Raymond Gogel has an unusual educational background for a corporate CIO -- a Ph.D. in philosophy with a focus in human values and paradigm shifts. But he has used that training to successfully eschew some traditional IT practices in favor of more innovative methods. That approach is paying off big at Xcel Energy, a Minneapolis-based energy company, where Gogel, 54, leads the IT department.
Take, for example, the economic value-add metrics that Gogel designed as part of a new program management office. The metrics revamped Xcel's budgeting process by moving all IT capital funding from business unit budgets to IT. The process requires corporate units to compete for IT dollars by citing concrete business value. "IT costs are driven only in part by infrastructure; other costs come from applications that sit in the units," Gogel says. "How do you really focus on an enterprise ROI ... so IT is only accepting projects that drive significant enterprise business value? When you spend capital, that is your opportunity to transform a business. There has to be significant enterprise architecture around that, or you are just setting up each business as an autonomous business but not maximizing enterprise value."
As a result, the project has contributed year-to-date savings of 17%, and the company plans to apply the approach to other key areas, such as Sarbanes-Oxley Act compliance and discrete demand for IT assets such as phones, handhelds and desktop computers.
Gogel has also turned conventional outsourcing wisdom -- squeezing suppliers for the cheapest services -- on its head, opting instead to form a strategic advisory board made up of suppliers and partners chartered to not only provide advice on technology best practices, but also to find new ways to transform the business.
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Raymond Gogel, CIO at Xcel Energy Image Credit: Patricia Barry Levy | |
Seven board members have jointly invested $10 million to work with Xcel to attack problems such as utility distribution and changing how IT enables outage management. The partners benefit from the intellectual property in the technologies they design.
"Everything we have done here for the past two and a half years ... has really been focusing on how do you drive partnering that focuses on mutual value exchange," Gogel says.
David Marley, managing director at IBM, which is on the Xcel board, says he knows of no other company that has an advisory board structured like Xcel's. "Ray is a strategist, not just a CIO," Marley says. "That is his strength. Anybody can be an administrator on a contract. How many people have a strategic advisory board made up of partners and venture capitalists willing to invest ... to work at Xcel? It is a much more fruitful approach than calling all your vendors and asking to reduce costs by 5%."