In Search of Excellence

Have IS organizations finally “got it”? Are businesses actually beginning to see their investments in information technology paying off in revenues, flexibility, service excellence, and increased productivity? We may not be all the way there yet, but the 1999 winners of the Information Technology Excellence (ITX) awards are certainly showing that it’s possible to do this.

CIO Canada‘s ITX Awards are produced in association with the Conference Board of Canada, and The Globe and Mail. They are designed to identify and celebrate exceptional uses of IT.

As we move into a new millennium, this year’s winners are exemplars of how to use technology for business value. The winner, Royal Bank Dominion Securities (RBC DS), has created a world-leading e-business application for foreign exchange that has users singing the praises of IT. Honourable mentions Clarica and Gulf Canada have developed exceptionally flexible systems which make their companies smarter and more professional. These suggest that the bad old days of “we don’t have to care about business, we’re IS” are long gone, replaced by a new generation of technologists who actually see IS’s job as solving business problems.

The panel of ITX judges came from the business, IS and academic communities. Four judging criteria were used: Business value (what specific results were delivered to the organization?); IT pervasiveness (could this application have be done without IT?); Collaboration (how closely did users and IS work together?); and the fourth criterion, which varies year by year, focused this year on Service excellence (how does the application help the organization focus outwards to its clients?).

This year’s winner, RBC DS, effectively integrates a packaged application and the latest in telecommunications and security software with existing legacy systems to fundamentally change how it does business. Clarica has created a system that enables it to grow its business by working smarter, not harder. And Gulf Canada now has instant access to data that used to take days or even weeks to get.

How did they do it?

This article explores some of the reasons behind their success.


Developing an E-business Platform

RBC Dominion Securities (RBC DS) is Canada’s leading securities dealer. It provides wholesale financial services such as banking, equity trading and foreign exchange (FX) to Canadian and global corporations. RBC DS is the fourteenth largest foreign exchange dealer in the world, the third largest in North America, and the largest in Canada. It serves customers globally from offices in North America, Europe, Asia, Africa and Australia.

Unlike the pin-striped world of traditional banking, the securities business is an extremely dynamic one. As a result, dealers must be prepared to move on a dime to capture new business or take advantage of new opportunities. In this business, senior executives have their desks on the trading floor, and are constantly consulted about decisions that could make or cost the firm millions of dollars. However, while the business might appear to be operating on an ad hoc basis, said Jamie Barton, Vice President, Commercial Foreign Exchange, its processes have always been carefully, even cautiously, thought through.

FX was a good example. Dealers would speak directly with customers about potential transactions, and when the customer was ready, would execute deals worth tens or hundreds of thousands of dollars. Once entered, the firm’s back-end systems would take over and produce the necessary records for everyone involved without any further intervention.

The Vision. In early 1997, David Gibbens, Business Head of Global Markets Fixed Income, and Barton recognized that the front end of the FX process could also be automated to allow customers to directly access FX quotes online and make their own trades. This would enable the firm to penetrate new markets without the added cost of new offices. With customers submitting trades in this fashion, staff could then focus more on marketing. Direct trading would also reduce costs and streamline operations. Their research suggested that more than 80 per cent of their corporate clients could be linked directly into RBC DS’s systems via dedicated data lines if a user-friendly front end was developed. They were aware of a company, Cognotec in Ireland, that had a package which could enable automated dealing, and approached IS with what they viewed as a “simple connectivity problem”.

The IS Challenge. Roger Mahabir, who took on the CIO assignment in 1997, was faced with a considerably larger challenge. Significant changes in the industry and the firm had taken a severe toll on the morale of the firm’s IT staff and were resulting in significant turnover. Furthermore, there was much work to be done before IS could play a meaningful role in the company’s strategic planning process. IS priorities were constantly changing, and relations with the business units were poor. It was obvious that the company was not going to be able to use IT effectively in an increasingly competitive market place, or even keep up with “simple” business requests, such as the one above, unless he made a number of key changes.

“The immediate challenge before starting anything new”, said Mahabir, “was to build a team capable of providing innovative solutions on a timely basis and to start treating our business partners as customers.” He needed to send a very clear signal to the business units that, in partnership with their vendors, IS could come through for them consistently.

