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The CIO Challenge: Deliver Business Value with IT! - Get your Cloud Strategy Right!
 

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The upper part of the clients that I speak to feel that there is a lack of actionable articles and publications that help to bridge the gap between the execution of the business strategy, business objectives and how IT can be used to support the latter to deliver business value. This is also the reason why I decided to put forward an execution centric material that has for objective to if not entirely bridge the gap between IT and the business provide Business and IT Decision makers the necessary common language to move forward in the same direction (pointing fingers is rarely productive).

The The CIO Challenge: Deliver Business Value with IT ! series is a reply to the request from CIO?s and IT Executives of an introduction of ?How do we put the IT Strategy in place? and how do we communicate effectively with our stakeholders. ?The CIO Challenge: Deliver Business Value with IT! ? Get your Cloud Strategy Right!? provides a focus on this area.

The execution of the defined business strategy is often a mystery (missing link) both on the Business and the IT side. The truth is that regardless of how well the executive team draws out the strategy in the boardroom the bottom line is that the business initiatives that were supported by clients succeeds, those not supported by clients (that do not get it) fail and disappear.

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The CIO Challenge: Deliver Business Value with IT! - Get your Cloud Strategy Right! The CIO Challenge: Deliver Business Value with IT! - Get your Cloud Strategy Right! Document Transcript

  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Title: The CIO Challenge: Deliver Business Value with IT! – Get your Cloud Strategy Right! ISBN: 9781301528738 Official website: http://deliverbusinessvaluewithit.com/ AUTHOR Martin PALMGREN, EVP .COMMUNICATE Copyright The CIO Challenge: Deliver Business Value with IT! – Get your Cloud Strategy Right! Martin PALMGREN Published by .COMMUNICATE Publications at Smashwords Edition Inc Copyright 2013 .COMMUNICATE Publications Introduction The upper part of the clients that I speak to feel that there is a lack of actionable articles and publications that help to bridge the gap between the execution of the business strategy, business objectives and how IT can be used to support the latter to deliver business value. This is also the reason why I decided to put forward an execution centric material that has for objective to if not entirely bridge the gap between IT and the business provide Business and IT Decision makers the necessary common language to move forward in the same direction (pointing fingers is rarely productive). The The CIO Challenge: Deliver Business Value with IT ! series is a reply to the request from CIO’s and IT Executives of an introduction of “How do we put the IT Strategy in place” and how do we communicate effectively with our stakeholders. “The CIO Challenge: Deliver Business Value with IT! – Get your Cloud Strategy Right!” provides a focus on this area.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Cheers Martin What the reviewers said “ The “Deliver Business Value with IT” series is an extremely solid piece of work that comes across as the A-Z reference of how to execute and implement IT strategy from a CIO level perspective. The reader will learn robust approaches to deliver services designed to support IT and Business drivers. The perspective that Martin spells out permits an overview of how to leverage existing frameworks but also to effectively support the execution of an IT Strategy aligned with the Business Strategy.” (Jean-Louis Leignel, Ex CIO of the Schneider Electric Group ; past vice-chairman of ISACA (Information System Audit and Control Association), of ISACA’s IT Governance Committee and of the AFAI association (ISACA’s french chapter)). “The focus that Martin takes in the “Deliver Business Value with IT” series will help in tackling the seven main non-technical challenges any CIO or other senior IT business leaders will face: 1. How and what should I communicate to whom in what way? 2. What to think of when it comes to competences needed to provide my IT services? 3. How to provide the best value at the best cost? 4. What to think of when ensuring efficient and effective delivery of projects? 5. How to establish a sourcing strategy and determining how to manage your vendors? 6. What are the best practices for managing my operations, and what to think of? 7. How can I best scan for and analyse emerging technologies? The approach taken utilizing basic business management principles and applying them to how to run an IT department are explained clearly, and takes this publication above and beyond the standard publication proclaiming to ‘run IT as a business’. The 2 key trends identified in the publication for the CIO to focus on of “Differentiation” and “Cost” are a perfect example of this. Further to this the focus and examples of non-technical KPIs used, provides a good framework for the CIO to communicate the state of how services are provided and how the company is maximizing its value of their IT assets.”  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE the book format where most articles and blog posts are “journalistic sensational” and few address questions where you need to dig in most likely due to the lack of competence / knowledge on the subject hence the social media or cloud, next fad frenzy where few of the “writers” would be able to describe the landscape with ROI to back up the logics of an investment. All that you would like to know in regards of the “Deliver Business Value with IT” series What is it about the topic that will get readers excited? After the “how do we align business needs to how IT works” (that is Business IT Alignment) clearly seen in SAP implementations the focus of the CIO need to be on how do we support / “leverage the execution of the business strategy with IT” where the IT Department supports new emerging business initiatives that will eventually form the business strategy as they succeed of fail. That said the IT department has not only the responsibility but should be held accountable for how well they help the business side understand how to leverage existing technology solutions (buy / make) effectively hence the notion of service delivery defined not as basic help desk but as a full fledged business partner and this would include IT Financial Management. Why do you think this book would be welcomed by potential customers? Deliver Business Value with IT will help the IT Department to move from a mere third party provider of Information Technology to a position of a full fledged business partner with a comprehension of business needs, stakeholder expectations and strategy execution and how to support the latter. How do you see your book being different from any existing or competing titles? We help the reader evolve from a position of “there are business needs and stakeholder expectations” (see COBIT 5 that is today one of the few IT frameworks that has included the notion “the needs of the business” and stakeholder expectations) to a potential position of a full fledged business partner with a comprehension of business needs, stakeholder expectations and strategy execution and how to support the latter. For COBIT 5 practitioners the perspective presented in ”Deliver Business Value with IT” pulls the logics presented in COBIT 5 together that you can effectively leverage with the IT Scorecard. Describe the three most important things you want the reader to have learnt/solved by the end of the book: How to ask the right questions to support the needs of the business (and not sit around to wait for the business strategy to be formalised as this might never happen). Focus on ROI and hands on metrics oriented results that supports business objectives. How to re invent the IT Business Model (that is how do we deliver IT services effectively) and the Business (IT) IT Model / Partership that is how do we support the needs of the business effectively. Who is the target audience for the book, and what knowledge and skills should they already possess in order to gain maximum benefit from the book? CEO, CFO, CIO, CTO, SVP, Architects, Strategy, Business Executives, Procurement professionals and the IT function in general as well ITIL, IT – CMF, CobIT 5 (ValIT, CobIT 4.1, RiskIT), ISO 38 500, TOGAF and ISO 9001, ISO 27 001, COSO)  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE A Story Board is an actionable document conceived in .ppt and often presented in PDF that permit you to flick out the slide set on a pad / smart phone / lap top and start to share with your CIO, Executives and Board on the spot. In the “Deliver Business Value with IT” Series Design, Build and Run an Effective IT (Service) Strategy to Business Needs https://flevy.com/browse/business-document/design-build-and-run-an-effective-it-service-strategy-to-business-needs-279/ref=mpalmgre Get Your Cloud Strategy Right https://flevy.com/browse/business-document/get-your-cloud-strategy-right-286/ref=mpalmgre Leverage Business Strategy Execution with IT https://flevy.com/browse/business-document/leverage-business-strategy-execution-with-it-281/ref=mpalmgre Logics for IT Sourcing (Internal, Shared service center, Out, Cloud) https://flevy.com/browse/business-document/logics-for-it-sourcing-internal-shared-service-center-out-cloud-285/ref=mpalmgre Build an IT Service Strategy Leveraged by ITIL V2 & 3 Design - Spell out IT Activities from a Demand and Supplier Side https://flevy.com/browse/business-document/build-an-it-service-strategy-leveraged-by-itil-v2-and-3-design-spell-out-it-activities-from-a-demand-and-supplier-side-282/ref=mpalmgre Build an IT Service Strategy Leveraged by ITIL V2 & 3 Build - Set IT Processes and Key Performance Indicators https://flevy.com/browse/business-document/build-an-it-service-strategy-leveraged-by-itil-v2-and-3-build-set-it-processes-and-key-performance-indicators-283/ref=mpalmgre Build an IT Service Strategy Leveraged by ITIL V2 & 3 Run - Aligned to Described ITIL Activities and Processes https://flevy.com/browse/business-document/build-an-it-service-strategy-leveraged-by-itil-v2-and-3-run-aligned-to-described-itil-activities-and-processes-284/ref=mpalmgre To be published in the “Deliver Business Value with IT” Series How to Build a CIO Office https://flevy.com/browse/business-document/how-to-build-a-cio-office-288/ref=mpalmgre CANVASSED in a Business (IT) Strategy Canvas: Business Vision, Architecture https://flevy.com/browse/business-document/canvassed-in-a-business-it-strategy-canvas-business-vision-architecture-289/ref=mpalmgre CANVASSED in a Business (IT) Strategy Canvas: IT Vision https://flevy.com/browse/business-document/canvassed-in-a-business-it-strategy-canvas-it-vision-290/ref=mpalmgre CANVASSED in a Business (IT) Strategy Canvas: Baseline, RoadMap https://flevy.com/browse/business-document/canvassed-in-a-business-it-strategy-canvas-baseline-roadmap-291/ref=mpalmgre  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE business models and concepts to permit the CIO and the IT department to meet the needs of the business (As Is, To Be). List of topics that will be covered in the chapter: We understand: -­‐ -­‐ -­‐ -­‐ The need for an “IT value proposition” (an IT Business Model and a Business (IT) Value Proposition), that is the competitive advantage that IT confer The criticality to acquire IT services end to end The need for IT Accountability The reason why IT strategies fail, and miserably 2: To avoid the “Marshmallow” momentum, focus on the business model We spell out the irregularities of the current IT Innovation process and the loss of competitive advantage for both the IT and the Business Side. List of topics that will be covered in the chapter: We understand: -­‐ -­‐ -­‐ -­‐ How to build an effective innovation process Why current “best in class” might not be best in class at all That Business focused technology can be a make or break factor as we innovate or re- invent a brand and business model To support business strategy execution we need to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy 3: "Do we really need a CIO and IT department to bother us with technology when we can use the cloud?" We spell out the need for The CIO and the IT Department to position as premium provider of IT services and focus on value to cost. In order to avoid the "do we really need a CIO and IT department to bother us with technology when we can use the cloud?" the CIO has to ensure that the business strategy and business objectives are supported by IT (from a Business and IT architecture perspective). Where the IT Strategy support Strategy execution, "Time to Market", Cost Effectiveness and stakeholder expectations from an Executive, Business Unit, IT Management and IT Risk Management perspective.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE List of topics that will be covered in the chapter: We understand: -­‐ -­‐ -­‐ -­‐ How to build and effective cloud strategy That to cloud is a traditional “to make or to buy” decision That a decision should either be demand or cost driven, if it is political this should be recognized. That all cloud initiatives should have a clear business case (financial + roadmap) where the IT department should be held accountable to the successful delivery and within the set cost frame 6: To leverage IT for Strategic Advantage As the reader has appreciated that the IT Department should have a clear IT Business Model and Business (IT) Value proposition we will be able to fully leverage IT for a strategic business advantage. List of topics that will be covered in the chapter: We understand how to: -­‐ -­‐ -­‐ -­‐ -­‐ -­‐ -­‐ Define the competitive advantage Acquire the IT Service Portfolio End to End Deliver Value Innovation as we differentiate and keep the cost down Reconstruct Boundries Create demand Govern Shift focus from customers to non-customers Figures Figure 0: IT supports the run and emerging business initiatives: http://deliverbusinessvaluewithit.wordpress.com/2013/03/19/the-very-reason-why-most-it-strategies-fail-and-miserably/ Figure 1: We articulate the Value proposition with a storyboard: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/we-articulate-the-value-proposition-with-a-storyboard/ Figure 2: Time to Market, Cost Effectiveness, CycleTime: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/time-to-market-cost-effectiveness-cycle-time/ Figure 3: Connect information: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/connect-information/  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE In order to avoid the "do we really need a CIO and IT department to bother us with technology when we can use the cloud?" the CIO has to ensure that the business strategy and business objectives are supported by IT (from a Business and IT architecture perspective). Where the IT Strategy support Strategy execution, "Time to Market", Cost Effectiveness and stakeholder expectations from an Executive, Business Unit, IT Management and IT Risk Management perspective. To deliver business value with IT we need to Focus on the Business Bottom Line: How fast can we get our products and services to market “Time to Market” & how can the IT department support the business from a Cycle Time and Cost Effectiveness perspective. The IT Bottom line is that up to 40 % of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities and demonstrate that the current Business Model is supported effectively. The IT department should facilitate the access to IT services to support new and current business initiatives. The business strategy emerge out of a number of initiatives