In 2003, Zurich Financial Services, one of the world's largest insurance companies, decided to transform its highly centralized IT organization to a highly decentralized managed by a small internal staff and a major outsourcing partner. After evaluating several global outsourcing companies, Zurich Financial signed a $1.3 billion outsourcing agreement with Computer Sciences Corporation or CSC.
Many large, global companies, such as Zurich Financial and Chrysler, have turned to CSC for innovation IT services in one of these areas: outsourcing, systems integration, and consulting. Founded in 1960, CSC has more than 90,000 employees in 80 countries and annual revenues exceeding $16 billion. CSC's service span most vertical industry segments and many horizontal lines of IT services, such as outsourcing and supply chain.
Recently, David McCue, CSCs's CIO and vice president, got named to Computerworld's 2008 Premier 200 IT leaders list, a carefully selected group of IT executives selected for their leadership capabilities in managing and executing IT strategies. enterpriseleadership.org recently said down with McCue to learn more about how he makes technology decisions that affect both the internal IT organization but also customers. Here's what he had to say:
EL. Can you provide an overview of your IT organization, especially what makes it unique?
DM. Our IT organization combines a blend of a federated model and a centralized model to achieve the best results for the business. Each of the main revenue areas has an embedded technology staff CIO. These staff CIOs represent the requirements of that particular area, such as a vertical like manufacturing or a horizontal like applications. The aspects of our business that fall into a central shared services type of model include, email, security, content for repositories, and portals. We use SAP to handle all of our financials.
I treat things that we do for ourselves, such as payroll, messaging, collaboration, customer relations management, financials, and business analytics, as if we were an outsourcer account with CSC global. We have about 1,250 people assigned to the CSC IT account. We're one of the largest IT customers of CSC global, the vendor.
Our CIO council comprises the embedded CIOs, along with some individuals. For example, I've appointed people to global HR, supply chain, and financial functions. Each area of the business has an advocate. The council does planning, strategy, and final review of policies. Some of the subcommittees will review policies in certain areas and report any changes to the CIO council.
EL. Does the company's outsourcing model complement your IT business model?
DM. We think of the CSC IT account as having several serious buckets of activities. The account needs these items. For example, we use SAP instead of Oracle. If I need Oracle expertise, then I'll leverage the capabilities of CSC, the outsourcing vendor. I'm the 800 gorilla customer. We have buckets of activities or commodities, which the entire business equally shared. I have a leverage capability that wouldn't be available if we didn't have our business model for IT. Every time we win an outsourcing deal, we gain a certain amount of infrastructure. We then rationalize and normalize it through the outsourcing process. We can re-deploy this excess infrastructure to other accounts that can use it. My cash expenditure doesn't actually represent the actual value of total services that I own, control, and direct. Leveraging what we've acquired changes our cash expenditure in terms of where it shows up on the balance sheet.
EL. Can you describe how your governance process goes works for getting projects and investments approved?
DM. I sit on two sides of the tables. I report to the chairman and attend his staff meetings. My peers include group revenue-unit presidents and the corporate vice presidents for each of the major functions. Our program governance board comprises the group president and me. We decide the research and development investments for the business. We take a blended approach toward governance.
From an axiom viewpoint, I put forward the business case, the strategic direction, and evaluation. Our go-to-market revenue decisions don't, in themselves, dictate internal choice and direction. A decision that we make for ourselves, such as a business case to go in a certain direction, has to make sense and pass hard dollar and soft benefits hurdles on its own, independent of alliances, partnerships, and go to market revenues. If selling something is the only reason for the business case, then it fails. If I have multiple choice business case decisions to make, I'll select the ones that can stand on their own, that have good relationships, and that have revenue potential. At the end of the day, we go to market, given the nature of our business, with all of the major players.
EL. How do you decide what technologies would be good fit for IT?
DM. Just because I run SAP, doesn't mean that I don't have a robust Oracle practice. I have to do what makes sense for our IT our account and the best practices. I can't possibly run everything. I can't run SAP for financials and Oracle for payroll. The same thing happens when we go to market. We might have multiple solutions within similar areas based upon the intellectual property needs, and the unique requirements and specifics of different verticals. For example, processing insurance claims has some similarities to handling returns in a manufacturing environment. However, the products used in each of these areas have some practical differences. Everyone would like to run every solution. That's not practical! Because we'd incur additional excessive expenses, it wouldn't be in the best interests of our stockholders to run every solution.
EL. How much of a say do stakeholders have in how you make technology investment decisions?
DM. Stakeholders always have had the ability to voice their views. We have command and control and there's direction. Any time we make a decision between choices, we can't always achieve a win-win scenario for everyone. Having a hybrid or central and federated model helps us to ensure a dialog to talk about all of the cards on the table. Our common services have to scale globally to provide attractive economies.
We do the traditional set of roadmaps for a specific number of years, and we review those roadmaps routinely to look at different technologies, best practices, or changes in functional requirements.
Those embedded individuals represent their stakeholders' internal needs, as they're appropriate to the larger revenue customer base. We don't do business in isolation. We know what we're doing in the market. I sit on the research and development governance board. I look at the business cases for things we're developing as potential go-to-market solutions. I work closely with our general counsel and with the president of our global marketing organization. We take all of that into account and bring that into the mix.
EL. Have you automated your governance and your portfolio process for investments?
DM. I don't run a single portfolio project management dashboard type of product. We've automated the reporting of variety aspects of that through different schedules. One schedule lists projects for each fiscal year. Each project goes through a multiple cycle process. If a project passes the business case review, we then release the funds to start that project. Each project has various reporting milestones. These milestones differ in their degree of specificity, timeliness and risk tolerance. The sponsoring business units do quarterly reviews and reporting of the overall portfolio of the projects. Monthly monitoring and reporting at the application or infrastructure level also supplement these quarterly project reviews.
EL. How does CSC handle innovation?
DM. We have a corporate office of innovation, which expands all aspects of CSC's environment, including go-to-market strategies. It has a concentrated, managed set of projects, programs, and strategies. It runs a leading-edge forum, conducts various conferences, give innovation awards to employees, and operates centers of excellence. I belong to the office of innovation steering committee. We leverage this organization as an approach to innovation for IT.
EL. What automated processes have you put in place to handle emergency communications with your customers?
DM. Our emergency crisis notation system can quickly mobilize key people from around the world to act on a critical situation. They get notified through SMS, text messaging, or whatever other media they use for critical situations. As a global outsourcer, we have formal processes if a situation arises, such as a data center going off the grid or an application fails. Once we assemble the restoration team, we establish multiple audio bridges which the customer and the technical people. Our management people review these audio bridges every one or two hours for updates. Once the customer's problem has been resolved, such as data center brought online, we go through a mandatory root-cause analysis process, which my staff reviews.
EL. Can you provide examples of some of your converged platforms to get closer to your customers?
DM. Our CSC account and our customers use some of the same applications, such as GCARS, a controlled release to production review-type application. We all use it whether the item released to production relates to the customer account's own equipment, or will run on a customer's account on our leveraged equipment. We have a variety of converged platforms like that one. Both our employees and our main customers have access to our global portals. Of course, it has areas restricted to specific accounts and customers.
Author: Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.
