In 2003, Exelon, the $15 billion owner of two of the nation's largest electric utilities, transformed the way it did business to keep its competitive edge, and to prepare it to handle mergers and acquisitions efficiently. Dan Hill, senior vice president and CIO, spearheaded the move to change IT from decentralized organizations into one centralized group with approximately 800 employees. He says, "We saw the centralized model as a way to increase and to improve our overall effectiveness through standard processes."

Working with senior management, Hill put a management model, or playbook, in place for the new IT organization and adopted the CobIT best practice. His on-going emphasis on relationships, ranging from a mentoring program for employees to the values IT managers require, have earned him several awards including, most recently, the Computerworld Premier 100 IT Leaders award in 2007.

Recently enterpriseleadership.org spoke with Hill to talk about the unique  aspects of his IT organization.

EL: Why did you decide to go with CobIT for the new IT organization?

DH: In devising our playbook, which we call the "management model," we looked at the best way to structure all of our processes and procedures across the organization. It made sense for us to align with an industry standard that we were familiar with, which is why we chose to base our management model on CobIT. We've put a lot of organization and rigor around our management model. Our decision to incorporate CobIT has really paid off for us. In fact, we're looking at taking it to the next level by incorporating ITIL [IT Infrastructure Library] to provide a framework for our service delivery and service support areas. With ISO 20000, we are well positioned because it nicely aligns ITIL with CobIT.

EL: What has been your payback from CobIT?

DH:  Our best metrics for assessing the value CobIT has brought to our internal processes and procedures is reflected in our performance with both Sarbanes-Oxley compliance and our general audit results.

EL: Can you describe your IT management structure and your IT  governance process?

DH: There are two IT vice presidents who report to me and who are each aligned to one of the major business units -- energy delivery and generation. There are also IT vice presidents for enterprise applications and infrastructure and operations.

The governance groups for architecture and engineering, the project management office, the business office, and security and compliance also report to me.

The IT executives aligned to the major business units sit at the "table" with the business when they talk strategy. This partnership allows us to integrate the future direction of each business unit into our overall business planning processes for IT.

In addition to ongoing partnership and work with each business unit, we also have an IT council comprised of senior executives from each of the businesses. This council has multiple functions such as reviewing our annual benchmarking and overall business plan.

EL: How do you handle a business unit's unexpected  projects?

DH: When we centralized several years ago, we centralized the employees, functions, and the budget. At that time, I recognized the need for a "relief valve" for emergent work that occurs during the year and is outside of the normal planning process. As a result, each year we set aside a "project reserve pool" that is managed by the IT council. Any business unit can apply for funding from this pool to address an emergent need.

EL: Besides your governance process, what other things did you do to align the new IT organization with the needs of the business units?

DH: We built a formal client engagement process and focused heavily on interacting with clients on a daily basis and in a consistent manner. The Client Engagement Model also helped to provide clarity about the delivery and value of "back office"-type functions such as infrastructure services. In the end, we eliminated a lot of the inefficiency and redundancy found in a decentralized structure, reducing cost while improving quality and delivery.

In addition, we also worked to make sure that IT strategy remained aligned with each business unit's direction while also looking for opportunities to drive standardization. If we saw similarities in initiatives from different businesses, we viewed this as a chance to leverage standardized and common platforms and solutions.

Lastly, I looked closely at how we selected our IT leadership team. We established guiding principles that we intended to operate by and ensured all of the leaders we selected to join the team regularly demonstrated behaviors consistent with these guiding principles.

EL: How does your IT mentoring program work?

DH: We put a mentoring program in place to help IT employees own their careers and to support them in that process. The mentor helps the employee identify what skills he or she needs to work on, and also provides a broader perspective of the organization. We encourage employees to choose mentors from different parts of the organization.

Acting as an essential business contact, mentors play a critical role as an employee transitions throughout their career.

The mentoring program places a lot of importance not only on the relationship an employee has with his or her mentor, but also the relationship an employee has with his or her manager. The manager plays a role in helping the employee identify their career development needs, and provides essential feedback and coaching necessary for successful job performance. Combined with the mentor's role, the result is a comprehensive program for the employee.

EL: How do you balance the mentoring program with other forms of  employee development?

DH: The mentoring program doesn't take the place of other, broader development programs the employee might desire, such as pursuing an MBA. The mentoring program very nicely complements the wide range of development opportunities by providing a trusted advisor who will help employees identify the development opportunities that support their career and growth objectives. We've gotten a lot of positive feedback about our mentoring program both from employees in IT taking advantage of it as well as areas outside IT. In fact, the company plans to use our program as a model for a company-wide mentoring program.

On our Balanced Scorecard, we track a metric related to employee development. This metric looks at the number of training days each employee has taken, the budget we've allocated for that training, and how many employees are utilizing the mentor program. We look at how well we have delivered against those metrics. This keeps overall employee development on the leadership team's radar.

EL: What is your philosophy about outsourcing IT tasks?

DH: Outsourcing IT functions isn't unique to any one company or industry. More IT jobs within a company are being done by outside resources. When it comes to sourcing, you first need to establish a strategy by which to make your sourcing decisions.

I've put a lot of emphasis on the strategy for how we source and outsource. The outsourcing strategy we developed can be viewed as aligning with the SDLC [Software Development Lifecycle]. The model has internal employees who have detailed knowledge of our business processes and systems, who engage with our clients, gather requirements, and design solutions. Doing so ensures employees are adding value in the right areas. We then leverage outsourcers to execute the "factory" or "build" portion of the SDLC.

EL: What have you been doing to drive innovation in IT?

DH: Innovation ranks high on the list of business initiatives I've been driving over the past year. We've leveraged technology to make our power trading business very competitive. For example, we've created a central data repository and other tools that support effective decision-making on the trading floor. We have rolled out a new portal with Web 2.0 features that are tightly integrated with the power trading organization's back-end system. This initiative has been a great win-win for the business and IT.

For our electric delivery companies, we recently implemented a new outage management system. We're currently working on a large project to roll out a mobile dispatch system for field crews. Overall, IT strives to bring solutions that enable the business to succeed and reach their goals.

EL: Any other innovations?

DH: Tagging and clearance is a critical operational process in our nuclear plants. Nuclear employees working on field equipment need to tag equipment out-of-service so no one will operate it. We've implemented a self-service kiosk where a worker can wave his or her badge in front of a reader to sign onto the tagging system. The worker is authenticated into the system and immediately brought to a screen listing any equipment tagged out by them. This system has brought significant benefit to our nuclear organization.

EL: How has Exelon coped with deregulation?

DH: Some areas of the country have very little experience with industry restructuring, while others have a lot of experience. We're in the latter group. Because we have been living through the process of restructuring for several years, we have built the ability to deal with changes in our business model that deregulation, and other major disruptive forces, can require. We have created our "management model," and we know to focus on our core business, to strive for operational excellence, to benchmark aggressively, to strive for continuous improvement, and to aggressively manage costs. All of these elements are important when the industry dynamics are changing and provide us with the ability to succeed in a deregulated industry.

Because restructuring has driven more M&A activity in our industry, we've developed a flexible business process architecture and infrastructure that enables us to respond to the demands of mergers or acquisitions.

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Elizabeth M. Ferrarini is a free-lance technology and  business writer from Boston, Massachusetts. You can reach her at elizabethferrarini@yahoo.com.