FRAMINGHAM (05/01/2000) - It's not hard to imagine an ambitious thirtysomething engineer with an eye on the lucrative IT consulting market. It's not even hard to imagine him squeezing in the extra time to work at consulting while getting an advanced degree. What is surprising is finding any company that would let him do it.
Edwin Moldauer did find such a company. He spent 1999 working on a complex financial systems project at J.D. Edwards & Co., a major Denver software company. While still in school, he focused his energies on the job: 20 hours a week, for pay, setting up a new IT cost-allocation system for the enterprise software developer. He enjoyed the interaction with his client, was challenged by the work and got a taste of what it's like to be a consultant in a large company.
He and his fellow teammates had the same experience, and despite a few bumps along the way, they got the job done--for about half of what a consultancy would have charged. Moldauer emphasizes that this project was not just some hand-holding student experience; it was a real job with real pay and real responsibilities. "A company wants results, not a learning environment," he says. And for J.D. Edwards, a student-staffed team that could deliver was just the creative fix the company needed in today's resource-starved IT environment.
It all began with too much growth too soon. From 1996 to 1998, J.D. Edwards had doubled in size, and Senior Vice President and CIO Mark Endry worried that the IT department's unscientific and unfair manner of calculating chargebacks would catch up to him. Historically, charges for services were divided equally among business units, regardless of how much each unit used. In some cases, business units were paying for services they rarely if ever used. The vision of general managers storming into Endry's office with reports in hand demanding an explanation was not something he savored. What he hoped for was a new accounting system that would use the activity-based costing (ABC) methodology, which assigns costs to a product or service based on the amount of labor and equipment needed to provide that product or service.
Strapped for staff, Endry called one of his long-standing consulting partners to deliver a proposal for the system that would solve his accounting woes and win him new respect with the business side. At about the same time, Yash Gupta, then dean of the Graduate School of Business and Administration at the University of Colorado at Denver (UCD), paid Endry a visit to discuss a new organization he was forming for CIOs and faculty members. The group would help CIOs exchange ideas and solve common problems like staffing, and Gupta wanted Endry's support (for more information on the Center for IT Innovation, see "Group Efforts," Page 174).
During that meeting, Endry casually mentioned his accounting project, and Gupta, an opportunity-seeker and networker, pitched the business school as a partner on the spot. Two weeks later, the university delivered a proposal--before Endry's consulting partner had responded, no less--and Endry took Gupta up on the offer.
Understandably, Endry was anxious about the possibility that he could end up with just a white paper and a system that didn't work. And his staff, accustomed to working with polished, professional consultants, weren't sure the students would fill the bill. "When the staff first heard we were using students, they thought of green hair and earrings," laughs Patrick Hellman, IT planning and business operations manager at J.D. Edwards, who oversaw the project.
But Endry and Hellman had good reasons to partner with the school. Not only would the partnership cost J.D. Edwards much less than what a consultancy would charge, but the University of Colorado faculty had expertise in ABC. In addition, the project required a good bit of upfront analysis and research--something universities do best. It would be a ground-breaking project for J.D. Edwards because ABC is typically used in manufacturing but rarely in IT services. And UCD would reap its own benefits since faculty members were eager to apply their research to a real-world case and publish the results. It seemed like a perfect fit, and by most accounts, it was.
TEAM BUILDING The first step in building the team was getting to know the faculty sponsors on the project. Endry and Hellman wanted to know a bit about their backgrounds and their approach to the project. The sponsors, Bruce Neumann, UCD accounting professor, and Jim Gerlach, UCD associate IS professor, had some real-world experience outside of academia. Neumann has been a board member of some local nonprofit organizations and of a government health-care commission and is also a former auditor. Gerlach on the other hand has worked on other consulting projects for the university, including IS needs assessment work for the Colorado Transportation Institute and for the state's department of transportation. "I've had a lot of connection with business people," Neumann says, "and I knew to have an open mind and to be flexible." His and Gerlach's prior business experience gave Endry peace of mind that he wasn't going to have to deal with ivory-tower attitudes.
Next came the process of selecting the students who would work on the system.
That responsibility fell primarily to Neumann and Gerlach, with Hellman having the opportunity to review student rsums as well. The professors went through three rounds of interviewing, looking for candidates with prior business experience, strong communication skills and diverse knowledge in both IT and finance, and who could commit to at least one of the two semester-long phases of the project. It would require 20 hours a week of each student's time, and students could opt for three hours of course credit, hourly pay or a combination thereof. Gerlach and Neumann were also paid a fixed fee for their time, but they would not disclose the amount.