Mahabir set about the task of signalling both his IS staff and business clients that things were going to be done differently. First, he created a Project Management Office to oversee all ongoing projects and staffed it with experienced project managers. Second, he assessed how the company was using technology at present. This survey told him that RBC DS had many opportunities to improve the functionality of its systems and to become more competitive with its uses of IT. Third, Mahabir recognized that he had to put a process in place that would recognize the business’ need for flexibility and speed to market while still ensuring that IS resources were used effectively and for the most important business priorities. To do this, with the approval of the President, he created a Systems Priorities Committee (SPC). All major Divisional heads would meet regularly to determine what systems had to be implemented in order to execute business strategies. The SPC could adjust priorities if changes could be justified to the business as a whole. This process ensured that the different business “islands” would work with IS for the overall benefit of the organization.

Said President and COO, Charles Winograd, “The entire SPC process is very well organized and managed. It is perhaps the best meeting that I participate in within the firm.”

The need for direct customer FX dealing was the first major project proposal Mahabir took to the SPC. As a result, there was a lot more riding on its success than simply providing a connectivity solution for customers. FX Direct, as the project was known, was Mahabir’s opportunity to demonstrate a new, more effective working relationship between IS and users. It was also a chance to show IS staff that the firm was committed to utilizing their talents to make it a preeminent and competitive user of technology.

The first steps were deceptively easy. The plan was straightforward and the project was approved by the SPC in August 1997. A team of senior business users and IS staff was established to oversee the project’s development. Cognotec software was a clear choice since it was already being extensively used for FX deals within many banks. Cognotec agreed to customize its product for external users.

The project also had another advantage. Its existing back-end systems had been so well designed that very little needed to be done to enhance them for this application. Bill Adams, a senior IS team member, explained that their open, modular, real-time design and continuous enhancement over time, meant that FX Direct could easily interface with them with few changes. “These were good legacy systems,” he noted. “Over the years, we have honed and polished them to keep up with business changes. As a result of our continuous improvement of these systems, we could make FX Direct ‘plug and play’.”

The first client went live in January 1998 and 20 more were added over the next few months. However, by April 1998, implementations had stalled. Clients were no longer willing to sign up for the system. In the few months since the project had been approved, client telecommunications had evolved away from LANs to Web-based computing. Barton had to inform Mahabir that the project had to be completely redesigned to permit browser access. Suddenly, a fairly straightforward project became a leading-edge e-business application complete with major connectivity challenges. The change tested Mahabir’s philosophy of working with the business, for the business. But the SPC agreed the changes had to be made and he wholeheartedly committed to making them work.

However, a new element had been added into the mix. Security over the Web simply wasn’t good enough for the deals the company handled. High security was an absolute essential.

The users also had three further requirements. First, the system had to be easy to roll out, taking less than 30 minutes to enrol a new customer. Second, the system had to use the open Internet and find ways through corporate firewalls without being rejected. Third, it had to be open to many different devices and combinations of networks so that customers could use it via any technology they had installed.

The resulting project was a highly complex, collaborative effort between RBC DS, Cognotec, AT&T and numerous vendors. In the end, however, the company not only had its browser application for foreign exchange — the first of its kind in the world — it also had something more important. It had a platform that would enable many different kinds of e-business and allow it to be first-to-market with a variety of Internet-based business-to-business applications.

The new connectivity solution was implemented with the first client in summer 1998. The company chose a client with whom it had a strong relationship and who was geographically close to RBC DS so that problems could be quickly resolved. By October 1998, six clients were using the system. This grew to 50 early in 1999. At this point, the firm still had not announced or advertised the system, wanting to make sure that things were going smoothly. However, in spite of this, there was huge demand from clients to get access to the system. At present, the system is fully operational with 330 clients and handles approximately 6 per cent of all FX transactions handled by the firm.

Business Value. Today, RBC DS has the world’s most advanced FX auto-dealing system. Clients from around the world are using it to conduct commercial transactions securely and safely. In 1999, Barton was able to take $1 million out of his budget and eliminate 13 dealer positions. More importantly, customer reaction has been excellent with almost all qualified customers signing up for the system, and the firm has increased its market share as a result. In addition, three tier-two U.S. banks have decided to use RBC DS to manage their own FX dealing using FX Direct, and there is much more opportunity in this area. Thus, the system has opened up new avenues of doing business which weren’t initially apparent to it.

