Executive Guide: Improving Mission Performance Through Strategic
Information Management and Technology (Other Written Prod., 05/01/94,
GAO/AIMD-94-115).
Making government more effective and efficient is a national issue.
Today's information systems offer the government unprecedented
opportunities to provide higher quality services tailored to the
public's changing needs. Unfortunately, federal agencies have not kept
pace with evolving management practices and skills necessary to (1)
precisely define critical information needs and (2) select, apply, and
control changing information technologies. The result, in many cases,
has been wasted resources, a frustrated public unable to get quality
service, and a government ill-prepared to measure and manage its affairs
in an acceptable, businesslike manner. Despite spending more than $200
billion on information management and systems during the last 12 years,
the government has too little evidence of meaningful returns. The
consequences--poor service, high costs, low productivity, unnecessary
risks, and unexploited opportunities for improvement--cannot continue.
This report focuses on what agencies can do now to improve performance
by using new approaches to managing information and their related
technologies. It summarizes 11 fundamental practices that improved
performance in leading private and public organizations. GAO's case
studies of these organizations shows that these practices make it
possible to do far more with less.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-94-115
TITLE: Executive Guide: Improving Mission Performance Through
Strategic Information Management and Technology
DATE: 05/01/94
SUBJECT: Management information systems
Federal agency reorganization
ADP
Information processing operations
Productivity
Information resources management
Information systems
Strategic information systems planning
Agency missions
Systems evaluation
IDENTIFIER: National Performance Review
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GAO
May 1994
Executive Guide
Improving Mission
Performance Through
Strategic Information
Management and
Technology
Learning from Leading
Organizations
GAO/AIMD-94-115
"Our information technologies and our knowledge economy give us the
opportunity to do things we never dreamed possible 50 years ago. But
to seize this opportunity, we must pick up the wreckage of our
industrial era institutions and rebuild."
David Osborne and Ted Gaebler, Reinventing Government (New
York: Addison-Wesley Publishing Company, Inc., 1992)
Preface
Making government more effective and efficient is a national issue.
But getting it to work better and cost less will be impossible if
federal agencies cannot learn to manage with modern practices the
information age demands. Today's information systems offer the
government unprecedented opportunities to provide higher quality
services tailored to the public's changing needs, delivered more
effectively, faster, and at lower cost. Moreover, they can enhance
the quality and accessibility of important knowledge and information,
both for the public and for federal managers.
Unfortunately, federal agencies have not kept pace with evolving
management practices and skills necessary to (1) precisely define
critical information needs, and (2) select, apply, and control
changing information technologies. The result, in many cases, has
been wasted resources, a frustrated public unable to get quality
service, and a government ill-prepared to measure and manage its
affairs in an acceptable, businesslike manner. Despite spending more
than $200 billion on information management and systems in the last 12
years, the government has too little evidence of meaningful returns.
The consequences--poor service quality, high costs, low productivity,
unnecessary risks, and unexploited opportunities for
improvement--cannot continue in today's environment.
Solutions to this problem are not simple. However, several critical
elements necessary to bring about management change are already in
place or are being considered--from the Chief Financial Officers Act
(to reinforce financial accountability), to the Government Performance
and Results Act (to emphasize results-oriented management), to the
National Performance Review (a variety of initiatives to modernize
federal operations), to the Paperwork Reduction Act (to improve
federal information management). Additional legislative and
regulatory changes may well be required. Yet, federal executives need
not wait to take aggressive actions to improve how they manage
information to affect performance.
Fortunately, solutions to seemingly intractable, complex information
management problems do exist. This report focuses on what agencies
can do now to improve performance by using new approaches to managing
information and their related technologies. It is the first step of
many toward defining what federal executives must do to modernize
their operations. It summarizes 11 fundamental practices that led to
performance improvements, both short- and long-term, in leading
private and public organizations. Our case studies of these
organizations provide evidence that these practices make it possible
to do far more with less--including significant service quality
improvements, cost savings, and productivity gains. The issue before
federal executives and policymakers, then, is not whether to change
federal information management practices, but exactly what to change
and how to do it.
Charles A. Bowsher
Comptroller General of the United States
Contents
______________________________________________________________________
The Federal Information Management Problem 7
______________________________________________________________________
Business as Usual Is Not Enough for the
Federal Government to Succeed 8
______________________________________________________________________
Learning From Leading Organizations 8
______________________________________________________________________
Strategic Information Management:
Fundamental Practices 10
Decide to Change 13
Direct Change 21
Support Change 33
______________________________________________________________________
Results That Can Occur by Implementing
the Fundamental Practices 40
______________________________________________________________________
Getting Started: Recommended Actions
for Senior Executives 42
______________________________________________________________________
Research Objectives, Scope, and Methodology 43
______________________________________________________________________
Major Contributors to This Report 45
Project Advisers 46
The Federal Information Management Problem
Within the past decade, the public has grown accustomed to the
benefits of using information technology to improve the cost, quality,
and timeliness of product and service delivery. Americans now expect
to solve a problem with one telephone call, obtain customer service 24
hours a day, withdraw cash from automated teller machines around the
country, and get products delivered almost anywhere overnight.
Consequently, at a time when almost anyone can get eyeglasses in about
an hour, veterans cannot fathom why they must wait 6 weeks to obtain
them. Similarly, the general public cannot understand why it takes
weeks, instead of days, to process an income tax refund or months to
determine eligibility for social security disability benefits.
Federal agencies spent at least $25 billion on information systems[1]
in 1993, and more than $200 billion over the last 12 years. Despite
this huge expenditure, it is unclear what the public has received for
its money. At the same time, critical information assets are
frequently inaccurate, inaccessible, or nonexistent. Efforts across
the government to improve mission performance and reduce costs are
still too often limited by the lack of information or the poor use of
information technology.
There is a striking resemblance between the problems currently
experienced in the federal government and those initially faced by the
leading organizations we studied. Yet, while leaders have emerged in
the private sector and the states, few federal agencies have learned
how to manage information and information technology to achieve
consistent results. Our transition reports in 1988 and 1992
underscored how agencies lack critical information needed to analyze
programmatic issues, control costs, and measure results.[2] In our
reports to Congress in the last 10 years, we have documented numerous
examples of federal systems failures, such as
- the outlay of millions of dollars of unauthorized student loans
because of poor information tracking,
- over $1 billion of mistaken Medicare payments,
- the release of highly sensitive computer data on informants for
federal law enforcement agencies through mismanagement of security,
and
- inadequate financial data on agencies' basic operations that makes
responsible financial management and auditing using accepted
accounting standards extremely difficult.
Business as Usual Is Not Enough for the
Federal Government to Succeed
Given both the risks of the status quo and the potential for
improvement, business as usual is simply no longer a tenable option
for federal executives. The administration's dramatic goals, ranging
from setting customer service standards for all federal agencies to
making targeted improvements in major areas, cannot be achieved
without successful information management. For example, improvements
from reengineering with the aid of information technology account for
over 40 percent of the estimated savings projected by the National
Performance Review over the next 5 years.
Strategic information management (i.e., managing information and
information technology to maximize improvements in mission
performance) will also be a crucial initiative for all federal
agencies as they move to implement the Government Performance and
Results Act, which is focused on results-oriented management. With
it, improved management information and restructured work processes
can gradually reduce costs and increase service levels. Without it,
many agencies will find their efforts to move to results-oriented
management hindered by their inability to develop vital data and
useful information systems that support performance measurement and
substantive mission improvements.
Without action by federal executives, the gap between public
expectations and agency performance will continue to expand. Program
risks will continue and unique opportunities for improvement will
remain unexploited. Many low-value, high-risk information systems
projects will continue to be developed unimpeded and undermanaged as
leaders blindly respond to crises by purchasing more technology. Most
federal managers will continue to operate without the financial and
management information they need to truly improve mission performance.
Moreover, many federal employees will struggle unsuccessfully, under
increasing workloads, to do their jobs better as they are hampered
with information systems that simply add on another automated layer of
bureaucracy. Given these risks, sustained Congressional attention is
vital to reinforce the link between accountability for returns on
information-related investments and the satisfaction of real public
needs.
Learning From Leading Organizations
Rather than continuing to analyze the causes of failure, we decided to
learn how leading organizations, private or public, consistently apply
information technology to improve mission performance. We performed
case studies of the information management practices of senior
management teams in 10 leading organizations. The five private sector
and five state government organizations we examined have been
recognized by peers and independent researchers for their progress in
managing information to improve service quality, reduce costs, and
increase workforce productivity and effectiveness. In addition, we
selectively chose nine federal agencies to assess the applicability of
outside practices and to improve our understanding of how federal
organizations compare against private and state organizations.
Leading Organization Case Studies
Private sector State government
American Airlines California
Kodak Florida
Royal Bank of Canada Minnesota
United Services Automobile Association (USAA)Oregon
Xerox Texas
Federal Government Case Studies
Army Corps of Engineers Veterans Affairs
Coast Guard Commerce
Environmental Protection AgencyFederal Trade Commission
Housing and Urban DevelopmentSocial Security Administration
Soil Conservation Service
Data were collected through interviews and documentary analysis, not
direct observation. We consulted with experts in the information
technology field and federal senior information management
professionals. To ensure the quality of our case study methods, we
used a consultant with expertise in researching public sector
information management issues and experienced with case study
methodologies. We also gave over 60 briefings to federal agency
management teams--including officials from the Office of Management
and Budget and the General Services Administration--to discuss the
applicability of our results to the federal environment. (A more
detailed description of our scope and methodology can be found at the
end of the report.)
