Just like hothouse yoga, domestic vacations and $2 bottles of cabernet (from Charles Shaw vineyards in California, affectionately called “two-buck Chuck”), partnering is all the rage.
Looking past the hype, however, it’s easy to understand why partnering is a trend that deserves its favorable press. “Everybody’s looking for growth and cost savings,” says Larraine Segil, cofounder and partner of The Lared Group, which specializes in strategic alliances. “When doing the two things simultaneously, partnering is an excellent vehicle.” It’s also a resourceful vehicle—by going it alone, many companies miss out on the synergies that partnerships can generate. For example, they can help organizations gain expertise in areas that aren’t their core competencies, help large companies gain the entrepreneurial skills offered by a startup, and allow a startup to expand its distribution or gain the marketing power of the larger partner. On a global scale, partnering is often a necessity to break into new markets.
However, few companies attempt or successfully manage partnerships. Segil cites research from the California Institute of Technology, where she teaches an executive education alliance program, that shows an eye-opening 60 percent of companies fail in their partnerships. So yes, alliances are good, but they’re awfully hard to do (for more on why, see “Building Alliances That Stick,” this page).
Some of our Resourceful 100 honorees have gathered the right mix of ingredients to cook up successful partnerships. Kutztown University of Pennsylvania is one of 14 schools in the state system that has implemented a shared ERP system; the CIO of the Virginia Department of Corrections participates in a tight, informal network of CIOs from the state’s public safety agencies; and the University of Pittsburgh Medical Center (UPMC) hosts risk management software for the Port Authority of Allegheny County (Pennsylvania), a benefit for both organizations. At a time when cash-strapped CIOs are forced to do more with less, these winners are partnering to leverage scarce resources and save money.
Finding Common Ground
An alliance between a university and a county port authority seems, at first glance, to be a rather odd pairing. In the case of the Port Authority of Allegheny County, which encompasses the greater Pittsburgh area, and Carnegie Mellon University (CMU), a phone dialogue system brought the two together.
The Language Technologies Institute at CMU received a $650,000 grant from the National Science Foundation Universal Access Foundation to study the use of phone dialogue systems by elderly and nonnative speakers. The university’s goal is to build a system that recognizes the requests from those callers and can automatically provide scheduling information to them. The Institute contacted the Port Authority, which was a ready source of data because many of its callers are from those populations. The Port Authority records calls from customers asking for scheduling information, then sends the recordings as wave files to CMU, where they’re analyzed. In return, CMU is building a customer information system for the Port Authority that will improve its service to the elderly and nonnative speakers (many of whom don’t own computers and therefore can’t access scheduling information online, says Port Authority CTO Maureen Bertocci) and will be available 24/7—a huge improvement since workers currently staff the phones six days a week and not at night.
The Port Authority also, coincidentally, partners with another CIO 100 honoree (and academic institution), the University of Pittsburgh Medical Center. The Port Authority, which manually processed claims, started to look at software to automate the process. UPMC stepped forward and offered to host risk management software for the Port Authority. It’s a win-win, says Dominic Talotta, director of support services and systems development at the Port Authority. “They host and are responsible for the software and upgrades and do it at a much cheaper rate than we ever could have done,” he says. UPMC CIO Dan S. Drawbaugh says, “We benefit because there is revenue that comes in to support our existing system.” A service-level agreement (SLA) covers areas such as support services and upgrades.
According to Bertocci, maintaining the partnership has been a breeze, with no challenges. The key, she says, “is the absolute trust factor that you’re both working toward a goal that benefits both of you.”
In the late 1990s, the Pennsylvania State System of Higher Education faced a problem—individual schools were coming to the System’s Board of Governors asking for money to improve their administrative IT systems. Kutztown University, in fact, was ready to go out on its own to purchase an ERP system. After looking at three models—each using a standalone system, all sharing a common application that is implemented individually, or all sharing a common, single system—the board of governors chose the last option.
At that point, the board knew that a partnership among the schools—which compete in terms of faculty and students—would be critical to the success of the venture. First, a committee of roughly 100 people, representing the IT and finance functions, was formed to look at various products. Eventually, it chose an SAP system, which included Unisys as an implementation partner. A central group known as Sytec (System Technology Consortium) was formed to coordinate the planning and implementation process. Each campus loaned executives to participate in the centralized group, which was critical to getting buy-in from the institutions. University presidents compose the executive board; CIOs meet monthly to discuss operational matters.