Collaboration. During the project development, Mahabir and the senior user, Andy Scace, Head of Global Markets, chaired weekly steering committee meetings. All teams were jointly composed of users, IS staff and vendor staff. This close cooperation enabled the team to deal with the many unforeseeable business and technical problems which arose during development. Mahabir’s involvement at a very hands-on level signalled to the users that IS intended to work with them in an active partnership. Barton noted, “Roger treated us like clients and this led to a fundamental change in the quality of the IS-business relationship.” Added David Gibbens, “For the first time business and IT are collaborating on a major initiative. Roger and I have been joined at the hip throughout this entire project.”

Service Excellence. This system taught both IS and users a great deal about what makes service excellent. Users had to learn more about their business. No longer could they just know that a particular client liked to work in a particular way. They had to think through their protocols and make them systematic, ensuring that the system would provide the same level of service without human intervention. Now, the system takes care of routine transactions and when traders get involved with clients, they are truly adding increased value to the deal. This provides greater satisfaction to both customers and traders. Conversely, IS staff were placed on the front lines for the first time, dealing directly with external customer problems. They could no longer afford to take a laid-back approach to service. Today, a three-person client-care team has been integrated right on the trading floor to provide immediate solutions to customers with problems.

While the FX Direct application has resulted in the development of a robust platform for doing e-business, it has also demonstrated to the firm the value of thinking and acting strategically when making IT investments. Today, business and IS have an “unbreakable partnership” which has totally changed how the company views IT. As Jamie Barton commented, “We have gone from spending carefully but reactively on IT to spending carefully and strategically.”


Revolutionizing Customer Service Delivery

Clarica, until recently known as The Mutual Group, was founded in 1870. It provides life and health-care insurance for more than four million individual and group customers. It offers professional financial-planning services and a range of savings and investment products. It also provides corporate loans and mortgages for thousands of Canadians and businesses across Canada.

The insurance business has become increasingly competitive in recent years. This has fuelled an industry-wide drive to become bigger and more customer-responsive. In 1996, Clarica realized that the company had to change how it handled customer service. Traditionally, all requests for customer service (e.g. address changes) went through Clarica agents. The agents then communicated with head-office staff who processed the change. While the agents liked this model because it kept them in touch with their customers, management recognized that as Clarica acquired other companies with different products, services and new customers, providing excellent and timely service was going to be increasingly difficult and expensive. It therefore began to look at different models of service delivery and to explore how IT could help implement them.

The first step was to articulate a retail customer strategy. Clarica wanted to provide its customers with the same level of individualized service and information they had always received but to provide them any time they were needed. The company also wanted its agents to stop being middlemen so they could focus on sales. Nevertheless, it wanted to maintain the strong customer relationships the agents had developed.

The Vision. When IS joined the team to develop a new retail service-delivery model, it was clear that a single customer-service centre was the most cost-efficient way to deliver customer service. A centre would enable customers to contact the company directly by telephone, or through letter, fax, e-mail or the agent. First-tier response would be largely located in Ottawa to take advantage of its large bilingual workforce. Second- and third-tier support would continue to be located in Waterloo, Ont.

The IS Challenge. Locating the centre in Ottawa meant hiring 75 new employees with no experience in the financial industry. The IS challenge was therefore to provide a Customer Service Workbench (CSW) which would enable inexperienced employees to professionally handle more than 5,000 different types of customer-service requests for hundreds of products requiring interfaces with dozens of legacy computer systems.

The development team was given a blank sheet and encouraged to see this as an opportunity to develop new ways of thinking about using IT to solve these business problems. Brian Gill, Clarica’s CIO, remarked that he is proud of the new levels of innovation this team achieved with the CSW. He credits having team members with a strong understanding of both the business and the systems needs involved.

Development. There were a lot of challenges. Technology was a huge issue. After determining that there wasn’t a product on the market that would meet their needs, the team decided on a home-grown solution. With the final business and technology solution still uncertain, by June 1997, the team had developed a prototype “fat client” system (which it made the users promise to throw away) to test a variety of concepts involved. This led to a number of innovations in the final product.

