Everyone at The Queen's Medical Center in Honolulu has their eye on some shiny new piece of technology. Doctors and nurses who have seen a new pharmacy management system demonstrated at a recent conference think the hospital should have it. An administrator wants his department to have PDAs to wirelessly access e-mail. Someone else wants a hospitalwide dietary management system—but doesn't have the budget to fund it.
And they want CIO and VP of IT Ken Kudla to get it all for them.
But before he even thinks about eking new systems out of his $13 million annual operating budget, Kudla has to contend with the 30 projects he has going on right now. He's in the middle of upgrading the hospital's network and deploying an antispam management system. By mid-January, he's due to replace the seven different systems that make up his hospital information system. Meanwhile, he's trying to finish a document imaging project begun back in 2002, for which funding has been scarce. "CIOs are being bombarded," he says. "There's a pent-up demand for things."
Kudla isn't alone. According to "The State of the CIO 2006," an annual survey by CIO, demand for IT is back with a vengeance. It's almost like the late 1990s. Except that what's missing now is the money, staff and late-night takeout to deal with today's demand. In turn, the requests for IT projects are piling up. CIOs say that managing this application backlog is the number-one barrier to their job effectiveness today, regardless of industry or company size.
How CIOs manage this burgeoning demand has a direct impact on whether business leaders view IT as responsive to their needs or not. "Any CIO who sets an expectation that something will get done—and it doesn't—will be committing career suicide," says Bob Holstein, CIO at National Public Radio. The challenge for CIOs, then, is to ensure that projects already in the queue are aligned with ever-changing business priorities, to manage business-side expectations and to control new sources of application demand from today's more sophisticated users. "One way you can interpret this [problem] is that users have a lot more appreciation of what's possible," says Holstein, "Or that the technology world has moved very quickly, and those business units want more, and they want it faster."
Whatever the source of the application backlog, CIOs should follow this cardinal rule: Don't complain. Nobody—especially your CEO—likes a whiner. "I tell my staff, You can't be a victim," says Susan Powers, CIO of Worldspan. "I don't accept the victim mentality."
How to Set Your Priorities
The 545 CIOs responding to our survey said they are buried under the weight of an overwhelming backlog of requests and projects. To some extent, backlogs have always been around, because users have always cried for the latest applications. Ten years ago, during the Internet buildout, everyone got what they wanted. Then Y2K put the brakes on many less critical projects. "Perhaps that started some of the backlog," Kudla says. Then came the dotcom bust, 9/11 and bad times for many companies.
Yet application demand remained. There may have been less development going on during the years when companies were focused on survival and keeping costs down. But users "still had their wish lists," says Stephen Rood, CIO of Strategic Technology, an IT consultancy that advises small and midsize companies. Now, those needs are out in the open again, fueling CIOs' concerns about project backlogs.
How one defines—and how one deals with—any backlog boils down to two factors: the source of the demand and the stage of development the project is in. Holstein identifies two different types of backlogs: a backlog of desire (applications that users are yearning for) and a backlog of commitment (projects that are approved but not started). CIOs need to pay attention to both. If internal customers can't get an IT project on a CIO's radar screen, "they perceive there's a backlog because the IT shop can't do what they want," Holstein says. When projects have been promised but not delivered, he says, "expectations have been set and not fulfilled." It may be that an IT organization hasn't planned properly, or that managers aren't tracking projects well, or that developers are taking time to assess the ins and outs of a project. But sometimes all users know is that they have yet to get what they were promised.
One way to look at the backlog is to consider the whole spectrum of projects that IT is currently working on but has not finished, in addition to the ones ready to go. Worldspan's Powers has a list of 100 projects that have funding and that IT is working on. Outside the top 100 are projects that are on deck. "When you finish [project] three, you bring in [project] 101," she explains. If she doesn't have the right staff with the right skills available for the next project on the list, she may skip to another. "We tend to have a backlog of about one year's worth of work. But because we prioritize every two weeks, some items never make it to the active list," Powers says. (See "Battling the Backlog," for tips on setting project priorities.)
How to Manage the Squeaky Wheel
No matter how good CIOs are at keeping a grip on their backlog, ever-shifting business priorities always threaten to shake up the IT agenda. One of the toughest tasks for CIOs is aligning the jumble of projects vying for resources with the company's strategic needs. In a fast-paced business climate, new projects—especially those that come from Mahogany Row—scream for attention. "They can also come about quite innocently," Holstein says, due to external factors that cause the business climate to shift. "What was a top priority becomes priority number 10."
A major contributor to the application backlog has been compliance-related projects, such as investments for Sarbanes-Oxley and HIPAA regulations. IT has to complete those projects by set dates, and in many cases, these infrastructure projects require substantial IT resources. Invariably, notes Holstein, implementing compliance projects pushes others farther down the to-do list. At Worldspan, Powers says, compliance-related projects trumped even a project that aimed to improve how the company prioritizes its IT projects.
According to "The State of the CIO 2006," enabling regulatory compliance is diminishing in importance as a contribution IT will make to the business in the coming year. This finding suggests that CIOs will devote less time to compliance projects. Even so, Rood of Strategic Technology says IT managers must think about how compliance projects change or dictate the direction of application development. "Nowadays, one cannot develop in a vacuum," he adds.
