CIO strategy for driving IT innovation

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How a CIO turned an IT group into an innovation powerhouse – Part 1

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If you’re a CIO trying to push a change-based agenda through a traditional IT business, where do you start – especially if the change is a mandate for you to turn the company into an innovation powerhouse?

I spoke recently with Sam Esfahani, and we had an interesting conversation about how he achieved that corporate mandate when he was brought on board as CIO at PSCU Financial Services. Competition in its market is very aggressive. The company provides technology and services (credit, debit, online pay, bill pay, etc.) for hundreds of credit unions. But the Digital Age arrived and, like many companies today, the board recognized the company had underinvested in technology and had an IT group that was misdirected, especially for the digital world. The board wanted to bring innovation and thought leadership into the organization and charged Sam with the turnaround to become an innovation powerhouse within five years. Sam set the bar even higher and aimed at hitting the goal much sooner.  

Taking stock of the IT environment he inherited when he joined PSCU three and a half years ago, Sam realized the organization was pretty backward from a technology perspective. Projects took years to complete; one project took five years to deliver. The product team had not been trained on Agile or iteration practices. The product development group and business partners were not happy about the slow time to market. The morale in the tech group was low as they were basically just order takers. There was no discipline in system availability diagnosis, system uptime, change management, project management methodology, software development and people in the IT group. Systems were often down.

It definitely wasn’t the sort of place where you’d think innovation could flourish and a company could create market-leading, value-add technology products and services.

C-suite commits to overcome obstacles

American writer and Nobel Prize laureate William Faulkner wrote that you can’t swim for new horizons until you have the courage to lose sight of the shore. That’s basically the same first step Sam and the executive team took in the turnaround journey at PSCU. There were obstacles and risks, but he says “I couldn’t even talk about innovation until we first stopped the bleeding and took care of the fundamentals.”

At the end of his first two weeks with the firm, Sam sat down with the executive committee and presented a straightforward assessment of the situation. He pointed out the positive things as well as some threats lurking around the corner, the approach to take to become a technology powerhouse and his recommended road map. And he asked for more money.

The company increased the IT budget by 25 percent, allocating the additional funds to stabilize the system, hire and train the right people, and pave the road for increased productivity and innovation.

Gaining traction

Sam and the IT group began the turnaround journey with the initial goal of getting system uptime to 99.9 percent. They installed a monitoring system and used ITIL to make sure they had change management, service management and problem resolution.

Legacy apps were a focus of improving system uptime too. Some apps were no longer necessary, and all were costly to maintain and brought down quality and system uptime. They whittled the legacy environment down from 158 applications to 78 and installed discipline and monitoring to the remaining apps … and watched system uptime reach the goal of 99.9 percent.

Sam explains he took a multi-faceted approach. Not all issues were technology oriented. In looking at the competencies necessary for the environment and new focus on innovation and thought leadership, he determined some people – including leaders – lacked the needed skills. They took the difficult step of re-positioning some people, exited some management folks and brought in new leaders with the right talent.

They also changed the culture. “We had to move away from the mentality that had been there for a long time and change to a culture of accountability,” Sam recalls. “We trained people and gave them autonomy but at the same time told our staff that they were now accountable. I told them if the system goes down because someone doesn’t do enough testing or changes something without going through the change management process, that person is responsible; and I told them the consequences. The message about accountability was loud and clear.”

At the same time, he told the staff that the company cares about them and wants them to have fun and experience victories. 

Sam recognized they also needed to improve IT security. The company had 15 million customers of credit unions in its database, and one breach would definitely kill credibility for innovation.  He hired “the top Cisco guy,” increased the budget for him and instructed him to get the best tools and best people to turn the system into a fort that hackers couldn’t breach. 

Gaining credibility and new allies 

Sam recalls that the company’s credibility in the eyes of its credit union clients was low regarding the IT group’s ability to turn the situation around. The feeling wasn’t much different in the company’s internal business community. Taking a metrics-based approach to service delivery, he established a technology advisory group with 15 leaders from various groups. Each month top-level leaders and Sam met with the advisory group to review the dashboard with performance metrics on issues such as system availability. They were very transparent with the group, discussing what IT had done to improve system uptime, and the new culture of accountability as well as the road map for future projects.

These meetings, the performance metrics and culture of accountability improved credibility right away. Also, the group could see that the company’s top leaders and technical team were happy with the improved performance and where they were going. Sam shared with me that, as they built credibility with the business community, the business leaders started opening up and explained their pent-up frustrations with IT. And the IT team really listened. Together, IT and the business stakeholders began building collaboration into their processes and knocking down some of their existing issues. 

This joint effort was a crucial step for success in driving innovation. The next step on the journey was to focus on project delivery and decrease the time to market drastically, and Sam needed the internal business partners to become allies in this effort. They would need to adopt the Agile mentality and become involved in reducing the time to market or time to value for new technologies.  

Stay tuned for Part 2 of this blog post, where I’ll discuss how they moved tech development projects from taking multiple years to only taking a few months and how they built eight mobile apps in nine months. The CEO stated that in just two years Sam moved the company forward 10 years and used technology to create PSCU differentiation in a competitive market. In part 2, I’ll also share the story of how they identified and exploited new areas where the company could innovate new products and services. And we’ll look at how he broke down change resistance and barriers to innovation in the company’s most powerful business group.

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