A key innovation was separating the processes from the technology involved. Whereas traditionally, systems have embedded processes into the technology solution, the CSW provides a process-design interface that enables users to control and dynamically change the processes involved as often as they wish. A work manager directs the Customer Service Representative (CSR) about what to do next, integrating the necessary tools and screens to step him or her through processes in a clearly defined and repeatable way. Gill notes that the innovative architecture caused a few ripples in IS because it represented a collision with architectural standards. However, he pointed out to IS staff that IT architecture needs to support business needs and not tether the company to models of the past.

“We had a truly difficult and high-value problem which demanded a coordinated effort focused on the corporate good. There was a huge business return for getting over the technical obstacles involved,” he said.

In addition to managing the process effectively, the architecture also had to provide a functional and robust bridge between the CSR and a number of different legacy systems. The team built more than 47 different tools to enable the CSRs to do this. One of the most interesting was a host navigation tool that enabled the system to effectively browse the company’s legacy systems, jumping automatically from system to system as needed. Another tool enables the CSR to send an e-mail to a process owner to suggest process improvements. Others traverse a number of systems showing the CSR all the business Clarica has with a particular customer and tracking all previous interactions he or she has had with the company.

Another major challenge was to find a way to combine the process flow and the tools with the knowledge needed to do a particular job. The team’s innovative solution was to integrate a knowledge database that explains each step of each type of service requests. Today, as CSRs do their work, information about what to do at each step of the process comes up simultaneously with the tool on their screens. This has enabled the company to easily integrate new staff and make them productive extremely quickly.

A third challenge was to get the users to clearly articulate the business processes involved in every single type of request. Previously, the CSR had been able to do this intuitively; now it had to be done explicitly. The result was the development of a seven-step customer-service operations model that provided an overall framework of how to deal with all customer requests.

The CSW was implemented in Ottawa at the end of 1998 and in Waterloo, Ont., in 1999. Today, it has proven so effective that it is also being rolled out to 500 tier-two and tier-three staff who handle specialized requests and develop new processes and standards. While the CSW was relatively easy to implement with new staff who had never worked any differently, proactive change management was essential for more experienced staff. For example, some agents found it very difficult to change their old ways of working until the tools for working in these ways were taken away from them. It has been hard for people to get used to using a structured process when they have been used to working more flexibly.

Wayne Sigurdson, Vice President of Retail, pointed out that it is extremely important under these circumstances to give people the big picture of what the company is trying to accomplish and to get people excited about it. The company has worked hard at restructuring jobs both in its head office and in its agencies to create new learning and career opportunities for the people involved. For example, agents’ assistants have now become branch manager assistants helping agents with the business and marketing side of their jobs. Some senior CSRs have become process owners while others have become coaches and trainers.

Business Value. One of the things Gill is proudest of about this system is that the benefits that were forecast for it were actually achieved. “Many times impressive cases fail because a system’s technology isn’t workable or there is business-value leakage,” he notes. “We have been able to seamlessly manage a 100-per-cent increase in our customer base and a 50-per-cent increase in sales force. Productivity has improved by 20 per cent; training time has been reduced from six months to one month; and cycle times have dropped by 25 per cent.”

While originally the system was designed only for the call centre in Ottawa, it is now being deployed more broadly in the company among all retail services units. The group and U.S. divisions of the company are planning to install it as well. Interestingly, the company has also received a number of enquiries from competitors about whether the company might package and sell the system externally. Although no decisions have been made about this, there are strong indications that the company could develop this as a new line of business if it wished.

Collaboration. The CSW project was led by two co-project leaders — one from Retail Services and the other from IS. A cross-functional team from many different parts of the organization collaborated in both the physical and the virtual workspace. All members of the team found it enormously satisfying to work on such a successful and innovative project. But the benefits of this collaboration have reached well beyond the team boundaries, remarked Gill. Overall, there is a new pride in the IT organization and what it can accomplish and this has been a real morale booster for the whole IS organization.

