Masters of IT Economics - How Three Visionary IT Executives Improved IT Economics to Realize Greater Value pot

On the following pages, senior IT executives from New York City Health & Human Services, GE Money and AXA Tech share their strategies, results and recommendations for improving IT Econo

Masters of

IT Economics

Volume 1 / Issue 1

How Three Visionary IT Executives Improved IT Economics to Realize Greater Value

Managing IT Economics is an art.

Managing IT Economics is about getting more value out of IT

It involves balancing cost and risk trade-offs Meeting the endless demand for services with a finite set of resources Supporting business objectives to drive profitability, growth and competitive advantage, while running a fiscally responsible IT organization Becoming a Master of IT Economics requires visionary leader-ship, business savvy and new approaches for changing the cost-value equation

On the following pages, senior IT executives from New York City Health & Human Services, GE Money and AXA Tech share their strategies, results and recommendations for improving

IT Economics.

A

with

Ahmed Abdelmoteleb, CTO

GE MONEY AUSTRALIA AND NEW ZEALAND 2 Kamal Bherwani, CIO

NEW YORK CITY HEALTH & HUMAN SERVICES 6 Antonio DiCaro, CTO

Masters of IT Economics

Ahmed Abdelmoteleb

Chief Technology Officer, GE Money Australia and New Zealand

As part of the General Electric family,

GE Money, also known as GE Consumer

Finance, is the personal finance provider

of choice for over 130 million people

worldwide GE Money has a global

presence across 55 countries In Australia

and New Zealand, GE Money serves

over 3 million customers.

Career Highlights

• 10+ years in financial sector

• Joined GE, 2003

• Transferred to GE Corporate

in U.S as Global Infrastructure Manager, 2004

• Degree in Engineering — Computer Systems

Personal Interests

• 4-wheel driving and exploration

• Being healthy and active with family and friends

Q.A classic economic principle is leveraging economies

of scale to drive down the cost of production — how does this apply to your experiences?

A.In the late ’90s, GE Money in Australia and New Zealand grew primarily through acquisi-tions As with a lot of companies that are active in M&A, our primary focus was on integra-tion projects About five years ago, GE Money continued the growth agenda with more of an emphasis on organic growth As a result, we’ve become more focused on delivering a higher-quality IT service

We first engaged our Six Sigma quality organization, something at which GE Money excels globally Also, through the help of our GE corporate parent, we’ve been able to take advantage

of economies of scale and our global talent resources We have made our organization much more efficient by consolidating our facilities and data centers, rationalizing redundant appli-cations and improving our processes across the entire organization

One example of an IT process where we’ve really become much more efficient is provisioning servers In the past it could take 34 days to provision a new server We leveraged our global relationships with partners like CA and HP, who helped re-engineer our processes and better leverage our investments to reduce our provisioning effort to six days That’s a savings of over

$12,000 every time we provision a server Our new streamlined process involves publishing offerings through a service catalog, a workflow that automates the approval process and back-end integration to our inventory and soon our financial systems This process now frees up more time for us to deliver a better outcome for our customers

Q.How do you ensure technology investments are aligned with business strategy?

A.Every technology investment we make is discussed at a senior executive level with great interest from our CEO and CFO on returns and alignment with our business strategy, both locally and globally

For example, virtualization is an area that we are investing in But, for us, virtualization is not only about saving cost It’s about adding agility so we can more quickly deliver a business requirement and ultimately a customer outcome

When we’re working with a business unit to develop a new service offering, we need to be able to quickly determine whether the application being developed runs better in a Windows, Linux or Sun environment, and we want to test multiple versions of operating systems, hard-ware and softhard-ware To take this heterogeneous approach, you’re going to need management that can handle that

If our primary goal were to deliver an application in the least expensive way possible, we’d standardize the platform that applications can be developed on Instead, we leverage built-for-purpose, nonstandard platforms, so our business can be more agile and our services more innovative

Q.I understand you’ve instituted a formal IT Governance process What were the main drivers and what benefits have you seen?

A.In the past, most of our technology investment decisions were being made as part of the project execution process But what we found was that when you have hundreds of developers

“If our primary goal were to

deliver an application in the

least expensive way possible,

we’d standardize the platform

that applications can be

developed on

Instead, we leverage

built-for-purpose,

nonstandard platforms,

so our business can

be more agile and

our services more

innovative.”

Ahmed Abdelmoteleb

Chief Technology Officer

GE Money Australia and New Zealand

unable to continue coding because they are held up waiting for a purchasing decision to be made — this is not conducive to making sure the right decisions are made

So, we introduced a formal IT Governance committee that I chair Now we can make technol-ogy decisions faster and ensure alignment with both our GE corporate standards and business strategy Our Enterprise Architecture team is also engaged in this process, so they can make the right recommendations, taking into account our long-term requirements

Our governance process has also given us broader visibility into IT costs, investments, risk items and compliance issues — we might identify, for instance, that across a series of projects we’re spending a lot of money on an infrastructure element that doesn’t directly support our strategy, and we can make an informed decision about it

Q.What steps can a CIO take to begin instilling a service-focused culture?

A.Turning a culture around generally involves turning your processes around But this is clearly easier said than done At GE we must first apply our Six Sigma LEAN methodology to ensure that we have an optimum process It’s also important to set realistic goals and build the foun-dation that will help you improve your processes

We’re believers in ITIL,® but there are some assumptions ITIL makes, and to successfully implement ITIL requires a level of maturity that many organizations don’t have For example,

if you don’t have the right monitoring tools in place or if you are organized too deeply into silos, you won’t be able to make the necessary process improvements

My view of service management nirvana would be where you know when a particular valued customer is having difficulty with an application, you’re automatically alerted and informed what to do to fix the problem But before you can even think about attaining this nirvana, you need to have the basics in place You need to monitor the application performance from the customer point of view, you need to have built your application so that it can respond in cer-tain ways when thresholds are crossed

You will also need to have open lines of communication across the groups responsible for the different divisions within IT At GE Money, we have built a dedicated team that is focused on the delivery of services end-to-end This team has greatly helped improve collaboration and has helped us build a service-centric culture

Q.To what degree does your IT management strategy change when the broader market economy changes?

