Learning from the Pioneers – Schumacher Group

October 12, 2009 Appirio

Today, we’ll be speaking to Doug Menefee. Doug, a Gulf War veteran, has been involved with technology
since the early 1990’s. In 1994, he resigned from the University of Louisiana to become a pioneer in the Internet economy by co-founding Planet Symphony, a website creation and interactive marketing management company. The company gained national attention in 1995 when it staged the first-ever Internet video broadcast of Mardi Gras. Keeping his roots in Louisiana, Menefee remained with The Graham Group, leading the convergence of interactive and traditional media until 2001 when he transitioned back into an entrepreneurial role by co-founding MenefeeINSIGHT and Yadacast. In 2005, Menefee joined Schumacher Group as Chief Information Officer.

Doug has overseenan IT transformation at Schumacher Group and has been an aggressive adopter of cloud computing.

We’ll be talking to him about his experiences with the cloud and how it’s changed the role of IT within his company.

Could you give us a brief overview of the Schumacher group and your role?

Schumacher is an emergency department management company. We manage emergency departments for hospitals across the US. We have 150+ physician practices across the country. Schumacher is growing very quickly, over 30% annually. When I joined in 2005, we were at 110 contracts and saw nearly 2 million patients a year. We now have over 150 contracts and provide quality health care to almost 3 million patients a year.

As the CIO of Schumacher Group, I’m focused on defining our IT strategy reporting directly to our CEO. Our CEO, Dr. Schumacher, is a strong advocate of IT and views IT as a strategic part of the company, not as a cost center.

What drove you to consider cloud computing?

As you know, I have a background in web application development, so I’m an advocate of the web and the http protocol. Our driver was not so much about being in the cloud but about what meets our business objectives best.

There were really three main drivers for us to consider cloud solutions.

First, our biggest driver was scalability, given our rapid growth. Having to maintain and size a server architecture is hard without knowing what the growth rate is going to be in the future. It’s not only hard but capital and resource intensive to predict growth and size resources appropriately. The cloud solves that problem for us.

Second, disaster recovery became a big priority for us. This came to the forefront when we were doing a technology refresh for CRM. During that month, Louisiana got hit back-to-back with hurricanes (Katrina and Rita) and we saw the pain of the CIOs who got hit in the Gulf Coast area. At this point, we saw that cloud applications could offer us much better business continuity capabilities than we had in-house.

Finally, we found that web-delivered applications opened up the opportunity for our team to focus on innovation vs managing server farms.

Today, we have over 50% of our applications in the cloud with the rest in our two datacenters.

Where are you using the cloud in your business and how did this evolve?

Most of the cloud processes are net new to our business. We have found that it’s much easier to build on Force.com rather than our on-premise platforms. We’ve built custom applications for recruiting (physician recruiting), credentialing/pre-qualification, healthcare analytics, and for the logistics of managing 2500 physicians across the nation.

A couple of exceptions. We moved our financials from on-premise Peoplesoft to hosted Peoplesoft (A/R, A/P and G/L). Second, we’re in the process of transitioning our HR to Workday. So far, we’ve moved all our employee data into Workday and we have benefits up and running. Payroll and performance management are slated to go live at the end of 2009.

One of the things that we’re maintaining in our datacenter is our enterprise data warehouse. We are considering a cloud BI solution for analytics and dashboards but so far our enterprise data lives on-premise in the Microsoft stack.

How has the cloud changed your role as a CIO?

Where do I start? I have a smaller ops team and a much larger service delivery team. We’ve shifted more of our focus to innovation and data quality.

I sleep a lot better at night because I only have to worry about 50% of what I used to have to worry about. This is because I have a high level of security and availability. I know availability is a worry for many CIOs moving to the cloud but quite frankly, there are many more outages and internally than externally. When it comes to security, cloud service providers have large teams of experts exclusively focused on security, whereas my small IT team has multiple areas of focus which include security.

The biggest impact is that the cloud has enabled me to be a transformational CIO. I focus on business strategy and processes vs. being a manager of information technology and hardware. This is a fundamentally different approach to the CIO role since it’s all about relinquishing control. I don’t want to be the bottleneck. The fact is that technology has become more user-friendly so users can take a much more active role in choosing, configuring and using applications. I don’t want to restrict this entrepreneurial spirit, but rather orchestrate it. To take the metaphor further, IT is a conductor in front of an orchestra. We’re guiding the use technology but not “managing” and “controlling”.

What this requires is a new mindset. There are CIOs who are resistant and still want to control everything. You can take that approach but when the business that’s next to you starts moving to the cloud and developing apps in 3-4 weeks, they’ll start kicking your butt and you’ll have to re-evaluate your approach.

What advice do you have for CIOs considering moving their businesses to the

  1. Surround yourself with web services developers.
  2. Don’t buy into the cloud hype, but look at your business needs and see what best meets your needs. Make sure you don’t disqualify things that are either on-premise or in the cloud. But, even with an open mind, I find that 9 times out of 10, the solution that best fits my needs is cloud-based.
  3. Look at the processes that are already running the cloud within your company. Then compare this to what other companies or consumers are running in the cloud. By looking internally and externally you can see where you can expand your cloud usage.
  4. To reduce the risk from moving off-premise, take a look at business continuity or business interruption insurance policies. To be honest, this is equally relevant to your internally-run applications.

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