After selecting a team of 12 students, who were studying for master's degrees in business administration, accounting, finance and IS, and ranged in age from 25 to 40, Gerlach and Neumann enrolled them in training seminars at various workshops in the area. They wanted to make sure the students were adequately cross trained: The IS majors learned cost accounting, while the accounting majors brushed up on IT skills.
Finally, J.D. Edwards had to be patient during the complex task of creating a contract, which took about three months of upfront negotiations. Even so, Gupta--not willing to lose the gig--gave the team the go-ahead to start working a few weeks before the contract was finalized. "It was new for the university and new for us, so there was a lot of back-and-forth with attorneys," Hellman says.
GETTING STARTED Once the project began in fall 1998, the students were issued company badges like any other consultant and worked out of a vacant room near Hellman's office. They designed their schedules around classes and worked independently, again just as any consultant would. Gerlach and Neumann played largely a mentoring and advisory role to both the students and J.D. Edwards, although they came onsite for presentations and major meetings. Hellman's role in the project was to keep the team on track and to make sure they weren't going off on an unrelated tangent.
In the first phase of the project, the students had to determine whether ABC could work in an IT environment. To do this, they interviewed IT managers from each functional area, including telecommunications, desktop support and databases. During the interviews, students collected general ledger and accounting data showing the cost drivers for each area, such as how telephone charges were calculated. Endry wanted the system to house two types of data: the first being the hours of staff labor worldwide for a given service area such as networking--a measure the IT department had never tracked before.
Second, the system needed to track the costs of equipment, supplies and services related to each service area. All this data would give the IT department an accurate picture of how much it was spending to provide a particular service.
After compiling the financial data, the students did independent research on ABC implementations and built a data model using a university-owned software package from ABC Technologies. The first phase of the project took roughly five months.
During the implementation phase of the project, the students spent much of their time porting the model they built to the package that J.D. Edwards had chosen, Metify ABM from Armstrong Laing Group. At this point, Hellman brought in Russell York, an independent IT consultant with a background in finance, to help lead the students on a full-time basis during this critical stage of the project. York admits he was at first skeptical about the students' abilities, assuming they would be too theoretical. Instead, he says, many of the students had a practical systems and business approach and were quick to speak up if they disagreed with a direction the project was taking. Moldauer, for one, questioned technology strategies during meetings with software vendor Armstrong Laing. Endry agrees with York, adding that the students' collaborative approach was a refreshing change from the know-it-all attitude of some third parties.
"They didn't come in and tell us how to run our business, the way consultants often do," he says.
BUMPS ALONG THE WAY While the task at hand was well defined and well suited to the students' analytical skills, cultural issues were not always so cut-and- dried. Students had to adjust to the chaotic nature of the business world, where solving problems is rarely straightforward and schedules change on the dime. "Students thought that deadlines were the most important thing and expected to have instant turnaround and access to people," Neumann explains.
Instead, they found that in the business world, outside forces mean that deadlines have to be more fluid than they are in academia and that it's not always easy to get a question answered.
One consideration Endry and Hellman did not anticipate was the academic calendar. On several occasions, they had to make scheduling changes because of semester breaks. In the end, Hellman says the impact on deadlines was minimal because students were flexible about picking up the pace during some stages of the project to accommodate for the loss of time elsewhere. While Gerlach says this unpredictability added stress to the team, Moldauer and another former student, Stepan Tonakanyan, don't recall the conflict at all. Tonakanyan, a former bank CEO with a doctorate in economics, says managers at J.D. Edwards were responsive and easy to work with. His main struggle was learning how IT departments operate, since he had no prior experience in the industry.
RELATIONSHIP BUILDING The student team finished the ABC project on time and within budget in late 1999, approximately 14 months after they began. Endry says he'd call on the university again if the timing and the project made sense. Since the new system was installed at J.D. Edwards, he's achieved his original goals for more accurate budgeting methods and cost analysis. "The real savings is that we now know what our cost drivers are," he adds. In addition, business execs are now able to better manage their budgets since the system calculates the actual cost--including labor and services--of say, purchasing 20 new laptops. And Endry hopes that it will eliminate a lot of the wasteful technology spending in the business units.
