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Accelerating IT SuccessMANAGING IN THE 21ST CENTURY

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CAI’S ACCELERATING IT SUCCESS | FEBRUARY 2014

C-Suite executives and business teams must collaborate to leverage information and technology for competitive advantage.

Managing in the 21st CenturyReducing Decision-Making Risks through an Enterprise-Wide Decision Support System.

BY PHIL WEINZIMERThe following article is a modifi ed extract from the fi nal chapter of Phil Weinzimer’s book, The Strategic CIO: Chang-ing the Dynamics of the Business Enterprise, published by Taylor and Francis-CRC Press.

Managing in the 21st century re-

quires new approaches than

those used in the past. The dy-

namic and ever changing global

business landscape requires companies to be ag-

ile and respond to changing market conditions

with speed. As a result, management delegates

decision-making throughout the company, even

to the personnel interfacing with customers.

My book, The Strategic CIO-Changing the Dy-

namics of the Business Enterprise, focuses on

how strategic CIOs and their IT teams are chang-

ing the business landscape. They accomplish this

by collaborating with C-Suite executives and busi-

ness teams to leverage information and technolo-

gy for competitive advantage by developing new

products, services, and processes to achieve sig-

nifi cant business outcomes. Strategic CIOs trans-

form their IT organization into a strategic enabler

for the enterprise using the following (Figure 1)

four-phase transformation model.

Strategic CIOs now sit on corporate executive

committees and are part of the C-Suite where

they actively participate in developing enterprise



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strategies that shape the future success

of the company. There is, however, an

important challenge the executive suite

must still address.

All personnel involved in making busi-

ness decisions need to be aware of po-

tential issues and associated risks if

their decisions could adversely affect

the company. Otherwise, unforeseen

events can quickly turn a profi table

and competitively successful company

into a potential disaster. Remember the

2012 JP Morgan London Whale trad-

ing scandal that resulted in 6.2 billion

dollar trading loss and 920 million in

penalties.1 True; JP Morgan has a set

of products and services that provide

signifi cant revenues. However, fl aws in

supporting processes that enable these products and services did not provide early warning of a po-

tential trading issue. Herein lies the gap and the challenge for the executive suite. This event led many

executives in the C-Suite to begin conversations regarding the fl aws in key processes throughout their

companies that often go awry. The “London Whale” event is an extreme example. However, each and

every day, executives, managers, and personnel throughout your company make decisions, approve

decisions, or are aware of decisions made by others. These decisions would be made differently if they

had an early warning system to advise them of the potential pitfalls and associated risks based upon

different decision scenarios.

Faster Yet More Complex

Today’s global business environment is more complex than ever before. This is due to the follow-

ing three paradigm shifts in the competitive marketplace; each causing a governance chasm for

the business enterprise.

» Expanding global marketplace requires constant vigilance to uncover competitive

opportunities and threats.

» Consumerization of IT results in customers demanding new digital products and ser-

vices that IT organizations need to develop quickly and cost effectively.

Strategic IT Organization Transformation Phases

Valu

e

1. Deliver Commodity and Business Services Exceptionally Well

3. Implement Initiatives to Improve Margin (Sales / Cost)

2. Understand the Business, Focus on User Experience, and Improve Business Skills of IT Personnel

4. Leverage Technologies Strategically to Innovate Value

Figure 1



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» Changing organization models composed of virtual teams making complex business

decisions replace the traditional vertical and hierarchical structures.

Each of the three market changes listed above has resulted in a new wave of information gathering by

companies to better understand the competitive environment, pulse the needs, wants, and desires of

its customers, and develop a more seamless communication process across the entire enterprise. The

result is a broader and deeper enterprise structure overloaded with data. True, companies today focus

externally to capture and mine much of this data, using social media and sophisticated analytical tools

to uncover customer behaviors and market trends. However, companies must also focus internally to

mine process data to anticipate where process breaches could signifi cantly affect a company’s revenues,

costs, and potentially, its survival. In effect, mitigate the risk of a potential disaster before it happens.

Take a look at all the major companies that have a global reach. Procter & Gamble, Johnson and John-

son, IBM, JP Morgan, Walmart. GM, Xerox, FedEx, and UPS are all familiar names to us and are just

some examples of companies that have thousands of employees around the world making critical busi-

ness decisions each and every day. The command and control structure of the past no longer works.

Market dynamics require companies to make decisions and take actions faster than ever. Customers

demand it. As a result, organizational structures are more decentralized and decision-making author-

ity is delegated throughout the entire

process, even to personnel closest to

the customer.

