The IT Train That Could: Getting Agreement on Major Initiatives
Tue, January 15, 2002
CIO — Have you ever had difficulty getting agreement on which major initiatives your IS department should pursue? And when expenses get cut, which applications do you eliminate or slow down? Those were a couple of the challenges I faced when I became CIO at Union Pacific Railroad in 1992.
I knew the overriding solution had to revolve around two principles: 1) IS needed to focus its resources on what was most critical to the business and would have the greatest impact, and 2) the major internal IS customers had to be involved in the decision making and have "skin" in the outcomes. During the next two to three years we evolved a process, called UP/2000 (later renamed UP/21), that worked well for us?in fact, it was ultimately adopted by many other companies. I’d like to share with you how it worked.
The Right Links
The job I filled at Union Pacific had been vacant for six months, and there was little new development in progress. A long-range systems plan had been developed several years earlier, but there was no current plan or process to determine what new development should be done or what should be cut during budget revisions. Companywide, there were many pent-up needs for IT systems, and we needed to determine on a rational basis?not a "who you know" basis?what new systems should be undertaken. Owing to a reorganization before I arrived, the IS department reported to the CFO, who was very much in favor of establishing a process for objective decision making.
An essential part of our solution was to tie all IT work to the company’s business processes. First, by interviewing our internal customers and inviting them to critique our existing business process documentation, we defined the business process flows within and among customer departments. Next we mapped the existing IT systems to those business flows and characterized each system by whether it supported the business flows, needed modification or needed to be replaced. For example, we found gaping holes in the systems that supported the maintenance of locomotives. By inserting an expert system to analyze the diagnostic data already captured in those locomotives, we could not only speed up the business process of determining what needed repair but also send advance information to the locomotive shop for more efficient planning and scheduling. Increasing the uptime of each locomotive meant fewer new locomotives had to be ordered.
We then organized the involvement of our major internal customers according to the business processes they used to accomplish their business objectives. This approach was based on the fundamental belief?shared by me and senior executives, including the president?that a company should first decide what it is going to do (its revenue goals, profit goals, strategies, for instance) and then what business processes it will use to achieve those objectives (such as how it will interact with its customers, what performance criteria it will meet, what payment methods it will use). The IT systems should then flow from these first two steps and enable and support the business processes.
