1. Righting the IT ship at Johnson & Johnson Prepared by Matt Redmond of McDeloite Consulting Presented on 17 December 2009 Draft
2. Executive Overview Iterate quick IT strategy formulations,focused at first on “keep the lights on” activities, and identify quick win projects to enable business growth, to improve business view of IT’s value, and maturing IT practices. 3 months 15 months 12 months 12 months 12 months / Quarterly (ongoing) Draft
3. Time Frame: 3 Months Confirm IT Strategy, Prioritize Portfolio J&J IT needs to prove ability to support coordinated business operating strategy through delivery of basics, including operating system, data center, and process standardization Strategy Portfolio Draft
12. Time Frame: 12 Months Implement Knowledge Management System Use industry best practices to design and roll out enterprise-wide knowledge management system, with business-unit specific content to maintain coordinated operations model Draft
13. Time Frame: 12 Months / Quarterly Establish PMO, Governance, Measure and Market Results Establish corporate PMO to manage enterprise projects, with BU-specific projects managed and governed at that level. Project successes marketed by PMO through balanced scorecard. Project Management Office Corporate Governance Board For enterprise or xBU projects Team Member Corp PM Produces Balanced Scorecard Team Member Team Member Local Governance Board For BU- specific projects Team Member Draft LocalPM Team Member Team Member Draft
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Summing up our interviews with senior executives we have identified four critical success factors1 to resolve the bickering on IT investments and to enable J&J to more effectively make decisions going forward:1. New product introduction speed and effectiveness in managing J&J’s pricing power with larger customers;2. Cost management in the inefficient use of human capital, product, and IT resources;3. “Brain drain” of aging IT professionals and executives taking their institutional knowledge with them when they matriculate from J&J; and,4. Effective enterprise data sharing such that executives are empowered to make the correct decisions about operations, without creating the burden of analysis paralysis that comes with collecting too much data for it to be of use. To address these factors and to establish quick wins, we recommend the following five action, designed specifically to piggy back off one another so as to ensure capture of best practices and lessons learned, as well as to expedite the overall implementation.Hold an IT colloquium with the key outcomes a strategy and project roadmap for attaining that strategy. The IT strategy should be aimed first at “keep the lights on” activities so as to prove IT’s value to the business such that they can be engaged as a trusted partner going forward2. To achieve that strategy, we recommend the following three projects;Consolidate operating systems to a Windows-based environment, piloting it within the Pharmaceutical group. This will help manage costs create a basic standardization that IT can either support directly or through a managed vendor relationship with Microsoft, instead of having to support multiple vendors products. While engaging in this activity, the project team should begin to explore commonalities in data storage needs of the business groups, so as to enable the next recommendation;Data and process sharing initiative aimed at selectively consolidating supply chain data into an enterprise wide single instance of SAP, piloted first in the Consumer group. Successful implementation of this will help executives make informed decisions in managing both supplier relations, as well as negotiating with key customers, enabling both a more rapid new product development and protection of profit margin erosion;Implement a knowledge management system, based on the Infosys model and piloted in the Medical Device & Diagnostic group, to stem the impact of the “brain drain”; and,Throughout these projects, create and foster the development of a Project Management Office while setting the correct levels of governance and communicating out to the business the progress and impact of the projects underway and recently completed so as to further engender within J&J the trust that IT can truly deliver value to business.Successfully meeting the charters and timetables for these projects will improve the maturity of J&J IT’s practices in contributing meaningful value in a coordinated operational business, such that they will be turned to in the future to further enable and drive business value.“ICEX Knowledge KitTM for IT Strategic Alignment”, ICEX“Attaining Top-Level IS Performance”, Doctor and Swanborg
J&J is currently a high level 1 organization that is having trouble meeting the diverse needs of its business units, due in large part to a lack of integration among the units1. To start we would recommend organizing an IT Colloquium2 with other J&J executives to gather and share best practices in addressing common cost & new product development issues to:Identify best ways to move from diverse to coordinated business operating model3 to effectively manage costs.Frame a ‘fast strategy’ by getting CIOs and business owners into the same room to “identify and prioritize the key questions that stakeholders hope to answer.”4 Select the right actions to take to bring a more coordinated approach to identified areas of IT to effect the greatest change on costs and scale.Capture key decisions and communicatethem down to all BUs and up to Corporate.To frame this discussion