You’ve Outsourced the Context and Kept the Core. Now What?

Most CIOs would like to transform their IT organization from “order takers” to “order shapers.”  They recognize that if they don’t break the “operations vs. strategy” paradox, they will never get out of the weeds and reach the promised-land: an IT organization that is consultative, high value and functions as a true business partner to IT’s stakeholders.

Kathy Kountze-Tatum, CIO of Northeast Utilities, is one of those CIOs. In 2012, she was CIO of NSTAR, a large gas and electric utility in New England that merged with Northeast Utilities, a move that nearly doubled the size of the company.  Now, she is CIO of the new $7B company, and she is ready to transform IT.

Kountze-Tatum has recently completed two major steps toward that transformation: she’s outsourced a huge number of the “non-core,” operational functions that had previously been performed by her team. And she has restructured her new 200 person organization, placing her IT team into much more strategic roles.

While implementing a new sourcing model and designing a strategic organization are Herculean efforts to be sure, they are only the beginning. “We’d been so thoroughly heads down and transitioning to our new organization model, we haven’t talked enough about what to do to help transform the company going forward,” says Kountze-Tatum. “Our new IT organization is positioned to be highly strategic.  But positioning an organization to be strategic and actually being strategic are two different things.  Our whole business case for outsourcing was so that the people we’ve retained will be strategic and solution oriented.  We’ve said it, we’ve written it, and we have the buy-in and support; now we have to do it.”

When I caught up with Kountze-Tatum a few weeks ago, she was just getting ready for a two-day meeting with some members of her brand new IT organization to assess their readiness for their new strategic role. Since changing a traditionally operationally oriented IT team into a strategic one is so important to all CIOs, I asked Kountze-Tatum about her approach to the meeting.

Day One

During Day One of the two day meeting, Kountze-Tatum plans to have some of her newly positioned functional leaders and members of their team report on many of the strategies for their area. “Now that we’ve outsourced the day-to-day support of our infrastructure, I need our infrastructure leader to talk to me about what we should focus on in that area going forward,” she says. “What are our priorities? We have the support structure in place to get to a better place, but what is our strategy and plans to make that happen?  I’m trying to find out if they are all in the same mode about going forward and if they truly understand that we are a new organization that needs to think and operate differently.”

One example of a large project that the IT team is standing up with the business is a new integrated HR solution, and they are going with Workday.  “Now that we are going with more modern SaaS solutions, my team needs to thinking about how we operate differently with our business partners, our vendors as well as internally within the IT department.” says Kountze-Tatum. “My team is moving from supporting a legacy environment and marching toward using a modernized approach. What kind of IT professionals do we need to be now and in the future to be successful at supporting a modern IT environment?  Our role in the company should be shifting from being an organization that delivers technology solutions to a group that is critical to delivering value-add business solutions.”

During the team’s review of their future plans in each area, Kountze-Tatum will be listening for a new perspective on IT’s role. “Even though we are still responsible for the technical piece, I want my team to think about the fact these solutions are based on operating model changes, not just technical requirements,” she says. “Are they thinking about what’s changing in HR as we support the new SaaS solution?  Are they taking Customer Care’s short and long term vision into consideration as we rethink our web environment?  We need to have our own understanding of how our solutions tie directly to the business layer, so that we can have the right kind of dialogue with our business partners.”

Day Two

The second meeting day will be all about staffing. “We have this new organizational model in place so that we can be consulting partners to our business partners,” says Kountze-Tatum. “Are we staffed right? Do we have the right roles performing the right duties?   I’ve found that people are struggling with understanding exactly what architects should be doing now. Should they be focusing solely on building roadmaps or should they be doing more collaborative work with our business analysts…or both?”

Changing any IT organization from technical specialists to process change consultants is tough because the new role requires so much balance.  You do not want them to be order takers, where they don’t participate and help drive the discussions and decisions to address business needs, and they limit their contribution to implementing technology chosen by others. But you also don’t want them to go too far and make all of the technology decisions themselves.

