Come Together

When Molly Rauzi took the job of deputy CIO of the city and county of Denver in 2004 to help lead an IT consolidation, the biggest hurdle she faced didn’t involve servers or software contracts. It was melding more than 200 workers from 20 disparate information technology departments into a single Technology Services division.

“They had to understand how they fit together, and that meant involving facilities planners and lining up training so they felt invested in right away,” she says. “They weren’t just moved and ignored.”

Instead of easing workers into the new department, Rauzi challenged employees with new assignments. IT employees who had been wearing several hats in support of a specific agency were reallocated to Technology Services along IT process lines, such as enterprise applications, operations or the project management office.

“We consciously encouraged people to try a new set of challenges,” recalls Rauzi, who was recently named Denver’s CIO. “It might take advantage of the same skills they had been using, but not with the same people they had been used to dealing with.”

Like Rauzi, many IT executives leading consolidations seek out innovations to convince employees to embrace the change. Consolidation better aligns IT with business processes and forges strong teams. But the truth is that the conversion also inevitably leads to organizational conflicts involving both the IT employees being moved and the agency officials losing control of their IT resources. CIOs reveal what they’ve learned the hard way about change management, bolstering morale and rebuilding bridges to internal business customers.

Resistance to Change

Looking back on the state of Michigan’s IT consolidation, former CIO Teri Takai says one misstep was underestimating the pushback from employees, legislators and agency executives.

“It’s a massive change,” she says. If reorganization can help IT workers realize their potential, it also can be seen as a threat to individuals’ authority and job status. Often, people who are agency IT leaders are forced to find new positions with less clout in the centralized organization.

Takai, who recently assumed the post of California CIO, readily admits that the Michigan Department of Information Technology (DIT) made personnel mistakes early on that hurt morale. One was too quickly creating a help-desk organization based on geography rather than organization or expertise. “It was a nightmare,” she says. “Someone who was an expert on working with state police was sent out to corrections and was lost. We shouldn’t have tried to blend from day one.”

In retrospect, she says, it would have been better to phase in the change over time as DIT grasped the agencies’ needs. “Each organization and their personnel had an informal set of processes, and we broke those,” she says. “People didn’t know whom to call, and we had trouble getting service levels up to where they had been.” In response, DIT launched a service delivery improvement initiative.

Like most centralized IT organizations, DIT set out to create a strategic plan to share with agency executives and legislators. Besides clearly signaling where the state’s service-oriented organization is going, Takai says, “it helped create an identity for employees who had been stripped of one.” Other identity-building efforts include publishing a newsletter and recognizing DIT agency employees through awards programs. Employees also find that training options are better at DIT than they were in individual agencies, and Takai says recruitment is easier because prospective employees see a broader array of possibilities than they would in a single agency.

In Denver, Rauzi’s team prepared a communication, education and marketing campaign geared toward uneasy or reluctant staffers who saw their work identity tied to the agencies they had traditionally supported. One thing employees appreciated was that the new agency strongly emphasized training.

Rauzi concedes that initially shifting the employees too far physically from the agencies had a negative impact on customer service. “We had to make adjustments to improve collaboration capability and increase how often we met with agency staff,” she says. Technology Services also created account manager positions to provide agencies with a single point of contact with the department.

Staffing Status

Stephen Fletcher, CIO of the state of Utah, achieved staffing flexibility by getting workers to relinquish their civil-service procedural protections.

Stephen Fletcher, CIO for the state of Utah, closely studied Michigan’s experience before launching an IT consolidation late in 2005. “We decided to build trust and support first and make it a longer process, a longer transition,” he says. “We could have done a big bang the first year, but that would have been a really terrible first year. It would have made the agencies mad as heck, because it would have turned them upside down.”

Utah’s new Department of Technology Services (DTS) has left workers situated in their agencies while it defines service levels, and it expects to have those in place by July. Seeking flexibility in how he could deploy workers, Fletcher pushed for a change from merit status, which offers civil-service procedural protections, to “at-will” employment status. “There might be people that I need to use, but they couldn’t be reassigned because of work rules, so they would just be sitting on the bench,” he says.

“Our governor and legislature wanted us to be more nimble and responsive,” he explains. “To do that, I needed the freedom to promote, to hire, to reassign people, to fire people, if need be.”

The Utah Legislature had the power to make new positions created in the department at will, but the changeover for current employees had to be voluntary. Fletcher and his staff held several brown-bag lunches with employees and played up the potential for quicker promotions, interesting work and additional training. He also offered $4.5 million in step-raise incentives, which the agency later made up in cost efficiencies, he says.

Employees told him they wanted to be sure that they would be protected from capricious managers. “I made sure all firings must be approved by me personally,” Fletcher says. “And with that protection in place, almost everyone accepted it, including the managers.” Eventually, DTS convinced 91 percent of state IT employees to voluntarily make the switch.

Fletcher believes flexibility in other areas is crucial as well. For example, the prison system is a different enough environment that he decided not to consolidate its help-desk staff. “I may not get as many efficiencies there as far as desktop support,” he says, “but it’s great that the legislature left it up to the CIO to make those decisions on a case-by-case basis rather than forcing us to do it even if it doesn’t make sense.” Along with this flexibility, he adds, comes the accountability of explaining the business case for each decision.

Working With Agency Executives

Although bolstering IT employee morale is crucial to the success of a consolidation, building new relationships with agency executives is equally important, CIOs say. And usually the sticking points involve service levels.

Deputy directors of agencies often perceive a loss of control when the technology organization is centralized. Previously, they have had a large say about IT projects and now find their IT employees working for someone else and their IT spending requiring approval from the state CIO. “I try to convince them that they still have a voice in the way the state uses technology,” Takai says. “I don’t want them to feel disenfranchised.”

To that end, her agency created the Michigan Information Technology Executive Council, made up of the number two person from each agency. DIT meets with them five times a year to hear about their priorities. It also holds quarterly meetings with the agency leaders to ask what is working for them and what needs to be changed.

Sometimes a focus on metrics can clear up misunderstandings about service and improve relationships. Kyle Schafer, appointed West Virginia’s chief technology officer in May 2005 to lead a consolidation, began hearing complaints from cabinet heads that his department wasn’t meeting its service-level agreements, although his agency’s statistics said otherwise. His staff attached surveys to 20 percent of the trouble tickets and got clear responses about customer satisfaction and timeliness of response. “I bring the results of those to meetings with cabinet secretaries,” Schafer says. “We not only have our own statistics, but have input from customers, which doesn’t end the griping, but it does put a damper on it.”

Often agency executives complain that they don’t have much recourse when centralized IT organizations fail to meet agreed-upon service levels. “I tell them that this is not a new model,” says Denver CIO Rauzi. “They get services from other internal organizations, such as purchasing or legal services, that don’t fall under their line of business. How do they address issues when they don’t get good service from those organizations?”

CIOs stress that the complexity of managing the transition to a centralized IT organization cannot be overstated. Yet they all firmly believe their workers are better situated to respond to the needs of internal customers and constituents. In fact, Utah’s Fletcher doesn’t even call what Utah is doing a consolidation. “We call it an optimization, because I think consolidation has a negative connotation. It implies that people are going to get laid off. What we are doing is optimizing processes and service offerings.”