Along the way, the IT department also gained expertise in ABC, which could drive revenues in new business lines, such as the company's application outsourcing service announced in December 1999. Endry believes that ABC will be perfect for pricing services for those customers. But the experience also makes Endry feel good, knowing he's helping forge a valuable long-term relationship with one of Colorado's larger business and IS programs. "We really saw the need to reach out to the community, and it's a great way for students to get to know a potential employer," Endry says.
Although one positive experience does not a trend make, this project shows the chemistry that can happen when academia and business work together. Schools need access to businesses because they provide valuable real-world experience, contacts and research opportunities that feed back into the curriculum of their programs. For business leaders, fostering close ties with schools in the local community is an opportunity to improve the quality of education (and by default, the students) and to build the image of their companies in the eyes of graduates.
Moldauer, who was involved in the project from start to finish, couldn't agree more. "For me it was an introduction to corporate America," he says. A globe-trotter who has lived and worked in Germany, Hong Kong, Israel and New Zealand, he hopes contacts he made on the project will be helpful in his search for a consulting job on the West Coast. Meanwhile, Tonakanyan, who will graduate this spring with an MBA in finance, believes that the exposure of working in a large IT department will help him in his quest for a management position in finance. As for the professors, both cite positive changes to their curriculum from the experience. Gerlach says he particularly enjoyed the chance to practice what he preaches. "I get satisfaction out of knowing that the things we're teaching in our curriculum are relevant to business," he says. And that's good news for CIOs, who need recruits who can hit the ground running.
How is your company working with local universities? Senior Writer Polly Schneider wants to know. Write to her at email@example.com.
A new networking organization helps business and academic leaders find common ground It was a radio report announcing Colorado's 11,000 IT job openings that drove Yash Gupta to create the Center for IT Innovation (CITI) in Denver, a collaboration between local CIOs and the University of Colorado at Denver (UCD). The state's economy has exploded in the last 10 years because of growth in the high-tech sector, and universities and corporations have been struggling to keep up with the demand for innovation and resources.
So Gupta, former dean of the UCD Graduate School of Business and Administration, worked closely with Chan Pollock, CIO at Johns Manville, to develop the concept and business plan for CITI. Their goals were multifold: help solve the IT staffing crisis by developing better-prepared graduates, engage private industry in curriculum and educational issues, create a networking forum where CIOs could share ideas, and increase the global awareness of students and faculty in the business school by giving them better access to the business community.
In addition to Pollock at Johns Manville, CITI has recruited some 40 CIOs of major Colorado-based corporations as members, including Coors Brewing, Geneva Pharmaceuticals, Janus Capital, Qwest Communications and US West. A few of the group's members come from the vendor and consulting community--including IBM, Oracle and PricewaterhouseCoopers--but they are expressly forbidden from marketing their wares.
In creating the nonprofit group, Gupta was adamant that it be independent of the university and self-supporting. In fact, CIOs pay upwards of $7,500 in annual dues to cover administrative costs. "In any university, the bureaucracy is phenomenal and even more so should you receive a dime from the state," he says. The model is working--the group has not lost any members yet.
In the 18 months it's been in operation, CITI has brought to the table two creative partnerships, including a student-staffed consulting project at J.D.
Edwards (see main story) and a reskilling program for non-IT engineers, sponsored by US West. A CITI committee also designed an MBA e-commerce degree program for executives that started its first semester this spring out of the J.D. Edwards training center.
What makes CITI successful as a networking and community action group is its small size. Ted Schaefer, chairman of CITI and partner with PricewaterhouseCoopers in Denver, says it will not grow much larger than 40 to 50 members. "We want the CIOs to be active," he adds. To keep the interests of busy CIOs piqued, CITI will need to make sure it stays focused on their needs.
For example, CITI members are finding value in the professional speakers who come to the monthly breakfast forums with advice on technology and management issues, and the targeted programs that will help them fill job openings--such as the MBA e-commerce program, according to Schaefer.
Gupta hopes CITI will become a national role model for new forms of CIO associations. Involving other university departments like engineering and medicine, as well as other colleges in the state, could provide even more value to members, he believes. The concept is something he's pursuing in his current post as dean of the University of Washington's business school. His Seattle version of CITI is launching this spring, and will recruit CIOs nationwide. -P.
THE DOS AND DON'TS OF WORKING WITH THE LOCAL U DO Take care of the legal and contract issues early Make sure you have clear goals for the project and communicate them Schedule frequent staff meetings with the team DON'T Sign a contract before meeting the faculty sponsors Forget to factor in the academic calendar Be afraid to use academia for consulting work.