A.No one is immune to market and economy changes, especially what’s happening currently

at a global level But this is the time when it is most important for us to help manage the busi-ness to balance our commitment to provide shareholders with acceptable returns and our customers with competitive products and services

We put a lot of emphasis on transparency and making sure that the business executives have insight into both our costs and the value being delivered There is widespread understanding

of the cost savings we’ve realized in the past four years So even now, when the economy is taking a downturn, we haven’t faced pressure to significantly further cut operating expendi-tures beyond what we are already doing as part of normal business

We will continue to look closely at balancing our commitment to provide our shareholders with acceptable returns and our customers with competitive products and services

Kamal Bherwani

Chief Information Officer, New York City Health & Human Services

NYC HHS is a domain that comprises nine city

organizations, which focus on social services, criminal justice and health In 2008, Mayor Michael Bloomberg announced a groundbreaking new system,

HHS-Connect, that will link more than a dozen city

agencies so that caseworkers can share client

information without compromising confidentiality.

Career Highlights

• 20+ years in technology

• Has been the CIO of three diverse

NYC agencies focusing on public health, housing and construction

• CEO and Chairman of Relativity

Development, a global technology investment firm

• CIO of Bridas Corporation,

a global energy firm

Personal Interests

• Motorcycle enthusiast

• Traveling with his family

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Q.IT has a classic economic supply and demand problem — infinite demand and limited supply

How do you address this challenge?

A.The keys to managing demand are having a consistent methodology for prioritizing projects and basing decisions on the potential for a project to meet agreed-upon organiza-tional outcomes

As new projects are requested, I meet with the business executive spearheading the project and we agree to the expected outcomes, including the projected timeline Typically there is both an expected cost savings and a “mission effectiveness” outcome For instance, we might set a goal for how IT can contribute to an organization’s goal to reduce homelessness year-over-year No new project enters our pipeline until we have gone through this exercise We make decisions about which projects get funding based on the expected value

Then, we continue to evaluate projects and reprioritize spend even after projects are under-way We have created a formula to measure the Net Present Value of all of our in-flight proj-ects We compare the cost to finish a project against the expected return of the project And because this changes as the project is executed, it’s important to reevaluate this every two to three months for each project

Q.Too often it seems that IT is seen as a cost center and not an enabler of business objectives.

How can CIOs change this perception?

A.In many organizations, the IT organization has a credibility problem The perception is that projects take longer and cost more than planned and it’s unclear what value is delivered The first step to building credibility is to prove that you know what it costs to manage ongoing oper-ations Project and portfolio management can help you make better timeline and cost projections

If you have bad news to communicate — that costs are going to be higher or timelines longer than expected — don’t wait to tell the business executives Communicate early and often The sooner you close the gap between what people expect and what they are going to get, the better Financial transparency is also important for establishing credibility Everyone should be on the same page about where IT spend is going Finally, don’t forget to take credit for past successes Often the true value of a new service offering isn’t fully realized until years after it is launched

Q.What are your strategies for reducing costs without compromising service?

A.I look at IT across three different parameters: Governing services, managing services and securing services Increasing automation can help you realize operational efficiencies across all three of these parameters

For instance, in the realm of IT Governance, you can realize cost savings by automating the way work moves between various project teams

For management, I focus on virtualization and automating data center tasks like provisioning servers and storage Service desk is another critical area for cost savings, especially if you

can help users help themselves with knowledge tools, a self-service interface and automatic password reset

For security, I focus on centralizing logging and event correlation If you have good centralized data, you can manage threats with a relatively small staff

Q.What role does innovation play

in improving IT Economics?

A.Innovation is extremely important in our efforts to support organizational goals

One of our major initiatives is called HHS-Connect — it’s a massive effort to bring online health and human service interactions that have typically been handled over the phone, through the mail or in person The in-person, paper-based processes are very inefficient and costly

One recent HHS-Connect example involves the process for applying for free or reduced-price school lunches There are 1.1 million schoolchildren in New York City, and 75% of them apply for the school lunches each year With an investment of about $900,000 and, in just a matter of months, we launched an online form for applying for school meals in September If we can get households representing just 10,000 children to use the online forms, the project will pay for itself in under a year We expect to realize a return of several million dollars over time due to better allocation of funds and the operational efficiencies created by the online process as disintermediation occurs from the paper to the online process

So, this is a great example of a government agency leveraging a modest technology investment

to yield great results in a short period of time It’s the right thing to do for the people we serve, and it’s the right thing to do for us

Q.How do you manage innovation at NYC HHS?

A.Establishing an enterprise architecture is essential Otherwise, every new service offering would be based on a unique architecture The result would be even greater complexity, and the cost of maintaining these new services would be too expensive

The challenge is that requests for new services and the funding for those services come in a siloed way It’s up to IT to allocate funds from individual projects to be able to build an enter-prise architecture over time — and to convince business executives of the value of moving to a shared service model

I’ve found that it works best to incrementally adopt an enterprise architecture A place to start might be with a centralized infrastructure, then establishing a centralized approach for middle-ware, identity and access management, enterprise content management and so on The order

in which you proceed will likely depend on the new initiatives underway The business objec-tives should drive the technology projects, which should drive your enterprise architecture