CVS IT Chief on the Remedy for Business-IT Alignment

CVS Caremark has no technology projects, says CIO Stuart McGuigan, just business projects. In this Q&A, he outlines the retail chain's strategy for keeping the IT and business relationship healthy -- and successful.

Stuart McGuigan will patiently talk with you about business-IT alignment, though he doesn't seem enthralled by the topic. To the CIO of CVS Caremark, one of the largest retail and pharmacy chains in the U.S. with 60,000 pharmacies, the conversation almost seems like it's "been there, done that."

CVS CIO Stuart McGuigan
CVS Caremark CIO Stuart McGuigan

Sure, the 51-year-old is aware of the infamous business-technology alignment issue that continues to plague so many of his contemporaries. And he's witnessed the sometimes disastrous results that such a disconnect can deliver. However, at the $99 billion CVS Caremark, it's simply not an issue, McGuigan says.

That type of IT governance awareness comes from the top, he says, and is ingrained into every technology-related discussion. "It's about recognizing that there's no such thing as technology projects," McGuigan says. "They are all business projects with technology components."

He took over the CVS Caremark IT reins in December 2008, having worked chiefly in the insurance industry before that. While McGuigan concedes that his predecessors laid a solid foundation for him—especially in terms of fostering IT governance practices—he's continuing to roll out new systems and technologies that improve business efficiency and give the company a competitive advantage.

CVS Caremark's IT efforts haven't gone unnoticed—especially by those financial analysts on Wall Street. In a January 2010 report, Citi's influential retail analyst Deborah Weinswig proclaimed that "CVS is the clear technology leader" within the retail sector, besting even Wal-Mart's efforts. Weinswig notes that "while CVS is ahead of the retail industry in terms of technology, the company continues to implement new systems to improve efficiency in its stores and at the pharmacy." (For more, see Retail Tech: Whose IT Is Tops, Who Needs to Restock.) Senior Editor recently spoke with McGuigan about the strengths of the company's Rx Connect implementation, why business execs should "unlearn their expectations" about technology projects, and how he keeps his IT staffers focused on the business needs first. What are CVS Caremark's core business strategies and then what are the key IT systems and strategies that support the overall CVS Caremark strategies?

Stuart McGuigan: Technology starts with really good business thinking. And if you look at core strategy here, you'll find a common theme which is a focus on customer experience and customer services. I've worked in a number of different industries—some very service- and measurement-focused, and some more product-focused. CVS Caremark is really at the extreme end of service-focused and measurement. And when you measure the effectiveness of key business operations that provide service to our customers, then it's that much easier to figure out where technology can provide the next advantages, opportunities and next set of improvements. Where does IT fit into all that?

McGuigan: It really starts out with a conversation about our go-to-market strategy, which is to provide excellent client service for our PBMs [pharmacy benefit managers] and excellent patient service for both retail and PBMs.

The way CVS Caremark is organized and the way the governance works is that the CIO is really a business role where the focus is the business person who happens to be running IT. As opposed to the technologist who happens to be sitting on a business committee. In my first meeting on the BPC [business planning council], our CEO Tom Ryan said, and I remember this very clearly: Welcome and we expect you to contribute to the dialogue here and not just on technology questions.

So it's not just encouraged, but our CEO insists that business, technology and operations all participate in that. And it is that mix, which is focused on key business strategies, that produces excellent operations and technology. You can't do them separately.

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