The dilemma facing executives is sim-

ple. Jack Welch described this during

his talk at the GE 1988 Shareholders

meeting:

“At the beginning of the decade...we

saw two challenges ahead of us, one ex-

ternal, and one internal. Externally, we faced a world economy that would be characterized by slower

growth, with stronger global competitors going after a smaller piece of the pie. Internally, our chal-

lenge was even bigger. We had to fi nd a way to combine the power, resources, and reach of a large

company with the hunger, agility, spirit, and fi re of a small one.” 2

I underlined the last sentence of the quote because this summarizes the challenge that the executive

suite faces today. Following is a personal example. When I joined ITM Software in 2003, a new start-

up, the founders, and a cadre of 30 employees with a high energy level and entrepreneurial spirit,

worked hard and pushed the boundaries to grow the business. Everyone wore multiple hats and com-

munication fl owed freely and quickly. Everyone was aware of business decisions on product design,

development, marketing, sales, customer service, etc. When a decision inadvertently resulted in a neg-

“We had to fi nd a way to combine the power, resources, and reach of a large company with the hunger, agility, spirit, and fi re of a small one.”

- JACK WELCHGE Report to Shareholders, 1988



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ative impact on the business, the team quickly banded together to correct the problem. At other times,

when team members worked together to discuss a potential action and someone anticipated a potential

problem, he or she spoke out, discussed the possible consequences, and the team agreed on an appro-

priate course of action. Such is the DNA of the small company. As companies grow, management instill

processes and structure to maintain a core of discipline and consistency in the execution of activities.

Decision-making is tightly controlled. However, information fl ows, which often traverse both vertical-

ly and horizontally, are often fi ltered as they traverse the management chain.

How Would Your Organization Answer?Here is a message to all CEOs, CIOs, and C-Suite executives: take heed of the challenge and fi gure out

how to develop an information system for managing in the 21st century that replicates the speed, agil-

ity, and spirit of a small company. How would you answer the following questions?

» As your business has grown, have your processes and policies slowed down the com-

munication of information across the business?

» Have you ever been surprised to fi nd out after the fact, that an incorrect decision

negatively impacted your company’s reputation, caused a loss of market share, neg-

atively impacted revenue, and share price due to a process not followed properly or,

even worse, personnel inadvertently making a poor decision, even though everyone

was telling you that everything is OK?

» Did you fi nd out during a project postmortem analysis that “someone always knew”

or there were warning signs that could have prevented the problem if they were prop-

erly captured as data or appropriately communicated to the management team?

» Do you realize that the inability to monitor and govern appropriately could jeopar-

dize the survival of your company?

If you answered yes to any of these previous questions, you need to fi gure out how to address the

problem. This subject is explored by Lynda Applegate, the Sarofi m-Rock Professor of Business Admin-

istration at Harvard, in one of her many papers on the subject. In her 1999 paper, “Time for the Big

Small Company” 3 Applegate’s main thesis is that information systems in the 1960’s were not mature

enough to handle the “volumes and complexity of information fl ows required” by complex organi-

zational structures. However, advances in technology and information systems are now available to

provide a digital governance layer across the entire business enterprise. 3

There are some examples of where this is happening in today’s business environment. Procter & Gam-

ble addresses part of the challenge with its Decision Cockpit and Business Sphere applications that

help managers and teams make well-informed business decisions Filippo Passerini and his IT / busi-

ness teams digitized the company data and accomplished three major objectives. First, there is now



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one set of information, so there is no dispute about the accuracy of the data, which often plagues teams

in accurately analyzing data. As Passerini describes it, “In the past, there was no one-stop shop for all

information, but today, with Decision Cockpits, all the data that had been collected through emails,

letters, phone calls and reports resides in this system. This has dramatically reduced the cost and com-

plexity associated with creating reports and the duplication of data.” 4 This enables 8,000 employees to

focus on data analysis versus data integrity when performing their job. Second, much of the non-value

added time resulting from capturing, organizing, and conducting some preliminary analysis is elim-

inated. Most managers will tell you that they spend 50-80% of their time gathering, organizing, and

interpreting data. Eliminating the data accuracy confusion provides managers the ability to spend a

majority of their time on decision scenario analysis to make well-informed business decisions, which

is a value-add activity. Third, data is analyzed extensively using business analytics and presented in

various graphical formats for ease of interpretation. This strategic use of technology and information

addresses the islands of information challenge that plagues many companies. The net result is man-

agers and teams focus on reviewing analyzed data that result in personnel and teams making well-in-

formed business decisions.

