Rapidly changing technology, digital convergence and M&A activity are forcing organizations to rethink and rewire IT systems like never before. But somewhere at the intersection of innovation and productivity lies the real-world challenge of making various systems work in a streamlined and cost-efficient way. GE Capital CTO Eric Reed offers insights into how the financial services firm, a subsidiary of manufacturing giant GE, takes a best-practices approach to the IT reorganization.
Baseline: When should IT organizations begin looking at a reorganization? What are some of the signs and signals?
Eric Reed: There are a few signs. One of the most obvious is a merger or acquisition. It automatically raises questions about how to fit systems together and what works best. But there’s also an ongoing need to respond to market conditions and the overall business and technology environment.
We often see the market going a certain way and believe it has implications for our business. Because of this we decide to make changes. Depending on what’s required and the technology touch points, we either address the task within IT or in conjunction with business units.
Baseline: Do you have specific factors you examine in order to decide whether a reorganization is required?
Reed: We take a close look at three different core issues and processes. One of them is people and the talent we have. When there’s a technology or market shift, we have to ask, “Do we have the talent in place to make a shift?” A focus on talent helps us on the front end.
A second area is forecasting where things are going over the next 18 to 36 months and what implications this has for the business. This helps us start planning how to make a shift. The third piece is more tactical than strategic. It’s essentially mapping out the changes and implementing a timeline.
Baseline: Can you provide an example of what you have done to reorganize and, ultimately, improve IT?
Reed: Recently, we examined the entire company and the IT systems in place, and we noticed a significant number of inefficiencies and inconsistencies. Three years ago, we had 16 different infrastructure teams, and we recognized the need to get down to just one. We were doing things 16 different ways at 90 data centers. It was inefficient, and we did not have control of the environment.
The restructuring has resulted in huge cost savings and productivity gains. For example, we have cut our data center footprint in half.
Baseline: How did the reorganization process take place, and who was involved?
Reed: In this case, we had 10 CTOs across GE Capital assemble in a room and discuss things in as clinical a way as possible. We did our best to keep emotions out of the process. We started by deciding which processes ought to be involved and which ought to be excluded.
We called these meetings “Workouts,” and they took place over multiple days. Essentially, we locked ourselves in a meeting room, had pizza shoved under the door and just hashed through things using data and human insight. We typically do this until we make sense of things.
Once we had a strategy and a plan, we sat with the CIOs and tweaked things. We explained what we were thinking, asked them if it made sense and worked to get their buy in. Then we held a third set of meetings where we looked at two things: How would the reorganization team operate from a process standpoint and how should things be organized?
Baseline: How do you handle communication and change management?
Reed: Communication is huge. After everything was hammered out, we got in planes. We flew around and talked to business and IT people in multiple countries about what we were doing. We made sure they understood what was taking place.
We used face-to-face and town hall meetings. We used Web chats, Websites and videos. We also used surveys in order to understand if people were getting it and what issues we needed to address. We used anonymous surveys.
Baseline: What role do metrics and key performance indicators play in IT reorganizations?
Reed: We look at objective measures such as costs and performance levels—particularly incidents and problems—but some of the metrics are very subjective. We plug in general opinions of CIOs and others.
Baseline: Can you share any other best practices?
Reed: It really comes down to a few things: Understand why you are reorganizing; understand where you are going and what it will achieve; and be a very good communicator to all levels of the organization. Be completely transparent and give people a chance to provide honest feedback.
It’s also important to recognize that change is always disruptive, and it’s always hard. But it’s also essential and valuable.