and to ensure that there are actionable takeaways from this meeting, use Business Urgency / IS Value Contribution and Strategic Importance / Relative Position frameworks to evaluate and select proposed projects2. Based on available data we recommend: Standardize PCs to Windows, thereby strengthening IT groups ability to deliver new applications and technology because they can avoid the “sometimes have problems with PCs” and explore lower number of data centers and/or exploiting new, lower cost technologies (i.e., cloud computing). This will help J&J cut costs long-term and helps to promote the view that IT can deliver value to the business units without undue intrusion into day-to-day operations. Selectively deploy a single instance of SAP across business units to ensure higher level of integration and economies of scale in managing costs, speeding distribution, and consolidating key financial, operations and logistic, and sales and marketing data such that J&J can more effectively negotiate with large customers. Implement knowledge management systems to institutionalize experience of seasoned IT personnel and executives, so that we can assuage fears for the corporate CIO and head of HR concerning the aging of the workforce and the potential loss of knowledge.Ask marketing to quantify the benefits of a more consolidated web presence, as currently it is unclear whether or not there is a compelling business need for select business units to have an individuated – as opposed to standard enterprise – web presence.By including staff from all different IT groups and leaving the colloquium with positive steps forward, we aim to help fit the sense that morale is very low in many of the IT groups – we have identified a way forward. To ensure that we maintain the positive momentum from the colloquium, executive buy-in and sponsorship for the proposed actionable steps, and agreement among the business units about the level of corporate purview of operations, we recommend establishing a project management office and a scalable Federal governance model. To approach this we recommend:Identifying current leaders from corporate and business units as suitable core project leaders as the foundation of the central project management office, who will have direct line reporting to the CIO and CFO. The next tier of talent will help with piloting projects at local levels to hone their project management experience.For enterprise-wide or high priority projects, project managers from the PMO will be staffed to manage the projects and bring in for reviews with a governance board of corporate executives. For business-unit specific projects, they will be staffed and governed by the business unit, but will need to report progress to the project management office.The PMO will publish quarterly results of projects through the use of the balanced scorecard.Sources:“Attaining Top-Level IS Performance”, Doctor and Swanborg“ICEX Knowledge KitTM for IT Strategic Alignment”, ICEX“Forget Strategy: Focus Your IT on your Operating Model”, Ross
We recommend taking a “force fit”1, “big bang”2 approach to implementing Windows-based architecture and standards, based on industry best practices identified during the global deployment of standard workstations at Dow Chemical3. While evaluating standards and upgrading infrastructure, the team should begin to evaluate the current use data centers to identify any common standards in usage and where there are opportunities for core shared, an activity that will inform the next recommendation. The “big bang” approach is recommended to motivate the team members to deliver the project on-time, on-budget, and within the terms of the project charter. This approach will also ensure that J&J gets the right level of employee support that is a critical success factor. Taking the “force fit” approach, J&J can quickly build a standard infrastructure that can enhance data sharing. Concerns around this approach are that it can be very expensive, political, and systems conversions can be risky.1 However, as the executives in the business groups have indicated, they just want to feel like their money is being spent on something that works. Consolidation to a standard system will go a long way towards fulfilling this very basic business need. As this is a commodity item, the political elements may not be as strongly voiced as they would with other initiatives. The project team should be sensitive to the potential for this to turn into something political and one tool they can use to defray these concerns is to allow for business units to apply for exemptions for select employees for whom there is a compelling business case that they need the Apple OS. This shifts the burden to those who may try to sandbag the project by saddling the project team with unnecessary work, and makes those applying for the exemption – and not the project team - accountable to the governance committee (discussed in the fourth recommendation) for any delays encountered as a result of this request.In a recent survey , J&J business unit executives expressed that they pay too much for basic IT services, that it takes too long to get any system modifications, and they are uninterested in getting involved with information problems. Additionally the CFO has expressed concerns regarding costcontainment efforts, and moving to a single vendor will help better manage costs in terms of asset and staff knowledge management. The IT staff will need to focus expertise on only a single operating system, such that the group can operate as subject matter experts