Randy Spratt is the EVP, CIO and CTO of McKesson Corporation, a $112 billion company based in San Francisco, providing medicines, pharmaceutical supplies, information and care management products and services across the healthcare industry. In this one-on-one Q&A, he tells CIO Insight: “In my mind, business Nirvana is top-line growth. IT Nirvana is making everything the same, efficient, secure, leveraging economies of scale. In this scenario, IT controls things to a greater extent. In [too] many organizations, there is a pendulum that swings between these two scenarios, between Business Nirvana and IT Nirvana, never quite reaching either side before the momentum shifts in the other direction.”
by Peter High, in CIO Insight
Randy Spratt is the EVP, CIO and CTO of McKesson Corporation, a $112 billion company based in San Francisco, providing medicines, pharmaceutical supplies, information and care management products and services across the healthcare industry. Spratt had been CIO since July of 2005, responsible for the global applications that serve the entire corporation and for the overall IT strategy and information security for the company. In April 2009, he added the chief technology officer role. In the company’s Technology segment and, to a limited degree, in its Distribution segment, Spratt is responsible for guiding the technology direction, strategy, and quality of the medical systems that the company sells, implements, and supports in the healthcare community.
Given dual internal- and external-facing roles, Spratt has had a chance to think a lot about the value the IT departments ought to deliver to the companies and customers that they serve. He also recognizes that they must solve the riddle of both remaining efficient and secure, while also forging efforts to innovate and add to the top-line of the company, as well. CIO Insight contributor and Metis Strategy President Peter high recently spoke with Spratt about his perspectives on “IT Nirvana” and how it can be attained by any CIO.
CIO Insight: Randy, you have spoken about the two sources of value that a CIO must bear in mind, one is growth oriented, and the other is leverage oriented. These can be at odds. How have you successfully managed this paradox?
RANDY SPRATT: It truly is a paradox. But it is the paradox that any business leader, any CEO faces. On the one hand, you need to innovate and be agile to serve the strategies of the business. On the other hand, you have a lot of activities that are commodity driven, and if you are not competitive with other entities that can provide those services, then you will be at a competitive disadvantage as a company. The more you can standardize, the more you can gain economies of scale and render the IT operation more efficient. On the other hand, the business needs non-standard technologies for innovation.
In my mind, business Nirvana is top-line growth. This suggests business-driven IT activity, and a high degree of IT agility. The businesses will want and expect new devices, new capabilities, new applications, new tools to reach and delight their customers. They are looking for social networking, iPad apps, smartphone apps, and linking into cloud-based services to reach their markets and deliver innovative products and services. IT nirvana is making everything the same, efficient, secure, leveraging economies of scale. In this scenario, IT controls things to a greater extent.
In many organizations, there is a pendulum that swings between these two scenarios, between Business Nirvana and IT Nirvana, never quite reaching either side before the momentum shifts in the other direction every three to five years. An innovative CIO is hired who focuses almost exclusively on enabling the business vision, and, for a time, achieves tremendous things for the organization. In many cases, this is a CIO within a business unit that is seceding from an overly controlled central function. In the process, our innovative CIO creates a shadow infrastructure, replicates existing functionality, and buys products and services at sub-optimal purchasing power and from unproven vendors. Projects fall behind, costs accelerate, and the desired speed and agility are not attained.
Next, a cost conscious CIO is brought in to rectify these issues. The business executives speak with great frustration about the cost and inefficiencies of the IT department and demand double-digit percentage cost reductions. That new CIO spends a lot of time fixing the mess, cleaning up the architecture and infrastructure, cutting staff, and instituting practices to make things more efficient. That CIO de-emphasizes innovative, top-line growth opportunities in favor of more efficient operations, greater buying power through standardization and scale, and more stable, reliable operations through solid IT processes. After a period with a lack of innovation, however, that CIO’s business leader peers become antsy about the lack of velocity and agility and the unproven top-line value IT is achieving, and the pendulum swings back again.
The remaining questions covered in this article are:
- You have said that CIOs must get off of the pendulum and to drive a technology lifecycle that takes its place. Please explain.
- How does your staffing model reflect this lifecycle?
- Given the diversity of the business units, how do you forge innovation across them?
- How do you define and measure innovation?
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To hear more from Randy Spratt, please visit his Forum On World Class IT podcast interviews with Metis Strategy: