One CIO offers keys to driving digital transformation

Digital transformation is the buzz phrase du jour, but the reality is that many CIOs struggle to understand what it actually takes to drive new customer-facing opportunities. They’d do well to look to Lidia Fonseca, the CIO and executive sponsor of the business transformation efforts underway at Quest Diagnostics – the lab testing and (emerging) analytics powerhouse.

[ Related: How to succeed at digital transformation; Digital transformation will shape 2016 ]

In this installment of the IDG CIO Interview Series, Chief Content Officer John Gallant asked Fonseca to outline exactly how the transformation effort was conceived, structured, managed and tracked to ensure success. Fonseca talked about how IT is organized to streamline and standardize operations, all to help align resources with new efforts to offer new big-data-driven services to Quest’s customers. She explored the politics of digital transformation as well as the key focus areas for 21st century CIOs.

[ Related: Tech Titans Talk: The IDG Enterprise Interview Series ]

CIO.com: What was your mission when you were hired into Quest a couple of years back?

Quest Diagnostics CIO Lidia Fonseca: Quest has been transforming since the CEO, Steve Rusckowski, joined in May 2012. He put the company on the course for transformation and called it the New Quest, with a new mission and vision. When we met to discuss having me join the team, it was really to help contribute to the overall transformation, but there were some elements of that transformation that I could specifically drive.

If you look at the company’s vision, we empower better health with diagnostic insights. One of the things that Steve set in motion is the idea that we’re more than a lab. Yes, we do medical testing and our test menu is one of the most extensive available out there, from glucose testing all the way up to genetics, genomic testing, as well as some pretty sophisticated neurology and cancer testing. But we’re also an information and insights company. The insights we provide with that testing really enable decisions to be made.

One of the other things we did over the past year and a half is that we refreshed the brand around a unifying idea, which is ‘action from the insight.’ From our perspective, it’s not enough to just provide insight. We very much believe that those insights need to enable actions so the best decisions are made about patient care. Those are going to be clinical decisions, reimbursement decisions, operational decisions. With that as the backdrop, Quest is transforming. Part of what I came to do is that transformation program. I’m the executive sponsor of that actually and that was one of Steve’s assignments for me. I am a transformation agent. If you look at my career, that’s my passion. Innovation is a side effect of what we do and what I do, but transformation is what I love to do and what I’m passionate about.

[ Related: Digital transformation: Why it’s important to your organization ]

CIO.com: You’ve talked about the modern CIO role encompassing three key components: operational efficiency, enabling business technology and leading transformation. I want to explore those first two relatively quickly and then spend most of the time on the business transformation. Let’s talk about that operational efficiency front. I assume this is all tied in with your Invigorate program?

Fonseca: Yes, it is. Our transformation program has three goals. The first goal is superior customer experience. More and more, that experience is defined by digital interactions and one of the major efforts that we’ve been driving since I joined is redefining those experiences.

There are physical elements to our business. We still collect the samples. A patient comes in either to our patient service center or that sample is collected at the doctor’s office. We still have couriers that pick up those specimens or samples and bring them into our labs. We then have a number of digital touchpoints along the entire value chain.

As we are redefining those digital experiences, we are making it very simple for that patient, that provider, to interact with us, whether making an appointment online or showing up to one of our patient service centers and then being cued. We then we provide the results electronically through our MyQuest portal. One of the goals is creating a seamless and intuitive digital experience for what they’re doing with us throughout, from beginning to end.

This is important because the consumer is becoming more engaged in managing their health. We can connect that patient, that consumer, with the provider and ensure that as they define the best course of treatment and the next steps in that patient’s care, it’s information, it’s the results that we offer that facilitate that communication. That’s one of the goals that’s really driving superior digital experiences.

The second goal is about operational efficiency and we are standardizing the way we work across all our locations so we can present a unified Quest. Regardless of where a provider or a patient interacts with us, whether they’re in the West or in the Northeast or in Florida or in the middle of the country, it will be a unified Quest with a standard menu, a standard experience, a very intuitive and recognizable interaction. That includes our brand and services as well as the various capabilities and options that we provide.

Standardization is a major effort for us and that’s driving that operational efficiency, as well as being able to launch new tests and new products. For example, a lot of the analytics offerings that we launched earlier this year we piloted in 2015. How do we get to market faster? That is also part of the operational efficiency, getting to market faster with our solutions so we can very quickly respond and anticipate client needs, especially in the changing landscape that we’re seeing in healthcare today. This is really operational excellence because it’s not just efficiency. It’s how you create an operation that’s not just standardized but can launch new products and services as quickly as possible.