and helping to boost not only their morale, but also business’ estimation of the group’s worth.Based on characteristics of the group, we recommend using the Pharmaceutical group the pilot group, with a skilled professional from Bill Toranto’s group acting as the project manager. Pharmaceutical has indicated that there is a pre-existing problem with PC updates and fixes and that there is a mixed deployment of Apple and Windows operating systems. Proving that this project can solve the problems of this group will help prove the value of the project to other business group executives and help speed adoption. Additionally, the Pharmaceutical group has an eLearning application already developed and deployed, which can help serve as a temporary knowledge management tool for lessons learned and best practices identified as an outcome of the project work. Another factor in this recommendation is that Pharmaceutical shares a network with medical device and diagnostics, so when the project transitions to that group it will be on a similar network, helping to further speed roll out. Lastly, as there is a shared network between the two groups it will serve as justification for starting to identify shared data and process that will inform the process and data sharing initiative that will piggy-back on this project.The project plan is modeled after the global deployment of standard workstations at Dow Chemical.3 Currently the evaluation of standards spans two quarters and – with the launch of this project – there will be a formal commitment to the Windows standard, this activity can probably be condensed and help expedite the project, helping the IT group establish that “quick win” to sustain belief in the new strategy and the future projects designed in support of it.Sources:“What Is IT Architecture?”, Swanborg“IT-enabled Business Change: An Approach to Understanding and Managing Risk”, Gibson“Global Deployment of Standard Workstations at Dow Chemical”, ICEX
We recommend, based on core data needs identified in the previous recommendation and those unearthed during the business case development, that J&Juse guided evolution project management3 approach to roll out a single SAP ERP instance with modules for materials management, production planning, order management, pricing, and executive information systems. Based on the strategy activity of our first recommendation, the success Elf Atrochem had ina similar deployment1, and results of an ICEX survey2, we feel this will be a timely implementation to help J&J secure better terms with both customers and suppliers.J&J’s head of manufacturing feels that standardizing supply chain processes can save money and speed distribution. However, this is met with resistance bybusiness unit manufacturing executives who are meeting their goals of shipping product. As each business unit is running some instance of SAP we wouldrecommend having a business executive from the Consumer group take the lead on piloting the least intrusive version. We recommend this group due to thehigh level of work that is outsourced to other companies, thus business units would see the value in consolidating core data in a central repository. Second,there is a degree of unionization in this group not existent in other business groups; as such, piloting and implementation would need to remain at the least intrusive level possible so as not to engage the ire of the unions. Third, SAP is already a vendor to the Consumer group, so the project manager fromthat group can condense the project management timeline in the activity area of evaluating vendors. Fourth, the Consumer group has demonstrated aptitudewith logistics applications, which the materials management and production planning modules will support.By selectively implementing the materials management and production planning modules, and not the entire suite of operations and logistics, J&J will stillallow the business unit manufacturing executives latitude in meeting their goals of shipping their product, with greater visibility into managing productionruns. It is also consistent with the corporate move to a more coordinated operations model and will allow for greater pricing power over both suppliers andcustomers. In that vein, we also want to support a widely dispersed sale and marketing staff with order management and pricing tools. Lastly, to fulfill the corporate strategy of more coordination we recommend the executive information system module so that executives at both the business unit and corporatelevels have visibility into the effectiveness of the implementation, providing them with clear line of site that the implementation is both on-time and deliveringreal business value, further validating IT as a business partner in delivering value.We recommend using a similar project schedule to that used in the OS consolidation project as it can provided a proven and trusted resource for the project manager to get the project up and running. As we are recommending SAP as it is common to all business units it is possible that the two quarter timeline for vendor evaluation could be consolidated to less than one quarter. Having some extra time built in to the schedule is important as there is bound to bepolitical obstacles to overcome leading up the installation. Again, as this is selective implementation with a more focused vision and modules dedicated toproviding a clear dollar value proposition some of the political pressure typical in these implementations should be defrayed. In connection with this,All business group presidents are worried about competition and new product development, a situation that a selective single instance of SAP can helpaddress through more efficient and effective sourcing and the requisite data to make informed pricing and distribution decisions. Additionally, piloting the project in a group that would clearly benefit from this implementation provides some business unit level evangelists to spread the word that the implementation was clearly planned and executed and delivered on its promises to better manage vendor and supplier relationships.Sources:1. “Putting the Enterprise into the Enterprise System”, Davenport2. “ERP Insights”, Swanborg3. “IT-enabled Business Change: An Approach to Understanding and Managing Risk”, Gibson
