State of the CIO 2003 Best Practive #4: Organize an IT Steering Group

Jack Cranmer, CIO with the Scottsdale, Ariz., branch of the Mayo Clinic, hates being the guy who says no. So the clinic’s IS steering group does it for him.

Every manager or physician with an idea naturally thinks it would benefit the organization and should go on the to-do list. “If I had to interact with each proponent [of a project] and say, IT doesn’t think your idea is worth what someone else’s is, I would be miserable and so would my staff,” says Cranmer. Instead, four board members?physicians and administrative executives?meet biweekly with the heads of major departments within the clinic and hospital to set IT investment priorities. Every proposal?whether it’s for a brand-new system, an upgrade or maintenance?needs the steering committee’s stamp of approval before it gets funding. And no project gets on the steering committee’s agenda unless it’s presented with a well-developed business case.

When a committee of top executives makes technology investment decisions, “there’s a lot more clarity” about the contribution IT makes to the organization, says Centex Homes’ Irsch. “I think it allows our IT organization to focus on more effective execution and less on having to sell things to the business.”

That’s why 56 percent of best practices CIOs in “The State of the CIO 2003” survey said this practice makes CIOs highly effective in their jobs. Those who get the most out of their steering committees follow a few basic rules.

Get Strategic

CIOs who want to form steering committees or improve their existing committees’ decision-making processes should start by making sure their CEOs agree that IT has strategic importance to their companies. “You need to explain to [CEOs] that if they are going to be spending millions of dollars on technology, you need some type of structure that can help them sort through the priorities,” says Cranmer. Once that principle is accepted, the next step is to give the company’s top managers a say in how the technology budget is spent.

IT steering committees have become more widespread in the business world as the importance of IT has grown. David Buchanan, director of information technology at Forsythe Technology, a Skokie, Ill.-based provider of technology management services, says his company set up an IT steering committee on the heels of a 2000 change in the reporting relationship for the CIO?from the CFO to the CEO. “[The CEO] wanted to make sure he had the right data to make decisions” about technology, says Buchanan, who joined the company two years later. A steering committee was the obvious way to align IT investments with business strategy.

Tap Top Decision-Makers

Some organizations such as Centex Homes involve only members of the executive committee in IT decision making; others, like the Mayo Clinic, include business unit heads. Buchanan offers this rule of thumb: Keep the group small enough to be able to make decisions, but make sure important business interests are accounted for.

When key managers participate in an IT investment decision, the outcome is a prioritized project list, along with resources to back it up. “I would have the head of our services group saying he needs project accounting today, and sales saying we need a CRM system,” says Buchanan. “They’re both valid requests. How do I prioritize those?” Forsythe’s high-level group, which also includes the company president, CFO, CIO, chief accounting officer and the heads of two business units, decides which projects should move quickest. For example, the purchasing department might have a system that’s working well enough to put off an upgrade, but the project accounting system has to be fixed right away to accommodate plans to take on more clients.

Meet Frequently

At the Mayo Clinic, a subgroup of the technology steering committee called the IT Application Prioritization Review meets twice a month to go over new proposals, passing on to the full committee those ideas that members think should go forward. Frequent meetings ensure that IT spending stays aligned with business strategy by providing a means for project proponents to get feedback.

Buchanan says that any time his steering committee rejects a proposal he thinks has merit, he can refine his argument and pitch it again in a month. To win approval for a recent upgrade to Forsythe’s human resources management system, Buchanan used the time between meetings to talk up the project in one-on-one conversations with steering committee members, then brought the HR director to the full group to help make the case. The two of them presented the argument that the existing system couldn’t support the additional users that would be accessing it as the company hired new people to advance its growth strategy. Buchanan’s case carried the day.

Establish Clear Standards and Steps for Project Approval

At Centex Homes, Irsch has built senior management approval into his development methodology for major projects. He starts with ideas generated within the company’s business units and uses teams of IT and business process experts to analyze corporatewide system requirements and design a prototype. In the design phase, Irsch spells out the business value for the project and investigates whether it can be scaled up for use by the entire enterprise. The company, which builds residential homes, has 55 operating units spread across 25 states, and executives take special interest in projects those units can share. Irsch says the development methodology, which is also used for non-IT initiatives, ensures he doesn’t overlook the best ideas from the field.

Irsch adopted that methodology about four years ago, as the company was beginning to develop an enterprisewide procurement system to replace the hodgepodge of systems used by individual operating units. He experimented with an off-the-shelf system but says his IT organization didn’t understand how to deploy it properly. Eventually, he concluded that no commercial application would work for the company and that he would have to build a system in-house. He decided the best way to proceed was to find a system already being used within the company and make it a corporate standard. “We identified a prototype, and senior management said, This is the direction we’d like to go,” Irsch says. A pilot followed, after which he began rolling out the procurement system to the business units. The rollout will finally be complete this year.

Cranmer, at the Mayo Clinic, developed a form to describe the business case for each project, which must be completed before a proposal can be submitted to the steering committee. Project proponents have to review the ROI and explain whether it fulfills a goal of the organization’s strategic plan. As at Centex Homes, anyone in the Mayo Clinic can generate an idea for an IT investment. The process ensures that every idea can be considered and that everyone knows what he has to do for his proposal to pass muster with the IT steering committee.