June 2008

Children's Hospital and Health System's CIO, Mike Jones, manages his IT portfolio like a Wall Street analyst

Smart Practices By Patricia Brown

CIOs are clearly being asked to focus on much more than just technology concerns these days. Indeed, as CIOs assume added strategic and financial responsibilities, some experts argue that sophisticated bottom-line knowledge may even trump bits-and-bytes know-how.

Gartner released an eye-opening report earlier this year, saying that as top executives begin hiring for 2009 and beyond, they're looking for potential CIOs who have at least one or two years of non-IT business management experience.

This view is shared — and embodied — by Mike Jones, Corporate Vice President and CIO for Children's Hospital and Health System in Milwaukee. Jones is responsible for an enterprise-wide technology infrastructure that includes three hospitals in southern Wisconsin, and he's also a hands-on financial manager. Nearly 250,000 children are seen on an outpatient basis annually, and another 55,000 pass through the hospital emergency rooms. Additionally, off-site, at 18 primary care pediatric offices, doctors see another 200,000 patients each year.

Beyond his basic duties of ensuring that the technology "keeps the lights on" for what are literally life-and-death medical services, Jones is tasked with contributing to the development of the healthcare provider's strategic plan. Like all CIOs, he must be fiscally responsible while implementing and integrating a complex information and telecommunication system that underpins current operations and emerging objectives. Jones' annual capital budget of $7 million and the operating budget of $22 million have to stretch in many directions.

Regardless of an organization's budget size, Jones says, "It's very important that CIOs are more than aware" of core financial issues. At the least, they should understand how to create, monitor and modify budgets, he says. Moreover, they need an intimate knowledge of the business's financial processes and their industry. In addition to his hospital experience, Jones served on the Finance Committee of the international Society of Information Managers (SIM) and held the post of Finance VP from 2003 to 2005, giving him a broad financial perspective. In those roles he helped support the chapters in their budgeting needs. He currently is VP of Partner Programs for SIM.

Teaming Up on Risk-avoidance

Financial acumen is particularly critical now, as the demarcation lines between business and technical performance become increasingly blurred. Because nearly all significant business operations are powered by the enterprise network, Jones says, risk management and avoidance fall to CIOs, as well. Therefore, they need a firm grasp of both the financial and technology risks to which the organization — and IT — are exposed. Those who aren't fluent in accounting and key financial principles can't contribute to the strategic and tactical demands of the business.

In his dozen years as CIO at the hospital, Jones notes that while the need for financial savvy was always present, today's volatile economy makes it even more of an imperative. He came to the job with a finance background, including a degree in commerce and an MBA. These offered him a greater comfort level — and credibility — when working with the finance team, which he does routinely.

Jones collaborates with the CFO and business owners on budget plans for IT capital projects. Business units fill out a project request form that Jones and his team analyze before suggesting resources and capital dollar amounts for the project. Once these items are prioritized, he can then build out a five-year IT plan and fast-track or push back projects as needed.

Regardless of an organization's budget size, Jones says, "It's very important that CIOs are more than aware" of core financial issues. At the least, they should understand how to create, monitor and modify budgets, he says. Moreover, they need an intimate knowledge of the business's financial processes and their industry. In addition to his hospital experience, Jones served on the Finance Committee of the international Society of Information Managers (SIM) and held the post of Finance VP from 2003 to 2005, giving him a broad financial perspective. In those roles he helped support the chapters in their budgeting needs. He currently is VP of Partner Programs for SIM.

The four goals of the process are: to identify long-term IT projects; to determine return on investment implications; to assess whether patient safety is involved, and to see how many users will be affected. It's essentially "an internal portfolio-management process," Jones says. "It's extensive, but it's not really that difficult" to do.

The process lets IT field requests all year and establish priorities based on business and financial impact. "We can project the resources we will need, such as personnel and key technology assets, so we can provide business-decision makers with clear choices on how to allocate capital expenses (CAPEX) and operational expenditures (OPEX)," he says. It also keeps business managers and IT on top of their budgets and in sync with one another. Jones and his team produce monthly reports that compare actual spending against the budget in real time. "Everything we've developed is online, so if I sign off on a capital project, dollars are allocated. I can see how many dollars are left and what we paid for — on a daily basis if I need to." Jones' CFO and others have access to the same information as well.

While Jones reports directly to the CEO, he works closely with the CFO, the finance team and director of finance "because they're the ones that control the budget and set the rules and guidelines," he says. In the medical field, service levels are unpredictable and uneven, and regulatory pressure is high. If the hospital isn't making budget, Jones has to work more closely with the finance team and CFO to develop an IT plan of action if things don't turn around. "In that case," he says, "we eliminate things that aren't mandatory."

To collaborate more effectively with business units and financial managers, Jones has many skill sets represented on his IT team. "It's important to have staff with healthcare backgrounds represented, and among our approximately 100 IT employees are three physicians, as well as nurses and respiratory therapists", he says. "Even though there's a core group of technical people," Jones will train all staffers in the skills they need, whether it's business management, healthcare or technology.

Funding Innovation
The IT team also has a prioritization process about how to fund for innovation. "We identify what's mandatory," including certain mission-critical maintenance efforts, before funding new projects, Jones says. The percentage of the IT budget spent on innovation varies from year to year. For example, the hospital is building a new 12-story tower, which will open at the end of March 2009. At that time, the main hospital will go from 236 to 294 private beds, with an additional 72 beds planned for the future. Much more equipment, such as staff PCs and printers, also will be required. The equipment costs will eat into the $2 million to $3 million that Jones might otherwise have been able to spend on innovation and new projects.

Although planning is carefully considered, agility is always key, Jones says. Even once the budget is established and the resources allocated, "you have to be flexible enough to go back to the business owner and ask: "What are we going to eliminate?" Everyone who understands finance also knows this rule: "You can't do everything."

Patricia Brown is a business and technology writer based in Oakland, Calif.

Ask the Expert

Mike Jones, Vice President and CIO, Children's Hospital & Health System,
Milwaukee, Wisc.
mikejones@smartenterpriseexchange.com

Mike Jones is currently corporate Vice President and CIO for Children's Hospital and Health System. He is responsible for the development of the strategic plan, as well as developing, implementing and integrating information and telecommunication systems. His experience encompasses 24 years in healthcare, with previous experience in the publishing and railroad industries. Jones has a bachelor's degree in Commerce from DePaul University and an MBA from Cleveland State University. He has been active in local chapters of the Society for Information Management (SIM) for more than 13 years, is a member of the Advanced Practices Council, and has served on the Finance Committee. He is currently VP for Vendor & Service Provider Programs, SIM.