California Department of Health Care Services Chief Information Officer Chris Cruz discusses enterprise-wide IT planning from an architectural perspective. He also talks about striking the right balance between centralization and decentralization and strategies and lessons learned that can help reduce costs and improve services.


Chris Cruz, CIO, California Department of Health Care Services

GTC West 2011, Sacramento, CA
May 9, 2011

MR. CRUZ: And really what I’m going to talk to you today is about progress, is about building a sustainable infrastructure to enable technology and align it with the needs of a business. And this is something that I did in a previous organization, and I brought the same plan to the Department of Healthcare Services.
I became the CIO of the Department of Healthcare Services on January 3rd of this year, so I’ve been on the job roughly four and a half months. But in those four and a half months, I think as some of my staff can attest to here, we’ve done a lot. And we’re going to continue to do more, and that’s because we’re putting in a solid infrastructure.

As you probably know, when you go to build a house, you’ve got to make sure the foundation is solid. And with everything going on in Health and Human Services these days with ObamaCare, with healthcare reform, with the healthcare information exchange portal, with CANIS and everything that we’re doing, you’ve got to have a solid infrastructure.

So the first thing that I talked about with my team when I walked in the door of Healthcare Services is a tangible plan to manage and handle just that. And that’s really what the formulation of this presentation is going to be today.

Let’s make it an interactive presentation. So feel free to ask questions of me while I roll through this to talk about this plan. Just to give you an idea, this is a plan that I implemented at the California Department of Food and Agriculture when I was the Agency Information Officer there. Consolidated all the IT staff. It was a decentralized organization prior to my arrival and we made it a centralized organization, and also introduced enterprise toolsets and matrix to manage information more effective and more efficient. So we’re going to see a plan today to do that.

And really what I’m calling this is my federated services plan. And many of you are probably asking, “What is a federated model?” I’m going to talk about that as well.

And really, IT at DHCS, one of the actual documents or initiation components of consolidation is AB 2408. How many are familiar with AB 2408 in here? So most everybody is. It talks about consolidation of staff resources and people under the CIOs of each of the respective departments and agencies. It also talks about consolidation of state’s email, which I happen to be one of the executive sponsors. Also, consolidation of the federated data center, which is consolidating in all of our physical servers at OTech, which is the state’s data center, and also green IT, to make sure all of our infrastructure hardware and software is at least green IT compliant in the first functionary way. That’s really what AB 2408 says. It was codified in September of last year, when then-CIO Teri Takai was here.

So really what that talks about is consolidating IT staff and operations under the same CIO. And really what I want to do is establish a comprehensive view of the current IT landscape across healthcare services, and really identity areas to streamline IT operations, is what we’re trying to do.

And after that, in doing that assessment when I walked in the door in the first 30 to 60 days, I decided that a single IT federated organization for DHCS was the best recommendation in moving forward. And really what that does is addresses centralized governance and decentralized decision making.

What does that mean? It means you streamline through an enterprise IT governance structure that you’ll — that I’ll talk about, you put a streamlined process in place for efficiencies and effectiveness, you develop enterprise tools, like portfolio and project management and testing and validation requirements tools, and you spread those across the enterprise.

Because prior to me taking the job as the CIO there, the department was basically broken into two areas: the things that are under the CIO’s purview in terms of infrastructure and software, and then we had the fiscal intermediary, which was done on the FI side that was outside the purview of the CIO. And this new plan addresses everything under the purview of my direction in terms of moving forward. This was our organization before federated centralization. And we are moving forward. I did get approval to move our department forward in this area.

But this is what the department looks like today. And you can it see in the orange legend where individual IT staff are, they’re still decentralized. They’re still within the decentralized operations of the organization which they serve today. They don’t report to — some of these people don’t report to an IT manager. They report to a non-IT manager to get their direction.

My plan will change that in terms of them reporting to an IT manager, but my plan keeps them in the same position that they’re in today given the subject matter expertise and business expertise that they have in that organization. And I’ll talk more about that.

Those in the green box already have an IT manager with those respective areas, and they have IT resources that report to them. My plan changes that, and that IT manager will report under the branch that has similarity to the IT function. So if it’s infrastructure, it reports under the infrastructure area. If it’s .net and web applications, it reports under the .net web app area. If it’s application development it reports under that area. Project management and client services and portfolio reports under that area. And security. So on and so forth. So you get the idea of what we’re trying to do here in terms of the organization to invite organizational synergies. Really in this slide — I don’t know if you can see it, but under that slide it identifies the number of staff that are located in those particular areas today.

