Formula for success

In my home country of England, medieval castles have unique architecture. Fortified inner buildings have many towers interrupted by narrow openings that allow inhabitants to see out without being easily seen — or targeted. In many ways, technology investments and skills in an IT organization are often structured the same way.

As CIOs, we sometimes call these inner fortifications silos — anointing specialists in applications, servers, database infrastructure, the network, and so on. And while this approach can be effective, IT organizations must be careful to find ways of working across these organizational silos to ensure agility, collaboration and quick decision-making.

I learned this lesson first-hand as a Briton promoted to the role of global CIO at Nortel Networks in early 2003. In Europe, organizations tend to have less overhead, are quick with decision-making, and are more responsive to customers, despite the diversity of multiple countries, languages, and cultures. The challenge at Nortel was to mimic this approach on a global scale.

Timing was critical. The organization was still catching its breath. Since 2000, the team had addressed many adjustments as the company responded to the massive economic downturn that hit the telecommunications industry.

In 2000, Nortel Networks had over 12,000 servers and 2,700 applications in more than 100 major data centers around the globe. Today we have less than 2,700 servers and 1,500 applications across the company. Since 2000, we have reduced IT costs by 75 per cent, and are now saving about $1.6 billion per annum.

The teams became very proficient at doing more with less. And yet, we realized there was a better way to organize ourselves and become more holistic — more connected to the business organization — to ensure a balance between our cost management initiatives and service delivery.

In early 2003 each member of my immediate management team was assigned to a business unit on a dotted-line reporting structure. As well, local IT site primes were appointed at major locations to enhance local communication and liaison with local business groups.

It was a simple yet effective move that improved our IT presence within the business operation. Our IT user satisfaction reflected this with a 4 point increase in 2003.

reorganizing the IT team

Still there was opportunity for improvement. We had a functional, skills-based silo model where an application team focused on all the organization’s applications and the process, while another group focused on servers and computing requirements, while yet another group was consulted about how applications run on a server. There were many serial handoffs as a project moved through the teams, resulting in a poor track record for on-time project delivery. Organization of the IT team had to be addressed.

Instead of aligning the organization vertically we decided to align it horizontally. That meant specific individuals would have full accountability and responsibility for an IT solution from end-to-end — i.e. the infrastructure needs, data storage impacts, system management requirements, security and access, application performance issues, legacy integration hurdles, and so on. For example, the supply chain prime is responsible for not only the ERP roadmap and capabilities, but also for the business process and supports, the data warehouse associated with ERP, the service in which ERP runs, the security of the solution, the cost of the solution, the user profile, licensing costs of ERP software, and the number of people using it.

driving home the concept

Gaining employee support and commitment upfront was vital. Being a Formula1 enthusiast, I used a car racing analogy to help clarify the concept.

I told the team to think of the car as the application solution, the end-user as the driver and the road as the technology solution. If the road is in a shambles, obviously nothing works. If the application is designed for the autobahn but the road is actually a country lane, it’s useless.

Now the kicker: if the road isn’t working right, should the end-user call the company that made the car? Well, no, they should call the folks who made the road. Another requirement: the folks who build the car should always be working with those who build the road, and vice versa, so that neither one is over- or under-designed.

The point was understood and embraced.

Today we have over 25 IT solution owners in the organization that have total authority for decisions pertaining to the strategy, service, productivity and cost associated with their solution.

– Solution strategy is articulated through a roadmap including targeted architecture, milestones, decision points, process reengineering identification, and system or application decommissioning activity (if any).

– Service quality is measured by CSAT surveys with improvement targets based on prior results.

– Productivity is measured against targets, baselines and external benchmark comparisons to industry peers, where possible.

– Total Cost of Ownership includes costs for user interfaces, applications, data storage, and computing services and network capacity.

As with implementing any new technology, realigning your IT organization takes time. Understanding the company culture, increasing communication and motivating employees were critical success elements for the company.

In today’s market, the technical skills of an IT employee are standard. We place greater emphasis on business skills and soft-skill development, such as project management and leadership.

Our IT solution owners recognize that technology and business are not mutually exclusive. By complementing technical capabilities with business skills, employees become more knowledgeable and valuable, naturally advancing their careers.

In fact, the ‘solution owner’ organizational structure has turned into a popular IT staff development program. We now have a more holistic view of the business, better collaboration, quicker decision making, and better yet, our IT user satisfaction jumped another 4 points in 2004. 052876

Albert Hitchcock is global CIO of Nortel Networks.

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