Published: 04 Aug 2010
This is the second installment of a three-part series on IT and corporate business services development and the business value of IT. In this second article, CIOs tackle services creation with a mix of old and new development techniques. In the first article in this series, CIOs shared their IT and corporate business services development strategies and the ways these services boosted revenue and built stronger relationships with customers.
More on application and project development
One kiss of death for many IT and corporate business services projects is a lack of vision. The business does not plan for the future, but focuses instead on speed to market and cost. That is not to say that cost savings can't make or break a project, or that agile project practices designed to expedite service delivery are not the right development path to take. Agile development practices are being used as a foundation for business projects that in some cases, have nothing to do with technology.
Agile, or any methodology you follow for developing IT and corporate business services, should have a long-term strategy attached to it. If not, a platform built for one service could end up being a one-trick pony.
That's what Continental Airlines Inc. set out to avoid when it built an e-discovery and document management system. When the Department of Transportation earlier this year informed airlines they would be fined if passengers spent more than three hours in tarmac limbo, Continental had a new system in place to track and reduce tarmac delays before the DOT's April 29 compliance deadline.
Continental was able to get a new service in place quickly because it had planned ahead, knowing that its industry required airlines to react fast to changing regulations. Driven by the legal team and with flexibility in mind, a new Microsoft SharePoint portal for e-discovery and document-management had been built already.
"We chose SharePoint because we knew we could add applications on top of it, on the fly," said Denise Wilson, senior manager of technology in Continental's enterprise engineering group in Houston.
Wilson's team did have to customize SharePoint, but it had extensive .NET resources in-house that allowed it to develop more services without having to rely on a third party.
"We looked extensively at [other commercial] document management solutions, and they were much more expensive," Wilson said. "We would have had to contract out any changes we wanted to make, and the base licenses were very expensive."
Reuse, buy or build, or corporate business services?
A rule of thumb often used when new IT or corporate business services are being developed is reuse technology you have in place, buy it if you can't reuse existing resources, or as a last resort, build it yourself.
Doug Menefee, CIO at Schumacher Group, chose a hybrid approach when the Lafayette, La.-based company built a collaboration platform to connect its employees to its 2,500 emergency-room physician customers. The system gave physicians access to a private portal area to view their patient intake and outtake documentation, compare their documentation acumen with that of peers, and correct documentation errors caught by Schumacher employees. The goal was to help physicians avoid medical malpractice lawsuits and violations of the Health Insurance Portability and Accountability Act, or HIPAA, and improve the quality of patient care.
Like Wilson, Menefee tapped internal developer expertise, in this case in ColdFusion, to develop the portal. The code base serves as a gateway that directs physicians to several IT business services, including Google Inc.'s Gmail; a scheduling application called Tangier developed by Software as a Service (SaaS) provider Peake Software Labs, in Hunt Valley, Md.; or an existing on-premises data warehouse.
All in all, about 80% of Schumacher's internal business processes and customer-facing services now live in the cloud. Applications from about 10 SaaS providers feed into the portal and back-end systems.
"I'm a strong advocate of the cloud, but what we needed was a wrapper that allows us to connect those environments and offer a single sign-on service to the physicians," Menefee said.
That wrapper was home-built because nothing was available on the market to aggregate so many services into a single offering, Menefee said.
Menefee uses agile practices to develop new internal and external services. If the business asks for a new service that can't be implemented in a 45- to 60-day window, the service is sliced up further.
"Since we have in-house expertise, we're able to continue to add new services weekly," Menefee said. "With some SaaS or off-the-shelf products, you're stuck in a box."
Menefee benefitted from Schumacher's CEO leading the charge behind this technology and business transformation. "We will sometimes spend two to three times what other companies might traditionally spend, because quality of patient care is the bottom line," he said.
IT business services as a revenue generator
Many enterprises have spent the past 20 years trying to get an ROI out of their business intelligence (BI) systems -- not to mention trying to get more employees to actually use them. Some companies finally have figured out how to do just that, and it is a sign of how BI platforms will play a progressively larger role in boosting bottom lines.
Stamford, Conn.-based research firm Gartner Inc. predicts that by 2014, 20% of global organizations will create a product or service based on some portion of data derived from their BI systems. "One in five will sell these solutions to customers -- most won't charge for it, but some will be able to," said analyst Kurt Schlegel at a Gartner BI Summit in April, adding that CIOs are in a prime position to develop products related to BI because many IT departments are charged with their organizations' BI efforts.
Here are three of the companies that were highlighted by Gartner as capitalizing on BI's ROI potential:
- Managed health care network provider Dakotacare, which serves more than 130,000 members in South Dakota, realized an ROI of $1.2 million from its BI program. In 2008 alone, it made $400,000 from related cost savings and new business opportunities. The BI platform is a set of analytic applications that provide claims analysis and other services.
- Toronto-based credit card processor Moneris Solutions Corp. has created Merchant Direct, a service that lets customers see how their sales fare against aggregated sales data in specific industry sectors. "They have 35,000 merchant locations -- florists, gyms, Kmart -- all use [Moneris] for credit card processing, and now these customers can see benchmarking data against [that of] similar merchants," Gartner's Schlegel said.
- Guy Carpenter & Company LLC, a New York-based risk and reinsurance service provider with more than 500 worldwide offices, developed a Web-based BI service that allows property and casualty insurers to minimize portfolio risk. Clients can reduce the loss ratio of their insurance portfolios, assess the overall risk of new policies and monitor catastrophes in real time to deploy claims adjusters to affected areas before claims are filed, according to Gartner.
New channels for building brands
Social networking platforms and Apple iPhone applications are being used to deliver new IT and corporate business services and hopefully, woo a few new customers.
I'm a strong advocate of the cloud, but what we needed was a wrapper that allows us to connect those environments and offer a single sign-on service to the physicians.
Doug Menefee, CIO, Schumacher Group
CSI Global Education Inc., a Toronto-based financial services education and accreditation services provider, is offering a new iPhone application it calls Financial Glossary to 700,000 financial service professionals. The free application, a compilation of more than 4,000 financial terms and definitions, is downloaded by about 80 people a day.
"The interesting part for us is that we are reaching people internationally now who may take an online course from us after using our application," said Dylan Fedy, CSI's senior director of customer insight. In addition, application users can request the addition of new financial terms.
Financial Glossary is optimized to be found by iTunes users. "People spend a lot of time on their iPhones, so we thought it was a new way to engage people who wouldn't normally come across us," Fedy said.
Instant messaging is old hat for most enterprises, but back when Jack Santos, CIO executive strategist at Burton Group Inc. in Midvale, Utah, was asked to create a new emergency room communication system as the CIO of a hospital, it took an intern to enlighten him.
The emergency room resident wanted to know why he couldn't just use IM to connect with the imaging department instead of walking to another building or having to log onto a desktop to check the imaging technicians' take on an X-ray.
"My first reaction was, 'What about security and cost?' But I also recognized that IT needed to go outside IT to understand what people are thinking," Santos said. "CIOs today need to recognize that social networking platforms are changing the way businesses deliver services and communicate inside and outside."
Let us know what you think about the story; email Christina Torode, News Director.