And without, obviously, a federated consolidation model, one of the things you need to do first in your organization is do a reorg. And Information Technology Services division is the division within the healthcare services branch of IT. And this is the reorg that we submitted through our human resources area.
And one of the areas that I’m trying to recruit for in my organization is a Chief Technology Officer. As I see the winds blow here and the fact that realignment potentially may happen in the state and we get smaller, it looks like healthcare services may get larger. And so part of that also is to make sure you have sufficient amount of executive leadership at my level. While my arms are long, they’re not long enough to get my arms around this, so I’m going to bring in somebody and actively recruit, when I get approval, to hire a Chief Technology Officer in my organization to manage the technological aspects, while I can do more of the vision, innovation, and as Mr. Rezel (PH) said today, the creativity part of this job.

So we’ve developed our organization really to streamline our lines of business to accommodate healthcare reform, to accommodate the benefits exchange, to accommodate modernization of our legacy application systems. And this is the plan that will do that. It puts the right people and aligns the right IT resources with the perfunctionary business functions. And this is what we’re moving forward with.

Now this is an (inaudible) phased approach, so my organization chart will continue to evolve as I move forward, because one of the things I need to do is build capacity and capability within this organization and move it forward.

And on the next slide really represents my vision for how we’re going to move forward starting here in the next week or two. We’re bringing these organizations, as you can see going back to the legend, those in green, underneath the organization, either through a dotted line or a fixed line relationship under our applicable branch areas.

Within the ITSD section today, we have really five branches: Administrative section that handles all our procurements and IT contracts; Information Security Officer; Application Support branch; Infrastructure Support branch; and our Enterprise Project and Portfolio Management branch, which I renamed, seeing the value of bringing portfolio management into our organization. And then you can see where the other applicable program areas will fit into the organization.

One of the things that we plan to do as well is create a new branch. And we’re looking at potentially a .web and web application branch, because our application support area branch right now primarily supports our med system. And that is a big job with the undertaking of the benefits exchange, with the integration of our enterprise solutions, building an enterprise service bus within our organization to manage integration and operability. We need to have a realignment and an additional branch to handle those capabilities. So the org chart will continue to expand.

But one of the things I really wanted to draw your attention to is how I’m going to do this and drive processes is through an IT governance, and that’s enterprise IT governance through the department, that we keep one set of books in the department for hardware standards, for software standards, that we look at enterprise solutions and tools and metrics for everything that we do. We can no longer afford to have a sustainable process where we have one of every tool, one of every software. So this plan further develops and enterprise perspective and holistic view of technology in our department, moving forward. And that IT governance plan will attain and supply side governance and also demand governance. And so those are the two areas that we’re going to drive.

What I’m more familiar with and what I want to do is manage the processes and streamline those from an enterprise perspective, not really micromanage people. That’s not what my plan is, is to give them the tools and the management team and the tools to be successful as an organization.

So you can see obviously there’s a number one — number of the green boxes here. The health information technology area is on the left side, and that’s a dotted line reporting relationship to me. That manages our provider incentive programs within our department. FIMIS (PH) is another area where we have our CANIS takeover project going right now. I don’t know if many of you may know — we switched to integration vendors from EDSHP to ACS. So we’re in the process of doing a major takeover. That’s a billion-plus dollar project that we’re moving forward with. And then we have the oversight people within the area before now.
So for the first time in 15, 20 years now, the CIO has an opportunity really to be the CIO for the whole organization and manage appropriately, but most of all building collaborative relationships within our organization. And that’s what it takes here in this particular environment to be successful.

I won’t go into all of the particular areas, but does anybody have any questions about this approach? Why? How? Okay, good.

So my intent is within six months to have this plan completely in place. And like I said, we’re starting this week on bringing the first organizational entities over into the ITSD purview.

MALE VOICE: Actually, I have a question.

MR. CRUZ: Uh-huh?

QUESTION: So how is it being perceived by the IT staff who weren’t already part of the (Inaudible) technology?

MR. CRUZ: Well, I think the general answer is “very good.” I’m — one of my expertise is communications. And so I think I do a pretty good job of communicating what the plan is. I think most IT staff are at ease to find out that they’re not physically relocating. That’s always the additional hurdle to overcome when people talk about consolidation. My plan keeps those people in their organization. They still report to an IT manager. They’re still conducting their business there, but we’re streamlining the IT operations and approach through enterprise governance.
So I think it was a better plan, and they’re more open to that type of plan then a rip and replace, or physically moving people, worrying how to rotate people and provide services back to those programs.
In our department we have a very unique department with lots of different core competencies and business missions. It didn’t make sense to fall through in a complete centralization plan without severely impacting the business. And so the federated model, I think, is the best practice.


QUESTION: It looks like the people, IT people who weren’t decentralized are now reporting to the infrastructures department? Did I hear you say some were going to be in apps, some would be webs?

