Examining The Business-Oriented CIO

How IT turns business priorities into business realities.
Examining The Business-Oriented CIO

Decisions about IT almost always have business implications. Even priorities that seem purely technological—moving to cloud computing, switching to a system with better database handling—are usually rooted in a business goal.

But the best IT managers work closely with their colleagues to expressly address business priorities with their development, acquisition, and choices of technology. We’re talking purely business goals like innovation and customer retention. When employees and customers have problems, IT can often provide solutions.

To do that, though, IT managers need to understand the company’s daily challenges—in the office, on the manufacturing floor, on a sales call. For Ryan Kingstedt, director of information technology for Vascular Solutions, Inc., a medical device company in Maple Grove, that means attending sales meetings and departmental brainstorming sessions that would seem to have little to do with his job. It’s VSI’s standard procedure to have an IT staffer present at any kind of meeting that touches on technology or changes processes. And Kingstedt just about has his company trained to call him when the topic of a meeting starts to involve an IT component.

“We put in a large training system, a learning management system, and it went down completely outside of IT to start with,” he says. “They started investigating how to distribute training better over the web, and then before we got too far down the road said, ‘Oh, this is starting to sound like an IT objective. We’d better bring them in.’ Because it’s really an IT solution. Training is secondary. How we’re delivering it, how we’re going to give access to a ton of remote employees, internal employees, maybe even vendors and distributors, is a huge IT project.”

Early involvement by IT can save huge amounts of money and heartache later, Kingstedt finds. “We’re here ultimately to support the stuff, provide an environment to host the technologies,” Kingstedt says, “but also just to be a liaison to make sure what they’re bringing in works with our other systems. There may be three or four decisions or options that look equally viable, and IT can come in and be that voice that says, ‘Let’s look at it from more of a technical perspective: Can it be hosted on the infrastructure we already have as far as our databases and servers, or would we have to bring in a whole new environment to host it? Does it integrate with our existing user accounts and security the way we have it?’”

David Harkness, vice president and CIO for Xcel Energy, Inc., in Minneapolis, says his company kicked off a program a couple of years ago called Productivity Through Technology to address business problems with IT. As part of it, Xcel asked 70 to 80 employees across all of its operational groups to participate in a series of forums and brainstorming sessions on how to leverage technology.

“I think we came up with something like 240 unique suggestions,” he says. “That, along with talking to other utilities, stimulated some ideas. [Then we asked the] senior-level employees who had the most experience to go through those hundreds of ideas to rationalize cost against opportunity.” Some of the ideas were big, such as major system upgrades. But some were “quick-hitters”—things Xcel could do easily to leverage its IT resources. “For example, we have different compliance reporting requirements that we have to meet,” Harkness says. “So we went and bought some tools that would help facilitate that compliance reporting. We were spending hundreds of hours across multiple people to generate these compliance reports, and we wanted to streamline some of that.”

Quality Assurance and Compliance

Utilities aren’t the only companies with significant compliance concerns. “We can’t get a cup of coffee without the government [being involved],” Kingstedt says. “There’s just so much tracking the government wants. It’s one thing to do everything right and not break any of the rules; it’s another thing to write down everything you do and make sure you can prove it when somebody questions you.”

At Vascular Solutions, Kingstedt has implemented several IT innovations whose express goal is making the company’s quality assurance and compliance efforts easier. Medical device companies’ marketing content is highly regulated, he explains; sales reps can only say very specific things about the products and can’t make any off-label claims. So VSI’s IT department equipped its sales force with iPads and built an app that delivers marketing content. It enables reps to catch cardiologists in the hallways between scrub-ins, show them a quick animation about a product, and email them more information if they’re interested.

The manufacturing floor is, if anything, even more tightly regulated. Every piece must be perfect, and every action must be documented. So the IT department uses monitoring equipment and data aggregation to create a detailed record of all the actions taken on each piece that goes down the line.

“[We’re] tying it in to our network and being able to count, not even just throughput of how many go through and how fast they’re done, but also the actual little steps,” Kingstedt says. “If one person does five things—bonding a catheter and crimping it and putting on a marker and so on—we can monitor those steps in a system that aggregates the data and then be able to present that to the leader of the line. We also have integrated some video monitoring so we can review what was done.”

The next step, to be rolled out within a year or so, is to use the Xbox Kinect to view manufacturing-line employees in wireframe, making sure they’re completing manufacturing steps in the right order and doing them with maximum efficiency. The IT department is testing the Xbox now.

Customer Retention

David Seffren, information technology director at Dental Services Group in St. Louis Park, says the churn rate in his company is “too high and we know it. The thing is, it’s not just us. It’s a lot of dental laboratory companies. Customers are switching from lab to lab. So the competitive advantage is to reduce that compared to our competitors.”

Through market research, the company has found that its customers place a high value on communication. So Seffren set out to tweak the company’s homegrown CRM program so it would encourage general managers and sales reps to stay current with their customer contacts.

