I recently talked with a fabulous IT leader. When Nipa Chakravarti took the IT reigns at TransAlta (Canada’s largest publicly traded power generator and provider of renewable energy), she faced a massive $40 million IT ERP re-implementation. After taking a look at it, her first action was to cancel this project. She said they needed to get the company out of the M2M world – her term for the “many months and millions of dollars” involved in large IT implementations.
Unfortunately, if you’re a CIO, you can probably identify all too well with the situation she described. Big initiatives. Really expensive software implementations that turn into runaway projects that take forever.
As she put it, “Traditional IT has a history of these M2M problems where we gather all the requirements, come back with a proposal, get a consultant in to do it, and then the project gets off track. Even if it doesn’t get off track, it still costs millions of dollars and takes many, many months and distracts the whole company. We end up realizing little business value and a whole bunch of expense. It’s financially killing organizations and destroying the reputation of IT.”
IT these days often has a horrible relationship with the business stakeholders because of frequently having to respond “no” to their requests … or responding “yes” and then ending up with an M2M problem of the project taking forever and delivering more expense than value.
Nipa recognized that the company’s enterprise IT function cost too much and was inflexible. Looking closely at M2M problems, she determined they needed a way to bill IT differently. Her journey at TransAlta has been one of moving away from these types of projects and moving to a world where IT costs come down and the business gets a lot more value.
How she transformed enterprise IT
The first thing she did on that journey was recognize that she needed to show the business the cost of their decisions/requests. She built a transparent chargeback vehicle so they could understand what they asked for in terms of the cost and technology consequences. She also realized she needed to organize enterprise IT that way.
They started by asking “What are the services we provide the business?” Then she organized her IT department as much as she could along those services lines, starting with the easiest area. The first and easiest step was organizing the applications into 40 services. (She is unclear whether 40 is the right number or if she could bring it down for a simpler conversation, but they had to start somewhere.) Next she organized her development and maintenance teams into the service lines.
As the next step in her journey of transforming TransAlta’s IT model from a functional disciplines model to a service-oriented model, her team is looking at how to move the infrastructure networking into elastic or consumption-based models. It became clear that they could organize all of the IT department into a services-lines model.
One of the results was dramatically lower costs even though that was not her primary goal. When she started the transformation journey, power prices were higher, so cost reduction was not the primary driver. She was just trying to put an end to the M2M problems and increase effectiveness of the IT organization.
Communication is key
Nipa learned the basic issue that led to projects of many months and millions of dollars was IT’s inability to communicate clearly with the business.
For example, in the ERP re-implementation situation when she took over IT, she was able to stand up an alternate program quickly.. She changed IT’s relationship with the business and, in this case, the finance group and IT, in partnership, addressed the underlying issues by implementing a more agile program at significantly lower cost.
More effective communication also led to implementing a more agile, responsive world. In avoiding M2M projects, IT’s last resort should be a big initiative. And their biggest ally in conversations about that should be the business users; after all, they are just trying to get something done and aren’t necessarily concerned about the underlying technology that gets it done.
It’s not that she’s isn’t implementing robust technology. Rather, she is having clear conversations with the business, allowing them to make decisions when they understand the implications of their decisions. The result is much shorter programs, quick sprints to value rather than a lot of money and a long wait with unclear value and a lot of change. She is driving her teams down the path of short-term bursts. And she doesn’t have to allocate costs to the business; but as they incur costs, they pay those costs.
Now, after three years, she is looking to move as much as possible into a consumption-based model and make IT delivery as transparent as possible to the users so they can understand what they buy.
Interestingly, Nipa didn’t start the journey of avoiding M2M projects by deciding to move to the cloud. Instead, she began by deciding to change IT’s relationship with the business. As she developed a language with the business and organized IT in business service lines, it drove them to cloud or flexible, elastic solutions for how they deliver technology. But the technology didn’t lead the business; the business led to that technology answer.
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