Service Excellence. Today, every CSR has the “big picture” of every customer he or she deals with. This enables them to achieve an unprecedented level of customer intimacy and to ask intelligent questions that will save the customer effort (e.g., would the customer like to change the address on her health insurance as well as her life insurance?) The system also tracks all previous interactions the company has had with a customer ensuring that whoever deals with him or her has a complete history of what the status of all items of business are. Because all requests follow the same procedure, customers can now be guaranteed that their requests will be handled in an optimal fashion every time they call in. Behind the scenes, the CSW provides managers with actual data to monitor workloads and to set appropriate staffing levels, helping them to minimize customer waiting times.

The CSW project has revolutionized customer service at Clarica and put the company in the front ranks of the financial services industry for customer service. By combining knowledge, data, processes and technology on a just-in-time basis, this project has also transformed the way IS approaches systems and brought new levels of flexibility and innovation to the business as well as providing significant business value.


Solving a Huge Storage Problem

Gulf Canada Resources is a senior independent oil and natural gas company with headquarters in Calgary. It has an asset base in excess of $5.5 billion and reserves of more than 1.4 billion barrels of oil. In 1985, Gulf Canada sold its marketing and refining divisions and became an exploration and production company only. Since that time, it has acquired several smaller oil companies and has assets in Indonesia, the North Sea and Australia. To achieve its vision of becoming one of the world’s preeminent oil and natural gas companies, Gulf must find more oil and gas, do it better than its competitors, and at less cost. The company’s business plan is therefore to grow the company with a balanced program of exploration, exploitation and acquisition.

Geophysicists find and exploit oil and gas reserves by examining seismic data. Crews “shoot” data along seismic lines and take extensive geophysical records in a variety of forms. Geophysicists then process the raw data by applying a series of corrections to it to create a “stack tape” and a pictorial version of the line. Unlike other types of automated records, seismic data consists of one extremely long record. The sheer volume of seismic information per line makes it difficult to store and retrieve on conventional media. Special high-density tape is therefore the storage medium of choice.

By 1996, Gulf Canada had accumulated an enormous amount of data. It had more than two million physical items, such as tapes and field notes, dating back to the 1940s from numerous sources, including its own surveys, those of the companies it had acquired, data owned jointly with other companies and data it had purchased. The company’s seismic assets, on which it based many of its decisions, were stored on a wide variety of media from analogue tapes, reels and cartridges, to paper, film and microfilm. They were spread out across five conventional physical warehouses.

When a geophysicist wished to examine the seismic data for a particular area, he or she had to make a request to a data technician who would determine what lines were needed and then initiate a physical search of the warehouses. The tapes requested would then be boxed and physically transported from the warehouse to Gulf’s offices, where the technician would unpack and inspect the tapes, make sure the desired data was available, and mount the tapes for the geophysicist to examine. The whole process would often take weeks to complete.

This system of data management, while common in the oil and gas business, was problematic for two main reasons. First, with land sales and potential “plays” occurring every two weeks, it was extremely difficult to make timely decisions based on all known information about a property. Clearly, the more seismic information the company could bring to bear on its decisions, the better it could decide where it wanted to do further work. Second, the company’s data assets, on which its future depended, were extremely vulnerable. There was no back-up. When needed, the only copy of the information requested would be physically transported to Gulf’s offices. The tapes on which the data resided deteriorated with each reading. Thus, protecting its seismic assets was fundamental to the future of the business.

The Vision. In 1996, Alice Bienia and Kathy Taerum, the geoscientists in charge of the company’s data assets, decided that it was time to improve the storage and management of Gulf’s seismic data. This would not only protect valuable company assets, but would enable geophysicists to access data directly themselves from their desktops, rather than going through a data technician. This would improve cycle time, extend the life of the seismic data assets, and provide more effective data-management techniques.

The IS Challenge. Finding the appropriate technology to efficiently and effectively manage seven terabytes of data was the initial challenge. Bienia and Taerum brought in Excalibur-Gemini, a seismic-data consulting firm, to assist in preparing a Request for Proposals and manage the project. While many possible solutions were suggested, most only solved part of Gulf’s problem. For example, while the data could have been put on CDs, it would have been stored in a proprietary format which would mean that the company would have to maintain all its original tapes, because the data could not be recreated if the CD company went out of business. Other solutions didn’t provide back-up or disaster recovery. After an extensive review of all responses, Kelman Technologies (KTI) was selected to consolidate and archive the physical data on its Data Management and Storage System (DMASS).

