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CIO in action: Leaving a legacy

Austin Energy CIO Andres Carvallo tells CIOs how to lead an IT revolution.

Pebble Beach, Calif. – CIOs as radicals? Sure, when radical change is necessary. That's the message Austin Energy...

CIO Andres Carvallo brought to the 2nd annual CIO Decisions conference.

Carvallo told the story of leading an IT revolution at one of the nation's largest public power companies, transforming an IT department from an outdated jumble of legacy systems to a streamlined operation by putting new governance processes in place.

"We needed to get serious about it, and by serious I mean how do you take an infrastructure built over 15 years and re-do it?" Carvallo said. He set to work with four business analysts over 35 days, to assess Austin Energy's existing IT infrastructure and plan for its future needs.

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Carvallo's company has a pretty big vision – to make Austin, Tex. the most livable city in the country – in part by delivering clean, affordable reliable energy. Since arriving on the jobs three years ago, Carvallo has implemented a new systems architecture; updated the company's Web site; established a new customer portal for online electronic bill payments; put best practices into place and more – all part of a four-year, $50 million overhaul of the company's IT system. The end goal is to modernize and streamline IT to shave $100 million from operating costs and reinvest those savings back into the company.

Three years into the four year project, Carvallo said, "we're totally on target."

Carvallo presented his successful case study, titled "CIO in Action: An IT leader who makes radical changes that work" at last week's Pebble Beach conference hosted by CIO Decisions and, which was attended by 175 senior IT executives.

Taking inventory of internal IT systems and showing business executives exactly where their dollars were going through budget transparency was a big theme at this week's conference. RGA Reinsurance senior vice president of IT Rick Nolle was among those who said that budget transparency was crucial to his shop.

"When they saw, molecularly saw, what we were spending and could connect the cost to value, they were willing to spend more," said Nolle, with outside department managers asking for a 25% IT budget increase once he showed them how the money was being spent and the value they received from those dollars.

At Austin, Carvallo used a systemic plan to turnaround the IT department. He assessed the company's needs by interviewing 500 employees and running an inventory of all its systems, developed a plan that included guidelines for everything from governance to legacy systems, project management to operational efficiency. Once the plan began, Carvallo measured its success against industry benchmarks, key performance indicators and their ongoing performance, process improvements and performance rewards.

Terry Mills, an IT worker with the Pitt County, N.C. government, said his group had undergone a similar transformation when CIO Michael Taylor started six years ago. Coming from a manufacturing background, Taylor added and emphasized documentation, service level agreements and other organizational processes like those Carvallo discussed, according to Mills. The adjustment was not easy, Mills said, but it has made his group more effective.

Conference attendee Jim Grimes, vice president of operations for Emeryville, Calif.-based Peet's Coffee and Tea, said his company has "constant conversations" about organizational changes like those discussed by Carvallo as a way to re-evaluate and streamline their operations.

Austin Energy, owned by the City of Austin, Texas, is the 10th largest public power utility in the U.S., with 2,700 megawatts of generation, covering 420 square miles, 1 million customers and earning $1 billion in sales. The company's goal is to deliver clean, affordable, reliable energy and excellent customer care to help Austin be the most livable city the country.

Carvallo asked audience members to grade themselves before and after he discussed the standards in place at his own company. In some cases, the before-and-after grades were strikingly different; in one example, just 3% of audience members rated their companies' IT structure as "poor" before hearing Carvallo discuss his own company's structural transformation, compared to the 12% who graded their IT structure as "poor" after Carvallo's discussion.

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