Case – 3: LIFESCAN

LifeScan, a wholly owned subsidiary of Johnson & Johnson, is a world leader in blood glucose monitoring for diabetes management Located in Silicon Valley, the company offers an array of consumer and hospital products. In 1981, LifeScan pioneered the modern era of blood glucose monitoring by eliminating wiping and timing procedures. This breakthrough took blood glucose testing out of the laboratory and into the hands of patients. LifeScan’s mission is to improve the quality of life for people with diabetes.

In 1986 Johnson & Johnson acquired LifeScan, and in 1996 it began promoting greater use of IT in business strategy. The company created the board-level position of CIO and encouraged all 188 affiliates (including LifeScan) to do the same. At the time, LifeScan Information Management (IM) was led by a director – two levels below the president.

In 1998, LifeScan appointed its first CIO, Hugo Yepez, who brought with him an agenda to align the department with the business. This agenda is leading the IM department to an IS Lite type of structure.

The Alignment Road MapYepez has drawn on a three-stage maturation of IM departments as his road map to moving his department from supporting the business to partnering with the business. His framework defines maturity by the value the IM department delivers at each stage:

“Stage One” IM organizations are “backroom” in nature. Their purpose is to keep the business running. Their value is defined through the internal IM measures of faster/better/cheaper.

“Stage Two” IM organizations work closely with business units. Hence, their value is measured from the business units’ viewpoint in terms of delivery and execution. In measuring their success, some use the Balanced Scorecard because it measures performance on four dimensions – financial, internal performance, customer satisfaction, and health and growth.

“Stage Three” IM organizations partner with business units and have direct influence on business strategy. Their value is therefore gauged through the business’s own performance measures. The two are integrated; there are no separate measures for IM.

Yepez believed the LifeScan IM department was at Stage One when he arrived, but he believed it could move into Stage Two in a couple of years and into Stage Three in several more years.

To progress toward Stage Two, Yepez focused on execution and measurement to gain credibility with the business units. Execution meant bringing the IM projects on time and within budget. Focusing on project execution would help move the department to a Stage Two

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mindset because IM staff would view their performance from the results they deliver to the business.

To deliver on their promises in implementing new systems, IM staff learned that they had to have strong project management and not allow “scope creep” (users asking for additional functions in applications as development proceeded). To deliver on promises in maintenance, IM began outsourcing work on several major systems. They use Tata Computing Systems in Calcutta, India, which has impressive software quality processes and high-quality software maintenance programmers.

LifeScan also outsourced maintenance of its desktop machines, drawing on the corporate outsourcing agreement negotiated by Johnson & Johnson’s IM department. Furthermore, LifeScan has turned over computer operations to Johnson & Johnson’s corporate operations department, National Computing Service. Outsourcing these supply-based IT areas has freed IM staff from doing the work to overseeing the work – performing the brokering and relationship management role in the IS Lite model.

IM also began measuring new projects, to make execution visible, by giving LifeScan employees an IM scorecard on the company intranet to show which milestones were being hit or not. The scorecard is expanded, as appropriate; to include Stage Two and Stage Three measures – such as the business impact of new systems on such areas as customer service, operations, and so on. The goal is for the board of LifeScan to be able to link IM measures and LifeScan’s corporate measures to identify where IM is best supporting the business.

In the areas of driving innovation and managing change, Yepez has undertaken several initiatives to involve business units in IM work. For example, he brought in an alignment process that assists business unit executives both to determine the priority of LifeScan’s business drivers and then to rank IM projects in their support of those drivers.

Being a manufacturer, LifeScan has instituted quality processes. IM is aligning itself with that quality-driven culture so that the entire company speaks the same language. In one initiative, IM is working with three other departments that develop software (for products, services, and quality assurance) to implement a company-wide, quality-based software development life cycle.

In addition, all IM projects are business led, which moves ownership of systems to the business people.

Finally, IM staff members who have the skills needed in a Stage Three IM organization – those with strong project management, business process, change management, and interpersonal skills – are being promoted and given opportunities to partner with business peers. In so doing, these employees present a leadership model, one that emphasizes relationship management and brokering skills, as noted in the IS Lite model.

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Case Questions:1. What is the major focus of the case?2. What do you mean by ‘alignment maturation’ model as suggested by Yepez?3. List out the key points highlighted in the case.

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