The third goal is [around] information and the insights that come out of medical testing. Laboratory medical testing represents about 2-3 percent of total healthcare spend yet it actually informs a majority of decisions that get made about patient care. What we’re doing around that third goal is leveraging those insights so that we can provide them to our patients, our providers, our hospital, and our payer clients at the point where they can make the right decisions.

So, the third goal of our transformation program is delivering those insights at the right points, at the point of care and not retrospectively – in other words, where they can make a decision and take an action while the patient preferably is in front of the doctor or even before the patient gets in. We have more than 20 billion test results in our big data backbone and we have an impressive amount of data but now we’re focused on turning that data into insights that really help the industry and our clients make better decisions.

[ Related: How to turbocharge digital transformation ]

CIO.com: How did the management team decide on those goals and define the role of the key players in that business transformation?

Fonseca: Several of us worked together to define the goals of the program. When I joined we actually created a cross-functional senior leadership team. A subset of us in the senior management team worked together on the scope and the definition, and that included the head of operations, the head of strategy, me, our CFO and, of course, the CEO.

Then we discussed it with the entire senior management team and got their feedback, so it was really all the members of the senior management team. The chief medical officer and heads of clinical franchises also participated. Once we had that strategy and that scope defined and we had it documented, we then took that to the board and got the green light to proceed.

CIO.com: How did that evolve into specific projects and specific undertakings? How did you go from the three broad goals of that business transformation to the specific things that you’re undertaking today? I think people really want to understand that process.

Fonseca: Again, having done transformation work before, we set the expectation that this is not a one-year kind of thing. This is a multiyear effort we’re driving. Once we got the green light, we organized this program into four work streams with a senior work stream leader. Within each of those work streams, we then defined specific initiatives and we have a core, cross-functional team. This involves operations, IT, and regional groups.

We have roadmaps laid out with specific activities and specific team members and roles. We set up a steering group that meets every month and then we provide quarterly, detailed updates to our senior management team. We also provide regular updates to our board. We put in place a well-organized governance structure because this impacts all sites in our operation. We have clear work stream leaders – we have an operations work stream leader, a business work stream leader as well as an IT work stream leader and they work together to define the specific project plans. We also have resources that are dedicated to support the effort.

It’s very important to have the governance in place. It’s very important to define the work streams so that the specific projects fall into the work streams. It’s critical to have dedicated resources. We do resource planning and allocation and we review all of the team members and what they’re spending their time on. We’re staying on track with our milestones, which are defined down to the task level. Requirements, work plans, tasks are defined down to the individuals and then we roll all that up to show how we’re performing in achieving the milestones across all the work streams.

We also have, very importantly, a change management group with some pretty experienced change management experts. Some of those came from the outside as well as some people from inside the company. Then we have a number of black belts and green belts that are supporting the effort and you can imagine a good chunk of activity going on around this. Again, it really came to structuring it very well with a clear strategy, a clear plan, and governance, and then dedicating the resources is also part of what I feel contributes to success.

CIO.com: What does it mean that you are the ‘champion’ of this business transformation? Is that a specific role? What does that entail?

Fonseca: There are two of us who are the executive sponsors of this transformation — the head of operations and me. What that means is that both of us are accountable for making sure the program is delivering. We are responsible for making sure that we meet those deliverables and we deliver on the goals and the results that we set out and that we presented and agreed to as the senior management team.

CIO.com: I want to talk about the big data aspect of this in creating products and services for the customer base. How did the ideas for those products and services develop once you knew that was a high-level goal? Can you walk me through the process by which you actually came out with the partnerships and the products that represented the fruition of that goal?

Fonseca: I’ve done this before in terms of launching data services and big data products and solutions. When I joined, one of the first things we did was stand up a product management organization and we complemented the team here with some specific skillsets that we needed to beef up. We brought in a couple of really strong big data experts and people who had done some of these things before. We created a technical product management group and they started to spend time with our CEO and with our customers to understand [their needs]. We spent time with our commercial team and our field services team and we started to really define the areas are that we’re hearing more and more about.

We got a really good sense of what customers are looking for. We reviewed that with our steering committee and our senior management team. Here are the data services and here’s how we propose prioritizing what we go to market with first. That was a conversation together with our marketing team, together with our senior management team, but our technical product management team actually put forward the different needs that we picked up based on the conversations. We captured that input from the market and from our sales team. It’s important because you want to hear what they’re bumping into.

