Years ago, CIOs tended to structure their IT organizations on a plan, deliver, run model, where one centralized group of architects shaped demand, a group of developers and project managers delivered, and network engineers and data center managers kept everything running. The IT organization was “everything to everyone,” until business partners grew impatient with technologists who did not have a deep understanding of their business and its processes.
So, CIOs began to disband the centralized organization in favor of one aligned to business areas. Business relationship managers (BRMs) would be dedicated to one line of business, sit in on those meetings, send requirements back to IT and be responsible for plan, deliver and run. The weight of IT delivery, it seemed, had shifted from the center to the margins. That structure, however, had its own set of limitations, as Joseph Santamaria discovered when he became CIO of PSEG eight months ago.
PSEG, with $12B in annual revenues, is one of the largest combined electric and gas companies in the United States. When Santamaria took over PSEG’s IT organization, the IT department had BRMs dedicated to each of the company’s lines of business including PSEG Power, Public Service Electric and Gas, PSEG Service Corporation. “The business relationship executives were the one throat to choke for everything from demand shaping to project execution to operations,” says Santamaria. “But these individuals struggled in their roles because they had too many priorities and not all the work was getting done.” Rather than focus on strategic issues, the BRMs would wind up fighting fires. “Our business partners would tell us, ‘We need you to be innovative and define our technology roadmap,’ while the BRM would be tied up in project delivery or operational issues,” he says.
Even when the BRMs did work with their business partners on innovative ideas, they did not have the power or influence to get IT to deliver on them. “The BRMs were making commitments to their lines of business, but they could not get full support from the delivery organizations,” says Santamaria. “They became disempowered ‘go-betweens’. And on the reverse side, some of the delivery organizations were becoming detached from customers. So while the BRMs were supposed to act as a link between IT and PSEG’s business partners, in reality, they played a distancing role. “The delivery organizations did not have an avenue directly into the business, so communication broke down,” Santamaria says. “Between the BRM’s lack of power and the separation between business demand and the supply organization, everyone was getting frustrated.”
Santamaria also felt that the skills needed to succeed in the BRM role were in very short supply. “We expect BRMs to be strategic and sit with a Vice President to discuss strategy at 9:00 AM, at then at 12:00 PM meet with a Project Manager to understand what is going on with a client project, and at 8:00 PM be on the phone dealing with a production issue. The skills, mindset, and ‘tempo’ required to perform each of those tasks successfully are different. We found individuals who were very good in one area but very few who excelled at all of them as the business expected”
A frustrated group of IT and business people is never a good thing, so Santamaria decided to restructure. “We built a new engagement model that centered around IT services,” Santamaria says. This service-oriented structure includes three layers, which resembles the old plan, delivery, run model, but has a new “line of business twist.” At the top is the strategic planning and architecture layer: On a quarterly cycle, BRMs and architects, engage with senior business partners on a strategic level. They discuss roadmaps, bring in vendors to explore emerging technologies, and introduce new ideas from the innovation centers. “This is the top of the pyramid where an IT executive works with his or her dedicated line of business executive on shaping up the future. Together, they take a six month to five year look at demand and architectural opportunities and tend to engage with VPs and Directors.”
The second layer is service enablement, which is delivered through a project and portfolio management steering committee. Project leaders work with business directors and managers , and they focus on budgeting, resource and project planning, business case development and software development life cycle.
The third layer is operations, where operations managers have well established Service Level Agreements (SLA) with each business units including customer satisfaction, service availability, solution responsiveness, compliance, help desk metrics.
“We have a line of business structure that cuts across this three layer ‘mega services’ model,” says Santamaria, “Each member of the strategy layer is dedicated to one business unit; they focus on creating and defining a common vision.” The delivery or project layer is not organized by line of business but by process. Someone owns delivery for customer operations, while another person owns delivery for asset management, and someone else owns delivery for human resources and finance. Some of these processes do align with one particular line of business like Energy Resources and Trading (ER&T), but others are shared by multiple businesses.
At the operations level, those lines of business that have unique technology needs (like the trading group or nuclear operations) have dedicated operations teams, while others receive operations services from a shared services group. The group is divided by sourcing model. There is an organization dedicated to supporting applications with internal resources and another group that works with providers to manage outsourced application support.
Santamaria just announced this new services-oriented model last month, so time will tell whether it allows IT to work strategically with its business partners and deliver on new applications and operations services. (I will be sure to check back with him later in the year, to see how things are going.) But regardless of whether he needs to make some adjustments, he is wise to be taking the best of the old model and the best of the new and to be focusing so much attention on those critical junctures between IT and the business. Those are the relationships that can make or break a CIOs chances for success.
About Joseph Santamaria and PSEG
Joseph Santamaria is Vice President of IT and CIO for PSEG Services Corporation, as of October 2012. He is responsible for leading, directing, planning and managing all activities relating to the company’s information technology needs and for ensuring innovative, reliable, timely, cost-effective and secure delivery of information technology to all areas of PSEG.
Santamaria previously served as CIO at UIL Holdings Corporation, an electric and gas utility in New England. While at UIL, he successfully integrated IT activities of a major acquisition, incorporated
SCADA support into IT, established a best-in-class cyber security framework, and led the company to receive the 2011 SAP Best Run Utility Award for excellence in business transformation.
Prior to his role at UIL, Santamaria worked at Pitney Bowes in several capacities, including Vice President of Enterprise Business Applications. Before then, he was a Principal Consultant at PriceWaterhouseCooper, managing commercial and delivery aspects of multiple business transformation projects.
Public Service Electric and Gas Company (PSE&G), is one of the largest combined electric and gas companies in the United States and is also New Jersey’s oldest and largest publicly owned utility. The Public Service Corporation was formed in 1903 by amalgamating more than 400 gas, electric and transportation companies in New Jersey. It was renamed Public Service Electric and Gas Company in 1948. PSE&G is the largest subsidiary of PSEG.
PSE&G currently serves nearly three quarters of New Jersey’s population in a service area consisting of a 2,600-square-mile diagonal corridor across the state from Bergen to Gloucester Counties. PSE&G is the largest provider of gas and electric service, servicing 1.8 million gas customers and 2.2 million electric customers in more than 300 urban, suburban and rural communities, including New Jersey’s six largest cities. While new business ventures will play a vital role in the long-term growth and strength of the company, PSE&G remains primarily a regulated gas and electric delivery company.
Martha Heller is CEO of Heller Search Associates, an IT executive recruiting firm specializing in CIO, CTO, CISO and senior technology roles in all industries. She is the author The CIO Paradox: Battling the Contradictions of IT Leadership and Be the Business: CIOs in the New Era of IT. To join the IT career conversation, subscribe to The Heller Report.