“We’ve had experiences where our business partners say ‘IT made that decision,’ when things go wrong,” says Kountze-Tatum.  “I’ve got to get my team to recognize the balancing act that it takes to be consultative. The technical lead needs to ask HR, ‘How do you want to employees to use self-service?  How do you want to pay people?’ And they need to realize that it is okay to recommend that the company reach outside the organization for advice on best practices to answer questions like these.”

But even though they’ve engaged in the business operational discussions, IT still needs a business sponsor on these projects 100 percent. Sometimes, I have to pull my people back and say: ‘Ask the right questions, listen, and add your perspective, but the ultimate decisions about the business operating model is not yours.’”

Kountze-Tatum’s plans for running the meeting:

1. No podiums. “I’m trying to keep things a little less formal,” says Kountze-Tatum.  “If I ask my team to get behind a podium and give a formal report, they will feel like they’re being reviewed.  I’d much rather we will sit at a round table, and have an interactive dialogue.”
2. No project updates. “We will not talk directly about projects during this meeting,” says Kountze-Tatum. “We will reference them, but only as a means toward talking about the operating context. For example, when we talk about SaaS solutions, we will talk less about the technology and more about how cloud solutions will improve the customer experience and IT delivery services.  When I ask,’ how does this technology solution support our Customer Care organization?’ if I get silence, then I know that I have more work to do to get us to operate at a strategic level.  If they’ve researched technology solutions by just reading technical whitepapers but they haven’t fully considered the business needs, we are not there yet.”
3. Action items.  “Sometimes when you meet with vendors, they have this long list of all of the innovative things they can do for you, but we really can’t do any of them because they don’t fit with our business goals or will take years before they deliver any business value.  We don’t want to fall into that trap in this meeting,” Kountze-Tatum says. “We want to establish some action items that are reasonable and actionable in the short term.  For example, one goal we might set is to have a multi-year enterprise collaboration solution that delivers short term business value for our customers as we build towards the long term strategy.”
4. Put the right people together:    While many of the players are the same the Northeast Utilities IT organization is brand new.  “We need our technical design people to collaborate really well with our support teams,” says Kountze-Tatum. “But some of them don’t interact with each other very often, if at all.  This is another opportunity for the IT folks to meet face-to-face and collaborate with each other.  The opportunities to do that don’t come along very often so any time we can all sit in a room together, even for a short period of time, helps to strengthen the department.”

Transforming an IT organization into a strategic, consultative partner is probably the toughest thing a CIO will do.  “We just came out of a very complicated transition and we need make time to focus on issues besides day to day,” says Kountze-Tatum.  “This meeting is an opportunity to do some forward thinking about how to achieve our ultimate goal: To walk beside our business partners – not behind them or in front of them and show the value that strong IT professionals can bring to an organization.”

 About Kathy Kountze-Tatum and Northeast Utilities

Kathy has held her current position at Northeast Utilities since April, 2012 and is a member of the executive team. Kathy provides the organization with the vision and leadership to assure the timely, innovative and cost-effective use of technology to achieve corporate objectives and improve productivity and effectiveness in serving customers in a constantly changing regulated utility marketplace.

As CIO Kathy is required to collaborate with the executive team and establish the short and long term technology strategies to support the company’s business strategies. She is responsible for setting the strategic direction for information technology for the organization in all areas including, IT security and risk mitigation, IT project management and process improvement, enterprise application selection, implementation and support, information management, IT infrastructure and operations, IT compliance, disaster recovery and IT outsourcing.

 Prior to her current position at Northeast Utilities, Kathy was the CIO for NSTAR Electric & Gas Company, an operating company of Northeast Utilities, and worked for eight years at United Illuminating a regulated electric public utility based in New Haven CT. in various technology leadership roles serving over two years as CIO.

 Northeast Utilities operates New England’s largest utility system serving more than 3.6 million electric and natural gas customers in Connecticut, Massachusetts and New Hampshire. NU is dedicated to this region, as well as the people, energy and technology so vital to its security, stability and economic strength.