This is the first installment of a three-part series on IT business services development and the business value of IT. In this first article, CIOs share their approach to creating business services and tell how these services boosted revenue and built stronger relationships with customers.
When a new market opportunity presents itself or an organization has to adjust its business model to change with the times, the CIO has the best seat in the house to make things happen.
The CIO and the IT department have a view of the processes across all the business units and departments at a detailed level. IT knows the technologies on which IT business services and underlying business processes are built. This insider knowledge puts CIOs in a prime position to help the business develop new internally and externally facing services.
The insight that's often missing, however, is business knowledge -- how an employee in sales interacts with customers, or what information customers need to help them grow and, in turn, help your business grow.
When Ed Bell joined the Waltham, Mass.-based Commonwealth Financial Network in 2000 as CIO, its business goal was to surpass the financial services offered by competitors. Bell, currently the interim CIO serving the House and Senate of the commonwealth of Massachusetts, started visiting the independent financial advisers, watched how they did their jobs, listened to their questions and learned how they were trying to increase commissions.
Learning the business
"We [as CIOs] see processes. We know what technology can do and we can improve internal processes, but from a business-product standpoint and a customer standpoint, we need to engage with customers to see how we can improve their environments," Bell said.
What Bell came back with was an idea for a new Web portal that would allow financial advisers to view their gross commissions and compare them with those of financial advisers in similarly sized firms. They also could set commission growth targets and view the lowest- and highest-performing products they offered. After the system was put in place, financial advisers started to use the technology to challenge themselves. Within a year, gross commissions doubled to about $300,000, he said.
"That system improved their commissions, and in turn our business grew," Bell said.
Developing new IT business services entails a new way of thinking, however, and the system was only a piece of a wider, far-reaching business adjustment.
The desired end state was a new technology platform that would give advisers easy access to information, but the strategy was a two- to three-year plan that involved completely re-engineering internal IT processes and an estimated 10 to 20 projects per year.
"When I walked in, [the business] knew they didn't have the technology they needed in place, so they embraced the long-term plan," Bell said. "Not only did they invest in it, but they challenged the rest of the organization to become change agents as well. If the business is not engaged, all bets are off."
Cutting IT business services delivery times
Dr. Kip Schumacher, CEO of emergency medicine practice management company Schumacher Group in Lafayette, La., felt out of touch with the needs of the 2,500 physicians his company served.
With the number of physicians it served growing at a rate of 10% to 15% annually, Schumacher recognized the need for technology to fill this communication void. "We knew that technology would never replace the human touch, and it couldn't supplement a handshake or face-to-face communication, but it would build a sense of community with the physicians we work with," said Schumacher CIO Doug Menefee.
Based on feedback from annual physician surveys, operational assessment team meetings, medical director forums and the Schumacher team members who spoke with physicians daily, Menefee and the Web services team began to develop a new physicians' portal.
The portal, written in ColdFusion on a BlueDragon server, acts as a single sign-on gateway to a personalized physician screen. Physicians and Schumacher employees can track the entire patient intake and outtake document management process.
In essence, the system lets physicians input patient information; Schumacher then takes over to check that the documentation follows the correct processes, procedures and Health Insurance Portability and Accountability Act (HIPAA) regulations, and collects billing information for insurers. Above all, it helps ensure that physicians are following the correct patient-care procedures.
The technology takes away such pain points as document management, risk mitigation and HIPAA compliance. "We educate them about things they are missing, how they compare to other physicians to help them reduce their risk of medical malpractice, and keeping their insurance premiums lower," Menefee said.
Before the system was introduced, it could take 30 to 40 days for a physician to correct a patient chart or answer a question from someone on the Schumacher team. With two-way, Web-based communication, clarifications are now made within three to four minutes, Menefee said.
"We are getting much closer to real-time collaboration amongst our employees and the physicians that have independent contracts with us," Menefee said. "We're building market share because of it, but it wasn't about next-generation technology or revenue. It is about our business -- how we can help the physician deliver a better experience for the patient."
Who's in charge?
Menefee has no problem admitting that he doesn't want to control technology -- other than security and identity management, of course. As far as he's concerned, his Web services team may do all the development, but the business units own the application and tell him what IT business services to create.
If you don't make the business feel that it owns a project, it will end badly, said Jack Santos, CIO executive strategist at Burton Group Inc. in Midvale, Utah.
We knew that technology would never replace the human touch … but it would build a sense of community with the physicians we work with.
Doug Menefee, CIO, Schumacher Group
"The business should get credit for a service that enhances the bottom line," Santos said. "I've seen some [IT departments] have a problem with this, but if the business believes they are in charge, a project will be pushed much farther ahead, faster."
Instead of viewing a new business model or new service approach as a threat, embrace it.
"The CIO can be a critical guide that lets the business know what a project may cost and what can be reused, or is already in place," Santos said. "They can also make sure the right infrastructure and governance is in place for a new service offering in the cloud."
Research and development is your client, human resources is your client; but ultimately, external customers are in charge. They can signal a change in buying patterns that ultimately could cause you to scrap your existing business model.
When Santos was CIO of an office supply company, sales were conducted over the phone. Then the Web hit.
"The Web introduced a whole new way for customers to buy, which meant the business had to figure out how to migrate processes to the Web and introduce a whole new tool set," Santos said.
The Web threatened an existing business model, but the IT team was able to get in front of this new service delivery model, Santos said. Today, CIOs are facing new service delivery models in the cloud -- look no further than the popularity of Google Apps and the types of technology leaking into your corporation.
"The CIO needs to recognize that outsourcing or the cloud could be a better approach before the business does," Santos said. "The CIO has an opportunity to make as many contributions as any other business person to the customer, but if you find out about a new service R&D is working on after the fact, you failed."
Let us know what you think about the story; email Christina Torode, News Director.