Then, as we spent more time with customers, we started to get more insight into the kinds of services that would really make their lives easier, that would help them with advancing patient care, that would really help them to navigate how the market is shifting. We’re moving towards value-based care. How do we help them cope with that? We brought that back and that’s how we defined the offerings.

The next decision point was how do we build ourselves up and are there services where it makes sense to partner? To your question, for example, we partner with Inovalon on an offering that we launched late last year where we combined our datasets. We have a very large dataset around laboratory and laboratory medicine.

Inovalon has a large dataset around medications and claims. When you bring that together, the insights we can provide are much more comprehensive. In that particular case, we made the decision to launch Data Diagnostics, a point-of-care analytics technology that uses that data. The technology identifies gaps in care that help the physician to stratify and profile the risk of a patient, that provide on-demand insights at the point of care, not just from the lab perspective but combining the lab, medications and claim data. Those are much more powerful insights and really cover a more extensive record of the patient.

That’s the process that we went through. It was first doing the market research, talking to our field, defining which needs are unmet or can be improved with offerings. Then we asked, which ones do we develop ourselves? I like to move fast so we took parallel tracks where there are some offerings we developed ourselves and some that will better serve the industry if we can work with a partner like Inovalon.

CIO.com: How are you structuring your team to support those different goals, everything from the new products and services, data analytics, operational excellence to improving the customer experience?

Fonseca: One of the things that we put in place fairly early on when I joined is our demand management process where we prioritize. This is a cross-functional group of colleagues from operations, medical, finance, and commercial. We prioritize our investments and our activities. I believe any IT portfolio has three components to it. One is what I call taking care of business now. We have a new customer that we’ve just won, we’ve got to turn them on, we’ve got to set them up with connectivity. That’s more immediate and there’s always going to be a part of our time and effort that goes to that because that is supporting the business in the here and now.

Then you’ve got the second bucket of activities which are enhancements that make the business better. It could be giving our finance team better tools for planning and forecasting. It could be giving our commercial team better tools to manage their opportunities with clients, as well as improvements in our laboratories, our patient service centers, or operations in general. We will allocate a percentage of our time and our effort towards that. Then we have the transformation program. At any given time, you should always have activities across all three.

Interestingly enough, as you clean up your activities and you get more robust, you start to shift more of the resources towards innovation and enhancements. When I first joined we spent more time on the stabilization of that first piece, taking care of business now. Then over time, as we get better and realign our activities and drive automation, we have actually seen some more of our time go towards enhancements and transformation. Transformation definitely needs to be part of our portfolio because you’ve got to continue to reinvent yourself as a company, making sure that we’re delivering new capabilities and we’re really meeting [customer] demands, especially in such a changing environment.

CIO.com: You described conversations with the end customer, whether that’s a clinic or a doctor’s office or one of the big providers or you’re talking to your own sales team and your own market-facing employees about defining products. How are you structured within IT to have those conversations? That’s a tough thing for many IT organizations.

Fonseca: We have a couple of frontline groups. We have the product management team, which is constantly looking at the market and their products. They work very closely with our marketing team. Some of them are focused on the analytics products. Others are focused on our lab solutions. Others are focused on our billing solutions. Others are focused on our patient-facing solutions. Those product managers, they’re really looking at what’s happening in the market, bringing that in and they’re working closely with our marketing and our sales team.

Then they evolve their solutions; the products that they manage. These are team members that in my mind can work interrupted because their job is to always be looking at what’s happening inside and outside the company. It’s really product management/product development. They are experts in their product and product family in those areas.

CIO.com: I’m sorry to interrupt, but I just want to make sure. The people you just described, they report to you?

Fonseca: Yes. They are part of my organization. They’re technical product managers that manage a specific product or a specific product segment. For example, one of my product managers focuses on patient-facing solutions. He owns the different offerings that we offer directly to patients and consumers.

CIO.com: That makes sense. Thanks for explaining that.

Fonseca: Then we also have a business relationship management team with clients inside the company. The business relationship manager – for example, the person that looks after our operations team – their job is to ensure that they attend operations meetings and understand the goals for operations and their areas of focus. They also handle escalations or when operations has a concern or they need some help on something. These different relationship managers, they’re more on the inside and they take care of our internal clients. They’re the ones who help our internal clients when they have a new demand or a new project. They help them navigate the demand management process.