The universities formalized the agreement (at a cost of $100 million over 10 years) and decided to phase in the 14 universities, as well as the various SAP modules, over time. Each functional module has an advisory council, made up of representatives from the campuses, that makes decisions regarding functionality and standards; each campus has an implementation team for each module headed by a local senior business executive. For example, at Kutztown University, the associate vice president for finance and administration leads the finance module implementation team. “That was a critical decision in order to ensure that the entire university recognizes that this is not perceived as an IT-owned project, but rather a project being spearheaded by the functional area,” says Richard S. Zera, vice president of information technology of Kutztown.
In terms of cost-sharing, capital and operating costs are allocated to the universities on a prorated basis, based on the size of the institution.
A number of factors contribute to the success of the partnership. “The primary key to this was we had a board mandate and systemwide vision and sense of direction,” says Khalil Yazdi, CEO of Sytec and IT vice chancellor for the Pennsylvania State System of Higher Education. “When you have individual entities trying to work together, they tend to want to be more autonomous. The board held its ground; [there was] sponsorship and leadership from the top.” They also built in flexibility so that the schools weren’t straitjacketed by centralized decisions.
Forming the partnership hasn’t been obstacle-free. Zera notes that many of the discussions that led to agreements between the state system and the campuses were tense and difficult, as would be expected when 14 partners (and the state system) need to work out a bevy of issues. For example, the project required that all universities agree on a common calendar (semester start and end dates) and on a single financial chart of accounts. He also points out that because all the schools are at different points in the technology evolution, they had to make sure there was some consistency among desktops in terms of having reasonably current operating systems and standard versions of browsers. Yazdi adds that the project leaders also worked very hard to develop trust and deliver on the vision. “To get partnerships to work, you have to create a vision that’s appealing and satisfies the needs of all,” he says. “The vision has to be trustworthy, you have to have buy-in, and people need to think it’s achievable.”
In the cases of the Port Authority of Allegheny County, the University of Pittsburgh Medical Center and the Pennsylvania schools’ ERP initiative, technology was the dog wagging the partnership tail. For the public safety CIOs of Virginia, the tail wagged the pooch—they began binding as a group first, then used their newly found friendships to collaborate on technology projects.
The impetus for the alliance came from John Marshall, the secretary of public safety, who heads a secretariat made up of 10 agencies and seven CIOs. Marshall asked Twyla Garrett (former secretariat IT program manager and now president of Investment Management Enterprise, a technology consultancy) to pull together the agency CIOs to discuss the $800 million in IT projects that were budgeted for public safety two years ago. He also wanted to find out how they could leverage their resources. That was a progressive move—government traditionally has been a bastion of independent agency silos with little inclination to collaborate. Virginia’s public safety agencies, up to that point, were no different. “We didn’t know each other at first,” says Dee Pisciella, CIO of the Virginia Department of Corrections, the state’s largest agency. “Everybody was running projects differently,” says Garrett.
The group began meeting every couple of weeks and currently meets monthly. One of its first efforts was bringing people from the agencies together for a 21-day project management academy to develop consistency in managing projects. Another was standardizing information-sharing across the agencies. Consolidation efforts included having the Department of Fire Programs and the Department of Correctional Education share server space. To deal with budget cuts, CIOs now use each other to independently verify agency projects instead of hiring outside consultants. In another cost-savings effort, the Department of Corrections developed an application for mandated IT security training for the 13,000 Department of Corrections employees by utilizing in-house resources. Hiring an outside consultant could have cost $40,000 to set up the system and approximately $3 per person annually to use it. The code from that security training was then offered for free to all public safety agencies for their mandated training.
For Pisciella, communication and trust have been critical to the partnership’s success. “A lot of people in other agencies come and ask us how we do it,” she says. Pisciella tells them they first must establish relationships, then set rules and guidelines up front by communicating openly and being critical when necessary. Setting up ground rules and meeting with each other is the best way to overcome trust issues, she says. The CIOs do have memorandums of understanding and SLAs when they share resources, but the effectiveness of the group is really based on the informal network they’ve developed; why spend money on a consultant when you can pick up the phone and call a peer for free advice?
Pisciella also advises other government leaders to look for opportunities to consolidate resources. And even though you may be used to running your own shop, a better solution may be running your shop out of another agency. “You have to leave your ego at the door and reinvent the way government does business,” she says.
A little initiative doesn’t hurt either. “They didn’t make us do it,” says Pat Wilson, CIO of the Department of Correctional Education, referring to the CIO group. “We thought it was a good idea.”