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Do you need to fire your IT organization to drive IT business transformation?

The CIO conferences put on by Global Business Events (GBE) are closed-door affairs intended to give IT leaders an opportunity to hear how their peers are solving problems and breaking new ground with IT. These are peer-to-peer forums where the emphasis is on a candid exchange of ideas. As a condition of listening in, SearchCIO doesn’t name names but does report back to our readers on the issues. IT business transformation, for example,  was a hot topic at GBE’s October event in Chicago.

At GBE’s most recent CIO event in San Francisco, the T-word again loomed large. Transformation — of the business, IT organizations, of security strategies, and of a personal nature (the panel I moderated explored whether CIOs are next in line to be CEOs) — was the theme, if not the title, of just about every session on the agenda. One talk, in particular, hit me hard, because it suggested that for CIOs to use technology to drive real change they may well have to fire a large portion of their IT workforces.

The case study involved a large healthcare company that depends heavily on technology. It has the largest EMR implementation outside of the U.S. government. In recent years — thanks in large part to technology — this company has seen a 57% reduction in medical errors, 26% fewer office visits, made 37.4 million test results available online to its patients and helped drive a 27% increase in patient self-management of chronic diseases. When the now SVP of infrastructure joined the company six years ago, however, he said he and fellow executives “faced a difficult decision.”

“We decided that IT could not improve quickly enough … and implemented a large-scale IBM outsourcing,” he told the audience.

Business agility no matter what

For the first two years post-IBM outsourcing the internal IT focus was “all foundational,” he said. He brought in ITIL best practices to improve IT availability and reliability. The “next frontier” was speed and service, with the lofty vision of one day being able make technology provisioning “as easy as Amazon does.”

So, with the help of its outsourcing partner, IT embarked on a major private cloud initiative that automates a lot of IT infrastructure provisioning — “Computers can build computers much better than people can,” as he put it — and this private cloud is already transforming the healthcare’s business processes. He said he’s now looking to do the same for app dev by implementing Agile methodologies.

So, a great story and triumph for an IT leader — that also required a massive shakeup of the internal IT organization, the loss of hundreds of IT jobs and some fierce maneuvering to transform IT services.

In order to pull off the cloud provisioning, for example, he built a small team of people — half from IBM and half from internal IT — and said he made sure he had their backs. “I walled this team off and protected them all the way up to implementation,” he said.

The ripple effects on IT jobs of this IT business transformation continue to this day. For example, the move to the cloud and agile software development is proving to be the death knell for project managers. “The projects go right through and we do not need project managers,” he said.

But without these personnel and process changes, IT departments cannot possibly compete against the big public IT providers, he told his peers. “If we don’t provide that level of service, IT departments will be out of business.”

Et tu?

So, as CIOs and business leaders, are you facing the same difficult decision? Can your IT team improve fast enough to drive IT business transformation, or are layoffs in the offing? I would like to know —  and understand that this is confidential information.

You can email me or find me on Twitter @ltucci.