that are successful or not. The IT department need to support the “Run” of day-to-day operations as well as new projects. The Cloud might particularly be of interest within this frame. The execution of the defined business strategy is often a mystery (missing link) both on the Business and the IT side. The truth is that regardless of how well the executive team draws out the strategy in the boardroom the bottom line is that the business initiatives that were supported by clients succeeds, those not supported by clients (that do not get it) fail and disappear. The CIO and IT department hence needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. We believe that in order for the CIO and the IT Department to position as premium provider of IT services and focus on value to cost we need to understand the Business (IT) Strategy and how the IT department can deliver effectively to business objectives, that is to deliver business value with IT: - What is the Business’s strategy and plans? , - What is the current business model that IT has to support? ,Where could IT make a significant impact on the business? ,- Are there any further opportunities to use IT? , - How do we provide IT Services as we meet demand and cost drivers where the decision is to make (internal) or to buy (external service provider)? We have identified 2 key trends for the CIO to focus on: - Differentiation (That is, how does IT provide a competitive advantage for the business), and - Cost (How does the IT Department deliver IT Services cost effectively). To do so we need to Build an effective IT Delivery Model to meet business needs and expectations as we leverage business strategy execution and business processes supported by an IT  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE will learn robust approaches to navigate the ever changing IT and global economic landscapes and deliver to next generation business drivers of IT architecture. “Deliver Business Value with IT” is an extremely solid piece of work that comes across as the A-Z reference of how to execute and implement IT strategy from a CEO and CIO level perspective. Deliver Business Value further helps us understand how to leverage business concepts brought forward in: Blue Ocean Strategy (W. Chan Kim and Renée Mauborgne), Business Model Generation (Alex Osterwalder & Yves Pigneur), The Balance Scorecard, The Strategy Focused Organisation, Alignment, Strategy Maps, Mastering the management system, Managing Alliances with the Balanced Scorecard (Kaplan and Norton), Breakthrough IT: Supercharging Organizational Value Through Technology (Patrick Gray), The Marshmallow challenge and the Customer Journey by IDEO.” (Andrew Loveless has held executive roles in Accenture, GE Capital, Saba and Cofounded Element8) “The CIO and IT department must focus on to support business objectives, the business strategy and to be able to demonstrate how they do this (that is to spell out a valid IT strategy and a value proposition to the business). To do so they need to manage IT like a business and be responsible to profit and loss. The “Deliver Business Value with IT” series has inspired me to approach the "how" differently, that is to think differently for the future development of IT services and the Enterprise (Business, IT) Architecture to support business processes, with IT processes (aggregated as services), applications and infrastructure.” (Daud Santosa, Chief Technology Officer and Distinguished Chief IT Open Group) “The “Deliver Business Value with IT” series is an extremely solid piece of work that comes across as the A-Z reference of how to execute and implement IT strategy from a CIO level perspective. The reader will learn robust approaches to deliver services designed to support IT and Business drivers. The perspective that Martin spells out permits an overview of how to leverage existing frameworks but also to effectively support the execution of an IT Strategy aligned with the Business Strategy.” (Jean-Louis Leignel, Ex CIO of the Schneider Electric Group ; past vice-chairman of ISACA (Information System Audit and Control Association), of ISACA’s IT Governance Committee and of the AFAI association (ISACA’s french chapter)) “The “Deliver business value with IT” series gives an excellent practitioner’s view on how to realize value from IT investments. Martin successfully introduces the core theories and practices regarding this topic that recently had a lot of attention from both academics and practitioners. The material in his book also gives for CIO’s a good overview of the most popular IT governance and IT management frameworks including the relative new ones such as ISO 38500 and COBIT 5. This publication  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE get in the business. IT is increasingly a part of or needed in direct support to the enterprise’s products and services. Stakeholders expect immediate, seamless access to transaction capability, information and analytics in their increasingly mobile work environments. IT leadership requires a refresh of approaches, thinking and management practice to meet these new challenges; thus the value of the contribution of “Deliver Business Value with IT”.” (Jerry Luftman Ph.D., Professor & Managing Director Global Institute for IT Management) “I like Martin's practical approach of IT strategy. With his new “Deliver Business Value with IT” series, he is helping us work on actual paradigms we can find in today's organisations like how to find a business foundation for technology supported undertaking while using state of the art technology” (Olivier Neau, has held IS & IT Leadership roles and is today the Business Systems Director at Amcor Flexibles) “The “Deliver Business Value with IT” series has for objective to set and influence the direction that the IT business relationship will take over the next few years. Where traditional IT management focus on management & amortisation the approach “Deliver Business Value with IT” spell out demonstrates the way to the future position of the CIO as de guardian of effective investments providing innovative services to the business by new enabling technologies. The approach focuses on Enterprise Architecture as a way of managing changes in business processes and their IT support services. Competitive advantage in business depends directly on agile business processes and their support by IT. CIOs often struggle with legacy application due to the fact that their flexibility has disappeared. New emerging service delivery models such as SaaS, as PaaS or as IaaS provides an opportunity to reintroduce flexibility to IT services. As stated “Deliver Business Value with IT”, technology evolution does not free up the CIO from his role but in the contrary asks for even greater understanding of the new enabling technologies and how they can support efficiently the business processes. Required skills are shifting from in house server operation to the management of virtual servers provided by external suppliers. The end-to-end service delivery still remains under the responsibility of the CIO. And companies most valuable assets, knowledge and information, getting distributed over the cloud, require higher security measures. “Deliver Business Value with IT” correctly states that the value of IT is even growing over years and becomes the beating heart in the Business processes. Efficiency and effectiveness are more than ever the key concepts of IT management driven by the business needs. By bridging the key elements of best practice IT management Cobit, ITIL, Togaf, COSO, … he provides us with an excellent approach to IT management of the 21 century.” (Bjorn Gronquist, Audit of IT Governance and Cobit compliance, he has also held the position as Chief Security Officer & Enterprise Architect @ a Capgemini Group Level)  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE (Gabriel Maties, Enterprise Architecture Manager, Gala Coral Group). “The “Deliver Business Value with IT” series provides a pragmatic approach to align IT initiatives to the business strategy and business objectives with the ability to measure the outcome (KPI’s). I particularly appreciate Martins capability to provide a metamodel of common IT frameworks as steps of the execution of the IT Strategy: Deliver IT services, - Ensure delivery capability (Governance), - Coherence (Architecture) and Security.” (Romain Hennion de Thyses, Governance and Architecture Director, Global Knowledge, VP ITSM France). “Information Technology has been a fundamental asset to excel in business performance. The “Deliver Business Value with IT” series is a new way of providing practical ideas to CIO and CEO about the extent to which cutting-edge IT such as Cloud Computing can deliver business value to customers.” (Mohamed Hédi CHARKI, PhD, Associate Professor, Director of the MSc Strategy & Organization Consultancy EDHEC Business School, FRANCE) Audience: CEO, CFO, CIO, CTO, SVP, Architects, Strategy, Business Executives, Procurement professionals and the IT function in general as well ITIL, IT – CMF, COBIT 5 (ValIT, CobIT 4.1, RiskIT), ISO 38 500, TOGAF and ISO 9001, ISO 27 001, COSO) practitioners that are interested in effective IT Strategy and cloud deployment. The material in this book has been derived from best in class practice @ Fortune 500 companies. Deliver Business Value with IT would particularly be of interest for auditors. Where COBIT 5 (ValIT, CobIT 4.1, RiskIT) provides guidance in the right direction it is imperative for the audit department to provide not only red or green light compliance check list, validate that a process is measured and managed or if IT has a dashboard, but to ensure that business process and notably those of support functions such as IT support new and ongoing business initiatives. The execution of the defined business strategy is often a mystery (missing link) both on the Business and the IT side. The truth is that regardless of how well the executive team draws out the strategy in the boardroom the bottom line is that the business initiatives that were supported by clients succeeds, those not supported by clients (that do not get it) fail and disappear. The CIO and IT department needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Track Record: Martin joins Altimus Partners (www.AltimusPartners.com) in 2012 as Associate, a specialist CXO Advisory management consulting firm with operations in NA and EMEA, and focus on sourcing strategy, adoption of cloud services, and deployment of technology business transformation in financial and non-financial markets. Martin founds .COMMUNICATE in 2006 to meet the GAP between the needs of the business and the solutions (value proposition) delivered by the IT department. He believes that in order for the CIO and the IT Department to position as premium provider of IT services and focus on value to cost we need to understand the Business (IT) Strategy and how the IT department can deliver effectively to business objectives, that is to deliver business value with IT. - What is the Business’s strategy and plans? - What is the current business model that IT has to support? - Where could IT make a significant impact on the business? - Are there any further opportunities to use IT? - How can we leverage the cloud in this perspective “Time to Market”, “Cost Effectiveness”, “Cycle Time”? Martin has consolidated this perspective (.COMMUNICATE Publications) with a series of best in class “Deliver Business Value with IT” books that address Strategy Execution (Design, Build, Run), (IT) Governance and IT Financial Management that focus on the execution of the IT strategy to business needs and how to leverage the cloud in this perspective. It is also within this frame that Martin founds the CIO Office 2.0 that sports + 850 on invitation only CIO's and CEO’s that focus on how to deliver business value with IT. In 2002 (– 2006) Martin joins a team of outgoing Gemini Consulting Business consultants to accelerate the development of ADSAP as Executive Vice President and associate (a start up specialised in the resale of industrial equipment (online market place) and Enterprise Portal Development) with the objective to accompany the executive management, identify business opportunities and to ensure the development of concordant solutions in the industrial equipment segment. He sells his parts in 2006 within the frame of the acquisition by a major US based actor within the online market place segment. Mission: Portal conception and solution development: structure, content, classification system elaboration (profession and functional oriented taxonomy: 56 000 lines, 7 languages, compatible with UNSPSC, ECCMA & ECLASS). Position  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE This is also true for the non brick and mortar references that have emerged from silicon valley. Amazon sells books and online store space + run applications on a cloud (mutualised storage space outside the firewall). Google the opportunity to find things + run applications on a cloud (mutualised storage space outside the firewall) + hosted services such as email (the opportunity to communicate in writing and keep a trace). Ebay enables the exchange of goods. Twitter provides a tool for self promotion and advertisement. Facebook fills the void of distance and keep the contact with your friends and the opportunity to make new acquantainces. Linkedin the opportunity to keep up to date with your professional network + some promotional features. The business model sets the direction enabled by best in class technology. Figure 0: IT supports the run and emerging business initiatives: http://deliverbusinessvaluewithit.wordpress.com/2013/03/19/the-very-reason-why-most-it-strategies-fail-and-miserably/ Why it is critical for the business to acquire the IT Service Portfolio End to End I was recently contacted by a large Editor (as most of you like know I have accompanied a number of IT consulting companies and editors in their “Go to Market” with Client acquisition, (Large) Account Introductions, Alliances (notably with BIG 5 consultancies), Market Position (Forrester, Gartner, Bright Talk) and position of the “Value Proposition” (discovery, competitive analysis of market offerings, road map to realign solutions portfolio and transform sales and delivery operations, develop new market strategy and execution plans, and drive sales transformation, acquisition of smaller actors)) to help them in their go to market. Where an IT strategy that support business objectives should demonstrate a coherent technology solution this is rarely the case. Most editors or consulting business sell adhoc projects in regards of opportunities to do so with the client. On the client side fire fighting that is to solve problems on an adhoc basis, where focus is on work arounds and throwing man hours and conceive ideal solutions on paper (encouraged by most consulting companies) leaves most businesses with a poor industrialization of business and IT processes. Clients need to step up to buy a full value portfolio of services (em)powered by the purchase department (this is yet to be done) on the other side large service providers should leverage their international organisations to sell and deliver end to end solutions to their clients. This will also permit significant cross selling with an increase in the added value perceived (that will take the said actors out of the equation to compete on cost only).  