Creating New Corporate Value

Scenario: Improve the corporate value of common divisional systems

Gene Berry, CIO, OneAmerica Financial Partners

OneAmerica Financial Partners operates under a divisional alignment. IT is consolidated at the corporate level, but in some cases each business unit uses a different system to perform the same functions, such as document management and policy administration. Since I arrived in 2010, one of my goals has been to reduce complexity, which allows greater responsiveness to business needs and cuts costs.

We recently engaged a consulting group to perform a portfolio rationalization study that will help us develop a list of high-value opportunities for improved functionality to present to our executive council as part of our 2013 plan. The ultimate goal is a multiyear initiative that will generate savings in the initial phase, and then use those savings to fund future modernization efforts.

One of the big challenges will be balancing our modernization efforts with our work on initiatives that support sales, marketing and operations, and improved enterprise functionality, such as consolidating data for better decisions through business intelligence and analytics. Historically, these modernization efforts have been squeezed out, and we need to find a better balance between these competing priorities.

Advice: Find Ways to Affect the Balance Sheet

Randy Fox, CIO, GE Healthcare

The real value of IT simplification is in streamlining business processes in places where you can affect the balance sheet. To sell this to your peers, you have to find their pain points and identify which ones need fixing and will deliver business value.

Sometimes you can see these opportunities from within IT, but you and your team really need to consult with your colleagues before choosing problems to tackle. Rather than asking about systems or technology, ask about the issues they’re having and what tasks they find difficult to perform. If IT system rationalization is not connected to the issues they really care about, then it will fail.

I have worked in many GE businesses and have had these discussions in each one. It always starts with the CEO and the CFO, but after those conversations, the talks differ according to the nature of the business. For example, when I was working in the Energy Services department, their focal points were supply chain and engineering. Find out where you can make the most impact.

I’ve also found that it’s easy to get carried away. System duplication is not always bad–eliminating redundancy at any cost can foster resentment. Rationalization is disruptive, so it’s critical to make point-by-point decisions to figure out which changes will offer the biggest benefit to the business.

Establish Mutual Expectations of Value

Frederic Chanfrau, SVP of I.T. Regions, Schneider Electric

Advice: Before even starting to create a global portfolio management approach, you must have a network of people who will be the voice of the business to IT, and vice versa. They are there to put the oil in the engine, so to speak, and serve as a necessary foundation for determining the needs and priorities that guide rationalization. This strategy is particularly helpful for identifying areas where there is duplication of effort, which is a more important issue than duplication of systems.

Having these relationships and building greater understanding on both sides will allow you to realistically predict–and then measure the effectiveness of–the benefits that can be expected from any rationalization effort. Many organizations do not commit to asking those questions about whether the predicted value materialized at the end of the process. I have found that when people know questions will be asked, they are much more frank up front about what they expect. This then keeps IT from being alone in bearing the burden of proving value, because the business was involved at the start in determining what the results should be.

As for how to include modernization in this effort, I would suggest separating out part of the investment portfolio specifically for IT infrastructure modernization. If the modernization work is tied into a business effort, it will fall behind in favor of specific process improvements. However, keep an eye out for opportunities to embed systems upgrades in process changes and be sure to include those costs in the project plans.

Berry, Fox and Chanfrau are all members of the CIO Executive Council, a global peer advisory service and professional association of more than 500 CIOs, founded by CIO’s publisher. To learn more, visit council.cio.com.