Integration: IT's Albatross

Death. Taxes. IT integration projects. Few things are more certain on life's road. The CIOs who drive massive, ambitious and sometimes scary integration projects need to be take-charge individuals with loads of technology and management experience who are willing to take risks but know when to stop racing ahead. They also need to have a keen understanding of the business in order to earn the trust of everyone involved.

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Integration:
IT's Albatross


Integration
projects are unpleasant, inevitable and put huge pressure
on IT teams. When done right, though, they can eliminate
redundancy and pay off big. Managing these projects
takes a certain kind of individual to pull it all
together.What
types of skills come into play in large integration
skills?


How
does an IT manager best update technology, while improving
business processes?






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"The first thing to consider with an integration project is the potential disruption to the business," advises Roger Gurnani, vice president and CIO at Bedminster, N.J.-based telecommunications provider Verizon Wireless, a subsidiary of Verizon Communications.


Rob Carter, executive vice president and CIO at shipping giant FedEx Corp. in Memphis, agrees. "It's riskier integrating internal business functions, such as here at FedEx Ground or FedEx Freight, because integration between them might hurt business performance, because IT has been optimized for [that particular] business," he explains.


These CIOs must confront what Jonathan Eunice, an analyst at Nashua, N.H.-based Illuminata Inc., calls "a key value of IT that has been around for decades and will be around for at least another 10 to 20 years: interoperability and integration."


According to Eunice, there are many reasons behind integration projects: mergers and acquisitions, a realignment of departmental responsibilities and technological change, to name just a few. But the primary reason, he says, "is because business value is about having systems that work in concert."


Pulling It All Together

Eliminating redundancy in IT operations was a core concept behind the final merger in April 2000 of nine companies' sprawling wireless businesses that came together to form the 28 million-customer operation of Verizon Wireless. Now the nation's largest wireless telecommunications company, Verizon Wireless generated more than $14 billion for its parent in 2000.


"Integration was needed to deliver the synergies and to leverage the economies of scale," says Gurnani, who reports directly to the CEO, Dennis Strigl.


The nine companies used more than 150 major applications for billing, inventory, point of sale, financial management, customer care and all other aspects of business. Gurnani's team has consolidated that number to 70 within 18 months, with an end goal of 25 to 30 core applications. Concurrent with that effort has been data center consolidation work and the development of companywide standards for desktops, e-mail and wide-area network services.


"We're not all done, but we've made significant progress," Gurnani says.


Many CIOs would be daunted by the project's scope, but Gurnani says his 15 years' integration experience from other mergers and acquisitions while an executive at Bell Atlantic Mobile and WilTel (now WorldCom Inc.) gives him the confidence that his staff will get the job done. He also says his experience means he knows the risks and how to create a "rigorous methodology" - a kind of project management checklist to get past the pitfalls that he has fine-tuned over the years.


Although it's important to be comfortable discussing all levels of technology changes during an integration, Gurnani says, IT managers should be focused on business users during these projects because "it's not just the technology, but the business processes that are changed." For example, during any application change, he has made sure that subject-matter experts were on hand with IT staff to handle any concerns from end users even after they'd gone through extensive training.


Ed Winfield echoes that sentiment. As CIO at F.X. Coughlin Co., a $300 million shipping company in Southfield, Mich., Winfield recently oversaw a major overhaul and the integration of the company's supply chain applications. He says it's natural for people to get comfortable with old ways of doing things that may be inefficient. It's the CIO's job to improve the processes while updating the technology. For example, Winfield recalls that his company once had 107 codes for freight designations. It now has three.


"A lot of people were entrenched in the way things were done. They took pride in knowing all the codes," he says. "And they worried that change would jeopardize customer service."


To get them on board, Winfield led a relentless communications campaign, keeping people who would be affected by the changes informed "while we were in process, not after the fact."


Driven by Business Goals

Even without the obvious prompts from a merger, business managers often demand that IT initiate an integration project. That's what happened at Newberg, Ore.-based A-dec Inc., a leading supplier of dental equipment that recently tied together its enterprise resource planning and sales forecast applications.


"We were spending an extraordinary amount of money on overtime in manufacturing because of inaccurate forecasts," says B. Keith Bearden, A-dec's director of information services and CIO. "We had the dollar forecasts right, but we had the product mix wrong."


Top management wanted to correct the problem and looked to Bearden's team to improve the timeliness of data from field sales. The result has been an impressive reduction in sales lead times by two months and a 20% to 25% decrease in overtime.


But even with enthusiastic buy-in from all departments and top management, Bearden notes, you can't assume that you know exactly what people want, nor can you assume that a particular improvement will be considered the right one. For example, field salespeople will want reports designed to illuminate regional or even customer-specific information, while in-house sales managers will want reports designed with more aggregate information.


Bearden says IT can do only so much, especially at the start of an integration project, so you have to be prepared to disappoint some folks. "You can never satisfy everyone," he observes.
Although improving business with technology is the common denominator in any integration project, you have to be careful not to push the envelope beyond what the organization can handle, warns James Jackson, vice president and CIO at $650 million Intertape Polymer Group Inc. in Montreal.


As a result of a handful of acquisitions and the subsequent systems integration and consolidation, Jackson's staff had the opportunity to push technological advances beyond the norm.


"We had to come to closure on the most important changes before we dropped more on people," he recalls. "We were bringing together six different corporate cultures and introducing change initiatives at a very high rate. With so much change, people were beginning to lose sight of their responsibilities."


Being sensitive to an organization's ability to absorb change makes you a more credible leader, Jackson notes.


And as FedEx's Carter observes, "During an integration project, trust starts with the CIO."



A Leader's Guide to High Anxiety


When subtler, less immediate forces require a business process change that impels IT to integrate systems, diplomacy skills come in handy for a CIO as much as communications skills.


At State Street Corp. in Boston, which manages $663 billion in assets annually, a cornerstone application needed to be changed to prepare the bank for the impending T+1 government rules. Those mandates require financial institutions to process securities trades within 24 hours of a transaction, down from the current three working days.


John Fiore, the bank's CIO, was given the task of leading the project, which ultimately automated many manual tasks. The changes made departments nervous because a variety of details in a typical transaction need remediation after the fact.


For example, the business rules for funds dispersal of a given client after processing a transaction might vary from one class of assets to another - say, from U.S. securities to derivatives. Historically, only highly trained individuals understood the distinctions.


Anxiety about automation among business managers ran high, Fiore says, which he never discounted. "It was a fundamental change to the way of doing business," he points out.


To get people comfortable with the upheaval caused by T+1 automation, Fiore made sure the integration between the core transaction mainframe and the Unix processing systems was bulletproof. Along the way, he conducted numerous modeling sessions with business managers to run through how transactions would flow through the new system, and he listened carefully to their concerns.


Then his staff established a series of operational run-throughs with different user interfaces until everyone was comfortable. Then there were dry runs. By the time the integration work was done and the cutover to the new system was made, everyone was comfortable with the new process, Fiore says.


— Mark Hall

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