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE It is due to his effort to build a solid infrastructure that David Giambruno @ Revlon has successfully turned a “we spend 80 percent of our resources to fire fight and hopefully keep the lights on” to one where 20 percent of the resources are spent on the run and 80 percent on how to deliver effective solutions to the business. Instead most IT departments are IT centric and focus on project management or to roll out frameworks (that have a specific function) to build business strategy. Once the “happy few” certified have managed to talk the IT Executive management in to how important it is to impose an excellent project management tool brought forward to develop software, or manage the IT architecture or how to ensure that IT and Business Processes are managed and controlled to build the IT Strategy we then feel obliged to adapt how the business side is run to fit to this world view and deliver to the needs of the business.. Agile is only the latest methology to suffer “the one methodology fits all dilemma”. I have over the last years encountered a number of CIO’s that tried to apply Agile to build the IT Strategy and run the IT department. Agile is an excellent tool to ensure capability delivery and effective project management and product delivery within the frame of software development. Where I do agree with the principles of a more “adaptive” approach to IT Strategy development spelled out in http://deloitte.wsj.com/cio/2012/05/24/an-agile-approach-to-it-strategy/ I believe it is important to keep the methodologies apart and focus on business objectives not to confuse your business stakeholders. Value Innovation, that is Differentiation and Cost! If apple inc is one of the highest valued business it is because the deliver best in class technology but above all due to the fact that they deliver a superior customer experince at the right cost to value. Michael Porter (http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1) identified competitive advantage by differentiation or cost. The value equation norm in the industrial world has since become differentiation and cost . The IT department as provider of services can no longer focus on one or the other. Standardisation both from a service and process perspective is a must. Each business is unique but the processes used to deliver to business objectives are to 80% the same across sectors. Within manufacturing standardisation is key, the IT department should move down the same path. If Salesforce.com or box.net, Oracle and SAP can deliver cross industry and sector we need to define the amount of “tailor made” that we are ready to pay for and how “Agile” do we need to be? To manufacture a product or build a building we specify the description to the needs of the client, deliver a blue print and produce / build. Changes in the production are costly, yet this is the very basis for “Agile” reason why most IT Contractors would not accept a set cost frame for a contract  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE clients consume which product / service at a specified quantity and subsequently be billed for their consumption (nor how you will finance the future run and build)? This is however the reality for most CIO's! The focus of a servicebased model is to demonstrate how IT Delivers Value to the business, that is delivers services to business needs (cost effectively, or at least at a specified cost rate that permit to take qualified decisions) over time with an effective IT Business Model and Value Proposition. We see Total Cost of Ownership (TCO) as the corner stone to move further from "IT generates to much cost" where we can demonstrate who consumes what services (and should subsequently pay for what they consume) to obtain the means (investments) and ends (budgets). To run a cost effective IT Operation that delivers to business expectations and leverages the execution of the set strategy (1) you would need to build a clear IT Service Strategy (what services do we deliver to the business) with Total Cost of Ownership per user with: cost (how much does each service cost), consumption (how much does the individual user consume) and chargeback (consumed services are allocated "charged back" on an effective cost basis to the business units) (2) in order to be able to provide the means (necessary investments) and ends ( budget). With the right support (best in class technology) this can be done in weeks with a top down (General Ledger), Bottom Up (effective cost) (3) analysis and tied to the roll out of an IT Service Strategy (that drives an end to end roll out of ITIL V 2/3 logics). Most CFO's understand a well concieved business plan (IT Service Strategy), with a clear Value Proposition (What services do we deliver) and Business Model (how do we deliver the depicted services to our potential clients) and know that to generate productivity improvement you need to invest. Our experience is that where some clients underconsume services due to a non effective cost allocation model other heavy users tend to overconsume services and do so the more willingly as they do no not pay for their consumption (are not charged back). An allocation model based on delivered services will hence accord the CFO to deliver a coherent financial model based on effective consumption and reflect user behaviour. Most IT Financial Management solutions tend to "massage" the general ledger and do not provide an effective integration to the IT Service Strategy over time. As a result they do not provide cost transparency on an ongoing basis, nor do they deliver to the above set objectives. You need to pull together an end-to-end perspective of IT Spend to: - Present a full granular IT Financial Management Model and "as a service”, - Align Project Spend with Service Spend, - Provide a transversal view that is an IT sub ledger that break out cost, consumption, show - / chargeback not only a “macro perspective”, Efficiency of each Service, - Leverage / consolidate the initiatives that you have already put in place, - Optimise the service portfolio as we identify opportunities to remove unused services (licenses) incremental cumulation, the time of the “silver bullet magical solutions” is over (if it ever existed), and take decisions based on economical logics and business needs rather than the “fad” of the moment,  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE He also clearly indicated that where the logics spelled out in ITIL are excellent they are are a minimum requirement to build an effective IT Strategy to the needs of the business where the perspective has to be completed with a Design (Demand and Supply) and Build (supported by IT processed with clear KPI’s) phase to tie the strategic value piece with the operational elements of IT service delivery. “We are able to get the business hooked on new services and products as we actively propose new solutions to the business to leverage competitive advantage and keep the run in perfect shape. But the role as “gatekeeper of technology” to create business value can only be valid as the infrastructure runs smoothly. We have shifted the focus of to use 80 % of the budget for workarounds and fire fighting the keep the lights on and 20 % to propose new solutions to the business to an opposite 80 / 20 where 80 % of the budget is used to enhance the capability of the business where the bottom line is to drive growth for Revlon. Where the logics spelled out in ITIL are excellent they are are a minimum requirement to build an effective IT Strategy to the needs of the business where the perspective has to be completed with a Design (Demand and Supply) and Build (supported by IT processed with clear KPI’s) phase to tie the strategic value piece with the operational elements of IT service delivery. This is where I see a clear advantage to leverage “Deliver Business Value with IT! - Design, Build and Run Effective IT Strategy execution to business needs”. When a fire destroyed one of Revlon’s factories in Venezuela in June 2011, operations at that location were quickly brought back up and running in New Jersey within 15 minutes and the team was able to restore operations. The business never noticed as we leveraged the internal cloud, which now supports a range of missioncritical apps and associated data this would include ERP, manufacturing, warehousing, business intelligence. Disaster recovery and business continuity are just one aspect of the benefits companies are leveraging from the private cloud where the bottom line is simplicity. Revlon has 531 applications that run on its internal cloud, which supports roughly 15,000 automated application moves a month, and 14,000 transactions a second, Over 90 percent of our corporate workload sits on our internal cloud, and it runs most of our footprint globally. The cloud ecosystem has delivered the ability to say yes and get more done faster, better, cheaper. What triggered Revlon’s cloud move? The company went through a server refresh, and chose to only replace 20% of its hardware resources. The remaining budget would go into private cloud technologies, such as VMWare. The first step was a storage area network in which data was pooled across enterprise hardware. The second step was to put applications on it. The approach was incremental a crawl, walk, run strategy to gradually introduce the cloud to the enterprise. We did not spend more we changed how we spent our money. Revlon was also able to take charge of its own disaster recovery. We internalized our DR. As we reduced  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE have not been effectively adapted to the execution of the IT Strategy. The Balanced Scorecard by Kaplan and Norton that I have to some extent addresses earlier is one, The Blue Strategy Ocean by W. Chan Kim and Renée Mauborgne is another. Though the approaches were developed for the execution of the business strategy they can effectively be used to ensure that the IT Strategy support the Business Strategy. In short a Blue ocean is a new market created as we innovate and redefine value in regards of the perception of the customer / client. Where technology can be an accelerator value innovation is inherently linked to the customer value perception and can be delivered by both established players and new entrants (start ups). New markets created by established players are usually situated within their core business. Long standing excellence is rare but a brand name and a large treasury and the ability to create new market space is key to deliver industry growth and profit. Key questions are: How attractive is this industry, as existing player what should your strategy be to achieve profitable growth, If you are not in this marketplace should you enter, If yes, what should your strategy be? How can we make the competition irrelevant and create new demand, Do we want to segment or de-segment the market, Do we focus on the competition or on alternatives? Eliminate, Reduce, Raise, Create is one of the techniques used to understand which feature of a service is valued by the client / customer where cirque du Soleil, Swatch, Apple, DuPont, IBM are examples of companies that have created / defined new markets to meet the needs of the customer / client and that can successfully be deployed within an IT context. “Blue Ocean Strategy” illustrates what the authors believe is the best organisational strategy to generate growth and profits. Blue Ocean Strategy suggests that an organisation should create new demand in an uncontested market space, or a "Blue Ocean", rather than compete head-to-head with other suppliers in an existing industry. The first part presents key concepts of blue ocean strategy that would include Value Innovation – the simultaneous pursuit of differentiation and low cost – and key analytical tools and frameworks such as the strategy canvas, the four actions framework and the eliminate-reduce-raise-create grid. The second part describes the four principles of blue ocean strategy formulation: how to create uncontested market space by reconstructing market boundaries, as we focus on the big picture, reach beyond existing demand and get the strategic sequence right. These four formulation principles address how an organisation can create blue oceans as we look across the six conventional boundaries of competition (Six Paths Framework), reduce planning risk by following the four steps of visualizing strategy, create new demand as we unlock the three tiers of noncustomers and launch a commercially-viable blue ocean idea as we align unprecedented utility of an offer with strategic price and target cost and by overcoming adoption hurdles. “Blue Ocean Strategy” looks across industries to demonstrate how to break out of  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE sales, marketing, R & D) and the importance of to produce a customer journey map and prototype. Each time I perfom the exercise it hits me how often the “Tadaa” moment turns in to the “Uuh” (translated in to that they did not get it) moment during the delivery of an IT project / IT strategy delivery. But rest assured this would also be valid for strategy, marketing, production, R & D, Sales and Delivery. Within the exercise we demonstrate how IDEO with a simple customer jurney map (day in the life of) formalised, modelised (prototyped if needed) and validated by the client permit significant improvement in effectivenes (that is productive and efficient) and the customer perception of the experince (in this case Amtrac and the General Portland Hospital). The objective is to address the actual health care service, the patient and staff experience of the service and then define the ways it could be improved. The developpment of what became IDEO Project Journey was key in this success. Step 1 - Observe: Try to define and map the different health care segment (surgery department, waiting room…) of the hospital/health care service. Collect feed-back from different patients/staff members of each segment (then make a statistical survey, with both quantitative and qualitative information about the service and give a mark to each segment). Rank the grades and select the segments that obtained the worst grade. Experiment the journey of a patient in those specific segments (use shadowing, interviews…). Step 2 - Synthesize: Confront the patient and the staff point of views of each segment in the health care service (use a unique support like a board to give a synthetic view). Carry out a « typical patient journey » for each segment selected. Step 3 - Generate Ideas: Allow patient and staff members to post ideas of improvement or suggestions in a box available in the hospital. Brainstorm with the staff. Step 4 - Refine: Realize a quick prototype for each main idea. Test the prototypes with staff members and patient to analyze what could be quickly improved. Give a provisional budget for each main idea. Step 5 - Implement: Implement the ideas that suit to the budget constraints. Implement the ideas collaborating closely with the staff. Inform staff and patients of the undergoing change. Be receptive to direct feedback. If I now describe what can happen in an IT project (all examples are fictional, for educational purpose and any similarity to a real IT project would be coincidental). Phase 1. - To support business processes and enhance the customer experience we: (this is where we tie back to the IDEO project journey): Step 1 - Observe: (Context A) A vendor of a process modelisation tool manages to convince the business or IT executive team that to provide a modelised version of  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Not half that bad case scenario: We bring in a Top 3 or Big 5 to perform a change excercise (preferable a very long slide deck of .ppt that if not produces nausea or panic puts the subject (participant) out (commonly called death by powerpoint) from exhaustion. The presentation should idealy be based on example of a project put in place for the production in a tooth paste / car factory (not our domain). If possible with a reorganisation so that a task that previously took 3 days now take 5 or 10. We cross our fingers an hope that the green light red light chart now will produce the desired