The senior leadership of the successful organizations we studied took
information
management very seriously. Increasingly asked to do more with less,
they have learned to focus carefully on the stream of dollars invested
in information technology and critical information resources and
knowledge assets. New ways of managing information and information
technology have become either a critical path or a stumbling block to
nearly every significant level of performance improvement. When
applied well, information technology can yield dramatic successes.
This is well known. Frequently underestimated, however, is the fact
that when neglected, it can produce painful failures and actually
inhibit improvement efforts. Three factors stood out in our
conversations with leading executives about the importance of
strategic information management:
- Size and neglect: Information technology and information assets
are typically substantial, poorly understood, and under-controlled
areas of capital investment and expenditure that are growing, not
shrinking.
- Risk: Large, complex information systems projects have an
inherently high risk of failure, delay, or overspending.
- Benefits and leverage: In most organizations, information and
information technology influences the quality, cost, and speed of
nearly every major function and the decision- making, productivity,
and even morale of employees.
Among other factors, strategic information management makes a
difference by
- enhancing decision-making at all levels by providing better
quality, more relevant, and more timely data and information,
delivered to the right people at the right time;
- driving the simplification and automation of processes, tasks, and
transactions to increase speed, lower costs, and improve
productivity and quality; and
- improving the integration of employees and customers by connecting
them in new ways over large geographic areas and organizational
boundaries.
Strategic Information Management:
Fundamental Practices
Strategic information management is one critical, integrated part of
any general management framework. Similar to the way modern
organizations have gradually become dependent on information
technologies, it has become an indispensable lens through which to
view most vital general management decisions. Strategic information
management typically involves defining a mission based on customer
segments and needs; establishing core processes that accomplish the
mission; understanding the key decisions that guide mission delivery
processes; supporting those decisions with the right information
available to the right people at the right time; and using technology
to collect, process, and disseminate information in ways that improve
the delivery of products, goods, and services to customers. The
following diagram illustrates critical issues senior executives are
faced with in each of these areas.
Strategic Information Management Issues
We found that senior managers in leading organizations used a
consistent set of practices to improve mission performance through
strategic information management. Each organization applied them in
different management contexts. However, our analysis suggests a
strong association between their consistent, effective use and
successful performance outcomes.
The practices worked because, over time, they institutionalized new
ways of doing business that are required to capture the value of
information and information technology. They are also most effective
when implemented together as mutually reinforcing activities, rather
than as ad hoc efforts.
We have grouped the fundamental practices according to three key
functions critical to building a modern information management
infrastructure: (1) deciding to work differently, (2) directing
resources toward high-value uses, and (3) supporting improvement with
the right skills, roles, and responsibilities. Beginning on page 13,
we briefly discuss the 11 practices within the confines of these
functions. In addition, we present examples from our case studies that
best illustrate how an organization selectively used the practices to
achieve meaningful results that were in many cases quantifiable. We
also suggest some initial actions for federal executives to consider
in applying the practices to their organization.
"To start managing our information and information technology
differently, we had to make a complete transformation . . . that
started with a consensus that there was a problem and that both the
business and the information management side were part of it."
-- a Chief Information Officer
Decide to Change: Initiate, mandate, and facilitate major changes in
information management to improve performance
Many federal agencies have an approach to information management
characterized by (1) a short-term focus that emphasizes the status
quo, (2) line management that is not engaged in, accountable for, or
knowledgeable of information management issues, and (3) a largely
paper- oriented planning process that is tied to existing ways of
doing business.
In contrast, senior management in the leading organizations we studied
made a personal commitment to improve by (1) recognizing the need to
fundamentally change information management, (2) creating line
management ownership to incorporate information management into
business planning, and (3) taking specific actions to maintain
momentum over time. Such action resulted in a serious, motivated,
sustainable improvement effort that had a wide impact throughout the
entire organization.
Decide to Change
1 Recognize and communicate the urgency to change information
management practices
2 Get line management involved and create ownership
3 Take action and maintain momentum
Direct Change
4 Anchor strategic planning in customer needs
and mission goals
5 Measure the performance of key mission
delivery processes
6 Focus on process improvement in the context of
an architecture
7 Manage information systems projects as
investments
8 Integrate the planning, budgeting, and
evaluation processes Support Change
9 Establish
customer/supplier
relationships between
line and information
management
professionals
10 Position a Chief
Information Officer as
a senior management
partner
11 Upgrade skills and
knowledge of line and
information management
professionals
Practice 1 Recognize and communicate the urgency to change
information management practices
"When I arrived here, I couldn't believe anyone could responsibly run
a multibillion dollar operation with such poor management
information." -- Head of a state agency
Specific Attributes
x Assess mission performance and the contribution made by
information and technology assets
x Clearly understand how information management is critical to
solving performance problems and exploiting opportunities
x Communicate specific mission-related performance problems and
make the business case for changing the current information
management approach
Without senior executives recognizing the value of improving
information management, meaningful change is slow and sometimes nearly
impossible. Significantly increasing the rate of change requires new
techniques, new processes, and new ways of doing business. Given the
competing demands on senior managers, building a sustainable level of
commitment to and involvement in a process improvement program
requires a thorough understanding and recognition of information
technology's critical role.
In recognizing and communicating the need to improve, successful
organizations assess specific mission-related performance problems;
clarify the linkage to information management; and emphasize the need
for a priority solution that integrates mission and information
technology decision-making organizationwide. Almost universally, they
also aggressively study, or benchmark themselves against, other
leading organizations both to challenge accepted habits and to set
appropriate targets for change.
Senior executives usually decide to change for one reason--strong
pressure to cut costs or increase service quality. As such, they are
forced to assess ways of achieving cost reductions or service
improvements, including improving mission benefits captured from
information systems investments. Many find their information systems
are both a large, uncontrolled area of expenditure and a neglected
tool. Once the decision to change this situation is made, top
management typically communicates goals for improvement with a clear,
concise vision or principle statement that describes how information
technology will be used to improve mission performance.
Case Study: Recognizing the Need to Improve and Exercising Leadership
to Make It Happen
Driven by budget constraints and public demands to stop ignoring a
several hundred-million dollar information technology (IT) budget, one
chief executive took strong action to scrutinize information
management operations. By doing so, the executive showed how
critical information technology improvements were to solving
performance problems. He also consistently communicated to the
senior management team that business as usual would not suffice.
These actions (1) illustrated the severity of the problems facing the
organization, (2) emphasized a visible, fact-based case for
information management's role in improving mission performance, and
(3) modeled the behavior expected of senior managers in getting to the
root causes of problems in their respective areas of responsibility.
In 1989 line managers in a large private sector company increasingly
complained that new software applications did not meet their needs,
were delivered late, did not work as intended, or cost much more than
they expected. These problems kept them from effectively developing
new lower cost products for a highly competitive, but evolving
marketplace.
The division president, recognizing the impact of these problems, took
several steps to more precisely define and address the issues. First,
the division conducted an extensive internal analysis of its
performance problems and the role of information management. The
results were revealing--less than a small fraction of the expected
benefits used to justify information systems projects were actually
being realized. Moreover, line managers clearly viewed these problems
as the sole responsibility of the IT shop. Second, the division used
an outside consulting group to conduct an independent analysis of the
information management organization and benchmark its performance
against counterparts in comparable organizations. Again, the facts
were overpowering--compared to an industry standard, the division took
twice as long and consumed four times the resources to build, test,
and deliver information systems. Third, to develop and implement
corrective actions, the division president, working with the Chief
Information Officer, fostered partnerships between line managers and
the information management professionals that focused on building
information systems with measurable mission benefits.
By the end of 1992, the division saw a marked improvement in
measurable returns from its information system investments. These
returns rose from $2 million to $20 million per year, while
applications development savings and productivity improvements
increased steadily ($5 million in the first year), and more flexible,
effective use of staff resources was possible (some 100 people moved
from maintaining existing computer applications to strategic,
reengineering development and support).
How to Get Started
To assess and make the business case for change, senior executives
should
- initiate a thorough review of (1) current performance, (2)
information systems spending, (3) projected versus realized
results, and (4) major information management problems; and
- benchmark information management practices against leading
organizations--preferably chosen according to objective data or
recognized criteria.
Practice 2 Get line management involved and create ownership
"Without top management commitment, you might as well not start." --
Program official
Specific Attributes
x Hold line management accountable for the mission impact of
information management
x Get line managers meaningfully involved in critical information
management decisions
Line ownership and accountability starts with the chief executive. In
every one of the successful organizations we studied, chief executives
played a strong leadership role in strategic information management.
Once the need to change is established, executives soon realize that
getting line managers to work differently means putting them in charge
of the change process. Consequently, they move to set clear
expectations and reinforce responsibility for information management
decisions and results with line executives who deal directly with the
customer. Where mission goals require work process innovation and
information systems that cut across program or functional lines,
accountability must also be aligned with the decision-making authority
necessary to raise issues above existing stovepipes.