We recommend implementing a knowledge management system using an improvisation2 project management approach. This project will address concerns in the IT and HR organizations about the potential for “brain drain” among IT executives and workforce. The improvisation approach is recommended as knowledge management is inherently an iterative process and we want to encourage the workforce – in particular, subject matter experts (SMEs) – to provide feedback on how the system can be improved, from pilot all the way through different versions. To keep the project on track we recommend setting a 12 month deadline such that the actual system is in place, select content is up and the foundations of communities are in place.This recommendation is structured largely on the best practices of Infosys in designing and implementing their knowledge management (KM) system1. While this system was developed and launched iteratively over the course of eight years1, we believe that – based on the infrastructure improvements and knowledge capture required as part of the preceding recommendations – that this can be implemented in a 12 month timeframe. The most difficult aspect of this particular project will be the people component of the deployment architecture, as this is a new cultural artifact for J&J. As such, we would recommend using a trusted resource from Jodi Gelles’ office in Medical Devices & Diagnostics. This group poses the most attractive group as it has the large number of employees in the most consolidated of structures (3 manufacturing plants, 92 sales offices, and 5 product distribution centers). Also, as they share a network with Pharmaceutical, upon successful implementation of the KM system, it could more easily be ported over to our next largest business unit for implementation. A third attractive feature of this group is that there is no unionization and there is a high turnover rate, so there is less likely to be resistance in the form of “this isn’t in my job description” and also a more willing group that would benefit from an institutionalized knowledge base.The 12 month timeframe addresses getting the system established – it will take longer than for true full adoption by the workforce. In order to get the system established J&J should follow this four step approach1:Set vision and objectivesTo own the vision, we recommend that the project team take as one of their first actions to create the vision for the KM tool. ICEX and John Hendersonprovide useful guidance that the team should consider in crafting the vision, namely that in order to maximize the value of knowledge it should “improvebusiness effectiveness by more effectively leveraging knowledge with the help of information technology”.3 Specifically, knowledge can be used to exploitopportunities in collaboration through expertise leverage, in reuse through knowledge asset leverage, and in training through personal development. As theimmediate concern is in talent departing, J&J should focus first in the areas of reuse and training, such as Schlumberger’s intranet knowledge repository orInfosys’s systems integration knowledge.32. Set deployment architecturesDeployment architectures span four subcategories:Content:Content can consist of internal (knowledge assets, internal white papers and reports, reusable artifacts) and external (online journals and books, technology and business news). J&J should focus first on accumulating internal content, and the content management process should ensure capture and review ofthis internal content prior to publication.1People:The content process will need to be more informal at first as the project team will be acting in the role of the central knowledge management group. To expedite the process as well as ensure that the appropriate resources are tapped, the project team should have a rotating spot for a subject matter expert inthe area for which content is being collected. J&J will need to identify practice champions within the business units, as well as at the business group level that are champion for the identification of SMEs and the adoption of the content generated by these SMEs within the group.1 The use of knowledge currency units (KCUs), discussed below, can certainly assist the efforts of the knowledge champions as well as the first critical task of identifying theappropriate SMEs.Technology:As the business units and groups have their specific needs, the system will need to be designed to be readily accessible at that level. However, as part ofthe broader coordinated operating model strategy, as well as to adhere to best practices, J&J should design the system so that the data is driven to a centralrepository and available to the appropriately authorized personnel.1Process:Process architectures “outline key processes required to support, enable, and measure ongoing knowledge sharing activities and