State of the CIO 2003 Best Practive #2: Engage Your Business Leaders

Before Bill Haser became vice president and CIO of Tenneco Automotive in 1998, he had spent 12 years on the business side, most recently as a group controller for a subsidiary of the Lake Forest, Ill.-based manufacturer of auto parts and systems. “I think part of the reason I got this job was that I was tired of having IT done to me,” says Haser. So when he took the CIO job, he wanted to involve business managers in the IT process.

In 1998, the $3.5 billion company had just begun the multiyear process of implementing SAP’s ERP product to its 74 manufacturing facilities in 22 countries, primarily one location at a time. But initial implementations went less than smoothly. “The first projects we did were your typical IT projects: The business gave us their requirements, we gave them the system, and they struggled,” he says. As the SAP work continued, Haser noticed another disturbing trend: Only 60 percent of project milestones were being met on time.

That’s when Haser decided he needed to involve business managers more intimately in IT projects. Like many of his peer CIOs, Haser has found that the only way to do that is to make the business leaders feel like ultimate owners of IT projects. Nearly 70 percent of best practices CIOs in “The State of the CIO 2003” survey said it’s extremely important to involve senior business leaders or managers in all stages of an IT initiative. Here are three methods that leading CIOs use to bring the business side into the IT process.

Establish a Clear System

Haser has set up a project management process (PMP, as it’s known around Tenneco) for all IT projects. PMP serves to clarify the requirements of business involvement. At the start of each initiative, the company’s IT department identifies a business champion and business project manager. The champion is the general manager of a plant or a business vice president who will reap the project’s benefits. The project manager is someone selected by the champion from his staff. If managers are reluctant to designate champions or devote their own time, Haser takes that as an admission that the project is a low priority.

“The business champion is the person ultimately responsible for the recognition of the business value of a project. If we’re claiming $1 million in savings, his annual operating plan must reflect that,” Haser explains. “And the business project manager makes sure the business roadblocks are taken out of the way.” For example, a business PM shepherding a project involving MRP software recently determined that the project staffers didn’t have the right skills to run the application. The business PM arranged to have them trained and in the meantime brought in temporary help until the staffers were up to speed.

An IT project manager familiar with project management methodology rounds out the project team. The team begins by reviewing its PMP: what they will have to report on and when, as well as instructions on how to identify and resolve problems and changes in scope. The team figures out the resources required (such as a materials manager to describe business processes or a financial analyst to help with the figures) and each individual’s level of involvement. Then throughout the life of the project, the business leaders, with the help of IT, follow the very detailed steps written down in the PMP.

Haser credits the requirement that management be involved in IT initiatives for an on-time completion rate of more than 90 percent for all project milestones?an increase of 30 percentage points. Management participation in IT projects has been particularly important as belts have been tightened at Tenneco. During 2002, Haser’s budget was slashed 15 percent, but the IT team was able to complete twice as many projects as during the previous year?and still come in well under the lowered budget. Haser hopes to continue the improved performance in 2003, despite a cut in his IT budget of another 6 percent.

Encourage Business Leaders to Think in IT Terms

At Palm, the $1 billion handheld device manufacturer based in Milpitas, Calif., the majority of IT projects are initiated by managers in the lines of business. CIO Marina Levinson asks the business managers to make a pitch first to their functional vice presidents?including a presentation of costs and benefits?for any IT project. If approved by the vice president, the project then goes before the information technology steering committee.

When, for example, the company’s Latin American unit switched its repair operations to a new outsourcer at the end of 2002 and was left without a customer relationship management tool to support its call center operations, the dislocation was relatively short- lived. Rather than leaving it to IT to figure out the business requirements, the vice president of customer service for Americas chose the Siebel Systems CRM software Palm had been using in other units, based on an estimate that the business unit would see benefits within two to three months. He then presented the project to Palm’s IT steering committee, which was duly impressed. The application was in place just two and a half months later.

“IT has to manage from the back,” Levinson says. “We [in IT] do a lot of things behind the scenes, but for projects to be successful you have to have senior managers say, ’This is mine. It’s integral to my success.’”

Business ownership of IT projects from the get-go has been helpful to Levinson as she’s switched gears from keeping pace with a company growing at 100 percent a year (when it was spun off from 3Com in 2000) to one that has slashed its IT budget during the past two years. “You’re faced with the dilemma of how you cut your budget by 50 percent without crippling the company,” Levinson says. “Having business representatives initiating and proving the value of IT projects ensures that what we’re working on is of the highest priority.”

Make Managers Set IT Priorities

The only workable method of prioritizing IT projects that Jim Burdiss, CIO of Chicago-based Smurfit-Stone Container, has found is to get business leaders to do it. To whittle down the hundreds of competing requests for IT services that come from each of the packaging manufacturer’s four autonomous divisions, Burdiss forms user groups around a specific area of technology that affects all divisions, such as e-business. Each group is chaired and populated by eight managerial representatives of the business and includes one of Burdiss’s IT directors. It’s a kind of mini-steering committee working below Burdiss’s executive IT steering committee, which “doesn’t have time to participate in the day-to-day drudgery of IT decisions,” he says.

Burdiss got the idea two years ago when he was facing a pile of 150 e-business related requests from various units of the $8.4 billion company. It wasn’t a first-in, first-out situation; IT had to figure out which projects should go to the head of the line. Burdiss first gave preference to initiatives that involved external customers or were based on a demonstrated business value. But once word got out that customer value was the criterion, every vice president and his brother were screaming, “Hey, it’s not me that wants it, it’s Wal-Mart!” As a result, prioritizing was getting harder, no one was happy with IT, and the IT department was miserable. “We weren’t pleasing anybody, and we were at the end of the whip,” Burdiss says.

So he decided to let the business managers battle it out by forming an e-business users group. Now, when any department leader has an e-business request, he must explain to his peers how it fits into the strategy of the company as a whole. The portfolio of e-business projects has gone from 150 to 50, with 10 having priority at any one time. IT-business relations have improved because division leaders “know why their project is off the list, and they knew that it was the business itself that put it off the list,” says Burdiss.

Last summer, Burdiss added a data resource users group because he was getting inundated with requests for help with data management. Burdiss is now looking into other technologies that could be ripe for this kind of business-driven shared services group. “We spend 1 percent of revenue on IT yet at the same time we don’t want to deprive our business of good IT,” he says. “And this kind of a users group is one of the best ways to do that.”