Once a project is approved and funded or we agree that these are the enhancements or the new features we’re going to add to a product, then it goes into what I call our excellence centers. That’s where we have our development, our testing and validation areas. That’s where the work gets done. That happens in our centers of excellence but only after the project has been approved, the requirements have been agreed to, the funding has been approved and it’s ready for us to go ahead and engage and get the project done.

CIO.com: Putting technology aside for the moment, what have you had to do from a cultural or political perspective within your own group as well as the company at large, to succeed with these business transformation initiatives?

Fonseca: I would say one key was making sure we have cross-functional involvement in ownership for prioritization of IT investments in projects. To me, that’s always a key component, you get people’s buy-in because we’re making decisions at an enterprise level. Whether we decide to work on this new product or business feature or we want to implement a different technology for Areas A, B and C, it’s important that we as a senior leadership team really take the time to say these are the right areas and, by the way, they should align to the company’s strategies.

If we do that right from a demand management process, then we prioritize our initiatives and our investment so that we really get the most return from a timing perspective. You know how it goes. There are a ton of great ideas. We can come up with them all day and all the time. The question is what do you sequence and how do you prioritize them so that we really are fueling not just the current goals of the business but positioning ourselves for growth in the midterm? We’re going to invest in this because we have the expectation that this is a new market opportunity. Having that demand management process with cross-functional involvement and prioritization of those investments – it’s an important piece that we implemented when I joined. That has been a great forum so that it’s not IT making the decision. It’s us as a leadership team making the decisions as to what we spend our time on and what we invest in when it comes to technology and data.

The other thing I would say is we needed a better way to talk about how insights are becoming more a part of the conversation as we’re shifting to value-based care. We needed a new way to talk to our clients about the fact that Quest is more than a lab and that we really can be their technology and data partner of choice. That was another area where a cross-functional team came up with a specific brand for our technology and data offerings that helps us to present to our customers – not just the offerings that we have already but also the new offerings that we’re launching into the market.

We came up with this idea of Quest Quanum™ JG NOTE: Quanum is accurate, which is our branded set of healthcare information technology solutions. That helped us to facilitate the conversations that all of us at the senior level, as well as the commercial team, are having these days. We’re not talking just about laboratory testing anymore. Now we speak about population health as we have population health solutions to identify and close gaps in care. We have better diagnostics, as I mentioned earlier. We have utilization insights that help hospitals benchmark and manage utilization, as well as benchmark their providers. Those are two examples where we had to galvanize as an organization to be more effective, especially in talking about technology to the market.

CIO.com: What’s your advice for CIOs on how they really can play a much bigger role here and lead these initiatives?

Fonseca: Just to give you a perspective, I spend about 30-40 percent of my time with customers, external customers. I always make a clear distinction that at the end of the day we’re all in sales. Our goal is to really advance the company and to ensure that we are focusing on how we grow the business, how we ensure that we retain and grow customers. The CIO role, because we’re involved across the enterprise, is a great vantage point to understand our business end-to-end. Because we work with everyone inside the company, we have a vantage point which is pretty comprehensive.

So, I think I would say number one, make sure you really understand the business end-to-end and get comfortable participating and really sharing your opinion. I believe CIOs have an opinion about the business, have an opinion about what we should do differently, better, smarter. Just feeling comfortable to be able to converse from a business perspective is something that I would always encourage colleagues to do. Spend time with customers. More and more, technology is an enabler in just about any industry. Spending time with customers will validate that the solutions we’re developing are going to hit the mark. Plus, it keeps us current in understanding customers, what’s top of mind for them, what is important.

The third component is to run IT as a business because at the end of the day the investments that we make should be supporting the company’s goals. I don’t believe in just being aligned with the business. I think we need to be in the business to really be effective and really enable the goals. That’s an important piece.

And I would say raise your hand as the CIO for those opportunities because any company has at least some sort of transformation, or should have, as part of its portfolio. I encourage CIOs to raise your hand and say: I want to participate and I want to help. I want to drive and contribute to that transformation. Get in the business, understand that all of us are in sales at the end of the day. Think more broadly about [whether] what we’re doing, the activities we’re working on, are they really furthering those [business] goals? Create a strategy and a portfolio that is very aligned to that. Feel comfortable talking about the business and what we do. How do we win our customers? How do we retain our customers? To me, that’s how to be the most effective that you can be.

CIO.com: What were your takeaways from your own big data initiative? What are the lessons you’ve learned through that project that you would share?

