Barbara Hoffnagle: Transforming IT at SRP

Barbara Hoffnagle had not contemplated becoming the first Chief Information Executive (CIE) at Salt River Project (SRP), the country's third-largest public power utility. In fact, when she was named CIE three and a half years ago, her main focus was managing the company's internal operations support services. At the time, an outside consulting firm had been brought in to assess the effectiveness of SRP's information technology investment. Hoffnagle had participated in interviews where she shared her concerns, not knowing it would become her role to drive the IT transformation. Hoffnagle was a featured speaker at a fall session of the IT Leadership Seminar Series, which brings experts to campus to speak about how their companies have strategically used IT to transform major aspects of their businesses for building a competitive advantage in their industries.

Barbara Hoffnagle had not contemplated becoming the first Chief Information Executive (CIE) at Salt River Project (SRP), the country's third-largest public power utility. In fact, when she was named CIE three and a half years ago, her main focus was managing the company's internal operations support services.

At the time, an outside consulting firm, Deloitte, had been brought in to assess the effectiveness of SRP's information technology investment. Hoffnagle had participated in interviews where she shared her concerns, not knowing it would become her role to drive the IT transformation. Armed with a Master's degree in Industrial Engineering from Arizona State University, and 23 years with SRP, she began her work.

Hoffnagle was a featured speaker at a fall session of the IT Leadership Seminar Series. The seminars, offered as part of the Master of Science in Information Management (MSIM), bring experts to campus to speak about how their companies have strategically used IT to transform major aspects of their businesses for building a competitive advantage in their industries.

What Hoffnagle faced was a central IT group that was delivering less than satisfactory service to the company. Satellite IT groups had formed in the business units to meet their IT needs. As a result, the total cost of information technology exceeded industry benchmarks.

The central IT organization focused on providing a highly reliable infrastructure, messaging services, and operating and maintaining existing systems. As a result, back office systems supporting financial, human resources and supply chain functions had not been updated and were in poor functional and technical health.

In addition, much of the new development was occurring in the business units without consideration for the enterprise architecture and duplication of technology. Hoffnagle's charge was to increase service levels and reduce costs, at the same time the utility industry was faced with increasing regulation, pricing pressures and a weak economy.

So where do you start? Hoffnagle offered the following summary:

• Establish a governance system by which all future decisions will be reviewed. Governance will provide the necessary endorsement as changes are made.
• Build a leadership team from all IT areas, knowing that the team and the organization structure will need to change as work progresses.
• Develop mission, vision and value statements.
• Take inventory across the enterprise of systems, resources (human and financial) and leadership competencies.
• Build a communication plan that includes regular updates to the most senior leadership.

Asked for the highlights of the transformation journey, Hoffnagle offered the following:

• Governance is key. All IT investments and changes are brought through governance for review, including those contemplated by the IT organizations in the business units. Depending on the cost and significance of change, decisions are made by frontline managers or escalated to the General Manager's staff.
• Build a strategic plan with input and buy-in from all organizations.
• Along with all systems assessed for technical and functional health, systems providing duplicate functionality were identified. Needs for upgrades were prioritized.
• Outsourcing was strongly considered. In the end the internal transformation was chosen. Here Hoffnagle commented that in her opinion "a well run internal service organization is inherently better than outsourcing."

Where is SRP today? According to the company:

• A seven-year IT application roadmap has been developed, funded and includes replacement of the back office legacy systems with SAP, as well as an application modernization program for existing systems and enhancements to SRP's Customer System.
• An enterprise disaster recovery system with prioritized recovery is in place.
• Organizational structure has changed multiple times to address business needs and currently includes a strategically focused security group, information management and Business Process Management services.
• Cost and dependency on contract workers are down.
• Service levels are up.

When asked if the work is complete, Hoffnagle responded, "Clearly, no. Much progress has been made, and there is much more to do. However the foundation is now in place to respond to changing technology and business requirements. The journey will never be over."

Hoffnagle went on to say that focusing on business drivers, surrounding herself with smart, capable people and empowering them, putting a governance structure in place to oversee IT enterprise wide and managing to a strategic plan were key to her success.