PSE&G IT Strategy and Business-IT Governance

Posted Thu, 10/23/2008 - 19:55 by admin

I led or co-led this series of initiatives, over a two-year period, which dramatically streamlined the IT organization (25% cost reduction) and also prepared it for considerable changes in business environment.

Situation:

PSE&G, which operates a number of businesses, is best known for being the largest electric and gas utility for the state of New Jersey. The CIO, responsible for a $150M IT budget , was under considerable pressure to (A) streamline operations and reduce costs, and (B) prepare for a number of major business scenarios which included merging with another utility, divesting certain lines of business or creating new lines of business.
 

Challenges:

 The PSE&G lines of business were highly siloed, bureaucratic and protective of their business plans. This put the IT organization in a highly reactive, “Order Taker” position. Compounding this were two other factors: (1) the IT organization perceived that the CIO tended to change direction frequently and (2) the IT Strategic Leadership Team (SLT) exhibited poor team dynamics—mistrust, vying for the CIO's favor, protecting turf. 
 

Approach:

 Over the course of two years, I co-led a number of engagements with the CIO and his leadership team to transform the IT organization into a much leaner, more business-focused partner to the lines of business (LOBs). This started with a 3-month strategic planning engagement, where we used a series of workshops to:
  • Assess business demand and develop business scenarios
  • Assess IT supply capabilities and develop and evaluate different options for strategic direction
  • Identify ways to accelerate transformation and determine IT implications
  • Integrate the IT strategy, IT Outcomes Model and IT Strategic Plan, including a Strategic Roadmap

As part of this new strategic roadmap, our next engagements focused on defining IT’s Capability Model, in terms of how it ran itself as a business and understanding it strengths/weaknesses/opportunities/threats. This led to a third engagement focused on streamlining and/or outsourcing non-strategic capabilities, such as telecom provisioning, IT help desk, application enhancements. The fourth engagement then designed two capabilities critical to establishing a strategic level of partnership between IT and lines of business (LOBs). One was Enterprise Architecture, which created integrated views of business processes, supported by underlying information, IT applications IT infrastructure. This created a context for the second critical capability, Business-IT Portfolio Governance, which created IT investment portfolios, tied to business objectives, with decision-making processes, tools, and decision rights assigned at Enterprise, LOB and IT levels.

Results:

 As a result of this “journey”, the IT organization
  • Reduced its overall budget by over 25%
  • Streamlined and/or outsourced problematic capabilities (e.g., application development)
  • Developed outcomes Business-IT outcomes models that it now uses jointly with the Lines of Business to guide the impact of IT initiatives
  • Established a Business-IT Portfolio Governance capability which has resulted in greater understanding and accountability for IT spend

 

My Role:

 Served as Program Manager and subject matter expert throughout the series of initiatives. Responsible for overall program business impact, communications to client executives and guiding project teams to accomplish the work streams. Also led account management and P&L from the consulting perspective.