Increasing line executives' accountability and involvement works
because it immediately focuses information management decision-making
and systems development activities on measurable mission outcomes of
strategic importance. In successful organizations, such a focus
ensures more realistic benefits projections, greater attention to
improving performance, and more extensive and intensive line actions
to realize benefits throughout the life of a project. Without such
accountability, it is too easy for the line organization to delegate
decision-making irresponsibly, accept project delays, or fail to
discern the loss of projected benefits.
Because the term of office of political appointees is limited, they
should work with a committed cadre of senior executives to provide
management continuity and agency ownership of major information
management and technology projects. A good example is IRS' tax system
modernization strategic plan which is now being initiated. It was
developed over the years by IRS commissioners working closely with the
top career executives, and will take years to implement.
Case Study: Putting Line Management in Charge Creates Necessary
Ownership
Creating line management ownership for driving information management
decisions and project implementation stops the "pushing a string"
problem that results from information technology departments trying
too hard to run the business. In one organization, line managers, who
could best judge customer needs, took a direct role in defining
product characteristics, process design specifications, and
information system requirements. As such, every stage of system
construction focused on the goals of decreasing costs, improving
service levels, and increasing customer responsiveness.
In the early 1980s, a private sector organization was confronted with
information systems that could not keep pace with business growth.
The only way to change the existing cumbersome processes--responsible
for long customer waits and unacceptable error and rework rates--was
to improve the ability to rapidly process and move large amounts of
information. Although the CEO fully recognized the central importance
of information management, the difficulty was that the company's IT
unit was unable to work with the business units. IT managers usually
gave senior line managers excuses why certain solutions could or
should not be developed based on cost and existing capabilities.
This frustrating situation forced a fragmentation of information
systems development efforts throughout the organization. Everyone
built their own systems because they could not agree on what should be
built together. To break the deadlock, the CEO gave a senior line
official responsibility for a major officewide information systems
project to develop a "paperless" process. While knowing nothing about
information systems, the line official ensured that divisions drove
all the major project decisions. He forced these divisions to justify
individual projects on net benefits. Information management
professionals were made responsible for supporting implementation of
this critical effort by functioning as investment counselors and
product/service providers. Moreover, throughout the project life
cycle, corporate leadership reinforced the new line ownership and
facilitated the process of ironing out the wrinkles in the new way of
doing business.
When the systems and new processes went on-line, the pay-off sunk in.
A customer process that used to involve 55 people and 55 procedural
steps was reduced to one person, one phone call, and one step.
Improved information management reduced data redundancies, improved
communications so that staff throughout the organization could be
reorganized around the new process, sped the delivery of data and
information to both internal and external customers, and increased
data quality. For example, documentation on new service contracts
sent out to customers went from 14 days down to 3 days.
How to Get Started
To increase line management accountability for the mission impact of
information management decisions, senior executives should
- establish an organizationwide information management steering
committee chaired by the chief executive and led by senior line
management, and
- identify executive-level sponsors for each major information
systems project.
Practice 3 Take action and maintain momentum
"The single-most important thing we did was fully educate our line
managers about where information technology could add value in their
operations." -- a Chief Information Officer
Specific Attributes
x Act short term: exploit or create windows of opportunity to
signal or reinforce an improvement initiative
x Think long term: clearly set direction, goals, and milestones
for an information management program
x Pick and place internal champions to shepherd day-to-day
improvement actions
x Establish incentives tied to successful resolution of
performance problems identified by top management
A willingness to take action and maintain momentum is the difference
between lip service and real improvement. Recognizing a problem and
creating ownership are only the first steps toward action. Because of
the barriers that exist to improving information management, leading
organizations give considerable attention to initiating the change
process and ensuring that it maintains momentum.
Perhaps the most important starting point is educating line
management. Unless all line executives begin to understand how
information management can make a difference in their performance,
only marginal change will occur. Carefully picked and placed
champions also create daily pressure to change by removing bottlenecks
and resolving thorny operational issues that can easily stall an
improvement initiative, particularly in public sector organizations.
Finally, incentives become the tangible representation of the
organization's level of interest in changing. Once performance
evaluations include information management issues, previously embedded
behavior frequently begins to improve. Education, champions, and
incentives all work because they address the root causes that inhibit
change--ignorance, lack of focus, and lack of interest. Without
addressing these root causes, even improvement efforts that get a good
start tend to fade quickly.
Agency secretaries and deputies lacking background and experience with
information systems projects need to educate themselves about how such
projects can and should be used as a lever to achieve performance
improvement. Only with such an education are they likely to make
information management a key part of their strategic business plans
and recognize the importance of identifying and encouraging department
and program champions to help them succeed. They are also more likely
to monitor and stay involved in the projects, which in turn helps key
agency personnel know that the projects are top priority and that they
will be suitably recognized and rewarded for their contribution to
success.
Case Study: Taking Action by Educating Line Management on the Mission
Value
of Information Technology
In this case study, investments in line management education moved
managers from a posture of discomfort and ignorance to a new level of
comfort and awareness about the opportunities and risks of using
information technology. This helped to pinpoint the most relevant
technology issues and spurred new relationships and a common language
that eventually helped put the management team on a new learning
curve. The fate of line and information management executives was
tightly linked by establishing incentives that were tied to successful
resolution of performance problems.
This organization began its information management improvement program
by concentrating on educating line managers. Previously, most
managers had little understanding of what information technology was,
how it could help or hurt them in their business, and even who to go
to for help and assistance in developing information systems
solutions. It was relatively easy for simple projects with a "back
office" orientation to get off the ground as compared to
mission-critical projects because it was much harder for line
management to articulate their needs.
Senior executives were specifically picked and placed by the CIO and
the head of human resources as internal champions to shepherd
day-to-day improvement efforts. The CIO and several line managers
jointly decided that the likely cause of the organization's failure to
use information technology effectively stemmed from poor communication
and education among line managers and information professionals. As a
result, technology either did not get used or systems projects failed
at unacceptable rates.
Management training and education was started that centered on
integrating information management and mission functions. Formal
meetings and seminars were used to set the direction, goals, and
milestones for an information management improvement program. The CEO
and senior line managers also had 5-day seminars, off-site, to focus
on information management training and planning. The organization
also initiated a program to provide senior managers with hands-on
experience in the information management organization. Managers were
rotated for a set time, lasting up to several years, in order to learn
what information management had to offer and so information
professionals could learn from the executives' business experience.
The result: line managers became motivated, knowledgeable leaders in
developing new applications of information technology to the business.
For example, new integrated customer data files were created that gave
field representatives important information about the relative
profitability of key customer segments and allowed them to focus their
energies and priorities on better meeting the needs of these groups.
How to Get Started
To initiate an improvement program and maintain its momentum, senior
executives should
- educate senior line management through a combination of
conferences, training, co-location and rotation programs at all
levels, and joint visits with information management professionals
to organizations that use technology well; and
- identify an informed, committed opinion-leader to be a champion in
supporting information management improvement.
"Institutionalizing organizationwide decision-making processes and an
architecture is the key to all of our information system development
efforts
. . . and our primary measure of success is impact on the bottom
line."
-- a Chief Information Officer
Direct Change: Establish an outcome-oriented, integrated
strategic information management process
Once an organization has made a serious commitment to change its
management of information and technology, it is paramount that an
outcome-oriented, integrated strategic information management process
be institutionalized. Our case study analyses indicate that
organizations that achieve substantially higher levels of performance
(1) make external customer needs and mission goals a central driver of
all organizational improvement efforts, (2) make serious efforts to
objectively measure performance, (3) focus on process improvement, (4)
tightly control information technology investments, and (5) integrate
the planning, budgeting, and performance assessment processes.
Conversely, for most federal agencies, strategic management is a
well-orchestrated paper chase responding to personal agendas and
short-term crises, rather than an integrated, institutionalized
process that focuses on producing results for the public. Most
agencies also live with loose, undisciplined, and opaque processes for
selecting and controlling investments, and these investment results
are rarely evaluated against projected benefits. More often than not,
information management decisions are made in response to crises,
without first examining how to simplify and redesign embedded, complex
mission processes. In short, the emphasis lies on conforming to
existing processes--which are rarely reevaluated--rather than focusing
on results.
Decide to Change
1 Recognize and communicate the urgency to change information
management practices
2 Get line management involved and create ownership
3 Take action and maintain momentum
Direct Change
4 Anchor strategic planning in customer needs
and mission goals
5 Measure the performance of key mission
delivery processes
6 Focus on process improvement in the context
of an architecture
7 Manage information systems projects as
investments
8 Integrate the planning, budgeting, and
evaluation processes Support Change
9 Establish
customer/supplier
relationships between
line and information
management
professionals
10 Position a Chief
Information Officer as
a senior management
partner
11 Upgrade skills and
knowledge of line and
information management
professionalsPractice
4Anchor strategic
planning in customer needs and mission goals
"Today, 69 percent of our transactions are handled by computer. By
doing this, we freed up the routine workload on our staff to the point
where they have been able to provide innovative services, which have
improved our product offerings to the customer." -- a Chief
Information Officer
Specific Attributes
x Match external and internal customer group needs with specific
products and services
x Link customer group needs to specific mission problems and assess
corresponding opportunities
x Focus strategic planning on highest priority customer needs and
mission goals
x Set explicit mission goals tailoring products and services to the
needs of key customer groups
At the leading organizations we examined, strategic business and
information system plans are almost always tightly linked and
predicated on satisfying explicit, high-priority customer needs. This
emphasis on customer needs helps an organization understand the
source, nature, and priority of demands on its resources. Successful
information systems are not only defined as the ones delivered on time
and within budget, but as ones that also produce meaningful
improvements in cost, quality, or timeliness of service.
