Case Studies

From Cost Center to Business Partner

A new and improved image for IT staff makes everybody look good.
This story appears in the March 2006 issue of BizTech Magazine.

Photo: Christopher Navin
A realigned IT team helped OneUnited Bank grow from scrappy newcomer into one of the nation's largest minority owned financial institutions, says CIO James Barry.

They're often the first people blamed when your password fails and the last ones thanked for keeping your systems up and running. They're information technology (IT) professionals — some of the small business world's most overworked and undervalued employees. For years, business owners have viewed IT departments as little more than cost centers — high-priced divisions that rarely contribute to growth or profitability.

 

"In our environment they viewed IT as the black hole," says Rob Shoenfelt, chief information officer at Celina Insurance Group, recalling the image of his IT department among back-office employees when he arrived at the Celina, Ohio, underwriter seven years ago. But Celina Insurance has changed internal thinking about IT from black hole to valuable business partner by turning in early wins and addressing business growth inhibitors, such as slow payment processing, and eliminating those problems through effective technology tools. The insurance carrier leverages custom Web-based applications and online payment systems to compete more effectively against competitors that are many times Celina's size, Shoefelt says.

 

 

Celina is at the vanguard of change as an increasing number of small businesses embrace the notion of IT as a competitive advantage and a primary driver of business success. It's a difficult transition — from cost center to strategic partner — that not only entails redefining the role of IT, but readjusting the mindset of employees. The good news is, for those companies that manage to foster a new perception of IT, the rewards are plentiful, including reduced turnover, increased productivity and happier employees.

 

Admin to Analyst

 

Just ask James Barry. Barry is the chief information officer at OneUnited Bank, a Boston-based African-American-owned bank with annual revenues of $25 million and nearly 150 employees. For the past four years, Barry has worked tirelessly to "consciously realign IT staff from being system administrators to being business analysts," contributing to the bank's growth from a scrappy newcomer into one of the nation's largest minority-owned financial institutions.

 

To achieve this realignment, Barry adopted a number of unique approaches. For starters, the financial institution's IT professionals spent time shadowing employees from a wide array of departments, engaging in nontechnical activities and conducting in-depth interviews with coworkers with whom they wouldn't otherwise communicate. Through these various engagements, Barry says that his IT team familiarized itself with the company's workflows and how technology supports these processes. Armed with this valuable knowledge, OneUnited's IT team now has a better chance of driving adoption of new technological solutions among employees.

 

In addition to strategic measures, OneUnited has taken tactical steps to foster greater appreciation for the bank's IT department and instilling a sense of ownership of the IT systems in employees across the organization. All too often, employees are quick to point an accusatory finger at IT when a password is no longer accepted or if an e-mail never quite makes it to a recipient's inbox.

 

To combat this problem, Barry ensured that OneUnited's workforce take responsibility for its desktop computers and accompanying applications. "Though we're there for the really serious problems, the senior management, management and users look upon the system as their property and their tool to take care of," says Barry.

 

CEO Takeaway

Promoting an image of the IT department as a vital partner within your business can pay big dividends. To help foster this partnership you should:

• Have the IT chief (CIO, CTO or simply IT manager) report to the CEO or a business owner; don't bury IT within the finance function.
• Involve IT leadership in the strategic planning for the business.
• Instill a sense of pride and ownership in your strategic IT systems across the entire company; don't just talk tech with the IT staff.
• Publicly recognize significant achievements by the IT team like you would for sales gains or big contract wins.

OneUnited Bank isn't the only small business to refashion the role and reputation of its internal IT department. Nestled in Las Vegas, ScripNet processes prescription drug claims for workers' compensation on behalf of clients including insurance carriers, self-insured companies and municipalities. Traditionally, pharmacies have to wait days — if not months — to receive payment for workers' compensation claims. With ScripNet, pharmacies are connected to an online adjudication system so that coverage for prescriptions can be verified immediately. Thanks to this entirely automated process, ScripNet, with about 35 employees, is able to negotiate discounted rates and reduce paperwork, thereby saving its clients time and money.

 

Such automation, however, wouldn't be possible without the company's three seasoned programmers, whose code-writing skills enable clients to receive daily electronic reports on injured workers and detailed prescription bills. The result is a painless experience for clients such as the City of Philadelphia and Texas Mutual Insurance — and increased revenue for ScripNet.

 

In order to recognize the contributions these programmers make to the company's overall success, Dennis Sponer, ScripNet's owner, established a profit-sharing model in which 5 percent of quarterly profits are divided among eight core managers, as well as the company's two programmers.

 

"We really believe that if everybody's focused on the bottom line, it keeps everybody's interests aligned," says Sponer.

 

Financial perks may help shape an IT department's objectives and ability to drive growth, but Sponer says ensuring that IT receives the respect it deserves from employees requires placing a strong leader at the helm. In ScripNet's case, that means the company's cofounder, Sponer's wife, Jae, runs the IT department.

 

"If the owner of the company is in charge of IT at a very high level, that really prevents IT from becoming the whipping boy," he says.

 

But that's not all. Sponer also recommends including IT professionals in non-IT decisions. For example, when it came time for ScripNet to move offices in July, Sponer says he intentionally included the IT department in making significant decisions such as the layout of the new location's office space as well as its server room and computer workstations.

 

But not everyone believes that the task of transforming IT from a necessary evil into a strategic partner should fall squarely on the shoulders of a small-business owner. According to Mark Granger, president of ProActive Resources, a Marietta, Ga.-based IT consultancy, and president of the National Association of Computer Consultant Businesses, today's IT professionals should step up to the plate to ensure that senior management recognizes the return on its investment in technology.

 

"If your IT person cannot explain what it is he's doing in terms you can understand, you need a new IT person. That's critical," warns Granger.

 

Nor should IT professionals allow senior management to wrest complete control of IT department processes and deliverables. Instead, experts recommend drafting an internal service-level agreement outlining factors such as budgetary requirements, incident response times and the criteria for assessing the criticality of technological mishaps.

 

Says John Sloan, a senior research analyst at Info-Tech Research Group in Ontario, Canada: "The IT function has to establish what level of service they can provide and then, internally, work out what is reasonable or not reasonable within a service-level agreement."

 

In the end, though, today's small-business owners play a starring role in sculpting an IT department's image and recognizing the very real contributions it can make to a company's bottom line.

 

Says Barry of OneUnited: "IT senior management cannot be effective if they're not looked upon by the CEO as among the most important strategic partners he'll ever have."

 

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