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The HPMD Bullet
October 1998
Copyright 1998, HP Management Decisions Ltd., All Rights Reserved.
Interview

IT Strategy: a view from the service sector by Richard Blythe


Not long ago we spoke with Mr. Gardner Wright, CIO for Blue Cross/Blue Shield of Georgia (BCBS) and asked his perspective on building a useable information technology strategy.

We first asked Gardner for his take on the most important components of an IT strategic plan. He listed three:
  1. Customer service, to both internal and external customers
  2. Operating Performance, including the financial aspect of the operating performance
  3. Anything which might help your company differentiate itself in the market place.


For example, Gardner explained that at BCBS the differentiators they are focusing on include

1) improving electronic commerce with their trading partners, and 2) electronic connectivity to their customers (health plan members, that is).
He elaborated, "Being able to extend the provision of healthcare into the home is key for a managed care organization, as well as for other providers of health care. We have to move more to what is taking place in the home population, where the population is aging and everybody is more comfortable."

Specifically, Gardner described medical monitoring and tele-medicine as activities which would not typically be considered e-commerce, but are very important to his organization. These would allow more services to be delivered directly to members in their homes.


Interestingly, this trend in the healthcare industry is reflective of the overall trend in e-commerce: to drive customer service delivery further down the distribution chain, thus reducing costs, errors, and time for the service provider.

"Being able to extend the provision of healthcare into the home is key..."



We asked Gardner about the strategic planning they've done for IT at BCBS.

He explained that prior to his arrival a strategic plan had been developed with the help of a major consulting firm-- though he qualified his answer with, "To some extent, we've followed it." When he came on board, he set up a more structured planning process, including assigning the responsibility to an Assistant Vice President on his staff.


Page 2
IT Strategy... (continued from page 1)



Warning!

Gardner did have a few words of warning for other senior executives conducting a
review of IT strategy. He listed two major issues to keep in mind.

First, be aware of the shortened business cycle. Specifically, keep the IT plan and business plan on a timetable which meets the demands of today's quick-to-market environment. He explained, "The traditional three to five year corporate plan is very difficult to work with these days. Frankly, IS has not traditionally been quick to market and while development cycles are getting shorter, they are still longer than required for today's speed-conscious demands."

Second, be aware of the major difficulties caused by the Year 2000 (Y2K) issue. At his organization, Gardner expects this to consume major IT resources through the next year. He explained, "We are an aggressive, for-profit health plan. But still, from a systems development standpoint, there is lots that has to be done on Y2K. At the same time we're trying to support the growth of the business and add systems to help connect better with our brokers, our providers, and our

members. Add to this the on-going need to implement and change the underlying infrastructures in the corporation, not only from an IT perspective, but from an organizational process on the business side."

"Frankly, IS has not traditionally been quick to market..."



In Gardner's view, the real impact of Y2K is that it keeps IT from implementing the strategic advances that will build the business. You could hear the exasperation as he continued: "It is difficult to be testing the existing systems three times, and at the same time, with the same resources (because that is where your subject matter experts are), be creating things that are new and exciting to support the business plan."

So what does it take to formulate an IT strategy relevant to the business's goals? Yes, you have to deal with the major "fixes", such as Y2K, but in the process you can't lose sight of the need to deliver better service directly to the customer. If you don't, your competition will.




Action Steps

  • Overhaul your strategic plan - If you haven't looked at it in the past 12 months, it's probably not relevant to today's situation. See our comments on strategic bets for starters.

  • Implement measurements - Only with the proper scorecard can you tell if you are meeting, exceeding or falling behind your plan. For example, note our bulletin on keeping score.


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