Without a customer focus, an organization risks missing its real needs
and ignoring what matters to key stakeholders. With it, corresponding
mission goals can be more easily developed to satisfy each demand, and
the needs of customer groups can be prioritized and matched with
specific products or services. For example, all veterans' health
benefits may not be managed the same way; elderly veterans with
special, often high-cost, health care needs might form a specific
customer group. This avoids treating all customers the same way when
they have unique subsets of needs and corresponding services.
Following a customer-driven approach, in turn, provides accurate,
detailed descriptions of requirements and specifications, which are
needed to drive the design and development of supporting information
systems. This allows the organization to set mission performance
goals for improving service delivery or product responsiveness, costs,
or quality--based on customer needs. Reengineering and information
systems projects can also be targeted and designed to improve specific
performance areas. In successful organizations we examined,
management made it clear that major systems proposals that were not
based on business plans would not be approved.
Case Study: Using Key Customer Needs to Guide Business Plans That
Match Up
With Information Systems Support
Faced with acute complaints about poor service quality and complex
procedures, a state revenue collection agency decided to use their
external customer--the taxpayer--as the focus for rethinking and
redesigning its services. This required new ways of managing
information in which a taxpayer profile, not the tax account itself,
became the focus of data management. As a result, taxpayer concerns,
questions, and special problems could be handled with a new level of
attention and timeliness.
Taxpayer evaluations of a state revenue collection agency indicated
dissatisfaction with the complex forms and procedures and poor
service offered by agency personnel. The agency developed a prototype
business plan revolving around two questions: "What are we trying to
achieve?" and "What do our customers expect of us?" Customer focus
groups--including individual taxpayers, small businesses, and large
corporations--were then used to supplement the plan and reengineer the
state's revenue collection process. As part of this reengineering,
information systems were redesigned to produce and maintain customer
profiles to assist agency officials in handling questions, problems,
and special situations for each taxpayer.
The payoff from this change in business practices and information
system improvements became apparent during serious flooding that
ravaged the state in 1993. Many individuals and businesses were
unable to pay state taxes because records had been lost or destroyed.
Rather than aggravating the situation by penalizing individuals and
companies for late tax fees, the agency used profile information in
its systems to develop personalized solutions. As a result, time and
resources were diverted from pointless enforcement actions and
taxpayer response was positive. In addition, these data had a
multiplier effect for business activities conducted by other state
agencies. State relief agencies could more efficiently handle relief
functions required by flood legislation, and budget forecasters could
better predict state revenue shortfalls for the coming year.
How to Get Started
To begin linking information systems more closely to customer needs
and mission goals, senior executives should
- choose at least one major mission area to specifically define
customer groups and needs
(i.e., those identified through mandated customer surveys) and
integrate with strategic business and information plans, and
- choose at least one major information system initiative and
determine if its key requirements will meet both external and
internal customer needs.
Practice 5 Measure the performance of key mission delivery
processes
"Performance measures define the management information you need to
make decisions and to determine what is success and failure." -- a
Chief Information Officer
Specific Attributes
x Focus performance measures on gauging service to key external
customers within individual customer groups
x Embed performance measures in key management processes--including
planning, budgeting, investment selection, and performance
evaluation--to influence decision-making and support continuous
improvement
x Use internal and external benchmarks to help assess relative
performance
x Tailor performance measures to gauge the mission value of
information management (e.g., clearly show whether information
systems projects make a difference)
Successful organizations rely heavily upon performance measures to
operationalize mission goals and objectives, quantify problems,
evaluate alternatives, allocate resources, track progress, and learn
from mistakes. Performance measures also measure whether information
systems projects are really making a difference. Good measures define
the information needed to perform a mission well and allow
organizations to learn objectively and consistently over time. As
noted in the passage of the Government Performance and Results Act,
without performance measures, managers often have great difficulty
getting results from information systems because they cannot define
their needs precisely.
The standard measurement practices we were shown focus on benefits,
costs, and risks. In most cases, this includes program outcomes,
resource consumption, and the elapsed time
(i.e., cycle time) of specific work processes, activities, or
transactions. Once the right measures are chosen, they act as a
common focus for management to target problem areas, highlight
successes, and generally increase the rate of performance improvement
through enhanced learning. Business plans identify measurable
outcomes and outputs expected from major information systems projects.
By focusing on the effects these investments have on operations,
performance measures help identify and track their true effect. While
the measures have value as stand-alone indicators, they are typically
used together to present a more complete picture of the impact on
quality, resource usage, and cycle time.
Case Study: Instituting a Performance Measurement Program
Improves Information Systems' Contribution to Mission
Outcomes
Faced with a budget crisis imposed by their legislature, one senior
management team used performance measures to rethink information
systems priorities, better direct investments to achieve mission
goals, and address legislative concerns. Their comprehensive program
focused on (1) specific agency-level and information management goals
and processes, (2) workshops to develop quantifiable performance
indicators, (3) benchmarking, and (4) integrating performance measures
into the planning, budgeting, and evaluation processes. Its primary
value has been to enhance organizational learning.
This large agency had especially high production costs, sloppy
management decision-making on resource allocation, and bureaucratic
"stovepipes" that made setting organizationwide priorities next to
impossible. Consequently, improvement efforts--especially those
involving information systems--had little effect. The cost of
comparable private sector service offerings continued to drop while
this agency's rose. Finally, the state legislature simply refused to
fund further spending increases.
Few performance measures even existed. Those that did were disputed,
had little accurate data to back them up, usually failed to focus on
customer needs, were not used consistently by senior managers to make
decisions, and did not measure the contribution of information
systems. Over a 3-year period, starting in 1990, senior management
instituted a comprehensive performance measurement program to drive
organizational change. Quantifiable performance indicators were first
developed to match agency objectives with statewide goals and to gauge
service to key external customer groups. Then, the information
management department developed its own performance indicators to
align with each of the agency-level goals. Workshops were conducted
with teams throughout the organization. Performance measures, once
developed, were integrated into management reporting, strategic and
information planning, and budgeting and resource allocation efforts,
as well as in criteria for selecting, controlling, and evaluating
information systems investments. The organization also used both
internal and external benchmarks to help assess relative performance.
The effort has enhanced the quality of decision-making and
priority-setting, improved service quality, and better directed
information systems investments. A greater than 150 percent return is
expected on information systems projects. As of January 1994, they
were already reaping some of these savings. Low-value projects had
been eliminated or refocused, existing ones were more sharply targeted
on improving mission performance, and new ideas had been generated
about how to use information systems more productively.
How to Get Started
To assess the mission value of information management, senior
executives should
- identify outcome-based measures of accomplishment for a major
mission area and benchmark performance against a comparable
organization, public or private; and
- charter senior management teams to develop measures that
specifically assess (1) the contribution of information systems
investments to mission performance and (2) the performance of the
internal information management organization.
Practice 6 Focus on process improvement in the context of an
architecture
"If it [a work process] runs like a mess, then using information
technology just gives you an automated mess." -- Senior line manager
Specific Attributes
x Establish and manage a comprehensive architecture that (1)
ensures the appropriate integration of mission-critical
information systems through common standards and (2) emphasizes
local control and flexibility in adapting to new processes and
technologies
x Distinguish large-scale improvement efforts from others by
concentrating on order-of-magnitude improvements in cost,
quality, or timeliness
x Focus strategic resources, at the right time, on a limited
number of large-scale process improvement efforts
x Target efforts at core mission delivery processes--defined as
those that, because of their cost and/or importance to
customers, have a unique potential for return on investment
x Use a combination of controlled development and rapid
prototyping to minimize risk and maximize benefits
Accomplishing order-of-magnitude improvements in performance nearly
always requires streamlining or redesigning critical work processes.
Consequently, information systems initiatives must be focused on
process improvement and guided by an organizational architecture.[3]
Information systems projects that do not consider business process
redesign typically fail or reach only a fraction of their potential.
Those that ignore technology usually leave significant opportunities
on the table. Using business process reengineering to drive
information systems initiatives can lead to order-of-magnitude
customer satisfaction and/or cost savings, rather than the marginal
efficiency gains normally associated with initiatives that use
technology to do the same work, the same way, only faster.
On the other hand, if several process improvement efforts using
information systems are pursued in an uncoordinated fashion, chaos,
incompatibility, and fragmentation can result. Similarly, rapidly
evolving new technologies (e.g., networks or imaging) that have
organizationwide impact need to be integrated into redesigned work
processes systematically (i.e., architectural management). To maximize
the benefits of process improvements across an entire enterprise and
reduce risks, certain shared standards and rules for processes, data,
and machines (i.e., organizational architectures) are vital.
Case Study:Reengineering Work Processes to Improve Customer Service
and Reduce Costs
One organization tried reengineering as a fresh approach to meet its
market share goals and alleviate persistent complaints about
complexity and sluggishness of customer service. They focused on
three organizationwide "stretch" goals: (1) reducing customer cycle
time by 80 percent, (2) cutting overhead in half, and (3) tripling
real sales per employee. Redesign of information systems and data
integration reduced the cost and complexity of a core customer service
process by eliminating redundancy and making information access
easier.
Prior to the reengineering effort, the company's approach to customer
service involved experts from its line operations dealing directly
with customers to provide a personal level of assistance in resolving
a problem. As the company's products grew more varied and
specialized, customers often had to talk with several experts--as many
as 16--before getting to the right one. Over 70 different computer
systems supported the customer service process. While the quality of
solutions to customer problems was very high, they took too long to
deliver. By 1990 this problem threatened the company's ability to
retain its established customer base and caused delays in the receipt
of payments for products sold.
The organization used a reengineering project in an attempt to
radically improve productivity. The object was to simplify business
processes, not make them more elegant. Information management and
technology played a large role in the reengineering effort. For
example, a highly integrated systems environment enabled various
project teams to simplify the number of tasks they needed to perform
to achieve a mission goal or serve the customer.
As a result, the division has seen both quick benefits and longer-term
performance improvements. In one example, the division consolidated
its dealer price catalogue to the point where it was able to produce
the catalogue in less than half the time at 10 percent of its former
cost, while reducing the number of organizations and documents
involved by 60 percent. In addition, the division reduced the number
of information systems supporting customer service activities from
over 70 to 1. Furthermore, in less than one year, customer service
representatives were handling inquiries without any referral at
all--single point problem resolution. The new process reduced the
number of customer billing disputes as well, which in turn reduced the
amount of accounts receivable over 30 days old by 90 percent.
How to Get Started
To begin focusing strategic resources on process innovation in the
context of an architecture, senior executives should
- task a senior management team to lead a high-level process
analysis of the organization and identify and sponsor a major
process improvement opportunity; and
- appoint both a business and an information architect--reporting to
the information management steering committee--to facilitate the
design and maintenance of an organizational architecture (e.g.,
work processes, information flows, and technology).
Practice 7 Manage information systems projects as investments
"Without these [investment] controls, we would probably not be able to
bring in any project at all."
-- a Chief Information Officer
Specific Attributes
x Link information systems decisions tightly to program budget
decisions and focus them on mission improvement
x Establish a high-level investment review board that fully
involves senior program and information managers to help in key
decisions through a project's life cycle
x Use a disciplined process--based on explicit decision criteria
and quantifiable measures assessing mission benefits, risk, and
cost--to select, control, and evaluate information systems
projects using post-implementation reviews
x Make information systems projects as narrow in scope and brief
in duration as possible to reduce risk and increase probability
of success
x Balance the proportion of maintenance expenditure versus
strategic investment
Successful organizations manage information systems projects primarily
as investments, rather than expenses. As information management
capability increases, projects are viewed more as mission improvement
projects and less as information technology efforts. Senior
management teams become personally involved in project selection,
control, and evaluation. The basis of decision-making is an explicit
set of criteria assessing the mission benefits, risks, and cost of
each project. Quantitative and qualitative cost, benefit, and risk
analyses--typically modeling sensitivities of project outcomes to
various risk factors--underpin the criteria.
The investment focus systematically reduces inherent risks while
maximizing benefits of complex projects. It does so by concentrating
top management's attention on assessing and managing risk and
regulating the tradeoffs between continued funding of existing
operations and developing new performance capabilities. These
tradeoffs, as well as conflicts between competing programs, surface
during annual budget decision-making. With a disciplined process,
organizations can identify early, and avoid, investments in projects
with low potential to provide mission benefits. They can help make
explicit links between project outcomes and program needs in complex
and often ambiguous budget debates. Line accountability for improved
performance is also reinforced. This typically means larger
successes, fewer failures, and more significant information systems
contributions to organizational goals.
Conversely, without a centralized process to select, control, and
evaluate information systems projects as investments, organizations
confront a number of difficult problems--significant unmanaged risk,
unexamined low-value or redundant projects that consume scarce
resources, mismatches between systems maintenance and strategic
priorities for improving mission performance, design flaws that can
unexpectedly increase complexity, and outsourcing decisions that put
the organization at risk.
Case Study:Using a Disciplined Investment Process Helps Capture
Benefits
After experiencing unacceptable information systems project failure
rates, slow progress, and disappointing results, one organization
designed a disciplined decision-making process to focus management on
increasing the quality and impact of investments. Project proposals
and selections became more careful; cost, benefit and risk analyses
and projections were more realistic; and managers worked harder to
ensure that initiatives delivered on their promise.
The organization was developing systems that were not aligned with
line management direction. An outside consultant, hired to analyze
this situation, reported that the organization was spending far too
much money on information systems that were not helping the company.
Not only were scarce budgetary resources being wasted or
underutilized, but low-value projects were actually causing harm by
automating isolated functions or decision-making processes that were
either unnecessary or highly inefficient. More important, but less
tangible, was the opportunity cost of spending too much on old systems
and investing too little in the future. The organization found these
problems were due, in large part, to the development of information
systems that had little or no measurable economic justification.
To solve this problem, senior line managers' responsibility and
accountability for information management was structured within an
organized decision-making and tracking process for information systems
investments. The organization used a "portfolio investment
process"--based on explicit decision criteria assessing costs,
benefits, and risks--to select, control, and evaluate information
systems projects. Having this structure helped ensure that a true
mission benefit was identified for each project and that it was
retained as a project focus until completion. One goal of the process
was to balance the proportion of maintenance expenditures versus
strategic investment.
Over time, the company has consciously reduced the proportion of
funding spent on supporting systems that are near the end of their
useful life cycle. A portion of the money saved from maintaining
these legacy systems is then added to the strategic systems budget.
In 3 years, the organization has seen a nearly 14-fold increase in the
return on investment from information systems projects. Such a
turnaround was possible because line managers and information
professionals were more visibly accountable for project delivery,
rigorous results reporting, and post-implementation reviews.
Consequently, they are more careful in what they promise for a
proposed information system and in measuring what a system actually
achieves.
How to Get Started
To hold line managers more accountable for project selection,
delivery, and rigorous reports reporting, senior executives should
- task a team to develop decision criteria for selecting and
evaluating major information systems projects; and
- institutionalize a process to propose, select, develop, and
evaluate the results of all information systems investments.
Practice 8 Integrate the planning, budgeting, and evaluation
processes
"We've made a lot of mistakes along the way. Our success has only
come from an organized process of learning over time." -- a Chief
Information Officer
Specific Attributes
x Put all five elements of the strategic planning cycle in place:
long-term strategic and information planning, systems life cycle
and project level planning, budget review, performance
assessment, and architecture management
x Require executives and senior management to fully participate in
and take responsibility for all major information management
project decisions throughout their life cycle
x Integrate key elements of the strategic planning process by
ensuring that outputs of one are used as inputs for the next
x Use the strategic planning process to manage operations and make
key decisions and assessments by top management--especially
those involving program budgets and information systems
investments
Successful organizations pay close attention to integrating the
planning, budgeting, performance measurement, and architectural
management processes, so that they never lose sight of critical
information systems projects and treat them consistently throughout
sometimes disparate management processes.[4] This helps force the
linkage of information systems efforts to the mission, provides tight
controls during implementation, and allows regular assessment to
ensure that benefits accrue.
Our case studies suggest this integration of once-separate processes
is the real test of whether an organization's information management
approach is truly strategic and thus will be able to improve
consistently over time. Without links to planning, budgeting becomes
a reactive exercise to priorities of the moment that are not weighed
adequately against those of the future. Without links to performance
measurement, mistakes are not discovered or are repeated in planning.
And without links to budgeting, plans can be mere paper exercises in
rationalization. Credible plans and budgets need to identify the
long-term benefits of information technology projects, how they will
be funded over the years, and how the savings and benefits will be
realized over time.
Case Study:Forcing Organizational Change and Continuous Learning
Through an Integrated Management Process
In one organization, the lack of a business vision--a definition of
how the organization would work in the future--and an integrated and
institutionalized strategic information management process meant a
majority of resources went towards maintaining existing, aging
information systems. Fierce short-term budget crises dominated
long-term planning, and mistakes were frequently repeated. By
focusing on these weaknesses, the organization developed a fact-based
approach to funding, a forum for decision-making, and a consistent
process that the senior management team used to move from crisis
management to strategic management.
In 1991 senior management meetings focused on how the lack of
mission-critical improvements was leaving the organization with costs
that were too high and customer interactions that were too slow and
low in quality. Abnormally high maintenance costs indicated the
organization was, in the words of the Chief Information Officer,
"building on a swamp." After conducting a self-analysis, the cause
of the problem was boiled down to the lack of a business vision and
the absence of an integrated and institutionalized strategic
information management process that would help manage operations and
make key decisions involved in implementing the vision.
To address these issues, the organization formally integrated
planning, budgeting, and evaluation by putting five elements in place:
long-term strategic and information planning, systems life cycle and
project planning, architectural management, budget review, and
performance assessment. The five elements were integrated so that
outputs from one were used as inputs for the next. For example,
outputs of strategic planning (a budget constraint), project planning
(strategic project proposals), and architectural management
(architectural screening criteria) were all explicit inputs into
prioritization and budgeting. Similarly, the outputs of
prioritization and budgeting (individual project objectives,
performance targets, and implementation plans) were direct inputs into
the performance assessment process. This level of integration not
only provided continual improvement and balanced and optimized
resource allocation each year, but also maximized the rate of
learning.
Over a 4-year period, the organization was able to shift approximately
a third of information systems personnel to reengineering projects.
These new improvements in turn affected mission performance in ways
ranging from increased productivity to new levels of customer service.
How to Get Started
To begin integrating all the elements of an integrated strategic
planning cycle, senior executives should
- choose one critical mission area, if possible limited in scope, to
fully integrate business and information planning, systems
planning, budgeting, and performance evaluation; and
- task a senior management team to design and implement an annual
information management performance report as an input to strategic
planning.
"Information management executives need credibility to participate.
We begged to be part of senior management and got it. That was good
and bad news. Once you're a part, you have to behave like a senior
manager--have the breadth, scope, and risk profile. By pursuing
strategic information management, we've defined the skills and career
path to get that done."
-- a Chief Information Officer
Support Change: Build organizationwide information management
capabilities to address mission needs
Neither a commitment to change or directed activities can succeed
without defining and providing the necessary skills and resources.
Hence, the goal of the third group of practices is to build a new
level of sustainable organizationwide information management
capabilities that address mission needs.
For most federal agencies--even those with serious improvement
programs in place--pervasive skill gaps and confused roles and
responsibilities severely inhibit significant increases in
performance. Common problems include (1) a failure to define the
roles of program managers in relation to information professionals,
(2) the lack of an effective CIO to raise and help resolve information
management issues with top management, and (3) an outdated or poorly
defined set of skill requirements. These problems weaken an
organization's ability to define how new systems support its mission,
meet customer needs, or respond more quickly to environmental change.
In contrast, leading organizations facing similar problems defined
clear responsibilities for line managers and information management
professionals, established a CIO as a senior management partner, and
worked to anticipate and define key skills that would be needed.
Consequently, their management processes worked fluidly, rates of
innovation increased, and conflict was minimized.
Decide to Change
1 Recognize and communicate the urgency to change information
management practices
2 Get line management involved and create ownership
3 Take action and maintain momentum
Direct Change
4 Anchor strategic planning in customer needs
and mission goals
5 Measure the performance of key mission
delivery processes
6 Focus on process improvement in the context of
an architecture
7 Manage information systems projects as
investments
8 Integrate the planning, budgeting, and
evaluation processes Support Change
9 Establish
customer/supplier
relationships between
line and information
management
professionals
10 Position a Chief
Information Officer as
a senior management
partner
11 Upgrade skills and
knowledge of line and
information management
professionals
Practice 9 Establish customer/supplier relationships between line
and information management professionals
"Our overall success depends on meeting user requirements with
cost-effective, quality solutions."
-- a Chief Information Officer
Specific Attributes
x Make line managers responsible for identifying critical
information and performance needs, work requirements, and
economic benefits of mission improvement projects
x Make information management professionals responsible for
supporting line managers as investment counselors and
product/service providers
x Clarify roles and responsibilities at the corporate, mission,
and project levels--focusing corporate management on reinforcing
accountability and facilitating mission success
x Manage the organizational architecture with a bias towards local
control and ownership, but also a strong central counterbalance
to maximize cross-cutting systems integration needs
x Rigorously understand the economics of information management
functions as well as product/service needs of line management
customers
The best-designed management processes in the world cannot work
without defining roles and relationships (i.e., knowing who is going
to do what). Establishing customer/supplier relationships internally
between line managers and information management support professionals
enables the organization to maximize the benefits of new management
processes. We found that line management in successful organizations
typically behaves as a customer of support professionals or
organizational units by asserting control over information system
project funding and direction. Key line responsibilities include
identifying specific mission goals, the core processes required to
accomplish them, key decisions that guide work processes, and the
critical information needed to support decision-making.
Information management professionals, then, act as suppliers, working
to support efforts to meet a management objective, make a critical
decision, or solve a business problem. Supplier functions can include
traditional responsibilities for producing and servicing information
systems. But they increasingly emphasize investment advisory services
and strategic architectural design and management. The new focus is
on achieving specific mission goals and objectives, rather than
satisfying sometimes unrelated user requirements.
Establishing formal customer/supplier relationships places
information-related assets on a par with the other physical and
intellectual resources. It also places the information management
organization alongside other suppliers as a competitor for the line
unit's business. These two effects contribute to organizational
learning by creating a constructive tension and interdependency
between line and information management organizations.
Case Study:Establishing Clear, Accountable Customer/Supplier Roles
Enhances Effectiveness
To combat endemic miscommunication and conflict between the
information management and line organizations, clear roles and
responsibilities were identified at the project and organizationwide
levels. This division of labor focused line managers and information
professionals on working together as they grappled with complex
strategy and design issues.
Like many federal agencies, one large private sector organization
experienced regular difficulties getting projects in on time and on
budget. Many systems development efforts required considerable
rework. Often, they did not meet real mission needs. This situation
not only wasted resources, but also frustrated line managers' efforts
to reduce costs and increase quality. Senior management identified
the likely cause of this situation as twofold--the lack of a
structured systems development process and an unclear division of
labor between line managers and information management professionals.
To remedy this, clear functions, roles, and responsibilities were
identified for both line managers and information management
professionals at the project and organizationwide levels.
At the organizationwide level, one of the primary functions was the
agreement on general rules for how to develop systems. This was
usually accomplished through architectural management, handled by a
business architect (data and processes) and a technology architect
(software and hardware). Together, their job was to design the
organization architecture and assist systems developers in making the
right technology choices. They also worked closely with vendors to
choose standard technologies for the entire company. In short, they
provided the infrastructure (PCs, software, data definitions, etc.) to
"separate and integrate" the different layers of the architecture
across the organization. The result, over a period of several years,
was a finely tuned set of information systems with high levels of
interoperability and interconnectivity, low levels of redundancy, and
lower maintenance costs.
At the project level, line and information management units shared
responsibility throughout a project's life. As it moved from one
phase of development to the next, leadership responsibility shifted to
the unit with the greatest interest in the successful completion of
that phase. For example, in phase one--requirements--the business
unit was responsible for articulating the business case justifying the
financial investment and risk, while in phase two--construction--the
technology group led the development. Rotating leadership established
the roles and responsibilities of each team member at the start of
every project phase. This discouraged members from making premature
decisions just to keep the project on-schedule and encouraged them to
stay actively engaged from beginning to end. The targeted roles also
focused members on a critical area where their knowledge and
experience could make the greatest contribution. Since the adoption
of this project management technique, the organization has found that
completed projects more closely match mission needs, require less
rework, can be deployed faster across the organization, and cost less
to maintain.
How to Get Started
To get line and information managers working together, senior
executives should
- institute a regular survey of line management's satisfaction with
the information management organization's quality, cost, and
responsiveness; and
- require every information systems project team to define line and
information management roles throughout the entire project life
cycle.
Practice 10 Position a Chief Information Officer as a senior
management partner
"The most important factor for a successful CIO is to be able to work
as a peer with line management." -- a Chief Information Officer
Specific Attributes
x Understand the mission and work closely as a peer with top
management to help increase awareness, understanding, and skill
in identifying and resolving information management issues
x Catalyze, design, and facilitate implementation of new
organizational capabilities by clearly articulating the role of
information systems in mission improvement
x Bridge gaps between top management, line users, and the
information management unit by acting as an adviser and
architect
Positioning a Chief Information Officer (CIO) as a senior management
partner is critical to building an organizationwide information
management capability.[5] By creating a customer/supplier
relationship at the highest levels, it helps line executives change
how information is managed organizationwide. CIO positions have, in
some cases, become untenable or controversial largely because they are
overemphasized, inappropriately staffed, lack adequate authority,
and/or are unable to focus solely on strategic information management
issues. A CIO is not a substitute for institutionalized information
management processes. Neither is it a panacea for resolving thorny
problems that stem from top management disengagement, as is clearly
illustrated by federal agency's experiences with Designated Senior
Officials for Information Resources Management under the Paperwork
Reduction Act. Selection of an effective CIO is critical and
difficult. Qualified professionals need a combination of leadership
ability, technical skills, business process understanding, and
communication skills.
A CIO serves as a bridge between top management, line management and
information management support professionals. This includes focusing
and advising senior management on high-value issues, decisions, and
investments. Equally vital is taking a strong role in working with
the line to (1) design and manage an organizationwide architecture and
(2) clearly articulate how information management will play a pivotal
role in mission improvement. Finally, the CIO is usually accountable
for serving line management with low-cost, high-quality information
technology products and services. Over time, a successful CIO evolves
from serving only as head of the information management unit to
becoming a strategic adviser and architect--a vital member of the top
management team.