Managing in the 21st Century

The next evolution for effectively managing in the 21st century lies in the development of an

information-based system that can predict and identify potential risk areas for the day-to-

day decisions that, if made incorrectly, could negatively impact the company. The key to

success will be monitoring

key enterprise processes and identify

potential risk areas. CAI, a profession-

al services fi rm, is developing a suite of

SaaS solutions named Advanced Man-

agement Insight (AMI) that according

their CEO, Tony Salvaggio, does this.

Salvaggio, a former IBM sales exec-

utive, founded CAI in the early 1980s

and has always believed that “process

excellence is the road to success”. Over

its 30 plus years in business, CAI has

developed methodologies, processes,

and solutions around their intellectu-

al capital that focuses on improving IT

processes. 5 LIKE A BUSINESS: An airplane pilot needs a well organized cockpit to help manage a very complex set of processes.



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One of the newer initiatives at CAI is the development of an early warning system to proactively identify

potential risk areas in all areas of the business, not just IT. Their AMI suite is comparable to an airline

cockpit where the on-board governance system constantly monitor aircraft processes and alerts the

pilots of any impending threat with mitigating data and voice instructions, via the cockpit dashboard,

to avert a potential problem. The airplane is a very complex set of processes composed of hydraulic

systems, fuel systems, navigation systems, take-off and landing systems, wing and stabilizer controls,

etc. All have to work in harmony for the aircraft to fl y safely to its destination.

CAI uses the cockpit as an example of management cell where employees perform activities to sup-

port a business process. Jim Phillips, The CAI Executive, leading the AMI initiative for Salvaggio

believes, “Every functional manager, team leader to CEO, needs a concise and accurate display of

real-time information encompassing

current position, environmental con-

ditions, predictive threats, and embed-

ded checklists (best practices) during

the decision making process.” 6 When

it comes down to the nuts and bolts of

the solution, Dave Smith, AMI Prod-

uct Manager, sees this solution, “as a

means to take the concepts of manag-

ing in the 21st century and bring them

to life via an automated system. It vir-

tually accomplishes that which is diffi -

cult or impractical to do without AMI

as a way to proactively mitigate poten-

tial risks during the decision making

process and should be included as a standard toolkit for every employee to use” 7

CAI efforts are right on track. Today’s business enterprise is composed of a very complex set of pro-

cesses, just like airplane systems. These processes have to work in harmony to develop, sell, and deliver

products and services for customers. I am sure your company focuses much effort on optimizing these

processes. However, you may not be focusing enough energy on the need for a governance system that

monitors these processes to avert risks that occur due to incorrect decisions made each and every day

throughout the company, and perhaps a major one that could even impact the very survival of your

company.

An extension of the cockpit example is to look at the United States Federal Aviation Authority

National Airspace System (FAA-NAAS). This organization is responsible for providing the

safest most effi cient aerospace system in the world. At any given time of day, approximately

“It virtually accomplishes that which is diffi cult or impractical to do without AMI as a way to proactively mitigate potential risks during the decision making process and should be included as a standard toolkit for every employee to use”

-DAVE SMITHAdvanced Management Insight Product Manager



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5,000 aircraft fl y in the skies above the United States. In addition, on any single day, the FAA monitors

approximately 85,000 fl ights.8 Through an extensive network of systems, highly trained air traffi c con-

trollers stationed at airports and FAA facilities across the United States monitor all fl ights “to ensure

that all traffi c moves as smoothly as possible” and handle “constraints in the system, such as weather

and runway closures. 9 The Air Traffi c Controllers reroute aircraft based on early warning indicators;

if planes are too close to each other, adverse weather conditions are forecasted, or if an aircraft needs

to be rerouted due to an onboard medical emergency. Although each aircraft has their own on-board

systems to monitor the plane’s systems, the FAA’s governance process ensures that all aircraft fl ying in

the skies above the United States move safely through their fi led fl ight patterns.

Proactive MitigationI would like to explore this analogy. Think of the airplane cockpit as one of your company’s process

cells where personnel from different parts of the organization perform a variety of process activities.

Think about logistics, product development, projects, and vendor management as examples of pro-

cesses that contain high degrees of risk. Major issues can occur if incorrect decisions are made or in-

formation about the process is not available to personnel performing process activities. Inadvertently

routing of logistics carriers; vehicles, planes, trucks, or rail, without knowledge of impending weather,

traffi c, or mechanical issues, can impact sales, cause product spoilage, and create havoc across the en-

tire network for many companies because of the lack of an early warning system. Projects refl ecting a

“green” status may in fact be “yellow” or “red” due to team members being unaware of warning signals,

resulting in project overruns, ineffi cient resource allocation, out of scope efforts, etc.

