USAA Case Study Learning Objectives

1. Read “IT Incorporated” in CIO.com at:

2. Read “IT Business 101” in CIO.com at:

Learning Objectives:

  1. Be able to discuss nature and weaknesses of the USAA IT model prior to 1999.
  2. Be able to outline the basic strategies used by USAA (from 1998 through 2004) to increase the efficiency and effectiveness of IT operations. There were separate approaches: one under Walker for the first year of ITCO, and one under Yates for the years 1999-2004.
  3. Be prepared to discuss the nature and impact of the business education curriculum (listed in the article: “IT Business 101”) as part of the USAA ITCO solution. Also be able to discuss the applicability of these training courses to your company.
  4. Possible test questions:
  5. What was the primary problem being experienced by USAA’s IT operations in 1999, how was the magnitude of the problem measured, and how did the company fix the problem? (Give at least three major components or key principles of solution.)
  6. What would be some of the main benefits to teaching IT people about each of the following business skills? (building relationships, negotiating, business basics, how to compete, how to treat customers, the company’s business model, measuring service)

Homework assignment:

Answer the following questions and turn in via email to your course coach:

  1. What was the primary reason/motivation for separating the USAA I.T. department off into its own company (ITCO)? Please discuss both the spending problems and the customer satisfaction issues.
  2. Contrast the Walker solution (first year of ITCO) with the Yates solution (after Walker’s tenure) to how ITCO should be funded and managed. What were the differences?
  3. In the USAA Case Study, we read that USAA’s IT department, by following the traditional IT management model, was increasingly draining the profits from USAA without sufficient return for those expenditures. The solution to this problem was to spin the IT department off into its own company, called ITCO. This action by USAA faced several daunting obstacles. List them:
    (1)
    (2)
    (3)
    (4)
  4. What did ITCO (and the CEO of USAA) do to overcome the obstacles you listed above? (List at least four things that were done.)
    (1)
    (2)
    (3)
    (4)
  5. What was the primary contribution of the ITCO CFO to the success of ITCO?
  6. There were two different chargeback models used by ITCO. The one used by Walker and the one used by Carswell under Yates. Why did the Carswell/Yates model work well and the Walker model failed miserably?
  7. Discuss the nature and impact of the business education curriculum (listed in the article: “IT Business 101”) as part of the USAA ITCO solution? (This is a very important question.)

More specifically, another way to look at this question is: In what SPECIFIC ways would your company benefit by training your IT people in each of the following business skills? (building relationships, negotiating, business basics, how to compete, how to treat customers, the company’s business model, measuring service)
Also, in what ways would your I.T. department improve by training your IT people in each of the above listed business skills? (Address improvements in I.T. funding and customer satisfaction—the satisfaction other company employees have with the way I.T. is helping them.)

  1. Other companies have attempted to copy the USAA model of spinning its I.T. department off into their own separate company. Usually, this does not work well. Discuss the wisdom of such a move for your company. If it would be bad, why? If it would be good, why?