A few weeks ago, I posted a blog in which Wolfgang Richter, CIO of PWC, describes three layers in a business: Strategy, operating, and systems. Companies, says Richter, excel at the strategy layer, often skip over that challenging and change-resistant operating layer, and go straight to the systems layer, which is supposed to make that operating layer efficient. This leaves CIOs in the unenviable position of having to create change at the operating layer themselves, when they are not always well positioned to do so.
When Michael Mathias became CIO of Blue Shield of California, he joined a company that was running most of its processes in silos with very little ability to leverage investments and capabilities across the enterprise. One major area ripe for change, for example, was customer service. “We wanted to engage with our customers differently going forward,” says Mathias. “But we were running customer service differently from business to business, so we wound up with a scatter shot approach. We needed to think through a new strategy that would give us a better approach and help us meet our business goals around customer engagement.”
Once the executive committee had settled on its new customer engagement strategy, Mathias took action. Rather than wait for the others to drive the operating changes, while he focused on IT, Mathias met with his CEO and raised his hand to take a major change leadership role. He then met with a variety of stakeholders to make sure all of the functions and businesses were aligned with the new customer engagement approach.
“I sat down with our CEO and talked about what we need to do be successful and earned his support for bringing the business leaders together,” says Mathias. “I talked to them about what, in each area, we were doing separately, and what we needed to be doling collectively. They understood that the only way to achieve our new business goals was to have a unified vision and a business architecture to make that vision actionable. In those early meetings I didn’t talk about technology at all.”
Using Business Architecture to Drive Change
Mathias relied and continues to rely heavily on the concept of business architecture to create change at Blue Shield of California. “We use business architecture to help the business defining the ‘what’,” says Mathias. “What do they want to be? What do they want to do? In IT, we tend to focus a lot on the ‘how,’ but not so much on the what.” Mathias finds that business architecture helps him and his team to drive business leaders toward a shared understanding of where to focus at the business level, before they even start to talk about IT.
“When I started the CIO job at Blue Shield of California, I wanted to develop an IT strategy, but I realized that I couldn’t begin until the entire leadership team had a clear view of our business objectives,” says Mathias. Once the executive committee was clear on their business goals, Mathias, his business partners, and his team spent four months developing a new business architecture, which they then presented it to the Board. “In the presentation, we are able to tell the Board, ‘Here’s where the business is going in the next five years; this is what we want to achieve; here is how IT will support those objectives, and here is the portfolio of initiatives. ‘”
Mathias finds that a defined business architecture gives all of his business partners clear view of the business and its capabilities. “The business architecture shows us our strengths, our gaps, and how to prioritize,” says Mathias. “Before business architecture, we had a siloed approach with tremendous redundancy in projects and spend; we were getting no leverage. Now, it is much easier for us to agree on how to direct our IT spend and focus our resources in the right way. “
Business Architecture plus Enterprise Architecture = Alignment
Mathias’s enterprise architecture team typically takes the lead in defining the business architecture. Within the enterprise architecture team are several business architects who have deep knowledge of a set of business processes used in critical parts of the company. The business architects, along with applications, data and infrastructure architects, all participate in the development of the business architecture. “By having the technical architects work alongside the business architects, we create tight linkages between our business goals and our IT strategy,” says Mathias. “We are able to build our technology architecture in parallel with our business architecture; we are able to execute much more quickly this way. It all becomes part of the same picture.”
The Business Architect
Without great business architects, it is hard to build a business architecture. So, how do you identify the right people? “I look for people who can bridge technology and business. They can think conceptually, abstractly and they speak the language of the business,” says Mathias. “But I’m also looking for people who have a systems architecture background, so that they understand how systems work together. It’s a tough skillset, and because of that, we augment the team with some outside resources.”
While the concept of business architect resembles a business relationship manager, Mathias doesn’t use the term. “I personally don’t care for the ‘relationship manager’ moniker,” he says. “’Business architect’ is a much more accurate description of the role: someone who architects the future vision of the business; someone who looks at the future of the overall enterprise. Business architects need to be able to think strategically, but equally as important, they need to make that strategy actionable.”
Advice for CIOs in Need of a Business Architecture:
Lead the charge. “As CIOs, we have the luck and the curse to see the enterprise in all of its beauty and its ugliness,” says Mathias. There really is nobody else who has this opportunity. As CIOs, we can look at where we are and say, this is what I see; these are the opportunities, these are the gaps, this is the history and this is the future. It is our responsibility to bring that perspective to the table; we have to have the courage to let everyone see that the baby is ugly.”
Get anointed by the CEO. “I have to give credit to our CEO who had the faith and trust in me to me to lead this business architecture initiative,’ says Mathias. “Without him behind me, we would not have been successful.”
Spend the time. “You are going to have to spend the time with the senior team getting them comfortable with the concept and gaining their trust,” says Mathias. “The more you bring people together to show them a horizontal view of the enterprise, the more quickly your business architecture will evolve.”
Be patient. “This is not easy; this is tiring work,” Mathias says. “You need to develop the right talent and you need support from every executive in the company. Thinking about a unified business architecture is a learning process for your team and for the business as a whole. It is a stark change from before. You are bringing people together who have always thought vertically and asking them to think horizontally. That’s a stark change. It will take some time, but once your business partners get into it, they will see the value of the approach.”
About Michael Mathias and Blue Shield of California
Michael Mathias joined Blue Shield of California in January 2013 as Senior Vice President and Chief Information Officer. Mathias directs the company's technology strategy and operations and oversees Blue Shield's significant technology investments. Mathias brings more than 25 years of industry experience to Blue Shield. Prior to joining the company, Mathias spent 16 years at Aetna, first as chief technology officer and then as CIO, directing the company's information delivery systems and long-term technology strategy. He also worked for U.S. HealthCare, UBS and Educational Testing Services.
Mathias holds a bachelor's degree from Long Island University.
Blue Shield of California, an independent member of the Blue Cross Blue Shield Association, is a not-for-profit health plan with three million members, 5,000 employees and $10.5 billion in annual revenue. Founded in 1939 and headquartered in San Francisco, Blue Shield of California provides health, life, dental, vision and Medicare insurance and health care service plans in California. Blue Shield of California was named one of the World’s Most Ethical Companies in 2012 and 2013. Since 2005, the company has contributed more than $200 million to Blue Shield of California Foundation, one of BusinessWeek's most generous corporate foundations.