Under tight budgets and short on staff, CIOs and their project managers have to piece together the appropriate resources for the most needy projects. "That's one of the hardest things," Powers says. But at least Powers, by virtue of her position on the executive team, is part of the process for setting new corporate priorities. She can work with senior company leaders and project sponsors to find out which projects are the most urgent, as well as "where we don't have demand and can redeploy resources," she adds.
The backlog generated by a new corporate agenda is worse for the CIO who has to scramble to execute a decision she wasn't consulted about. Rood has seen it happen: A CEO and COO decide that they want a CRM system. When the CEO tells the CIO about it, the CIO is clueless as to the reasons why the project is necessary. The new project sends the IT department scrambling to jump-start the CRM project—and pushes everything else to the side. "That will upset what the priorities are in terms of technology needs for the entire organization," observes Rood.
At The Queen's Medical Center, Kudla wages a constant battle to ensure that all of his constituents know that every IT project has to be in sync with the center's strategic initiatives. As a member of the senior management team, he considers his most important task making sure his peers are aware of—and agree to—the center's priorities. Everyone, from senior executives on down, should know that a pharmacy management system is important for the hospital—and understand that rolling out the wireless PDAs for e-mail is "low on my food chain."
The Expectations Landmine
With requests for new projects coming from so many different places, expectations of the IT department have to be managed carefully. It's easy to interpret a backlog as a failure of CIO leadership: a deficiency in IT governance or a breakdown in business alignment. No CIO wants his department to be viewed as treading water in a sea of demand.
But when it comes to controlling perceptions, CIOs can be their own worst enemy. "CIOs have a tendency to overpromise, especially when they're new. And when they start overpromising, the application backlog builds," says Rood. Then CIOs are in the position of having to back off from their commitments, putting their jobs at risk. Rood notes that although a CIO should not discourage new technology, he needs to accurately assess IT's capabilities and manage business expectations of any project from start to finish.
Rood, who's been in the IT field for 26 years, says he learned this lesson early in his career. "When you're new, everyone wants to shake your hand, welcome you on board, take you out to lunch, and at the end of the day you've got 50 things from everyone to do," he recalls. "It all adds up to a backlog, and then you're going to be crying to the CEO: 'I can't do this.'"
At that point, he says, CIOs either have to take the hit and not deliver what they promised (which could get them fired), "enter a crash mode, where they push their staff to the point of exhaustion to complete a project," or spend extra on contract labor to meet a deadline. "In any case, it becomes a no-win situation," he says.
Powers gets around the problem of not wanting to say no by sending the message that IT is a resource to be managed like any other—her IT organization can do anything given enough time and money. Then the onus is on users to justify and manage their requests through Worldspan's project justification process.
When Holstein joined NPR just under two years ago, the IT department was overextended—pulled by user demands in too many different directions. As the demand for new applications increases even more, Holstein's been cautious not to promise anything he thinks is beyond his IT department's capabilities and resources, lest he create the perception that the project backlog is getting bigger. Meanwhile, his approach, like Powers' and Kudla's, is to align project requests with NPR's strategy. The perception he wants to create among end users is that the IT department is a partner with every part of the organization—from the newsroom to the mailroom. "Then we can develop the right technology strategy for them: one that complements and supports NPR's overall mission and strategic plan," Holstein says. And then, he adds, "we must deliver on the explicit promises that are part and parcel of that strategy."
The Problem with Users
An additional factor complicating CIOs' effectiveness at managing the project backlog is the sophistication of end users. Today's line-of-business managers and their employees are more adept with technology than the employees who held those same positions 10 years ago. "The younger people have grown up with [technology], have been exposed to it, understand the value," says Rood. As a result, they don't hesitate to recommend a new ERP or sales-force automation system or suggest changes to an existing system.
At Worldspan, Powers encourages this kind of behavior. "We let everybody submit projects," she says. For example, salespeople working in Romania came to Powers with a business justification for a new sales application. Worldspan provides airline reservation information to travel agencies, and it offers a service that allows customers to price tickets based on negotiated corporate or group airline rates. The idea from Romania, Powers says, was to help travel agencies that have personnel in different countries by allowing agents to enter rates in different currencies, rather than restricting the agents to the currency of the country where they are located.
Businesspeople "know what our customers need and have good ideas," Powers says. But as she has made her department receptive to any and all ideas, she estimates that project requests have increased 20 percent.
Kudla of The Queen's Medical Center expects that once he upgrades the hospital's seven major systems, new demand will surface. "Once the system is stabilized and users realize the potential of the new system, I anticipate a demand for new functionality," he says. Kudla anticipates requests for, among other things, automating the capture of data from patient monitors and expansion of wireless access on the hospital campus.
In other words, the application backlog isn't a problem one solves, it's a condition one lives with as technology matures and expands into new areas of the business, enabling growth and greater efficiency. NPR's Holstein says that, in the end, having a backlog poses a risk to the IT department, and that risk becomes a reality if you're missing project milestones or going over budget, and these developments come as a surprise. They shouldn't, he says, "if you are properly monitoring these variables on a routine basis."
"Of course working harder and more funding help," concludes Worldspan's Powers. But it's not manpower or money that solve the backlog problem, she adds. One needs effective governance.