“What we’ve done is developed a series of reports that will show the reps and the general managers exactly when that customer was last contacted and flag them, on a schedule that we have developed of who needs to be contacted and when,” he says. “Customers who are new to the company or haven’t done business with us in over a year need to be contacted every seven to 10 days. That would be a general manager’s responsibility. So they’re going to receive on a daily basis a report that shows the contacts they need to make.”

Established customers still need to be contacted regularly, but the company wants to make sure not to badger them. So the software prompts sales reps to call them on a longer schedule.

Increasing Efficiency

Eagan-based Holmes Corporation, which provides certification exam preparation products, uses continuous-improvement programs such as Lean and Kaizen, so its CIO, Erik Hinkie, is always looking for ways to use information technology to increase efficiency throughout the organization. Hinkie says his department’s goal is to streamline everyday tasks so that the company’s teams have more time to spend on value-added activities such as customer service, support, and sales.

“A few years ago, we focused on our customer service department’s order processing,” he says. “We did a time study to figure out how long it was taking them to process orders, and we mapped out the entire process. We determined that there was a different way we could be order processing, and we could also be making some improvements to the technologies we use for ordering to dramatically reduce the amount of time we were spending per order. It had a 20-hour-per-week positive impact—a half-person! And we’ve only got five people on our customer service team, so that’s a big time savings.”

Currently, he says, his department is eyeing customer service. By adding additional detail to tracking systems, his staff has been able to break out customer support issues into categories and rank them in order of occurrence, then work with other managers to figure out how to help prevent those issues from occurring as often. For instance, if customers are calling because they’re having problems logging in, it could be that the login page isn’t written clearly or that the emails the company sends to customers need to be rewritten.

Hinkie says Holmes employees are starting to understand how IT can help them. “The key with any sort of continuous improvement like this is instituting a cultural change in the organization whereby every day, people are saying, ‘Wait a minute, in the last week I’ve done this same thing eight times, and it takes too long,’” he says. “We’ve been taking this approach now for a few years, and there are more and more folks bringing forward issues that they’re seeing that could be improved.”

Enterprise Growth

For much of its 50-year history, Greenfield-based Skybridge Americas has been fulfilling orders within four to six weeks instead of getting products out the door the same day. Its existing customers are perfectly happy with the arrangement, says Skybridge’s former senior director of information services Jim Aulick.

“But the problem we’ve been finding is that our new customers take a look at our old system, say ‘Well, you guys are not current,’ and they’ll walk away,” he says. “Right now, the business is profitable, but just a little bit. We could double the size of our business with very little additional cost, just by adding clients. But I can’t add clients with old technology.”

Aulick has spearheaded a campaign to replace all but one of the company’s computer systems and to change its business model from traditional fulfillment to e-commerce fulfillment.

“All the old systems needed to be replaced because they were very old technology, but more importantly because they did not support the new business model,” he says. “IT has been one of the drivers toward changing the business model. Within a year, we will be positioned to be very competitive because of cost reductions and improved functionality for our clients.”

How competitive? Well, by swapping out old hardware for new, the company will remove the opportunity cost of not being able to attract new customers. But it will also reduce per-transaction costs markedly.

“I anticipate something like another 60 percent,” Aulick says. “The hardware and software solution we have going right now is going to get increasingly expensive as I’ve got to replace old hardware with more old hardware that’s rare and costs a lot more than contemporary. So getting off that old-hardware platform allows me to cut costs a lot. The other part of it is, I will not be doing development on the warehouse management system. So those two pieces will reduce the future costs from 5 cents a transaction to 2 cents a transaction. That’s significant.”

Cost Reduction

Tony Lusiba, director of information technology at J&J Distributing, a wholesale food distributor in St. Paul, says most of his IT initiatives begin outside his department. When it comes down to it, they’re all ways of addressing business issues.

“It usually starts out with a problem that somebody has,” he says. “Often there’s a process that’s taking forever to get done and they want to find a way to streamline it.”

For instance, he’s been cooking up an EDI (electronic data interchange) system that will allow customers to enter their orders via their computers or devices rather than calling and reciting the items over the phone. If they tend to order the same products over and over again, they’ll be able to duplicate past orders.

But his biggest impact may have been his decision to replace PCs with thin clients or zero clients (terminals that don’t have processing power of their own, but rather link to data on a central server).

“Thin and zero clients are more energy efficient than personal computers,” he explains. “Some clients use up to 85 percent less power than the PC, which translates into saving the company money on our monthly Xcel bill.”

The new regime also saves the IT department valuable time and resources. “For the longest time, we had personal computers,” he says. “It would take a long time to prepare those work stations for all the employees in the workplace. The introduction of the thin clients was good because now you could in essence make a copy of one PC the way you want it to be, and then kind of have it go over to the rest of the network with very little downtime for the user. If somebody’s computer were to die today, I could easily just go in there with a new thin client, put the new image on there, and then be up and running in less than 15 minutes . . . which is obviously a good thing for the business users here and the people who need to get their work done.”