As 2007 begins, CIOs need to start thinking about systemwide integration and collaboration.

Howard Baldwin,CIO Leadership Forum

As director of information technologies at the Central Utah Clinic, Jamie Steck has witnessed a lot of changes in technology. He has installed a state-of-the-art network for the clinic's 70 physicians–linking the Provo headquarters with 15 other facilities around the region–and has implemented a similarly advanced electronic health records (EHR) system so that patient information is available electronically no matter where the patient or the doctor may be. Having achieved all this, does Steck have a strategy for this year? Not per se. He resolves: "I am going to focus on expanded use of the systems we have. It is time we started to show some results."

But Steck's plan actually represents a logical next strategic step for CIOs–and not just because the calendar has rolled over. According to some consultants, we're at a key point in strategic thinking, one we've been working toward for a few years.

Simply put, you, like Steck, must resolve to make the systems you've built over the past few years work in concert, and in two ways. They must work holistically among themselves, and they must be equally well integrated with the business. As with most resolutions, keeping this one isn't going to be easy.

The Pieces Come Together

To understand why holistic systems have become so important–loath as I am to fall back on the language of my graduate economics class–consider the widget. The widget is designed, manufactured, marketed, and sold. Its components must be listed, purchased, built, and shipped. The people who sell it are compensated for their work, sometimes depending on how many they sell. They must track their customers, not only to service their widgets but also potentially to offer discounts to high-volume widget buyers.

Our simple scenario touches almost every department of a company: manufacturing, operations, finance, human resources, sales, and marketing. If those systems aren't integrated, data can be inconsistent, inaccurate, or inaccessible. Having a "single version of the truth," as it's been called, makes companies far more efficient. And it's technology that makes this holistic view work.

Jim Sutter is senior partner at the Peer Consulting Group, which gathers as many as 40 members of its CIO roundtable each month to discuss trends and concerns. Sutter is a former CIO of Rockwell and Xerox. When his group met in December to list the concepts it wanted to discuss in 2007, Sutter says, the top subject echoed our widget scenario: tracking information on a product through the company. "It was more content management than transaction management," Sutter says, noting that people cited the need for information about everything from packaging and documentation to advertising artwork. Still, the underlying point is that multiple activities in a company are interrelated and must be integrated accordingly.

How did we get to this inflection point of a holistic system? It's really the confluence of several trends:

• The drive toward alignmentAs technology becomes less distinguishable from the way we do business, IT staffs have an increasing need to understand how the business works. That way they can deploy technology for a specific purpose, not just because they want to be on the cutting edge.
• The popularity of enterprise resource planning (ERP)?Although the transition from information silos to consolidated ERP applications is ongoing, companies can see the value of using single applications to consolidate data and of allowing users to access that data according to their needs and perspectives.
• The development of service-oriented architectures (SOAs)Today, SOAs are approximately where ERP systems were 10 years ago with a difference. SOAs acknowledge that there's no way any one application can handle everything a company does, so they provide a less complex way of exchanging data and integrating applications to create a more holistic enterprise–one that still relies on a single source of data but that makes it easier to access no matter where it might reside. (In a recent report from the management consulting firm McKinsey, 48 percent of the surveyed CIOs said they planned to implement SOAs for integration with external trading partners in 2007.)

According to Kaiser Permanente Chief Technology Officer Dave Watson, SOAs let Kaiser "do mash-ups on a new scale." Watson spoke about his plans for 2007 with M. R. Rangaswami, of the business strategy firm Sand Hill Group, in a recent podcast. "SOAs give me more flexibility to make choices between integrated platforms such as SAP's R3 and other e-business applications I can use to anchor my business," he said. "I can then more rapidly and effectively integrate best-of-breed components that operate on the periphery. SOAs also give me much more flexibility in how I meet business needs within the organization."

The same applies to business needs outside the organization. Watson noted that in some areas, Kaiser has contracts with community hospitals to serve its members. "We have created a seamless integration layer between our systems and theirs that would have been time-consuming and expensive if we'd done it with message-oriented middleware," he said. "That's the attraction for us of SOAs."

Besides SOAs, the other two technologies noted as vital for integration and collaboration are so-called Enterprise 2.0 applications–which allow communication through blogs to be posted and promulgated quickly–and mobility. Toby Redshaw, currently corporate vice president of ideas at Motorola (he was formerly corporate vice president of IT strategy, as well as formerly CIO at FedEx), participated in the podcast with Watson. He believes that along with SOAs, mobility will help contribute to the holistic system, because it enables people to access and exchange data wherever they are. "When people get up in the morning, they turn on their smartphone or Windows Mobile device, look at the real-time state of their business, and start to act. You're going to see speed-related competition become important."

The Potential for Failure

Keeping this resolution, as we noted, isn't going to be easy. Why? Because CIOs still just don't get it. Pete DeLisi is president of the strategy consulting firm Organizational Synergies and serves as academic dean of Santa Clara University's Information Technology Leadership Program. He's frankly disappointed by how few CIOs hew to the holistic view. "I continue to be frustrated in trying to convey the importance of strategy and understanding from the business perspective," he laments. "Some CIOs don't know what they don't know." DeLisi fears that some CIOs have spent so long pondering how to solve specific application problems–that is, thinking about deploying outmoded silos–that they can't see the big picture.

"All these pieces are interrelated, but CIOs aren't thinking about the whole they're dealing with." It's not the technology that's important but how technology delivers value to the company as a whole. "It's a paradox," he says. "The information systems organization is not thinking about the systems."

Jim Sutter adds that the problem is not just with CIOs. "Sometimes these silo applications were built that way because of the way the company is organized and how its culture works." Sometimes it's the business executives who resist the necessary integration and collaboration, he notes. "The CIO is trying to cut across boundaries, trying to develop good relationships between departments that almost instinctively want their own database and applications."

More than anyone else, CIOs are expected to navigate these obstacles and create an integrated, collaborative system that doesn't emphasize boundaries. "It's technologically and politically tough, and I don't think CIOs get enough credit for being the ones to deal with everyone's expectations," says Sutter.

Still, such strategic thinking is simply becoming the entry fee for CIOs. "You can no longer separate business from technology," warns Sutter. "You have to look at the business and see how technology can more easily achieve the business goals. Today CEOs pay CIOs to think in an integrated way."