effect. Worst case scenario: We bring in a Top 3 or Big 5 to help management understand how important it is for IT not to be a support function. Executive management is brought in (down from their ivory tower) and walk the floor and participate in a IT strategy workshop. This is often resumed to a quick walk past a few desk and then in to a war room where an entusiastic team of IT leaders, personel (convoqued by the stategy consultants engaged) are to demonstrate how important it is for the company to have IT. A good intention turns in to a strategy exercise (that the Executive Team has no desire to perform let be told how to do strategy by the IT team) on a brown paper. In a Worst worst case scenario: the consultants bring out finger paint and the Businees executive finds himself with green paint on his tie or suit and now sees red. Really bad case scenario: The consultants have organised an excercise for the IT team to solve the problem that end users do not get it when solutions are delivered and tend to interupt the reflections of the IT team. The obvious solution would be to exclude end users from any contact with the IT team and set up an answering machine with no possibility to leave a message as they have problems. Since the business consulting lead did not fel convinced, he managed to convice the IT Director to present the conclusions in front of the board. After all this was the conclusions of his team, and an all in IT initiative would have so much more credibility. Phase 3. - The Big Change: As the business excecutives are a bit stingy and as the green light red light chart still does not do the charm we once more decide to bring in a Top 3 or Big five (preferably the same as earlier). We decide turn the situation around an in order to do so we will not do thing half way and go for a Big Change. Best case scenario: We engage a top 1 team of consultants, that will manage a top 2 team of consultants, that will in turn manage a top 3 team of consultants to deliver change and new revolutionarry projects to be presented to the board. A transversal Big Change programme is announced and consultants from the top 1, 2 and 3 consulting companies an invited and provided with the possibility to bring in new ideas. The business, IT and endusers are not consulted and business is delivered as usual. After a year or so the conclusions of the programme is delivered, the cover looked smashing but we did not have the time so we put it (burried it) in a drawer for a moment where we would have more time on our hands. Worst case scenario: We read this really good article by the guy who used to be the top hen for IT for the US government that decided to chuck IT out to the cloud not to have to run an IT department and IT resources (By the way I wonder why he stayed for such a short time before he went on to evangelise the cloud for salesforce). I  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated. The IT Bottom line is that up to 40 % of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities and demonstrate that the current Business Model is supported effectively. The IT department should facilitate the access to IT services to support new and current business initiatives. The business strategy emerge out of a number of initiatives that are successful or not. The IT department need to support the “Run” of day-to-day operations as well as new projects. The Cloud might particularly be of interest within this frame. We believe that in order for the CIO and the IT Department to position as premium provider of IT services and focus on value to cost we need to understand the Business (IT) Strategy and how the IT department can deliver effectively to business objectives, that is to deliver business value with IT: - What is the Business’s strategy and plans? , - What is the current business model that IT has to support? ,Where could IT make a significant impact on the business? ,- Are there any further opportunities to use IT? , - How do we provide IT Services as we meet demand and cost drivers where the decision is to make (internal) or to buy (external service provider)? COBIT 5 (ValIT, CobIT 4.1, RiskIT), ITIL, CMMI, IT-CMF are excellent frameworks to ensure that business and IT processes focus on to deliver business value, to implement a framework is as absurd as to try to roll out a dictionnary. Pick and choose the bits and pieces that apply to your business. Business focused technology can be a make or break factor as we innovate or reinvent a brand and business model Business focused technology can be a make or break factor as we innovate or reinvent a brand and business model. Angela Ahrendts for Harvard Business Review: “When I became the CEO of Burberry, in July 2006, luxury was one of the fastestgrowing sectors in the world. With its rich history, centered on trench coats that were recognized around the world, the Burberry brand should have had many advantages. But as I watched my top managers arrive for our first strategic planning meeting, something struck me right away. They had flown in from around the world to classic British weather, gray and damp, but not one of these more than 60 people was wearing a Burberry trench coat. I doubt that many of them even owned one. If our top people weren’t buying our products, despite the great discount they could get, how could we expect customers to pay full price for them?” Read the full article @ http://hbr.org/2013/01/burberrys-ceo-on-turning-an-aging-british-icon-into-a-global-luxury-brand/ar/1    
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE IT provides competitive leverage As the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated in: An IT Business Model “This is how we deliver IT services to the business” and a Business IT Value proposition “This is how we support business objectives with services in a time to market perspective”. The Business (IT) Strategy, link to operations We Link Strategy and Operations as we Develop the Strategy, Translate the Strategy, Plan Operations, Monitor and Learn, Test and Adapt the Strategy, Execute Procedures and Initiatives. Business (IT) Tactics We Map Strategic Themes from a Financial Perspective, Customer, Process, Learning & Growth Perspective as we Create a High Performance Culture. See also http://hbr.org/2008/01/mastering-the-management-system/ar/1 Business (IT) Context We Define Market Position with New entrants, Suppliers, Substitute products or Services, Buyers, Existing Competitors. http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1 Strategy Map Captured in a Strategy Map that Formalises stakeholder outcomes to deliver value. The Stakeholder Strategy Roadmap set the scope with Objectives: - Formalise stakeholder outcomes: To deliver value for all parties (partnership), Which drives Customer value: For effective and satisfied end users, That deliver - Business processes: Speed, process innovation and growth, Executed by - Employees and organisation: Collaboration that deliver strategy execution. Strategy Canvas Articulated in a Strategy Canvas The Stakeholder Strategy Map Formalises stakeholder outcomes to deliver value for all parties. The strategy canvas allow the  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE can be increased at an affordable cost, - How actual ongoing IT cost can be tracked or organised, - How cost effective IT improvement expertise can be found, - The most effective implementation of strategy to improve effective delivery of IT services. In order to successfully deliver business value with IT we could: 1) Create a committee of stakeholders affected by the IT investment, that would include IT managers and business unit managers. 2) Define intangible benefits of the IT investment that are agreed on by the committee with flexible and effective budget process and improved decision analysis. 3) Define intangible risks associated with the IT investment that is: slow response to system change, risk of poor integration with existing systems and staff resistance to a new system. 4) Establish weights to the relative importance of the tangible benefits (the financial result), the intangible benefits, and the intangible risks of the IT investment. 5) Estimate on a scale of zero to five the likelihood benefit and risk observed. 6) The investment alternative that results in the largest sum of benefits is the preferred alternative. Make a plan and get executive support: - Build a plan to ensure that the IT Strategy support the business objectives, - Include all top-level executives and business unit heads in the plan. - Be certain to cover business technology execution, support processes, and the organisation, - Meet with the key executive stakeholders to receive input and buy in, - To strive to create a partnership. Form a steering committee: - Create an executive-level steering committee to review all business technology initiatives and projects, - Gain support from top management for the steering committee, portfolio management process, and TVO model, - Meet formally and informally to build a “trusted adviser” relationship with key stakeholders. To anchor Total Value of Ownership in to the business and IT culture we: Implement a reporting process and consistently communicate the company’s progress on key initiatives and projects to all levels in the business. - Build a culture of enterprise wide planning, - Enforce a practice of rigorous TVO prioritisation and analysis, - Make sure all business units and key stakeholders use a TVO approach to projects. Bottom line: We focus on value impact: As we focus on business objectives and processes that will have the most value impact as they are industrialised. We ensure success: A business executive sponsor and business champions is committed to the successful delivery of identified business objectives and process to be supported / industrialised. We select: The information technology was selected to best enable the process changes to generate the greatest value to the business. We deliver to the needs of the business and on target: IT and business management work together to identify and ensure the delivery of benefits. The relationship is essential to effectively support business objectives with IT (Business IT Alignment). The organisation moves from a pure cost center perspective to emphase value creation that is a profit center or investment center perspective. Managers evaluate and coordinate a portfolio of projects with an effective IT governance process. This would include for IT and business leaders to share accountability.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE In order for the CIO and the IT Department to position as premium provider of IT services and focus on value to cost we need to understand the Business (IT) Strategy and how the IT department can deliver effectively to business objectives, that is to deliver business value with IT: - What is the Business’s strategy and plans? - What is the current business model that IT has to support? - Where could IT make a significant impact on the business? - Are there any further opportunities to use IT? - How do we provide IT Services as we meet demand and cost drivers where the decision is to make (internal) or to buy (external service provider)? In our case we do this via a shared service centre that we leverage as a catalyst for breakthrough innovation in competitive IT services where the objective is to become the premier shared services provider as we deliver exceptional customer experience (both from a service delivery and cost perspective) and address the “challenges” of a 21st century service centre. We promote a continuous competitive market position as we deliver cost effective (productive and efficient) IT services to business needs that spur operational excellence: provide economic value, support open capital investment that allocate resources to the most promising ideas / solutions, encourage effectiveness (productive and efficient) and innovation for operational excellence, - promote and support communities of innovation and culture. To do so we invest innovatively as we: recruit, retain, and develop competent staff, build and sustain agile infrastructure and processes, build dynamic adhoc teams to foster ideas and implement innovation, - encourage and promote enterprise solutions that improve effectiveness (productive and efficient) across functional disciplines, proactively suggest new ideas and new solutions, - promote better business (LoBs) University, and Industry partnerships to spur ideas and innovation to, - leverage emerging technologies and innovation to deliver premier services. To deliver effective Business and IT services supported by EA (Enterprise Architecture): There are numerous EA frameworks: TOGAF, DODAF, FEAF, Zachman that provide guidance to implement EA to business needs. Government and the private sector have spent millions of dollars with long life cycle to develop their EA programs and yet we still struggle to identify short term added value / result to the Business. On the other hand, technologies have changed rapidly and the business has to react quickly in order to beat competition. Numerous companies have started to build their EA program in order to support the business / Lines of Business (LoBs) but few have seen immediate result / business value with their EA program. A program must have both short and long term strategy in order to show immediate value to the business / LoBs. I also believe that the mentioned frameworks must change in the future in order to accommodate new emerging technologies and the need for business agility. We must be able provide business value in a short time frame. We need to focus on the area of the architecture that can provide short term business solutions and result. Many architecture practitioners face challenges of where to begin  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE To deliver business value with IT we need to Focus on the Business Bottom Line: How fast can we get our products and services to market “Time to Market” & how can the IT department support the business from a Cycle Time and Cost Effectiveness perspective. The IT Bottom line is that up to 40 % of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities and demonstrate that the current Business Model is supported effectively. The IT department should facilitate the access to IT services to support new and current business initiatives. The business strategy emerge out of a number of initiatives that are successful or not. The IT department need to support the “Run” of day-to-day operations as well as new projects. The Cloud might particularly be of interest within this frame. IT must be responsible for profit and loss from a business perspective and be managed like a business. The fact is the technology will play a bigger role in order for business to thrive in the future. The level of implication of IT varies as it depends on the nature of the business. The more the business rely on technologies the more the business needs to include technology as a part of the business strategy. We believe that in order for the CIO and the IT Department to position as premium provider of IT services and focus on value to cost we need to understand the Business (IT) Strategy and how the IT department can deliver effectively to business objectives, that is to deliver business value with IT: - What is the Business’s strategy and plans? , - What is the current business model that IT has to support? ,Where could IT make a significant impact on the business? ,- Are there any further opportunities to use IT? , - How do we provide IT Services as we meet demand and cost drivers where the decision is to make (internal) or to buy (external service provider)? We have identified 2 key trends for the CIO to focus on: - Differentiation (That is, how does IT provide a competitive advantage for the business), and - Cost (How does the IT Department deliver IT Services cost effectively). To do so we need to Build an effective IT Delivery Model to meet business needs and expectations as we leverage business strategy execution and business processes supported by an IT Service strategy (ITIL, IT – CMF, COBIT 5 (ValIT, CobIT 4.1, RiskIT), ISO 38 500, TOGAF and ISO 9001, ISO 27 001, COSO) delivered in a Business IT roadmap; that is how do we support business objectives and processes leveraged by IT and an effective IT Services strategy. Within this scope we would by definition address how we execute the IT service strategy (ITIL) Design - Spell out IT Activities from a demand and supplier side, Build - Set IT processes and key performance indicators, Run - Aligned to described ITIL activities and processes and full IT Financial Management (supported by delivery capability IT CMF, COBIT 5). Once services defined we can then decide where to run the application that support the IT and or Business Services (server / internal / external cloud / outsourced provider). Within the frame of an acquisition up to 80% of the value realisation is (can be) on the IT side. The failure to address IT and the IT strategy can be an additional (1 out of 3) reason to M & A failure.