A product development team makes a decision not realizing that the same decision previously imple-

mented by another product development team resulted in untimely delays. One of your major strategic

vendors, while providing similar services for another company, made decisions that negatively impact

revenue and cash collection. These events happen every day at many companies. Yet management has

yet to fi gure out a way to proactively mitigate these negative outcomes. During my interviews for this

book, many CIOs shared their experiences of being surprised at decisions made by personnel through-

out the enterprise due to lack of an adequate governance process.

Businesses Need an Early Warning SystemManagers at companies around the globe spend billions of dollars improving the effectiveness of busi-

ness processes but not nearly enough to provide a governance “early warning system” to ensure that

potential risk areas are identifi ed, communicated, and proactive actions taken to prevent negative out-

comes.



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My message to all CEOs, CIOs, and C-Suite executives based upon the Executive Challenge is:

» Ensure the integrity of all enterprise data and eliminate disparate islands of infor-

mation

» Continue initiatives to capture and mine customer data to learn about customer

needs, wants, and desires, behaviors that impact buying decision, and competitive

intelligence.

» Continue to optimize business processes to improve effi ciencies and improve desired

business outcomes.

» Identify key processes and begin a program to capture key information about poten-

tial risk areas, key predictors, past negative outcomes, focusing on specifi c activities

and decisions that resulted in risk as well as how you can identify the “predictors” of

risk.

» Investigate “early warning” applications available in the market that can analyze this

data to predict potential risk areas and communicate alerts to include suggested mit-

igating actions.

There is much more research and development required to explore this subject in more detail, perhaps

the subject of my next book.



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Citations

1. Bloomburg News: http://www.bloomberg.com/news/2013-09-19/jpmorgan-chase-agrees-to-

pay-920-million-for-london-whale-loss.html.; September 20, 2013

2. Welch, J., “Managing in the 90s,” GE Report to Shareholders, 1988

3. Applegate, L. M.”Time for the Big Small Company.” Mastering Information Management Series.

Financial Times (March 1, 1999).

4. The Strategic CIO-Changing the Dynamics of the Business Enterprise; Phil Weinzimer, Taylor and

Francis; 2014;

5. Tony Salvaggio, CEO-CAI / Phil Weinzimer interview December 18, 2013 / CAI website: http://

www.compaid.com/

6. Jim Phillips, Principal Consultant-CAI / Phil Weinzimer interview January 26, 2014

7. Dave Smith, AMI Product Manager - CAI / Phil Weinzimer interview January 30, 2014

8. FAA Website: http://www.faa.gov/nextgen/snapshots/nas/

9. http://www.nycaviation.com/2011/04/faa-opens-new-air-traffi c-control-system-command-cen-

ter-in-virginia/#.Ut2f0BAo6Uk



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About The Author

PHIL WEINZIMER is president of Strategere Consulting and works with clients

to develop business and IT strategies that focus on achieving business outcomes.

Mr. Weinzimer was previously the Managing Principal-Professional Services for

IT Business Management at BMC Software. He also held Managing Principal po-

sitions in the Professional Services organizations for ITM Software, CAI, Sapient,

and Unisys.

Mr. Weinzimer’s new book, The Strategic CIO: Changing the Dynamics of the Business Enterprise, to be published in June 2014 by Francis & Taylor, focuses on how CIOs strategically

transform IT organizations by leveraging information and technology to create new customer value,

increase corporate revenue, and enrich shareholder value. His previous book, Getting it Right: Cre-ating Customer Value for Market Leadership, published by John Wiley, focuses on transform-

ing an organization using a 3P strategy: PREPARE personnel to work together as a team, PERCEIVE

customer needs, and PROVIDE new products and services that create sustainable and profi table value.

Mr. Weinzimer writes an ongoing column for AITS focusing on The Strategic CIO, written articles for

CIO magazine on the subject of strategic CIOs, and co-authored a case study for Harvard Business

School (HBS).



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About CAI’s Accelerating IT Success

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professionals. Currently published in 159 countries and six languages, AITS promotes best practices,

project management, IT governance, and professional development. The AITS website has more than

2,000 article summaries covering fi fty IT and management topics, along with a growing list of white-

papers and studies.

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