This system consists of a data bank of 3590 tapes each holding 10GB of data. Using a robotic data-storage system, DMASS is able to automatically respond to a client request for data, select the appropriate tape, read it and deliver the data to the desktop in a matter of minutes. Proprietary software and duplicate systems ensured that data integrity, security and disaster recovery were addressed. Gulf Canada technicians worked with KTI to help develop the user interfaces.

Brian Widdoes, CIO of Gulf Canada, joined IS after the project had gotten underway, and he had to determine what role IS would play in it. A quick review of the project’s objectives showed that the project team had done its homework and was moving the company toward a totally integrated environment. Satisfied that Taerum had addressed security and integrity concerns, he asked himself, “What’s the best thing I can do to make this project happen?” Instead of adopting a “not-invented-here” attitude or going back over what had already been done, he decided that a collaborative approach between IS, KTI and the user community would be most effective. Thus, IS played an enabling and oversight role for the project.

IS’s other main responsibility was to develop the telecommunications linkages between Gulf’s office and KTI’s computer room. Calgary is fortunate in that it has excellent fibre-optic networks that enabled IS to create a virtual private connection between the two organizations. IS specialists tuned this network so that as much as one gigabyte of data could be rapidly sent between the companies.

The retrieval and movement of the data assets was a huge task. With so much data from so many sources, there were a wide variety of different naming conventions and no standards. The team had to map the data, identify duplicate information and oversee its transfer from the warehouse to KTI. Because data in a particular geographic area took several months to transfer, the team had to devise a mechanism to keep track of every tape so that it could be used in the interim if necessary. Since all processed data was kept, there were often 15 to 20 stack variations of the same raw data. Eventually, the team found a mechanism that could recreate different versions of the processed data from the original without having to store all the different copies.

By June 1998, most of the core seismic lines had been transferred to KTI. Since that time, any Gulf employee has been able to query, retrieve, view and plot seismic data online from their workstation. New and non-core data has gradually been added and today, users can access all seismic data for western Canada, the Northwest Territories and some parts of the northern United States.

The data technicians loved this system from the start because it made their jobs so much easier. Initially, the geophysicists were uncertain about calling up their own data. Gulf adopted a process of gradual education for them and the system was slowly accepted. Interestingly, over a year later, their data access, as measured by the number of lines looked at, is up 340 per cent relative to the old system.

Business Value. This system is generating considerable benefits for Gulf Canada. First and foremost, the company’s valuable data, on which its business is based, is now secure and protected from deterioration. Second, Gulf’s geophysicists can now make drilling and other types of decisions with more confidence because they have access to more data for an area. Data analysis and decisions can also be made within days or hours rather than weeks. Third, the productivity of Gulf’s data technicians is up more than 400 per cent and several staff have been able to be redeployed. Finally, once archived in DMASS, original field tapes do not need to be accessed ever again, saving the company the cost of storage and couriering. The company is now actively investigating how this system can be expanded to seismic data in other parts of the world and to other types of scientific data.

Service Excellence. The resulting system gave Gulf Canada virtual control over its own data 24 hours a day, 365 days a year. Geophysicists now have almost instant turnaround on their data requests. The system also provides additional functions, such as the use of interpretation tools and the creation of maps and reports, which enhance their views of the data.

Gulf Canada’s seismic archive is the largest and most sophisticated of its kind in the world. Its integration of robotic technology, advanced telecommunications and detailed knowledge of seismic data, gives it a significant competitive advantage and leading-edge data management processes. The speed with which such large amounts of data can be accessed and delivered to the desktop is unprecedented and sets a new standard for data processing in the oil and gas industry.

Heather A. Smith is a Senior Research Associate at the School of Business, Queen’s University, and coordinator of the ITX Awards University Advisory Council. She is a co-founder of the Queen’s I/T Management Forums, which explore IT and knowledge management issues, and the author of Management Challenges in I/S . She can be reached at [email protected].

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