Fonseca: Make sure that the scale and the size of what you do not only can support what you’re doing today, but it can support future growth. One of the lessons I’ve learned is that once you make those insights on the data available there’s an appetite for more views. So make sure it’s sized and organized and structured appropriately. The second thing I would say is make sure that you have the right skillsets, which are really a number of different roles. You’re going to have data scientists and people that really dive into the data more on the qualitative, “what-does-it-mean” side, as well as creating new views. Then you have people more on the technical side in terms of how you structure data, how you tag the information, understanding how we visualize it and what are the tools that we want to apply to that.

Another big lesson is to always remember that data must become applied data. It’s not enough to just put it in a data warehouse. I call data marts and data warehouses, data cemeteries. What’s going to enable you to leverage it? Always remember that it’s really about applied data. Start visualizing. We have all these great datasets. What is it that we want to apply it to and how is this going to make a difference to the client?

You can get a little bit lost in the data itself. But always bear in mind that you must turn it into something that’s valuable and that people can use to drive proficiency and to improve their operation. Or use it to, in our case, provide better insights so that they make the right decisions about that patient’s care. Really start thinking about those scenarios. Not just the data on its own but what you can do with it.

CIO.com: What’s ahead for you in this business transformation initiative?

Fonseca: This is a multiyear program so we need to stay the course. It’s an important message because when a program is going to be three or four years long it’s very important that you keep it relevant and you stay the course. I don’t want to underestimate that. We still have a number of things to do. Aside from that, the consumer, in my mind, is playing more of an active role in healthcare decisions as more of the responsibility is shifting to them. With the high- deductible health plans out there, they’re becoming more engaged and involved in managing their health. We see some pretty interesting developments on the consumer side and we have a number of new offerings in the pipe that we’re working on that really support and enable the consumer. Our industry is becoming more consumer-driven and consumer-oriented which is exciting because we see it as a great opportunity. That’s one thing that’s ahead for us.

Secondly, we started to position ourselves very clearly as being more than a lab. We’re going to continue down that path with all these different offerings like Data Diagnostics, population health, and utilization insights, and Interactive Insights, which is a graphic-rich lab reporting view, that we’ve launched for providers. Those solidify that we are an insights company as well as a laboratory and medicine company and so really bringing to light the whole unifying brand idea for Quest of action from insight. We’re early on in that process and we want to continue to grow that further. There will be more analytics and other insights offerings that you can expect from us.  

Expect to see more from us in terms of leveraging our vast network. We have a whole set of mobile nurses and phlebotomists, so we see some opportunities there, especially as healthcare is becoming more mobile and the place of healthcare is evolving so that healthcare services are not just provided in a doctor’s office. You probably saw a recent announcement from us about a relationship with Safeway, which provides an additional channel for us to serve consumers. How do we leverage all these mobile resources that we have? We have this whole set of services like Blueprint for Wellness that we offer to employers to provide diagnostic services to facilitate better employee health. We see more coming in that space as well, as employers are looking for additional services and as the whole industry shifts from treating the sick to keeping people well.

CIO.com: How do you see your own role evolving within Quest as this business transformation continues and evolves?

Fonseca: My passion, as I said, is for transformation so I’m having a blast. We have an opportunity to really transform the way that we work in all aspects of the business. The great thing here is that I have the support from my boss, the CEO. We have tremendous support across the company – from the field, from the salespeople all the way up to the board. We have work to do here. Transformations don’t happen overnight and 2015 was year one.

We’re now halfway through year two of the transformation. I like to finish things and I like to make sure that we deliver on the goals that we set out. That, for sure, is in my future for the next two to three years, to really focus on this transformation and see it through to completion. I serve on the board of a public company {Ed. Note: Gannett Co.} and because that company is much more on the consumer side, I’ve been able to bring to Quest what I’m learning in that role. I expect that I’ll be able to do more of that, especially as we are more and more focused on consumers and their role in our own industry.

I will continue to be involved in innovation and coming up with new business models and new offerings. I get opportunities to be involved in things that you don’t typically expect the CIO to be involved with. In the last two years I’ve been pulled into some pretty interesting projects that are not in “CIO-Kansas” anymore, so to speak. That’s been really great and I expect that will continue. We’ll see over time whether I want to again consider moving more onto the business side. We are growing the analytics business and I’m very involved with that. We’ll see where that goes. But right now, for the next two or three years we have our work cut out and I want to see it through.