In the summer of 2002, the accounts payable department at Novartis Pharmaceuticals Corp. faced a full-fledged financial crisis. Somewhere in the computerized disbursement system, between invoices and checks, payments were being held up and a backlog of overdue bills was building. A few vendors even put a credit hold on Novartis Pharmaceuticals, which is the U.S. arm of Novartis AG, the US$23 billion Swiss pharmaceutical giant.
The Accounts Payable and Strategic Sourcing departments impugned IT — more specifically, a recent SAP AG upgrade to the R/3 financial modules. The message the business departments felt they were hearing from IT was: SAP is the Novartis global standard, like it or lump it. Frustrated, Accounts Payable and Strategic Sourcing began meeting — without the IT group — to figure out a way to reengineer their requisition-to-pay process and perhaps even scrap the new SAP modules that didn’t meet their needs.
On the other side of the corporate campus in East Hanover, N.J., IT executives knew the unpaid invoices were not completely the fault of the SAP upgrade. The existing process for invoices was inefficient, requiring manual approvals by too many managers. The IT group had recently launched an effort to improve its alignment with business partners by appointing business information managers (BIMs) to clarify and support business goals. Nonetheless, the finance BIM felt frozen out of the meetings held by the fed-up business community to settle on a new solution.
It’s an age-old story: An IT project starts out with high expectations and involvement from the business. But as the project progresses, it becomes clear that the two sides have different needs and constraints. Under the strain of time lines and tight budgets, communication is inadequate. Business units blame the IT department, and IT feels insulted and misunderstood. Both factions grow increasingly suspicious and self-protective. Project tanks.
And that’s how the situation at Novartis probably would have played out. “It was a train wreck waiting to happen,” says Jose Ramirez, Novartis’s vice-president of IT for finance and supply chain. “We would have continued to have political problems, along with a proposal by the business that didn’t have buy-in from IT. It would have come to a head at some point.”
Instead, Ray Pawlicki, Novartis’s vice-president for IT and CIO, effected an intervention: He invited all parties involved to a six-month program to create a joint leadership approach. It was a long shot, but it worked. And it helped answer the looming question at Novartis, and among many business and technology units everywhere: Why can’t we all just get along?
When the IT solution is part of the problem
The billing problem was actually straightforward. “There wasn’t a true requisition-to-pay process,” says David Galbraith, director of business process design, who was brought in to help solve the problem. “The company was structured in silos. No one knew what was going on.”
The IT department thought it had a solution in the SAP R/3 implementation. “The mantra was, ‘Let’s put everything we can in SAP so we have fewer interfaces,'” says Pawlicki. “People within IT were saying to the business, ‘Yeah, we know what you want to do, and this is where we’ll stick it in SAP.’ And the business was saying, ‘But, but, but….’ And there was the rub.”
Because of the tight time line and budget of the financial modules implementation, IT scrimped on training and all but ignored the new system’s impact on business process, says Ramirez.
But when the IT group got wind that Accounts Payable and Strategic Sourcing were meeting privately to reexamine the req-to-pay process and the IT system to support it, they grew very resentful. Other IT finance projects took on the same bitter flavour, says Ramirez, and IT morale suffered. Senior managers from IT and the business departments met or talked weekly to try to bring the estranged departments back together, but it didn’t work.
A potential solution came from an unexpected source. The head of Accounts Payable, while serving as a liaison to IT in a previous role, had participated in a training program called the Language of Leadership. Pawlicki had previously used this program solely for IT staffers. But when the Accounts Payable chief encouraged Pawlicki to apply the Language of Leadership to breaking the barrier between IT and the business units, the CIO invited all employees involved to a joint program.
The ontology of IT
A philosopher, a psychologist and a businessman walk into a conference room…. It sounds like the beginning of a joke, but actually it’s how the six-month Language of Leadership sessions kick off.
Pawlicki had previously offered this training, led by trainers from SDI Communications, to his top 50 IT leaders as a way to improve their listening and collaboration skills. This time was different. “We decided to try something new and help these individuals not only evolve as leaders but also to agree on a strategic outcome: to have this project be the best project ever undertaken within Novartis,” he says.
A lofty goal, to be sure, but it was what the Language of Leadership concept was all about — creating leaders who could commit to meeting grand, strategic outcomes.
Initially, though, attendees weren’t buying it. The sessions included ontological discussions on how individuals could improve their leadership not by changing what they did but by changing their fundamental “way of being.”
“I thought, ‘These people are from a different planet,'” says Ramirez. “They’re talking about a different way of being. I was confused.”
“We were skeptical,” agrees Galbraith, the business process design director. “We thought our own project methodology was sound and were afraid to say there might be another way to go about things. Besides, it sounded a little too soft.” Could the metaphysical have any place in the management of a multi-departmental corporate project?
During the first two-day sessions (out of a total of four over several months), the program trainers asked the business professionals what they thought of IT, and vice versa. On the first go-round, the answers were pretty polite. But “(the trainers) were grinding,” says Galbraith. “They didn’t let us get away with that.”
By the third round of the same question, people got brutally honest. The business said about IT: They’re too bureaucratic, they don’t care about the business, they only care about standards. IT said of the business: They don’t trust us, they’re secretive, they have no understanding of what it takes to get things done.
At the end of the session, Ramirez found it hard to look his business counterparts in the eye when leaving the room. “We got a load off our chests, but it was awkward,” he says.
Over time, this clearing of the air had the desired effect: People from both sides began really listening to each other and, eventually, sympathizing. The trainers had them practice taking a stand for the other side’s concerns. “The focus was on being committed. Compliance was not tolerated,” says Pawlicki. “And that had been the sense with the req-to-pay project: Some parties were just being compliant — not committed to making it a huge success.”
Ultimately, the Language of Leadership participants were able to commit to two strategic outcomes that went beyond their preconceived notions of each other and what was possible.
One was general: Create a new way for IT, Accounts Payable and Strategic Sourcing to work together that would enable rapid business transformation. The other attacked the problem at hand: Improve the buying experience for Novartis departments so that they would no longer make independent purchases, and instead would channel all their requisitions through Strategic Sourcing. This centralization of purchases would increase Strategic Sourcing’s leverage in buying to the tune of US$4 million to US$5 million in annual savings.
We can all get along
The Language for Leadership training had a surprising effect on the req-to-pay process problem. The finance BIM (“Our new best friend,” says Galbraith) and other IT folks, galvanized by a deeper appreciation of the business requirements and how those matched up with SAP and other providers, ultimately agreed on what Accounts Payable and Strategic Sourcing had wanted all along: a best-of-breed solution. In May 2003, IT signed off on an upgrade to an old Ariba system that would automatically reconcile sourcing and accounts payable, reducing late payments.
Along with a couple of other changes implemented by IT and the business groups, the Ariba upgrade improved the internal buying process so much that the planned savings of US$4 million to US$5 million annually was within sight six months into the project.
It was a long way to travel to end up where the req-to-pay team initially started, but participants say the project would have never succeeded without the leadership sessions. It was not only IT that had a change of heart. The Accounts Payable and Strategic Sourcing staffers made a concerted effort to understand how the SAP team would hear their argument. “We had to present [the Ariba proposal] in a way that showed we understood where they were coming from, validating their very real concerns,” Galbraith explains.
Novartis’s experience with the Language of Leadership gives hope for changing the typical dynamic between IT and business units. “On a scale of one to 10, this project was probably headed for a six. There would have been rumblings, and eventually they would have worked things through,” Pawlicki says. “This time they were all committed to making this a success.”