This case study discusses strategic IT alignment and cost transparency at Priority Health. It notes that Priority Health's IT budget has two components: innovation capacity and maintaining and operating systems, organization, and equipment (M.O.O.S.E.). The goal is to decrease M.O.O.S.E. spending as a percentage of the overall budget while maintaining service levels, bending the cost curve for core operations, and increasing funds for discretionary spending and new initiatives to enhance the company's competitive position.

1. Case Study: Strategic Alignment and Cost Transparency November 20, 2008 Krischa Winright, AVP, Information Technology Priority Health

2. Number of FTEs (% outsourcing varies widely) Overall IT spend (varies widely by industry, growth phase) IT spending on ongoing operations and maintenance relative to total expenses

3. IT budget has two components: Innovation Capacity and IT “M.O.O.S.E.” 65% 35% Spending on new initiatives Spending to M aintain and O perate IT O rganization, S ystems and E quipment

4. Decrease Core (MOOSE) as a % of overall spend Maintain service levels (don’t grossly exceed) Bend cost curve of Core Increase ability to contribute to Discretionary/New (enterprise competitive position)

5. IT PLAN FOR WORK QUEUES

6. IT Expense & Capital