MR. CRUZ: Right. Well, wherever their competency is right now in their decentralized area — so for example, if they’re doing application development, then they’re going to report to the application development branch, their manager would start getting direction from that branch chief on core standardization of the programs.
What I’m trying to eliminate is also building more siloed databases and applications and building enterprise applications.

QUESTION: So what are you doing if you have a (inaudible) used to work for one and (inaudible) and some do desk top support, some do apps, some do web sites, some do applications? Splitting them up?

MR. CRUZ: Well, that’s what we’re doing. Like for example, in the FI oversight area, OMPS (PH), MISB and MISDSS, there’s both infrastructure and application development there. Because we have the .net and web people as part of infrastructure support branch right now, that’s going to be a new branch that does .net and web apps. So MISDSS and MISB will report to that particular new branch. So like business/like competency. And that’s how we’re going to deal with that.

QUESTION: Then how do you handle decision-making (Inaudible) division chief that used to be their boss?

MR. CRUZ: Well, the division I’m making will be a matrixed organization. So they’ll still get some direction on the business priorities and entities of what’s going on there. But they’ll get the technology solution to align with the business direction. So it’s a very collaborative model and involves communication on both sides.

FEMALE VOICE: Thank you.

MR. CRUZ: Mm-hmm.
So really outcomes of a federated model, as I talked about, is really centralized governance for IT across the Department of Healthcare Services. Effective change management across the organization, which really I wanted to put in given all of the big projects and initiatives we have in the organization. Got to have effective change management. Effective service delivery is what that model will give.
One of the things that I’m doing, and you’ll see in the presentation that’s been unheard of in the department before is I’m signing service level agreements and memorandums of understanding with every division on the delivery of IT services. And I want to be accountable. With accountability and responsibility there is some level of authority, so that’s my way of giving back, of having something in writing with my division chiefs at my peer level to say, hey, the reason we’re doing this is we want to be more accountable and more efficient.
IT standardization, delivery of enterprise and specialized solutions and support. And really the big one: participation of IT in all department activities and projects. This is mandatory, that we have project managers assigned to every project in the department, that we use a PINBA (PH) process, that we use a portfolio management intake process for everything that we do. We need to become as cookie-cutter as possible. And training across the department for all people involved in projects. Really, really important here, especially with the big projects that we have.

And really what this is again is using the federated service model, whereby some services I talked about are delivered centrally and others are delivered locally, meaning the people are still in the same organization. The nice thing about the federated model, if there’s major projects that happen within the division, we need to reallocate and redirect resources, we can take those from the centralized pool and address those particular project priorities.

Common pool of resources I just talked about, I’m not going to read this verbatim. And also local service delivery and how that aligns to dedicated resources within the division based on business value, customer satisfaction and fit for purpose. And really again, the service level agreements across the organization in terms of the things we’re doing. And also we’re going to be assigning account managers from our project management area to each one of those divisions, and really to be the eyes and ears of that division. So when there’s a budget change proposal that comes out, everything from now on always has an IT component. So as opposed to jumping in late in the game and having four or five hours to allocate resources and money to officially scope something, we’ll get in from the intake process and all the BCCs and BCPs to hopefully allocate the necessary IT resources and scoping that comes with it. And that’s a big issue with state projects in government, as probably most can attest to.

And this is really the model that I am adopting, and this was a best practice from Gardner Group. And really what it talks about, again, is what a federated model is. And really what is, without reading this verbatim, is it’s between centralized and it’s between decentralized. And it’s somewhere in the middle in terms of how services and deviations and common practices are leveraged.

So again, we’re looking at common practices, processes, infrastructure and common governance across the applicable organization. That’s really what federated means. And if some of you attended the cloud computing session that I moderated today, they talked about cloud computing as a federated model. Well, you’re going to see more federated — more of a federated model with email moving forward in a consolidated effort, and also within the federated data center with the consolidation of the infrastructure. You’re going to see that word federated quite a bit.

And really the impacts of federated service delivery again — we’re trying to make services more efficient and effective to support, you know, an infrastructure to support capabilities. Again, we don’t want multiple tools. We want enterprise tools for everything that we do. We want constant change processes in place for the things that we do. And we want to align best practices with application development as well. We want to leverage solutions that are already built to sustain repeatable solutions and stand those up. We can no longer afford to build cookie-cutter applications or maintain, if you will, legacy systems. You know, a lot of our programmers are retiring that have the COBOL experience. We can’t replace those; .net is the new application — or excuse me, the new programming language that we’re adopting. We need to make that transition and start training our people. This plan will help remediate and move forward with a strong foundational plan.

Infrastructure in place for measuring performance. Really one of the things we’re doing is looking at metrics now. We’re going to be implementing metrics across our help desk and service delivery systems. We’re going to move that forward so I can get a report every month on the number of tickets that are open and the number of tickets that are closed. But really tickets for performance of everything that we do. I want to start monitoring and managing performance so again we can be accountable to the divisions in terms of the work that IT is doing. This plan will help us get there.