Case Study:A Chief Information Officer Keeps Information Management
Issues on the Agenda
Given the difficult task of organizing and motivating senior
executives to attack information management issues, a new Chief
Information Officer was brought in to help. The position was staffed
with an experienced professional with demonstrated prior success who
could work as a peer with senior executives. Major goals were to (1)
focus day-to-day efforts on improving information management and (2)
bridge the gaps between top management, line users, and the
information management unit.
Prior to establishing the CIO, the cost of maintaining and enhancing
existing systems consumed nearly all of the organization's information
technology budget. Consequently, funds were not available for new,
mission-critical information applications. Line executives could not
see the risk associated with maintaining old systems versus building
new ones. They only knew cost was increasing without a corresponding
increase in value. Line managers also had trouble managing the
tradeoffs between risks and returns. There was no one to focus senior
management attention on crucial information management issues on a
day-to-day basis and provide them with advice, concepts, services, and
tools to resolve them.
A new, experienced CIO drove information management changes by
pinpointing and responding to mission needs. She participated as a
peer in all senior management decision-making committees, keeping
tough, painful issues on the agenda and continuously facilitating
their solution. In almost no other position would this person have
had the scope of authority necessary to create the wide-scale change
in the relationship between line managers and information
professionals. Specifically, establishing the CIO led to the creation
of customer/supplier relationships in which line executives were
accountable for (1) the business case underlying technology
investments and (2) ensuring that information systems investments
reflected the organization's priorities and were linked closely to its
current or emerging mission needs. In contrast, the CIO was
accountable for improving the speed, productivity, and quality of the
information management organization.
Since line management began working with the CIO, systems maintenance
costs have dropped making more funding available for strategic
projects. More importantly, the organization has been able to invest
in new technologies more closely bound to current and future mission
priorities. Another effect has been the transformation of the
information management unit from a "back office" data processing
organization to a forward-looking developer of mission-critical
systems.
How to Get Started
To articulate information management's role in mission improvement,
senior executives should
- recruit or promote a qualified professional with a track record of
results to serve as a Chief Information Officer, reporting
directly to the Secretary; and
- task the Chief Information Officer to participate in a line
management effort that identifies major opportunities to use
information systems to enhance performance.
Practice 11 Upgrade skills and knowledge of line and information
management professionals
"No matter how good our processes are, it's hard to make them work
without good people."
-- a Chief Information Officer
Specific Attributes
x Teach line executives and managers how to identify important
information management issues, opportunities, and decisions
x Ensure that information management professionals acquire line
management and leadership skills
x Identify existing skills, explicitly target future skills, and
move systematically to new levels of capability
x Find the right mix of technology dependent and independent
skills
Strengthening the skills and capabilities of line and information
management units is the final part of the formula for building
strategic information management capabilities. Lasting improvements
in information management are impossible without upgrading the
knowledge and skills of executives and managers.
First, it ensures that line executives gain a better understanding of
information management, while helping information managers to acquire
greater knowledge of the line unit's mission, goals, and problems.
Second, it brings skills and knowledge up-to-date. In the rapidly
evolving world of information technology, remaining current is
critical. Organizations that fail to improve themselves continuously
become literally trapped in antiquated skill bases, which then become
an anchor inhibiting the organization's ability to change. For
instance, every year information systems get easier to use and
interact with. However, this ease of use is only possible with ever
more complex decision logic and data flows. Operating and maintaining
these progressively sophisticated systems requires continuously higher
skill levels. Similarly, increased levels of complexity also demand
more systematic, controlled planning, design, and development.
This fundamental is especially important in the federal government
where so much technology acquisition is contracted out. The chance of
a breakdown between the agency and contractors is great when the
agency does not have competent information management professionals to
assist line management in evaluating and supervising contractor
performance.
Case Study:Building Capabilities Around a Backbone of World Class
Project Management
To address inconsistent and languishing systems development efforts,
one organization emphasized project management and system development
skills. Systematically building this capability allowed them to
consistently increase the complexity of projects they were able to
handle, improve timeliness and cost, and increase the range of
technologies and scope of potential innovation they could apply to
improve business performance.
Initially, this organization's training and professional development
programs were, as in many organizations, largely ad hoc. There was a
wide range of skills in information systems project management,
design, and construction. As a result, the corporation suffered
through many typical system development problems, including limited
capabilities or a poor match with user needs. Projects got done, but
with little assurance as to their quality. Many were late and over
budget. Senior management in the organization recognized that
business managers and information management professionals needed to
improve their capabilities.
A comprehensive training and professional development program was
instituted, based on project management--the skills, processes, tools,
deliverables, and decisions required to take a project from the idea
stage to successful installation and operation. Training and
professional development took place both on-the-job and in seminars
and classes. It included both line managers and information
management professionals. In addition, line managers and information
management professionals were often placed on interdisciplinary teams
and cross-trained. This allowed them to understand the other's
perspective and thus improve coordination in complex systems
development efforts.
For example, line managers were trained to understand the risks of a
system development effort and to judge how to align systems
specifications with user needs and mission objectives. They were also
taught how to manage information and make information technology based
business decisions. Conversely, information management professionals
were taught line management and leadership skills to support the
translation of line user requirements into system design
specifications. The information management professionals were also
trained to understand the mission benefits to be derived from the
system being developed.
Through a combination of skill development in project management, as
well as investment selection, control, and evaluation, the
organization now completes 85 percent of its information system
projects on time and on budget. Even more important, says their CIO,
systematically building project management and systems construction
capability has allowed them to consistently increase the complexity of
projects they can handle. This increases the range of technologies
and scope of potential innovation that can be applied to improving
mission performance.
How to Get Started
To upgrade information management capability, senior executives should
- systematically identify information management skill targets and
gaps for both line managers and information management
professionals, and
- fully integrate skill and knowledge requirements in performance
evaluations and promotion criteria.
Results That Can Occur by Implementing
the Fundamental Practices
While meaningful short-term benefits can accrue within a year or two,
these fundamentals are not quick fixes. They take significant effort
and commitment to implement. In the case study organizations, new
performance levels were achieved by consistently applying the
fundamental practices over time, usually a period of 2 to 5 years. In
addition, the practices were usually pursued in the context of other
mutually reinforcing management improvement initiatives (e.g., total
quality management).
Implementing these practices in the federal environment is not only
possible, but is already beginning in several agencies. Though
barriers exist--perceived and real--each practice is consistent with
existing elements of federal regulations. Moreover, although few
federal agencies are applying all 11 practices, we found evidence that
each one exists at various degrees of maturity in at least one of our
federal case study organizations.
The best examples of the benefits that were achieved by leading
private sector organizations are presented below. The private sector
firms clearly had the best data on which to base measurable outcomes.
Leading states and selected federal agencies tended to have more
highly qualitative evidence of impact. We believe similar results are
possible throughout the federal government.
Increased Productivity: Productivity benefits allow an organization
to cope with rising workloads in an environment of shrinking
resources. For example, one organization now handles 158 percent
above its 1986 workload, with roughly the same number of staff, while
at the same time increasing both quality and customer satisfaction.
During this period, the organization's productivity grew at a 5.9
percent annual rate.
Improved Customer Service: Fewer mistakes and faster, easier, and
more valuable services narrow the gap between public expectations
and federal service delivery. For example, one organization developed
a new customer service process, reducing the number of people involved
in responding to customer inquiries from as high as 16 to 1 and the
number of systems supporting the process from over 70 to 1.
Higher Returns on Information Systems Investments: Investments are
made today based on the promise of achieving net benefits in mission
performance tomorrow. For example, one organization achieved a
14-fold increase in the benefits returned from information systems
initiatives. In 1989 this organization realized just 9 percent of the
benefits promised in project funding justifications. In 1992 all of
the promised benefits were attained, plus another 33 percent that were
unanticipated.
Lower Risks of Failure, Delay, and Overspending: With established,
systematic processes, information systems projects can be more
predictable, timely, carefully managed, and affordable on a consistent
basis. For example, one organization suffered from many projects that
were late, over budget, or had little real impact. Now, it completes
85 percent of its information systems projects on time, within budget,
and at acceptable risk levels and has seen examples of improvements in
its investment returns.
In the near term, low-value projects can be eliminated or stopped,
unnecessary risks can be uncovered and mitigated, existing projects
can be given an increased likelihood of success, and productivity
improvements in information management operations can be stimulated.
In the long term, the combination of process improvement and
technology has the potential to reduce the burden on the public from
collecting information for government use, increase access to valuable
government information, and reduce the costs while increasing the
quality and responsiveness of government services. Selected examples
from the National Performance Review include:
- Reduced costs and increased quality of government services
� quicker, easier application for and receipt of government
benefits--ranging from social security to veterans' benefits
� more effective national law enforcement activities
� more effective and economical health care service delivery
- Reduced burden on the public
� easier, quicker tax filing
� fewer, simpler forms and requirements for small businesses
- Increased access to more valuable government information
� wide variety of business information on competitiveness and
international trade issues
� quicker and more accurate information on environmental safety
risks
Getting Started: Recommended Actions
for Senior Executives
To take comprehensive, quick, and practical steps toward improving
strategic information management, federal executives should consider
doing the following:
- Take a personal leadership role in establishing strategic
information management and designate a champion to lead day-to-day
improvement efforts
- Make senior managers responsible for effectively implementing a
strategic information management improvement program
- Make this new strategic information management program a critical
success factor or a goal in the department/agency strategic planning
process
- Initiate a strategic information management improvement program
within the next 90 days.
