Presentation to CAREGROUP Board of Directors

1. Presentation toCAREGROUPBoard of Directors Governing Your Networked IT Organization Ken PeffersApplicable IT Research, Inc.November 21, 2002

2. AITR’s Charge • You have asked us to investigate the circumstances surrounding the recent network failure and to • Determine the material facts • Draw the appropriate inferences • Describe alternative solutions • Recommend the most appropriate solution

3. Management Problem • As the Caregroup’s business processes become more dependent on IT, how do you make sure that the risks associated with this dependency are acceptable? • How do you manage new service requests? • How to you manage infrastructure implementations? • How do you insure that you can recover from a disaster? • How should IT be governed overall to manager your answers to the above questions?

4. Material Facts • Caregroup part of an industry increasingly under pressure to reduce prices and costs. • You have seen integration using IT as a means to achieve cost savings. • By your own evaluation of your situation you have achieved the best integration in the industry. • Medical personnel dependent on systems to make decisions and implement them.

5. Precursors to the crisis • Capital IT budget reduced by 90% in three years. • Operating IT budget increased slightly. • Chief network guru left. • No one in the organization competent network expert. • Research environment. Experiments allowed involving network.

6. Inferences • When the business is dependent upon systems, systems needed to manage risk because a calamity to the systems means a calamity to the business. • Separate development, experimental systems from production systems • No new system is integrated with the production systems until it is thoroughly documented and tested. • Clear organizational structure to insure responsibility for system. • Management of staff resources, training, etc. • Backup data, architecture, systems, business processes • Limits to the use of resources. • Life cycle for hardware and software

9. Caregroup’s Governance • Caregroup needs a full time professional IT executive to act as its CIO • Managing its IT personnel resources • Planning IT investments • Monitoring service levels • Managing risk • IT Steering Committee • A leadership committee comprised of senior managers of the operating business units, the CIO, and the new Network Change Control Board and supported by staff experts, e.g., technologies, finance, legal, etc. • This unit would be responsible for screening and preliminary approval for proposed new services and applications • Network Change Control Board • Focuses on changes in the network • The Project Team • To implement new applications

10. These are requests that will require new applications that are integrated with the network and/or require network modifications. Proposals approved by the Network Change Control Board If requiring major investments, approval by the IT steering committee Management of Major New Service Requests

11. Managing Infrastructure Implementations • Project Team • Functional Unit representation to insure that the resulting system meets the business needs • Technical representation for design and implementation • Development Environment • Develop new applications in a development environment that is isolated from the production environment • Appropriate authority determines when application has been adequately tested and can be installed in the production environment

12. Alternative Sourcing Choices • Outside vendor for network maintenance • Outside vendor to supervise network development • Outside vendor to develop and operate network • Develop in-house network expertise

13. Recommendation • Hire an outside vendor to own, operate, and develop the network infrastructure • Caregroup’s core competency is patient care and research, not running a IT network. • Consider Caregroup’s culture • Also, a hospital isn’t an ideal employer for IT specialists • In a hospital, if you’re doctor, you’re special. Otherwise, you’re never quite as good. • Hire Cisco or another competent vendor and outsource the network

14. Postscript • Presentation guidelines • Take on an appropriate identity • Speak to the decisionmakers • Rehearse and plan an effective presentation. It isn’t required that everyone speak. • Identify the decision problem • Identify and analyze the material facts • Identify alternate solutions, if possible • Recommend a solution • Don’t • Give us a laundry list of the stupid things that the managers did • Don’t summarize the case or give us a history of the firm (would you give the board of directors a history lesson?).

15. Postscript 2 • Halamka is a physician. Did this entice executives in the organization to overlook his weaknesses? • “…I know all the technologies…I’m a doctor so I understand the clinical domain and the technical requirements.” “…[I’ve] never built anything beyond a home network…” [p. 3]. “They call me the ‘Chief Information Officer,’…but I’m really the ‘Chief Integration Officer;’ I make everything talk to everything else.” [p. 12].