And really what does that mean in this transfer of plans? It means for those that have not been a part of central IT, it means skills assessment for all employees. We want to find out what skill — what the skill level is for employees out in the decentralized organizations, or even at the job that they’re performing today — do they still want to do that job? Or can they be cross-trained into doing something else where there’s a more apparent need in the organization?

As mentioned, service level agreements with all divisions and IT support, a memorandum of understanding and we’ll use all divisions on transfer of funds for PYs, if applicable, and hardware and software. So one of the things that I’d like to do in this plan is manage the funding dollars for IT across the department. I mean, I want to control IT spent. As opposed to some dollars coming to me, I want all dollars. And you know, usually if you’re in charge of the funding you’re in charge of how to implement successful processes to spend the money. So again, it’s that accountability and responsibility with authority. And that’s really the key plan in moving your organization and consolidating from an enterprise perspective.

And annual customer satisfaction surveys on IT, performance of IT. So we’ll have a customer service survey going out this year on where we’re at. What are the areas that we’re hitting the mark? What are areas that we could attain — see some improvement with, and where do we go from there? And part of that will be quarterly, if not semi-annually division meetings on showing process improvement through metrics.
Really, the IT vision for DHCS is right now, I think in some of our organization, we’re proactive to service level. In some parts of our organization we’re still firefighting and reactive. My goal with the plan that I’d like to adopt is to make us a service and value organization and one of the best organizations in town. And I believe with the support of the staff that we have there that we’re going to get there with the right plan. I mean, things take time. I mean, this — this department is an aircraft carrier compared to a frigate. But, you know, if you stick to the plan and you make a commitment, as a gentleman said this morning, you’re going to realize progress. And I’m a pretty determined guy, so I’m sure we’ll get there.

Any questions about the plan, the approach? Yeah.

QUESTION: How are you handling the HR allocations in the divisions where the IT staff are coming from where they used to support the other non-IT management?

MR. CRUZ: Well, here’s what we’re going to do. As part of what we’re going to do to be compliant is everybody that has an IT position is shown under the CIO from an HR perspective. But what I don’t have to do is I don’t have to physically transfer positions. So the position numbers will still stay with the program, but we’ll augment their duty statements to show that they now report to ITSD and have a dual reporting relationship for program processes and standards. So we’ll be compliant across the board but still give the programs some liberties in terms of the resources that are helping them fulfill their objectives.
So it’s a middle of the road plan that I believe is a collaborate plan that makes sense in this organization.

QUESTION: (Inaudible).

MR. CRUZ: Well, what we’re going to do with the duty statements is I sat down with HR and went through this whole plan first to talk about that, and we’re going to add an additional paragraph to their duty statements to talk about that reporting relationship. So if it’s the folks in the orange box that are reporting to a non-IT manager today, they’ll be reporting to an IT manager now. So we’ll change that duty statement and discuss that with them in terms of how that works.

So signing 634s and other things, those will still be signed at the program level, because in reality I don’t know if they’re coming to work or not. Those folks still in the program level know that they’re coming to work. So what they’ll do is initial their 634s and that manager will sign the document moving forward. So there is some tradeoffs in terms of how this is going to work, but I think it’s the best way.

QUESTION: (Inaudible).

MR. CRUZ: Oh, we have MOUs ready to go. Yeah. This will be the first time that MOUs, I believe, were signed with the divisions, to my knowledge. Yeah, what that says is basically here’s what we’re doing, here’s the types of services that we’re providing, here’s how we’re going to use funding. In my division we have a pretty mature yearly training plan that we ensure that a trained employee is a highly skilled employee. And that’s a belief that I carry. And so we’re going to involve and incorporate these folks into our training plan. So I’ll be able to leverage those dollars within that division to help move those employees forward in terms of their training and education processes.

Any other questions? Yeah.

QUESTION: (Inaudible).

MR. CRUZ: Well, this is budget neutral. There is no really budget cost in our department to do this from a budget perspective, because again, we’re leveraging the existing budget these divisions have allocated for IT. I’m not asking for a budget augmentation here. And within the state you can do what’s called a zero-based budget. And what that means is you can transfer employees in your department to another program. So you don’t have to do a BCP. It’s called zero-based budgeting. And that’s something I found out when I worked at Food and Ag when I met with the Department of Finances, you can do that.
So really what you want to make sure is when you transfer resources you also transfer the OENE and expenses that come with those resources if there is a transfer. But in this case I’m not physically transferring positions. What I’m asking for is a funding code to — so I can attach to that funding code to monitor spending and to make sure that there’s a certain amount of dollars allocated for training and personal development for those employees.

Any other questions? All right, well thanks very much. I appreciate it. (Applause).