in-house expertise, and resource collaboration.
The additional investments needed due to the migration of existing non-standard platforms, infrastructure scalability to accommodate data growth, injection of external consultancy expertise, additional staffing headcounts (e.g., architecture, programming support, and other FTE aspects) were taken into account. These were then compared and contrasted with the corporation's current BI spend, which came primarily in the form of software licensing and maintenance costs for multiple BI vendors, projects, and operational costs to keep the environments running.

Business case for adopting an enterprise-wide DI/ETL platform. This step was focused on collecting an inventory of current and future DI projects. Various parameters were defined to compute the estimated costs—for example, expected project start date, months to develop with hand-coding or current ETL tools, estimated project completion time, estimated number of FTEs needed in the absence of a standardized ETL tool, ETL development costs (e.g., extracting data, creating mappings and transformations, applying business rules, and loading data into targets), and ETL production costs (e.g., code enhancements, bug fixes, change management), plus annual resources costs (which differed from continent to continent).
These estimated costs were then compared and contrasted against projected savings, where another set of parameters was defined—for example, impact of standardized ETL tool in terms of reduced code rewriting and testing, projected labor savings, ability to share know-how consistently across the corporation, incremental ICC impact on projects, and cost avoidance (license and maintenance costs savings) realized through retirement of nonstandard ETL tools.
Numerous scenarios were constructed that looked at computing future licensing and maintenance costs for various alternatives, such as staying with the status quo, pay as you go, paying based on the wish list, and achieving cost-effective licensing structure via enterprise-wide licensing agreements.

RECOMMENDATIONS AND CURRENT STATUS

A set of key recommendations were made:

19 Establishment of a cross-functional program to drive alignment with the architecture and redirect DW-related projects and operational activities where necessary. The cross-functional program would drive the creation of subject area DWs and relevant efforts.

20 Funding a business intelligence competency center (BICC) to establish a global platform in order to bring together the various BI projects in a coordinated manner.

21 Funding a data integration competency center (DICC) to establish a global platform in order to streamline DI activities in terms of the resources, infrastructure, skill sets, and training aspects.

The recommendations along with the needed funding were approved by the respective governance bodies.

Current status to date is as follows:

· An organizational model has been established in the form of a cross-functional data warehousing department. Geographically dispersed resources with the right know-how and subject matter experts have been brought together under the auspices of this department. It is currently providing oversights related to cross-functional projects, platform guidelines, relevant processes, and governance. The cross-functional task force is now in its second generation and continues to bring together cross-functional stakeholders via establishment of sounding boards.

· Design and implementation activities with regard to the subject area-specific DWs have been launched.

· The BICC has been launched. The first phase of the project has been concluded with the establishment of an enterprise-wide infrastructure and pilot projects. Subsequent phases have started with onboarding of projects for broader usage in all the functions.

The DICC currently is a work-in-progress project. The corporation has completed foundational activities, such as the competency center readiness assessment; completion of the financial business case depicting cost-benefit analysis, risk analysis and return on investment (ROI) calculation; adoption of an enterprise-wide DI supplier; and procurement of a cost-effective global licensing agreement. The business case and ROI justifications have been approved by the IT leadership committee. The DICC establishment commenced operations in early 2010.

LESSONS LEARNED

Ten common themes that we have found in dealing with many corporations are presented next. Some may be familiar, and some may be new.

22 Executive management sponsorship with the support of business executives. As the team leader working in a cross-functional, global matrix environment, the author had little authority or influence over the team members. Team members were dispersed across multiple countries and sites. Having a top-down mandate and formal sponsorship of the IT leadership committee turned out to be vital in overcoming the organizational barriers and easing change management aspects. Organizational barriers came in the form of team members committed to other projects who needed to negotiate with their supervisors and prioritize their time and their schedules.
Key Message: Creating and executing enterprise-wide strategies represents a great change management effort from the perspectives of people, technology, and organizational process. It is imperative that organizational commitment exists. CIOs must support the IT strategic efforts through a formal, top-down sponsorship.

23 Focusing on information requirements analysis. A lesson learned in early project phases was to keep the future architecture approach and road map recommendations aligned with the underlying information requirements. In earlier recommendations, major emphasis was placed on rationalizing the DW landscape by reducing its numbers via consolidating and retiring DWs. We realized that this approach was not intuitive enough and could not have accommodated the changing business requirements.
Soon thereafter, we shifted gears and placed the emphasis on collecting and documenting use cases. A set of 50 use cases were collected that aimed to address the pain points. These use cases were classified into two buckets: (1) needs specific to functional areas and (2) needs specific to cross-functional areas. Segregating the use cases in this manner allowed the team to define and solidify the architectural concepts at the right level of granularity. The advantage of this approach was that it achieved outcomes similar to those that the team wanted, but the approach was much more foundational in nature and met the changing business requirements.
Key Message: Think creatively about the future by incorporating the information requirements analysis. Document use cases and brainstorm to define architectural concepts at the right level of granularity.

24 Coupling portfolio planning and enterprise architecture skills. It is a well-understood fact that tight correlation exists between key disciplines: enterprise architecture, strategic planning, and enterprise portfolio management.[3] Successful harmony between and among these disciplines allows IT organizations to align process, technology, and people aspects with business strategy; to manage business requirements; and to make IT a credible partner in delivering value to the business.
As the team leader, the author had to wear different hats as occasions demanded, especially around strategy planning, project management, and enterprise architecture areas.
Key Message: CIOs should appoint an individual who is well versed in the aforementioned disciplines to drive IT strategic efforts.

25 Selecting the cross-functional team members. Due to the aggressive mile stones and high expectations of the sponsors, failure was not an option. It was imperative that an agreed-on approach that balanced stakeholder needs along with long-term organizational priorities must be established. A cross-functional team had to be assembled of people with specific skills: a solid understanding of organizational history and culture and of the decision makers and their risk tolerances; substantial knowledge of data warehousing, BI, and DI areas; and the ability to positively influence decision makers. Each task force member had a vested interest since the strategy outcomes directly impacted his or her respective business needs. Thus, there was wholehearted participation.
Key Message: Amplify chances of strategy success by selecting a team of people in the trenches who are technologically savvy and organizationally astute.

26 Achieving Shared Goals. Often the project experienced tough times, due to accelerated milestones, differences of opinions, presence of strong personalities, or simply because the author did not have answers to the issues or questions. Acting as conduit and not a barrier went a long way. Team members appreciated dedication and forthrightness. Sharing the issues collectively with the team allowed the members to get involved and solve problems creatively, and gained their buy-in from the get-go.
Key Message: When working toward the shared goal, forge sustainable partnerships by developing trust, walking the walk, and demonstrating a high degree of integrity.

27 Construction of the financial business case. It is the author's experience that IT organizations typically are good at computing soft benefits. However, they face a perennial problem of computing quantitative ROI in terms of hard dollars to financially justify the undertaking. They are not savvy enough when it comes to constructing financial business cases that involve complex formulas and concepts such as present value, future value, and net present value.
The construction of the financial business case for the BICC establishment was delivered internally, and it was certainly a tough act to follow. In order to construct the financial business for the DICC establishment, the corporation leveraged a consulting firm, Technology Finance Partners.
Key Message: Given that CIOs now routinely demand financial ROIs and cost justifications, the author highly advises the hiring of a competent and knowledgeable consultant. Although this expense will be front-loaded, it should be looked at as an investment. You will impress the CIO as having done your homework and it will pay more dividends at the end, leading to successful project approval.

28 Gathering best practices and understanding the competitive landscape. The corporation had a subscription to services of research firms such as Gartner Inc. and Forrester. The cross-functional team took full advantage by leveraging their analyses. The added value came in the form of utilizing 30-minute comple mentary advisory calls. Additionally, the team was able to tap into the brain trust of would-be strategic suppliers and their references. A wealth of information was shared (e.g., supplier competitive landscape, road map, business climate, bench marking data, and pros and cons of tool set capabilities) that helped facilitate discussions with the suppliers (e.g., requests for proposals and supplier days).
Key Message: The 30-minute call passes before you know it, so proper homework (e.g., choosing which questions to ask) is crucial prior to making advisory calls. Would-be strategic suppliers had a vested interest in ensuring that the corporation succeeded in its undertakings.

29 Executive management buy-in. Getting organizational commitment through top-level sponsorship opened the door. However, it represented just one side of the coin. Keeping that door open was equally important. It ensured that the business case data and ROI justification figures represented the pain points of respective stakeholders. The IT leadership committee was aware of this fact, and hence the final approval process turned out to be a breeze.
Key Message: Adopt a bottom-up approach by constructing the business case from the ground up to get CIO-level buy-in.

30 Official communication of the strategy. The corporation had a structured way to communicate the strategy (e.g., official announcements, web site news, intranet postings, and regular communication with the governing bodies). However, in this case, even before the official communication took place, other project teams started knocking on our door and were eager to embrace the proposed architectural approach, future vision, and standards. This was a great demonstration of the power of word of mouth and the remarkable traction that was derived from it.
Key Message: Good work is contagious.

31 Acknowledging completion and celebrating success. Although leadership is important, successful delivery of any project is never the result of the work of any one individual. Rather, project success is achieved due to the collective efforts of a project team. After successful approval of the strategy, the author, as team leader, ensured that all the participants were recognized and rewarded by sending hand-written thank-you notes and formal gifts.
Key Message: Recognize and reward team members for outstanding performance.

[3]Meta Group, "Enterprise Program Management—Keys to Driving an Effective Project Portfolio", EPMO Executive Session, Somerset, NJ, November 13, 2002.

CONCLUSION

This chapter has described the key ingredients for creating project proposals by providing a real-world example and describing the considerations CIOs and IT executives need to take into account in terms of the linkage IT has with a corporation's strategic objectives.