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Within this context I believe that a new notion and function will have to be introduced, the IT department as effective broker of services (cost effective and that meet demand drivers). Where most IT department perform well, some decisions are still based on “gut feeling” or external pressure from executive management influenced by vendors / management consultants “as a strategy of survival” rather than on fact based logics. “Time to Market” – The notion of time to market is critical within the context of a business. The delayed launch of a product might erase up to 70% of potential earning (the rest is evaporated by the cost of the resources absorbed to solve the problems that delayed the launch). “Time to market” can be applied to the context of the IT department 1) in the frame of how well do we set up a new service (bundle of application with a coherent architecture) 2) How well do we support the business to launch a new service / execute the business strategy supported with IT (when needed). “To Cloud source” – Cloud computing is the result of 2 trends*. 1) The survival of salesforce.com (that is to outsource data in an application that we have decided not to buy / run on an internal server) 2) the decision of amazon, google and other cloud (external storage space) providers to leverage their capability to buy and run server parks more effectively then an IT department would / could (external cloud). A decision to run applications on a server outside the firewall can be motivated by cost or demand (time to market) where an architecture and applications are set up to rapidly respond to the needs of the business. The “service bundle” can then either be brought inside the firewall and run on an internal cloud or continue to run on the cloud provider’s server (outside the fire wall). The private cloud: We leverage the Private (internal) Cloud, as an internal provider perform process execution and the applications (bought or leased (Software as a Service (SaaS)) run on one or several mutualised servers inside the firewall) sit on an internal (private) cloud. The public cloud: Salesforce.com is one of the few survivors of the first internet wave where one of the major ideas targeted towards the B to B market was to facilitate the ERP court for enterprises where independent providers would run ERP blocs such as CRM for the client where the data would reside outside the firewall in the providers application. This solution is excellent for enterprises that do not wish to invest in an application and infrastructure that would provide a similar service internally. Google has over the years enhanced their portfolio of application that run on their servers where individuals can use an email function (Gmail) to drive trafic to their search engine. This function was later made available to enterprises together with an office suite and google +. As Amazon (and Google) have become highly effective over time to negotiate storage space they at one point decided to leverage this ability to procure and run storage space less expensively available to individuals and enterprises. The principle is to provide storage space and services (Infrastructure as a Service (Iaas), Platform as a Service PaaS, Sofrtware as a Service (SaaS) outside the firewall on which the enterprise can run applications (in an architecture as a bundle of services). The public cloud can be used to either leverage cost or to rapidly develop new application architectures that can then continue to run on a public cloud or be  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE The fact that we often find a significant amount of the IT Spend hidden in the budgets of the Business Lines might give a hint. The international COO of a multi B€ business that I recently spoke to put it bluntly “if the internal IT Department can not deliver to our needs, they should at least get out of the way”. In order to deliver effective Business (IT) Alignment you need to leverage best in class technology (on paper compliance is not enough). The frameworks should be a point of reference and only the bits and pieces applicable and useful for the business should be rolled out (but you need to understand which framework represent which perspective and how to leverage the latter) and above all focus on stakeholder expectations! Step 1) Define the services that the IT department deliver to the business with total cost of ownership (TCO) with cost, consumption and chargeback. Cost – This is often where you would get the WOW, we did not know that we spend this much on IT from the executive management. Consumption – most IT departments suffer from the overconsumption of users that are not willing to pay for what they consume hence the importance of coherent chargeback based on factual cost of the delivered services. TCO is also the base to qualified selection of cloud sourcing / outsourcing partners. Step 2) Capture the “IT Business Model” that is “This is how we deliver IT services to the business” in the IT Service Catalogue, Step 3) and the “Business (IT) Value Proposition” “This is how we support business objectives with services in a time to market perspective” in the Business Service Catalogue. Our experience is that where IT is perceived to fail to deliver to business expectations the “IT Business Model” (“This is how we deliver IT services to the business”) and “Business (IT) Value proposition” (“This is how we support business objectives with services in a time to market perspective”) is often broken or nonexistent (demand and cost drivers not understood or not communicated well enough). At the end of the day, business executives take the decision to outsource / cloud source when: - IT is not perceived to understand stakeholder expectations, IT is not perceived to contribute to business objectives, IT is not perceived to deliver value to cost, IT is not perceived to deliver services to business needs, The service is a commodity and cost is the primary driver - The IT department is unable to deliver in a time to market perspective  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Cost, Consumption & Chargeback is identified, Focus is on perfect order business transactions, Services are effective (demand and cost drivers identified), Services are competitive (Benchmark Industry Market Forces) and New technological solutions that could change how current business is performed are explored, proposed and implemented. The demand and cost model is clear and long term risk / benefits are established We have identified the following critical success (benefit) / risk factors: - Total cost of ownership - Does the initiative support business objectives: - Cost is the primary driver, - Demand is the primary driver - Capacity is adapted to need & price is scalable as business in(de)crease - Peak loads can be absorbed with little impact on performance and response time - Ability to audit metrics used by the provider to calculate the utility price - Version upgrades and migration are transparent (cloud, hosted provider) - Licensing of applications is clear & Interoperability ensured (cloud, hosted provider) - As we break services out, how do we manage data integration - Re integration of data if we decide to insource / change outsourcing partner - How do we recuperate data / applications if the outsourcing partner is attacked / goes out of business (cloud, hosted provider) Total Cost of Ownership To establish an effective IT Business Model you need to perform an in depth analysis of business needs to understand Total Cost of Ownership with Cost, Consumption and Chargeback. IT Cost is spelled out - What are my IT assets and what do they cost? - What are my IT resources and what do they cost? - What services do I provide to the customer: - What do these services cost? - What was their intended value proposition? - What is the quality of the service delivery? - Who consumes the IT services:  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE With Vision, Principles and strategy: Strategic Intent: set by the Board, Executive Management, Business operations management with objectives on a: Strategic, Tactic & Operational level. Strategic Intent: Product / service life cycle management: Interprets, models and articulates the strategic intent in to business strategy. Business Strategy: Process based Enterprise Architecture: Interprets, models and articulates the business strategy and ensures capability. Business & IT objectives: Project Portfolio Management: Interprets, models and articulates the business objectives and ensures capability. IT Strategy: Process based IT governance: Levers formulated operating processes with best in class IT solutions. Aligned on business requirements: Service Portfolio Management: Levers formulated operating processes with portfolio management. Software Asset Management: Application Portfolio Management: Levers formulated operating processes application portfolio management solutions. Infrastructure Asset Management: IT Infrastructure Portfolio Management: Levers formulated operating processes with IT infrastructure portfolio management. We Design, Build and Run the IT Service Strategy We Design, Build and Run the IT Service Strategy as we spell out IT Activities from a demand and supplier side (Design), Set IT processes and key performance indicators (Build): Manage the Business of Information Technology, Develop and Manage IT Customer Relationships, Manage Business Resiliency and Risk, Manage Enterprise Information, Develop and Manage Information Technology Solutions, Deploy Information Technology Solutions, Deliver and Support Information Technology Services, Manage IT Knowledge. Aligned to described ITIL activities and processes with full IT Financial Management (Run). Define “to be” state with established KPI’s: - Articulated, - Key Performance Indicators, - Cycle Time, - Cost Effectiveness, - Corporate Contribution, - User Orientation, - Operational Excellence, - Future Orientation. Articulated from a Cost Effectiveness and Cycle Time perspective where IT Business Drivers & Processes are clearly spelled out: Manage information technology: To Manage the Business of Information Technology we: Develop the enterprise IT strategy, Build strategic intelligence, Identify long-term IT needs of the enterprise in collaboration with stakeholders, Define strategic standards, guidelines, and principles, Define and establish IT architecture and development standards, Define strategic vendors for IT components, Establish IT governance organisation and processes, Build strategic plan to support business objectives, Develop and Manage IT Customer Relationships, Manage Business Resiliency and Risk, Manage Enterprise Information, Develop and Manage Information Technology Solutions, Deploy Information, Technology Solutions, Deliver and Support Information Technology Services, Manage IT Knowledge.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE content management" per €1,000 revenue, - Systems cost of the process "perform enterprise data and content management" per €100,000 revenue, - Personnel cost of the process "develop and maintain information technology solutions" per €1,000 revenue, - Systems cost of the process "develop and maintain information technology solutions" per €100,000 revenue, - Personnel cost of the process "deploy IT solutions" per €1,000 revenue, - Systems cost of the process "deploy IT solutions" per €100,000 revenue, - Personnel cost of the process "deliver and support IT services" per €1,000 revenue, - Systems cost of the process "deliver and support IT services" per €100,000 revenue, - Total cost of the process "manage the business of IT" per €1,000 revenue, Total cost of the process "develop and manage IT customer relationships" per €1,000 revenue, - Total cost of the process "manage business resiliency and risk" per €1,000 revenue, - Total cost of the process "manage IT knowledge" per €1,000 revenue, Total cost of the process "develop information and content management strategies" per €1,000 revenue, - Total cost of the process "define enterprise information architecture" per €1,000 revenue, - Total cost of the process "manage information and IT knowledge resources" per €1,000 revenue, - Total cost of the process "perform enterprise data and content management" per €1,000 revenue, - Total cost of the process group "manage enterprise information" per 1,000 revenue, - Total cost of the process "develop and maintain information technology solutions" per €1,000 revenue, - Total cost of the process "deploy IT solutions" per €1,000 revenue, - Total cost of the process "deliver and support IT services" per €1,000 revenue, - Total IT cost per €1,000 revenue. Corporate Contribution (Key Performance Indicators): - Control of IT expenses percentage, over or under IT budget, allocation to different budget items, - IT budget as a percentage of turnover, - IT expenses per staff member, - Business value of the IT function percentage of the development capacity engaged in strategic projects relationship between new developments/infrastructure investments/replacement investments, - Business value of new IT projects financial evaluation based on ROI, NPV, IRR, PB business evaluation based on information economics. User Orientation (Key Performance Indicators): - Preferred IT supplier, - Percentage of applications managed by IT, - Percentage of applications delivered by IT, - Partnership with users, - Index of user involvement in strategic applications, - Applications index of user involvement in developing new applications, - User satisfaction, - Index of user friendliness of applications, - Index of user satisfaction Process Management. Operational Excellence (Key Performance Indicators):  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Address Critical Success Factors How do we: - Deliver services to the needs of the business on target in a “Time to Market” perspective (Business (IT) Value Proposition) and demonstrate contribution, - Conduct a constructive budget dialogue with the business: Total Cost of Ownership (TCO) with Cost Consumption and Chargeback / Showback, - Build and run an effective IT Business Model to Best Practice Frameworks. Figure 5: Deliver effective business strategy execution: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/deliver-effective-business-strategyexecution/ An IT Business Model and Business (IT) Value Proposition IT provides competitive leverage as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated in: An IT Business Model “This is how we deliver IT services to the business” and a Business IT Value proposition “This is how we support business objectives with services in a time to market perspective”. We deliver effective business strategy execution with an: (IT) Business Model “This is how we deliver IT services to the business” where IT processes (bundled IT services) are supported by applications and execute the IT Service strategy to business needs (where ITIL Spell out IT Activities from a demand and supplier side (Design), Set IT processes and key performance indicators (Build), Aligned to described ITIL activities and processes with full IT Financial Management (Run)), Delivery capability (IT - CMF, COBIT 5, ValIT, CobIT 4.1, RiskIT, where we ensure that managed processes and objectives meet stakeholder expectations, ISO 38 500 we ensure that IT has the necessary means to effectively support the business strategy), Architecture (TOGAF where business objectives are supported by business processes, a business architecture leveraged by an IT architecture and applications that sit on an IT infrastructure as needed (inside the firewall on a server or mutualised servers (internal / private cloud) or outside the firewall on a mutualised server (external / public cloud), Security (ISO 9001, ISO 27 001, COSO where business continuity is ensured by risk and control objectives). A Business (IT) Value Proposition “This is how we support business objectives with services in a time to market perspective” where Business processes (bundled Business services) are supported by applications (Develop vision and strategy, Develop and manage products and services, Market and sell products and services, Deliver products and services, Manage customer services, Develop and manage Human Capital, Manage information technology, Manage financial resources, Acquire, construct and manage property, Manage environmental health and safety, Manage external relationships, Manage knowledge, improvement and change).  