results”.1 As part of buildingthe project team the project manager will need to identify the appropriate business analyst support to help with such activities as requirements gathering,data process modeling, and enterprise resource diagramming.3. Create user-friendly UIAs each business group and unit will have differing needs for knowledge management, it is important that the UI of the portal is designed in such a waythat these groups can most easily access the material needed. To manage the sprawl of possible permutations of UI, J&J should create a standard templatecovering 80% of functionality of how the UI will look, feel, and operate, and then work with the knowledge champions and business unit leads to customize that design with the remaining 20%. This will help establish buy-in with those business unit leaders. To validate the design, the team should pilot thedesigns and conduct user acceptance testing to ensure that the delivered KM system does deliver the value needed by the end-user. This will help encourageadoption of the system and laying the foundation for future network effects in use and contribution to the system.4. Create knowledge sharing cultureRome, nor it’s culture, were built in a day. This will be an ongoing activity that is built into the recommendation, and the outcomes from discussions aroundthe culture will shape the future design and use of the KM system. It is important that the team get out ahead with efforts in this regard, starting fromthe announcement of the KM initiative at the conclusion of the IT colloquium as an opportunity to start building the new culture, building on the proclaimedKM corporate priority to help communicate and foster that recognition. To start fostering this culture the project team should work with the business groupsand units to identify key topics of the group and identify both internal and external resources that could hold short information systems to talk about thetopic. This will help start to identify SMEs, as well as fostering respect within the organization for those with knowledge around best practices. With thelaunch of the system J&J should incorporate the KCU scoreboard to increase the visibility of those with significant contribution to the institutionalknowledge of the business group, as well as to engender some healthy competition within the group to start to generating new content and to move up thescoreboard.1Sources:“Knowledge Exchange PartnershipTM for Global IT Organizations – Building Collaborative, Knowledge-Based Communities”, ICEX“IT-enabled Business Change: An Approach to Understanding and Managing Risk”, Gibson
This recommendation will evolve as the previous projects pass critical phases. The project management office (PMO) will be primarily focused on resource management, and process standards and methods development1. At first, we recommend culling the top project management talent, preferably from business groups to increase the ties between this nascent organization and existing structures, from the corporate and business unit level to lead the previous initiatives from a new, centralized PMO. This approach is an important addendum to getting the executive sponsorship for the previous initiatives, as “gaining buy-in from the ranks is just as important”1.To manage the work-load and not overload the project managers, the PMO will only handle enterprise-level projects, or those deemed of high strategic importance. To ensure that we maintain the momentum of executive buy-in we recommend the establishment of a governance board for projects at this level that will consist predominantly of c-level executives and at least one other business group (e.g., CxO and BU leaders). This group may also include IT executives2. The project manager will be responsible for managing a cross-functional team through different phases of the projects and, depending on the scale of the project, may be replaced if a different management style is necessary to drive the project to conclusion. In addition to reporting to the governance board, the project manager will also be responsible for reporting on the resources used and the status of the project to the PMO.In terms of structural artifacts, project management at the local business unit level looks much the same. However, to maintain the scale and to develop future talent, we recommend staffing and governing the projects with local talent. However, in order to develop institutional knowledge and to gain insight into project status and resource availability, the local project manager will be responsible for reporting project updates to the PMO.In order to continue the successful implementation of the PMO, we recommend compiling the status updates from these two levels of projects into a balanced scorecard to market and communicate the success of the project management culture created and fostered in the areas of financial success, internal process improvements, customer satisfaction, and learning3. Communicating the results of these projects will build up the profile of the PMO as an attractive organization to be a part of, and will deliver on the goal set out when we begin this project of moving the IT organization from a Level 1 organization primarily concerned with “keeping the lights on” to one that has and continues to prove its value as a contributing member of the J&J infrastructure.Resources“The IT Project Management Office: Best Practices, Trends, and Challenges”, ICEX“Describing and Assessing IT Governance”, Weill“The Balanced Scorecard – Measures That Drive Performance”, Kaplan and Norton
