Hopefully you saw Janice’s memo to core leaders a week ago Monday (Sept. 17) outlining our financial performance situation as an IS department and $3.05 million worse than planning EBITDA budget performance we’re projecting for end-of-year. The good news it, we can improve our end-of-year performance with a few key measures:
- Ensuring the work your team is engaged in aligns to our core strategic imperatives
- Instituting a much higher bar for the roles we staff moving forward
- Restricting work travel and reviewing any team meetings requiring travel with your IS exec team pillar leader
- Reviewing our capital labor utilization and being better versed in our capital labor rules
- Assessing pending purchases and moving forward only with those that are business-critical
Good Morning IS Core Leaders,
As was outlined in the July MIP update shared by Chris Briggs a few weeks ago, we are continuing to see a degradation of our financial performance within the department. The July MIP update referenced an end of year forecast for the department of $3.05m worse than planned EBITDA (Earnings Before Interest Taxes Depreciation and Amortization), and as the last few weeks have unfolded and the books have closed for August, we are seeing this gap widen to $5.7m worse than planned EBITDA by year end. There are many things driving this overage—storage, telecom, purchased services and revenue are key areas of concerns. (Details can be found on the IS Finance Dashboard).
We had some big savings targets layered into our 2018 budget—more than $60m in total from 2017 to 2018. Overall, we are largely meeting these reduction goals but we still need to close the gap and meet budget. To address this gap, the IS Executive Team is instituting some controls to ensure we correct course and end the year at or better than plan. This will ensure we meet our commitments to the organization and will allow us to go into 2019 in a good position to meet what will be a another challenging budget year. The controls we are putting in place are outlined below:
- The IS Executive Team is reviewing all inflight projects to assess alignment with the Health 2.0 vision and the core strategies for IS. Likewise, we are asking all core leaders to look at the work their teams are engaged in and ensure the work is aligned with our core strategic imperatives. If you identify work that doesn’t appear aligned, please review with your leadership. The IS Exec Team has already stopped unfunded projects identified as not aligned with our core strategies and will continue this assessment and stop projects and work that is not aligned with our
- We are instituting a “hard slushy” for all hiring within the PSJH IS This is not a hiring freeze, however, we are going to require a much higher bar to move roles forward, including backfills. Additionally, we will be re-reviewing all open roles that don’t currently have an offer out. Please review any roles you want to fill—both new PRF submissions and/or pending offers—with your IS Executive Team leader before moving forward. You can see all open roles within your functional area using this dashboard. (Select Taleo as the source.)
- Meetings requiring travel should be reviewed with your IS Exec Team leader before incurring any travel expense, and only critical meetings should move Additionally, we are asking managers across the department to avoid travel unless critical to do so. Reducing travel can have a direct impact on our bottom line, often without impacting our output.
- We are asking all managers to review their capital labor utilization. Ensuring we are appropriately capturing labor expense and charging it to a capital project will lower the overall operating expense for our staff, help correct our budget variance and ensure we are following accounting principles. If you have questions about capitalization of labor, please first review the capital labor rules, then reach out to the project manager leading your (Chris Briggs can be an escalation contact if you’ve reviewed the capital labor rules and there is no project manager assigned.)
- Please look at any pending purchases you may have and assess whether they are truly While we need to be diligent of all our purchases, this is especially critical for the purchases hitting the operating budget.
I understand these changes may force tradeoffs and more careful discernment as a leader, but this course correction in the final months of this fiscal year are critical to ensure we meet our organizational commitments and have a strong foundation for what we’ll achieve in 2019.
Should you have any questions, please reach out to Chris Briggs, myself, or your core leader. Thank you for all you do.
Janice