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Business Continuity is ensured. Priorities from an IT Risk Management Perspective: The organisations assets and operations are protected, Key business and technology risk is effectively managed, Effective process, practise and controls are in place, We have clear security objectives to which we expect IT to deliver. Where the Bottom Line is that to leverage competitive advantage with new technology is “nice to have”, to keep the business systems running is mission critical! Figure 8: End to end industrialisation of business processes: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/end-to-end-industrialisation-of-businessprocesses/ As we meet Stakeholder Expectations Business drivers support Strategy Execution To deliver business value with IT we need to Focus on the Business Bottom Line: How fast can we get our products and services to market “Time to Market” & how can the IT department support the business from a Cycle Time and Cost Effectiveness perspective. The CIO and IT department needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. Develop vision and strategy: - Define the business concept and long-term vision, Develop business strategy, - Manage strategic initiatives, Develop and manage products and services: - Manage product and service portfolio, Develop products and services, Market and sell products and services: - Understand markets, customers, and capabilities,- Develop marketing strategy, - Develop sales strategy, - Develop and manage marketing plans, - Develop and manage sales plans, Deliver products and services: - Plan for and acquire necessary resources (Supply Chain Planning), - Procure materials and services, - Produce/Manufacture/Deliver product, - Deliver service to customer, - Manage logistics and warehousing Manage customer services: - Develop customer care/customer service strategy, Plan and manage customer service operations, - Measure and evaluate customer service operations Develop and manage Human Capital: - Develop and manage human resources (HR) planning policies, and strategies, - Recruit, source, and select employees,  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE management is yet to be broadly applied and standardised beyond classical activity based costing related to IT projects. With the introduction of COBIT 5 the notion of IT Service Delivery and the use of IT Service Management will become a standard exercise beyond helpdesk, problem and change management. The notion of the IT department as a profit centre IT Services and the cost of a services delivered by the IT department is a notion that was introduced on a broader basis with ITIL V3 and confirmed with the introduction of COBIT 5. Where the IT department traditionally account for services delivered and billed by outsourced providers, services delivered by the IT department (outsourced services included) have not been formalised and broken down in to direct and indirect cost and related to the cost, consumption and chargeback of an engaged service. Traditionally the IT Department tend to be run as a “cost centre” rather than a “profit centre” and investments tend to be technology rather than business driven. The hypothesis of this paper is then that in order for the IT department to deliver the right IT Services cost effectively, the IT Strategy need to support the business strategy and set business objectives. Furthermore the IT Department should be run as an internal profit centre where resources are considered as scarce and services delivered supported by IT financial management. In order to do so we need to identify the services delivered together with cost, consumption and chargeback of the delivered services to ensure that the business units that consume services are conscious that IT services bear a cost to avoid overconsumption of services that the business is not willing to pay for as well as a coherent repartition of cost related to the use of ERP / infrastructure services. The notion of the IT department as a profit centre focused on total cost of ownership with cost, consumption and chargeback is also critical to ensure financial resources from the business units as well as an effective use of resources deployed to deliver IT Services. Recent efforts to outsource (data) cloud source (infrastructure) needs to be supported by solid business cases with ROI and clear cost, consumption and chargeback of the billed services which is rarely the case today where invoices from outsourcers, cloud computing providers are non granular and does not provide data clear enough to distribute cost (charge) the users / business units that consumed the service. ROI and the total cost of services delivered are difficult to validate as contract conditions in regards of the cost of termination / exit that would include a secure migration of data or applications tend not to be transparent. To conclude IT Financial Management is a critical part of a successful IT Strategy and the effective delivery of IT Services. Though the notion of service delivery is supported by internationally recognised standards such as ITIL and COBIT 5 IT Financial management is yet to be broadly applied and standardised.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Figure 9: The Business Strategy is executed by IT: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/the-business-strategy-is-executed-by-it/ Business Architecture Figure 10: Confirm business vision: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/confirm-business-vision/ Confirm Business Vision: Articulate strategic intent, Business objectives, Business drivers. Figure 11: Articulate the Business Value Proposition: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/articulate-the-business-value-proposition/ Articulate the Business Value Proposition: Translate (Articulate) Business Vision to Business Architecture Vision & Business Architecture, Vision of Business Architecture “to be”: state “where we need to go”, “where we are now” & “how we need to proceed”, Architecture principles, Business principles, Technology principles, Build business case & roll out (with Roadmap). Figure 12: Deliver the Business Architecture: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/deliver-the-business-architecture/ Deliver the Business Architecture: Translate Business Architecture Vision to Business Architecture, Vision of Business Architecture “to be”: state “where we need to go”, “where we are now” & “how we need to proceed”. Figure 13: Translate the Business Vision to an IT Vision: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/translate-the-business-vision-to-an-itvision/ Translate the Business Vision to an IT Vision: Vision of IT “to be state”: “where we need to go”, “where we are now” & “how we need to proceed”, Regulatory requirements, Technology guiding principles, IT Governance guiding principles (process & organise decisions).  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Direction The business (IT) strategy is effective and Provides clear, meaningful Business (IT) Vision / Mission: as it is realistic and achievable, articulated, communicated. Defined Market Position Industry structure with New entrants, Suppliers, Substitute products or Services, Buyers (customers), Existing Competitors. Competitive Advantage There is an understanding of Competitive Positioning, Strengths and weaknesses, Strategies and relative positioning. External environment There is an understanding of the Political, Environmental, Social, Technological external environment. Customer value proposition There is an understanding of The Customer value proposition, needs, segmentation. Talent Appreciation of the implications for the strategy of Resources, Skills and competencies, Appropriate development / recruitment plans, Shared direction, Extent of buy-in to shared vision by key managers, Barriers / commitment to change, Structure of the organisation. Execution There is a understanding of the: Clarity of the IT Strategy roll out, Extent to which the IT Strategy responds to industry and competitive environment, Extent to which the IT Strategy responds to internal capabilities, Extent to which Critical Success Factors are clearly identified, the Clarity of implementation plan.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE (demand and cost drivers identified), Services are competitive (Benchmark Industry Market Forces) and New technological solutions that could change how current business is performed are explored, proposed and implemented. IT provides competitive leverage As the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated in: An IT Business Model “This is how we deliver IT services to the business” and a Business IT Value proposition “This is how we support business objectives with services in a time to market perspective”. The Business (IT) Strategy, link to operations We Link Strategy and Operations as we Develop the Strategy, Translate the Strategy, Plan Operations, Monitor and Learn, Test and Adapt the Strategy, Execute Procedures and Initiatives. Business (IT) Tactics We Map Strategic Themes from a Financial Perspective, Customer, Process, Learning & Growth Perspective as we Create a High Performance Culture. See also http://hbr.org/2008/01/mastering-the-management-system/ar/1 Business (IT) Context We Define Market Position with New entrants, Suppliers, Substitute products or Services, Buyers, Existing Competitors. http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1 Strategy Map Captured in a Strategy Map that Formalises stakeholder outcomes to deliver value. The Stakeholder Strategy Roadmap set the scope with Objectives: - Formalise stakeholder outcomes: To deliver value for all parties (partnership), Which drives Customer value: For effective and satisfied end users, That deliver - Business processes: Speed, process innovation and growth, Executed by - Employees and organisation: Collaboration that deliver strategy execution.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Acquire, construct and manage property, Manage environmental health and safety, Manage external relationships, Manage knowledge, improvement and change). The do-or-die questions boards should ask about technology In the “The do-or-die questions boards should ask about technology” (http://www.mckinsey.com/Insights/Business_Technology/The_do-or-die_questions_boards_should_ask_about_technology?cid=other-eml-alt-mip-mck-oth-1306 ) Paul Willmott raises a number of questions that well recapitualtes what we have seen in this chapter: 1. How will IT change the basis of competition in our industry? Questions to ask: - Who are our emerging competitors? - How is technology helping us win against traditional and new competitors? - How can we use technology to enter new markets? 2. What will it take to exceed our customers’ expectations in a digital world? Questions to ask: - How does our customer experience compare with that of leaders in other sectors? - What will our customers expect in the future, and what will it take to delight them? - Do we have clear plans for how to meet or exceed their expectations? 3. Do our business plans reflect the full potential of technology to improve our performance? Questions to ask: - Has the P&L opportunity and threat from IT been quantified by business unit and by market? - Will our current plans fully capture the opportunity and neutralize the threat? - What is the time horizon of these plans, and have they been factored into future financial projections for both business and IT?  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE the right incentives? 