Additionally, both congressional leadership and top agency executives
should ask and answer the following questions:
� Are the right strategic information systems and reengineering
projects being worked on?
� Are external and internal customer requirements being satisfied,
and is overall productivity and quality improving?
� What is the risk-adjusted return on information systems
investments?
� Are there performance measures that truly define success for the
organization in terms of expected outcomes for customers?
� Does management information support critical decision-making and
reinforce accountability for results?
� Is management information accurate, timely, secure, usable, and
targeted at the right decisionmakers and decision processes?
To assist with these efforts, GAO is developing and testing a toolkit
for agencies to use in benchmarking themselves against these 11
practices. The toolkit is expected to provide senior executives with
an efficient, fact-based evaluation of how their organizational
processes and practices compare to those of leading organizations.
For additional information on the toolkit or this report, call Jack
Brock at (202) 512-6406 or Christopher Hoenig at (202) 512-6208.
Research Objectives, Scope, and Methodology
The objectives of our research were to (1) identify information
management practices used by leading private and public sector
organizations with demonstrated success in consistently applying
information management and technology solutions to improve mission
performance and program delivery outcomes, and (2) share our results
with federal executives to help improve overall mission performance.
Scope
Our research focused on information management practices used by
senior management teams in five private sector firms and five state
government agencies. Our unit of analysis was individual business or
mission units (i.e., a business unit within a corporation or an agency
within a state). The sample organizations were chosen purposively,
not at random or to ensure representation of a larger group. We
selected the private sector firms based on
(1) recognition by corporate executives and independent researchers
for their progress in successfully managing information technology to
improve business performance, and
(2) discussions with three major business consulting firms doing
similar research that also included these organizations. We selected
the five state government agencies based on
(1) discussions with representatives from the National Association of
State Information Resources Executives, and (2) recommendations made
by a consultant we used on the project with recognized expertise and
research in public sector IRM issues. Because our work often involved
data that these organizations regarded as proprietary or sensitive, we
agreed not to identify individual organizations in examples cited in
our reports or to disclose any data they wished to protect.
To supplement our findings from the private and state organizations,
we selected nine federal departments or agencies to include in our
research. We chose these organizations judgementally, attempting to
consider diversity in organizational size (budget, personnel), mission
types (civilian, military, regulatory), and information dependency
(collection, use, dissemination). We did not choose these
organizations to represent places in the federal government with the
"best" information management practices, although many were actively
involved in developing information management capabilities. Rather,
we used the sample to help confirm how federal organizations compare
against some of the leading private firms and state agencies and to
help assess whether the practices used by these successful
organizations could work in the federal environment.
Methodology
Our research was conducted with an illustrative case study approach
using open-ended and focused interviews and documentary analysis, not
direct observations. In conducting the case studies, we interviewed
senior executives, line managers, and IRM professionals to learn how
the organization managed information and technology to deliver quality
services/products in an effective, timely, and cost-efficient manner.
Interview information was supplemented with documentary analyses of
each organization's existing practices, processes, and reported
outcomes.
For quality assurance, we consulted with representatives of an
advisory committee comprised of information technology experts from
the public and private sector on overall approach, sample selections,
research findings, and applicability of the practices in both private
and public settings.[6] We also formed an advisory panel of senior
federal IRM officials to assist in deciding the scope of our work and
to critique our analyses and findings. To ensure the quality of our
case study methods, we hired a full-time consultant with expertise in
researching public sector IRM issues and using case study methods.
Moreover, we convened several focus groups comprised of senior program
and IRM officials across the federal government to learn more about
their strategic information management activities and approaches, help
identify research gaps, and comment on the applicability of the 11
practices to the federal environment. As a final measure, we obtained
comments on a draft of this report from each case study organization,
members of the executive advisory committee, the advisory panel of
senior IRM officials, the Office of Management and Budget, and the
General Services Administration. We have incorporated changes where
appropriate.
Caveats
It has been little more than two decades since information technology
began seriously penetrating private and public workplaces. As a
result, the state of information resources management is still
relatively immature. It is influenced by wide-ranging
factors--managerial, technical, cultural, and political. Stable cause
and effect relationships are difficult to define and expert points of
view often differ significantly. As an initial step, this report
presents a framework that begins to document the state of the practice
drawn from our analysis of a relatively small number of case studies.
Admittedly, much more work in this area remains to be done. This
project is the first in a series of efforts needed to help bring
strategic information management in the federal government up to the
level of leading organizations.
The 11 fundamental practices should be viewed as a template relevant
to any organization. Although we attempted to be as thorough as
possible within the scope of our study, we recognize that our results
are neither comprehensive or definitive. A number of areas remain
that require further research before integrating them into our
framework, including outsourcing, technology research and development,
and the use of innovative technologies such as networking and imaging.
We also recognize that this management template requires customized
application to any organization depending on a wide variety of
contextual factors (e.g., skill base or current improvement
initiatives in place) as well as existing organizational strengths and
weaknesses.
Major Contributors to this Report
Accounting and Information Management Division
Information Resources Management Policy and Issues Group
Jack L. Brock, Director (202) 512-6406
Christopher W. Hoenig, Associate Director (202) 512-6208
David L. McClure, Assistant Director (202) 512-6257
Kevin G. McCarthy, Senior Evaluator
Kennard A. Thompson, Senior Evaluator
Edward G. Joseph, Senior Evaluator
Dr. Sharon Caudle, Consultant
Shane D. Hartzler, Reports Analyst
Project Advisers
We would like to acknowledge the advice of the following senior IRM
executives from the federal government and private sector who we
consulted throughout the course of this study.
Members of GAO's Advisory Council for
Information Management and Technology
Mr. J.C. Grant
President, C.G. James & Associates
General Donald R. Lasher (Ret.)
President, Information Systems
United Services Automobile Association (USAA)
Mr. Victor Millar
President, Worldwide Information Services
UNISYS Corporation
Admiral James B. Whittaker (Ret.)
Chairman and Chief Executive Officer
Applied Decisions, Inc.
Mr. Frederic G. Withington
Project Advisory Group
Mr. F. Kevin Boland
Assistant Comptroller General
Information Management and
Communications
U.S. General Accounting Office
Mr. Roger M. Cooper
Deputy Assistant Attorney General
for Information Resources Management
Department of Justice
Mr. James P. Jadlos
Director, Office of Information Resources Management
Department of the Interior
Mr. Wallace O. Keene
Director, Office of Information Resources Management
National Aeronautics and Space Administration
Dr. John L. Okay
Director, Office of Information Resources Management
Department of Agriculture
Mr. Reed Phillips
Director, Office of Information Resources Management
Department of Commerce
Mr. Alan Proctor
Deputy Executive Director for Planning and Information
Federal Trade Commission
Dr. Neil Stillman
Deputy Assistant Secretary for IRM
Department of Health and
Human Services
Mr. A. Joseph Williams
Review Officer, Information Resources Management
Department of State
Executive Office of the President
Office of Management and Budget
Ms. Sally Katzen
Administrator
Office of Information and Regulatory Affairs
Mr. Bruce McConnell
Chief, Information Technology Management Branch
Office of Information and Regulatory Affairs
Mr. Steve Holden
Senior Policy Analyst, Information Technology Management Branch
Office of Information and Regulatory Affairs
Mr. Schuyler Lesher
Chief, Federal Financial Systems Branch
Office of Federal Financial Management
General Services Administration
Francis A. McDonough
Assistant Commissioner
Office of Federal Information Resources Management
Ms. Susan Robson Tobin
Director, Management Reviews Division
Federal Information Resources Procurement and
Management Reviews
1. Information systems are a discrete set of information resources and
processes, automated or manual, organized for the collection,
processing, maintenance, use, sharing, or dissemination of
information.
2. Information Management and Technology Issues (GAO/OCG-93-5TR,
December 1992), Information Technology Issues (GAO/OCG-89-6TR,
November 1988).
3. Architectures explicitly define common standards and rules for both
data and technology, as well as mapping key processes and information
flows. For additional information refer to Strategic Information
Planning: Framework for Designing and Developing System Architectures
(GAO/IMTEC-92-51, June 1992).
4. This concept of management process integration also directly
underpins the threefold requirement of the Government Performance and
Results Act for performance measures, strategic planning, and
performance-based budgeting.
5. Determining the balance of decision-making authority between
corporate and mission levels on information management issues is a
complex issue--one that depends largely on the degree of similarity
between missions. Most organizations we studied operated on the
presumption that, unless some significant shared corporate benefit was
justified, decisions took place at the mission level.
6. This committee, GAO's Executive Council for Information Management
and Technology, was created in 1989 to provide expert managerial and
technical advice to GAO on potentially sensitive and controversial
information management and technology issues.
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