8. Are we comfortable with our level of IT risk? Questions to ask: - Do we have a comprehensive understanding of the IT risks we face? - How is our level of IT risk measured, and is it aligned with the company’s overall risk appetite? - How are we reducing our IT risk on an ongoing basis? - Who is responsible for overseeing the level of IT risk? 9. Are we making the most of our technology story? Questions to ask: - What are the key messages we should communicate? - How, when, and to whom should they be communicated? To conclude The CIO and the IT Department need to position as premium provider of IT services and focus on value to cost. In order to avoid the "do we really need a CIO and IT department to bother us with technology when we can use the cloud?" the CIO has to ensure that the business strategy and business objectives are supported by IT (from a Business and IT architecture perspective). Where the IT Strategy support Strategy execution, "Time to Market", Cost Effectiveness and stakeholder expectations from an Executive, Business Unit, IT Management and IT Risk Management perspective. To deliver business value with IT we need to Focus on the Business Bottom Line: How fast can we get our products and services to market “Time to Market” & how can the IT department support the business from a Cycle Time and Cost Effectiveness perspective. The IT Bottom line is that up to 40 % of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities and demonstrate that the current Business Model is supported effectively. The IT  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE management, business line management, IT management and IT risk management perspective. The CIO and IT department needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. The CIO and IT Department that sit around and wait for the Business Strategy to be formalised to build an IT strategy and vision might not make the 18 months magic mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated. Chapter 5. Cloud computing thunder or lightening? How to draw the fluff out of the cloud and effectively support business objectives with IT. The material in this chapter is developed to provide pragmatic guidance on how to develop and execute your IT Strategy with effective “Cloud” Sourcing (Computing) to support the Business Strategy and Business Objectives. Please find an actionable story board format designed to permit you to flick out the slide set on a pad / smart phone / lap top and start to share with your CIO, Executives and Board on the spot. @ Get Your Cloud Strategy Right https://flevy.com/browse/business-document/get-your-cloud-strategy-right-286/ref=mpalmgre This is an introduction to the subject with a full version to be published on a stand alone basis. See also “Get your cloud strategy right” http://www.brighttalk.com/community/it-service-management/webcast/534/29211 as well as “Cloud Computing: Fluff or Lightening?” http://www.brighttalk.com/community/it-service-management/webcast/534/21892 How to get your Cloud Strategy Right! Cloud computing (cloud sourcing) is now a part of the IT strategy landscape and an understanding of how to leverage the "cloud" will become prerequisite for decision makers both on the IT and the business side. We will provide the necessary tools to  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Make or Buy In both cases defined services are supported by applications and an infrastructure that can be either bought or leased “as a service” where the service (with underlying processes) is executed by the business as opposed to a “classical” outsourcing model where the outsourced services / processes are executed by a provider. To cloud is a decision to outsource The public cloud: Salesforce.com is one of the few survivors of the first internet wave where one of the major ideas targeted towards the B to B market was to facilitate the ERP court for enterprises where independent providers would run ERP blocs such as CRM for the client where the data would reside outside the firewall in the providers application. This solution is excellent for enterprises that do not wish to invest in an application that would provide a similar service internally. Google has over the years enhanced their portfolio of application that run on their servers where individuals can use an email function (Gmail) to drive trafic to their search engine. This function was later made available to enterprises. As Amazon (and Google) have become highly effective over time to negotiate storage space they at one point decided to leverage this ability to procure and run storage space less expensively available to individuals and enterprises. The principle is to provide storage space outside the firewall on which the enterprise can run applications (in an architecture as a bundle of services). The public cloud can be used to either leverage cost or to rapidly develop new application architectures that can then continue to run on a public cloud or be brought in house to a server or a bundle of servers (private cloud). Where the needs of the business and the business strategy should drive the IT Strategy, the IT Department can leverage the business strategy with an effective IT Service Strategy that would spell out how the roadmap for how the IT Department will cost effectively run the IT Function but also how to support the business function. Leveraged by a Cloud Business Model - Is the initiative political or Business Case driven (TCO with Cost, Consumption and Chargeback)? - How do we support IT (IT (service) Strategy, Delivery Capability (Governance), Architecture and Security) and Business objectives and processes - Are investments demand and / or cost driven and how do we support new business initiatives - If we start with mail and infrastructure how do we make the services available  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Opportunity: when the initiative support the business strategy - Threat: The initiative is disconnected from business needs and technology centred only, System failure, security breaches, lock in (contract), cost of exit - Lessons learned: the imperative of a solid Business Case with a focus on TCO Trends: from Cost to Differentiation (Demand) and Cost, aggregation of services Google apps, Salesforce.com Make or Buy We make (provide IT services internally) when the service provides a competitive advantage, can be provided to a lesser or equal cost or legal constraints impose data control. We buy (provide IT services externally) when the service does not provide a competitive advantage and the services can be acquired for a lesser cost externally. In the case of an external Cloud the setup of a service on an external infrastructure (PaaS (Platform as a Service), IaaS (Infrastructure as a service) can shorten the “Time to Market” that is the time needed to deliver the service (application or bundle of applications) to the client. The application can then be brought to an internal cloud (or server) or continue to run on an external cloud as needed. We leverage Hosted Applications, as the application is contracted and sit on a provider internal /external Cloud with the application provider (Gmail, Google Apps for Business, Google + Salesforce.com, dropbox). The provider performs some form of services (infrastructure, security, maintenance, upgrades, helpdesk) but there is no business process execution. As we meet Stakeholder Expectations Business drivers support Strategy Execution To deliver business value with IT we need to Focus on the Business Bottom Line: How fast can we get our products and services to market “Time to Market” & how can the IT department support the business from a Cycle Time and Cost Effectiveness perspective. The CIO and IT department needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. Develop vision and strategy: - Define the business concept and long-term vision, Develop business strategy, - Manage strategic initiatives, Develop and manage products and services: - Manage product and service portfolio, Develop products and services, Market and sell products and services: - Understand markets, customers, and  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE As we Source internally Process execution and delivery is performed by an internal provider. Applications can be bought / leased (SaaS) and sit on a server, an internal (private) or external (public) cloud. We In source as we take a decision to internally source a service that was previously outsourced. Shared Service Centre A Shared service centre is put in place to optimise cost and competency. Process execution is performed by an internal provider and the applications can sit on an internal (private) or external (public) cloud. Subcontract We Subcontract to perform punctual tasks delivered by an external provider but there is no process execution. Source externally (Outsource) We Source externally (Outsource) to perform the execution of a process that can be manual or industrialised with IT. Delivery is performed by and external provider. The client data sit on the provider’s servers (provider internal cloud) or on a hosted application (provider external cloud / Hybrid). Public (external) Cloud We leverage the Public (external) Cloud, as an internal provider perform process execution on an external (public) cloud provided by a “storage provider” such as Google, Amazon and the applications (bought or leased (Software as a Service (SaaS)) run on one or several mutualised servers outside the firewall) on a public (external) cloud that is run by a cloud provider. The latter deliver a bundle of services (Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Software as a Service (SaaS) outside the firewall on which the enterprise can run applications (in an architecture). Trends have over the last 12 months seen the evolution of a hybrid Cloud Model that can be defined as an outsourced provider that runs applications on a provider external cloud. The higher up the cloud stack you go (IaaS->PaaS->SaaS->BPO), the greater the value delivery possible, but also the higher lock-in potential. Software as a Service (SaaS) Software as a service sometimes referred to as "on-demand software", is a software delivery model in which software and associated data are centrally hosted on the  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE We run software that we have bought (built) or leased (SaaS) on an infrastructure (IaaS) that we lease that run on a provided platform (PaaS) that we lease. • Bought (Built) Software • SaaS • Iaas • PaaS Hosted Applications such as Google apps, salesforce.com, SAP SMB that sit on a provider • Internal (Private) Cloud • External (Public) Cloud Outsourced Providers Run software that they have bought (built) or leased on an • Internal (Private) Cloud • and External (Public) Cloud (Hybrid model) The demand and cost model is clear and long term risk / benefits are established We have identified the following critical success (benefit) / risk factors: - Total cost of ownership - Does the initiative support business objectives: - Cost is the primary driver, - Demand is the primary driver - Capacity is adapted to need & price is scalable as business in(de)crease - Peak loads can be absorbed with little impact on performance and response time - Ability to audit metrics used by the provider to calculate the utility price - Version upgrades and migration are transparent (cloud, hosted provider) - Licensing of applications is clear & Interoperability ensured (cloud, hosted provider) - As we break services out, how do we manage data integration - Re integration of data if we decide to insource / change outsourcing partner - How do we recuperate data / applications if the outsourcing partner is attacked / goes out of business (cloud, hosted provider). Total Cost of Ownership To establish an effective Cloud Model you need to perform an in depth analysis of business needs to understand Total Cost of Ownership with Cost, Consumption and Chargeback.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Build the Sourcing Strategy The focus on sourcing as a part of the service strategy is limited to the identification of an optimal sourcing strategy for the IT Service Strategy. Question: How do we optimally source our IT requirements to execute strategy and business drivers and objectives? Objective: The objective is to create a model to meet the IT services strategy required by the organisation and how it should be packaged for optimal delivery. This leads to a definition of the resources (skills and competencies) required to support and manage defined services effectively. Service levels and key performance indicators to monitor and manage each service ‘bundle’ are also developed to ensure the effective management services. Benefit: Define the value of services required to support the business requirements and identify the best sourcing options for IT to meet business performance objectives. The IT sourcing strategy identifies IT services required by the organisation and the resources (skills and competencies) required to support and manage services effectively. The sourcing strategy also specifies how the required services will be “bundled” for optimal delivery and identify services provided internally by parts of the organisation or by external providers. Key performance indicators to monitor and manage each service ‘bundle’ are developed for the effective management of services. Develop a service architecture: The Service Strategy is developed with input from the IT Assessment, Demand Side Architecture, Technical Architecture and preliminary reflections on governance to structure an architecture of the IT services. The architecture clearly identifies services (in-house and outsourced) required by the organisation with skills and competencies required to effectively manage the required services. Establish guiding principles As we develop and define the service architecture, the next step is to define the service delivery options that will in turn will be influenced by how the services are “bundled”. As a consequence, a number of sub tasks have to be performed iteratively to ensure that IT services are optimally “bundled” and realistic options identified. To establish guiding principles to take decisions on to in-source or outsource services the key elements considered include available skills and competencies, cost, potential for improved productivity, effectiveness and user satisfaction to meet demand and cost drivers. Package services to develop sourcing options  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE personnel transitions, a description of how cross-tower services will be implemented (such as change management, incident management, problem management, configuration management and service level reporting), and a description by tower of the changes that will be implemented. 5. Pricing – Expect your outsourcing cost to go down over time. One of the best ways to ensure the long-term success of your outsourcing agreement is to start with an agreement based on market prices. This means you are starting the relationship in the right place, and any future pricing adjustments (such as benchmark adjustments) will not be as extreme or emotional as they otherwise might be. “ How do we transform the IT department in to an effective broker of services and how can the cloud help in this effort?” I have introduced “non traditional IT” notions such as ”Time to Market”, “Cloud source”, ”Make or Buy”, “Cost and Demand drivers”, “An IT Business Model and Value Proposition” and ”An IT service Strategy”. Within this context I believe that a new notion and function will have to be introduced, the IT department as effective broker of services (cost effective and that meet demand drivers). Where most IT department perform well, some decisions are still based on “gut feeling” or external pressure from executive management influenced by vendors / management consultants “as a strategy of survival” rather than on fact based logics. “Time to Market” – The notion of time to market is critical within the context of a business. The delayed launch of a product might erase up to 70% of potential earning (the rest is evaporated by the cost of the resources absorbed to solve the problems that delayed the launch). “Time to market” can be applied to the context of the IT department 1) in the frame of how well do we set up a new service (bundle of application with a coherent architecture) 2) How well do we support the business to launch a new service / execute the business strategy supported with IT (when needed). “To Cloud source” – Cloud computing is the result of 2 trends*. 1) The survival of salesforce.com (that is to outsource data in an application that we have decided not to buy / run on an internal server) 2) the decision of amazon, google and other cloud (external storage space) providers to leverage their capability to buy and run server parks more effectively then an IT department would / could (external cloud). A decision to run applications on a server outside the firewall can be motivated by cost or demand (time to market) where an architecture and applications are set up to rapidly respond to the needs of the business. The “service bundle” can then either be brought inside the firewall and run on an internal cloud or continue to run on the cloud provider’s server (outside the fire wall). The private cloud: We leverage the Private (internal) Cloud, as an internal provider perform process execution and the applications (bought or leased (Software as a Service (SaaS)) run on one or several mutualised servers inside the firewall) sit on an internal (private) cloud.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE world an investor would require a good business case with a clear “Business Model” and “Value Proposition”. Our experience is that an IT department that does not have a clear “business model” defined as “This is how we deliver IT services to the business” and “Value Proposition” defined as “This is how we support business objectives with services in a time to market perspective” will continuously find it difficult to obtain sufficient funds from executive management and the board for the above mentioned reasons. “An IT service Strategy” – In order to effectively communicate with the business the IT department need to adopt the notion of services a bundle of applications to be run cost effectively and set up in a time to market logics in accordance to cost and demand drivers where demand drivers are linked to the business emerging needs to support the execution of the business strategy with IT when needed. The authority of the IT Department can only be confirmed as it delivers cost effective services in a time to market perspective to the business lines in order to deliver to the set business objectives and strategy, to impose non adapted technology solutions on the business will not. The fact that we often find a significant amount of the IT Spend hidden in the budgets of the Business Lines might give a hint. The international COO of a multi B€ business that I recently spoke to put it bluntly “if the internal IT Department can not deliver to our needs, they should at least get out of the way”. Now to the how to: In order to deliver effective Business (IT) Alignment you need to leverage best in class technology (on paper compliance is not enough). The frameworks should be a point of references and only the bits and pieces applicable and useful for the business should be rolled out (but you need to understand which framework represent which perspective and how to leverage the perspective) and above all focus on stakeholder expectations! Step 1) Define the services that the IT department deliver to the business with total cost of ownership (TCO) with cost, consumption, chargeback. Cost – This is often where you would get the WOW, we did not know that we spend this much on IT from the executive management. Consumption – most IT departments suffer from the overconsumption of users that are not willing to pay for what they consume hence the importance of coherent chargeback based on factual cost of the delivered services. TCO is also the base to qualified selection of cloud sourcing / outsourcing partners. Step 2) Capture the “IT Business Model” that is “This is how we deliver IT services to the business” in the IT Service Catalogue,  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE (TCO) with Cost Consumption and Chargeback / Showback, - Build and run an effective IT Business Model to Best Practice Frameworks. We support business objectives with services in a time to market perspective with a clear “Business (IT) Value Proposition”. IT support business objectives, strategy execution: The IT Business Model “This is how we deliver IT services to the business” is supported by the IT Service Catalogue that permit to deliver a structured Service strategy (ITIL V2 & 3), Delivery capability (ValIT, CobIT, RiskIT (COBIT 5)), Architecture (TOGAF) and Security (ISO 27 001). With an effective Business (IT) service strategy: ITIL defines the roadmap to deliver an effective Business (IT) Service Strategy with Catalogue, Request, Portfolio, Level, Demand and Financial Management. VALIT, COBIT, RISKIT, CMMI provide control objectives for an effective IT Service Portfolio, IT Delivery and IT Risk Management. “With a balanced (IT) Scorecard?” The balanced Scorecard is an excellent opportunity to capture and “steer” the direction of a Company / Line of Business / department / activity as it depicts the roadmap on how to deliver to the business (IT) strategy (and in the same direction). Managing alliances with a balanced scorecard (HBR 2010 / 01: P 114 – 120) points out the importance to articulate the financial, customer (value proposition), process, and learning and growth (capability) perspective in an actionable roadmap and scorecard to set expectations over time. As we believe the logics to be valid in the context of IT and the roll out of an effective Business (IT) Service Strategy we use the Business (IT) Roadmap to reflect stakeholder expectations and the (IT) Service Strategy to support Business Drivers from an Executive, Business Unit, IT and IT Risk Management perspective where: Stakeholder Expectations Drive Business (IT) Objectives that are delivered by the Business (IT) Road map that is Executed by Employees & Organisation. Business (IT) Drivers Drive Demand and Cost Drivers that deliver the IT Service Strategy that is executed to set Metrics. As we capture the IT Service Strategy we ensure the effective roll out of the IT Roadmap and Service Strategy with Expectations and Drivers. Stakeholder (IT) priorities: IT provides competitive leverage: From an Executive Management Perspective it is important to understand that:  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE “How do we leverage IT Financial Management as a critical part of successful IT Strategy delivery and key in the Business Case of effective outsourcing?” IT Services and the cost of a service delivered by the IT department is a notion that was introduced on a broader basis with ITIL V3 and confirmed with the introduction of COBIT 5. Where the IT department traditionally account for services delivered and billed by outsourced providers, services delivered by the IT department (outsourced services included) have not been formalised and broken down in to direct and indirect cost and related to the cost, consumption and chargeback of an engaged service. Traditionally the IT Department tend to be run as a “cost centre” rather than a “profit centre” and investments tend to be technology rather than business driven. In order for the IT department to deliver the right IT Services cost effectively, the IT Strategy need to support the business strategy and set business objectives. Furthermore the IT Department should be run as an internal profit centre where resources are considered as scarce and services delivered supported by IT financial management. In order to do so we need to identify the services delivered together with cost, consumption and chargeback to ensure that the business units that consume services are conscious that IT services bear a cost to avoid overconsumption of services that the business is not willing to pay for as well as a coherent repartition of cost related to the use of ERP / infrastructure services. The notion of the IT department as a profit centre focused on total cost of ownership with cost, consumption and chargeback is also critical to ensure financial resources from the business units as well as an effective use of resources deployed to deliver IT Services. Recent efforts to outsource (data) cloud source (applications) needs to be supported by solid business cases with ROI and clear cost, consumption and chargeback of the billed services which is rarely the case today where invoices from outsourcers, cloud computing providers are non granular and does not provide data granular enough to distribute cost (charge) the users / business units that consumed the service. ROI and the total cost of services delivered are difficult to validate as contract conditions in regards of the cost of termination / exit that would include a secure migration of data or applications tend not to be transparent. IT Financial Management is a critical part of successful IT Strategy and the effective delivery of IT Services. Though the notion of service delivery is supported by internationally recognised standards such as ITIL and COBIT 5 IT Financial management is yet to be broadly applied and standardised beyond classical activity based costing related to IT projects. With the introduction of COBIT 5 the notion of IT Service Delivery and the use of IT Service Management will become a standard exercise beyond helpdesk, problem and change management. To run a cost effective IT Operation that delivers to business expectations and leverages the execution of the set strategy (1) you would need to build a clear IT Service Strategy (what services do we deliver to the business) with Total Cost of Ownership per user with: Cost (how much does each service cost), consumption (how much does the individual user consume) and chargeback (consumed services are allocated “charged back” on an effective cost basis to the business units) (2) in order to be able to provide the means (necessary investments) and ends (budget). With the right support (best in class technology) this can be done in weeks with a top  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE - IT is not perceived to deliver value to cost, IT is not perceived to deliver services to business needs, The service is a commodity and cost is the primary driver - The IT department is unable to deliver in a time to market perspective “Is there a peer se competitive advantage in the adaptation of the cloud?” The adaptation of the cloud (external cloud defined as owned/ leased (SAAS) applications, bundled in to services with an underlying architecture, that run on a server provided by an external provider that operates outside the firewall) are either driven by cost effectiveness (cost) or the need to set up services rapidly (demand) and cost effectively that can then run on the external cloud or be brought inside the firewall to an internal cloud. The competitive advantage of the external cloud lays above all with 1) the corporate teams ability to negotiate effective contracts (volume, peak, exit) where total cost of ownership (TCO) should be clearly visible with the possibility to renegotiate contracts as prices fall over time, 2) the IT departments ability to provide effective IT services to their internal clients. In order to back up the investment we need to provide a business case with TCO of the current run as well as future build and run. This would also be valid for outsourcing and shared service centre initiatives. If the decision to move to move to and internal / external cloud model is not backed by a clear business case (BC) with TCO for the existing run future cloud solution that would include cost of exit you might want to ask a few more questions before you move ahead. “How do we Secure IT delivery capabilities as we move to the cloud” As you move to the cloud, ensure that you secure your IT Delivery capabilities with spelled out business objectives to which the IT organisation can deliver with an effective Service Strategy to leverage IT in the execution of the business strategy. Where security is important, and I would think twice on the data that I would choose to put on the cloud, Time to Market and Cost Effectiveness are the critical success factors. Time to Market should not only include “how fast do we get IT services set” but how can we leverage the business strategy execution with IT as we support the end to end delivery of new products / services to market. The impact of Cost Effectiveness can be measured only as Total Cost of Ownership with cost, consumption and chargeback is objective. We also need to define a clear IT Service Strategy with an “IT Business Model”  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE To conclude on the Cloud: The cloud can bring significant leverage to an effective execution of business objectives in a “Time to Market & Cost Perspective” but only as we deliver to a clear IT Service Strategy and secure IT delivery capabilities. Chapter 6. To leverage IT for Strategic Advantage Value, Profit, People – What is your unique competitive advantage? To leverage IT to execute on the set business strategy we need to effectively focus on: Value, Profit and people aligned to create a unique competitive advantage. The tandem is an excellent metaphor for the Business IT relationship. Where Information Technology can accellerate “Go to market”, “Cycle time” and “Cost effectiveness” it is for the Business to set direction and for the IT Department to support the business model. This is also true for the non brick and mortar references that have emerged from silicon valley. Amazon sells books and online store space. Google the opportunity to find things + run applications on a cloud (mutualised storage space outside the firewall) + hosted services such as email (the opportunity to communicate in writing and keep a trace). Ebay enables the exchange of goods. Twitter provides a tool for self promotion and advertisement. Facebook fills the void of distance and keep the contact with your friends and the opportunity to make new acquantainces. Linkedin the opportunity to keep up to date with your professional network + some promotional features. The business model sets the direction enabled by best in class technology. Why it is critical for the business to acquire the IT Service Portfolio End to End I was recently contacted by a large Editor (as most of you like know I have accompanied a number of IT consulting companies and editors in their “Go to Market” with Client acquisition, (Large) Account Introductions, Alliances (notably with BIG 6 consultancies), Market Position (Forrester, Gartner, Bright Talk) and position of the “Value Proposition” (discovery, competitive analysis of market offerings, road map to realign solutions portfolio and transform sales and delivery operations, develop new market strategy and execution plans, and drive sales transformation, acquisition of smaller actors)) to help them in their go to market.  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE Even my tailor (one of the finest in Paris) has moved forward to a model of “tailor made” to half custom made where he has realised that a person that does not know what he needed in the first place will systematically be disappointed and want something better as the product is delivered (even if it corresponds to what the client asked for). The situation is comparable to that of most IT departments and one of the reasons why an internal client can refuse to sign off the delivery of an application because the colour of beige is not right where he most likely know that the definition did not correspond to the needs of the business in the first place and certainly less so 18 or 36 months (processes modelled and defined by a consultant, translated and programmed) down the road. The CIO and IT department needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. The CIO and IT Department that sit around and wait for the Business Strategy to be formalised to build an IT strategy and vision might not make the 18 months magic mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated. Reconstruct Boundries Would you sign up to run a retail business operation where you do not know what clients consume which product / service at a specified quantity and subsequently be billed for their consumption (nor how you will finance the future run and build)? This is however the reality for most CIO's! The focus of a service based model is to demonstrate how IT Delivers Value to the business, that is delivers services to business needs (cost effectively, or at least at a specified cost rate that permit to take qualified decisions) over time with an effective IT Business Model and Value Proposition. We see Total Cost of Ownership (TCO) as the corner stone to move further from "IT generates to much cost" where we can demonstrate who consumes what services (and should subsequently pay for what they consume) to obtain the means (investments) and ends (budgets). To run a cost effective IT Operation that delivers to business expectations and leverages the execution of the set strategy (1) you would need to build a clear IT Service Strategy (what services do we deliver to the business) with Total Cost of Ownership per user with: cost (how much does each service cost), consumption (how much does the individual user consume) and chargeback (consumed services are allocated "charged back" on an effective cost basis to the business units) (2) in order to be able to provide the means (necessary investments) and ends ( budget). With the right support (best in class technology) this can be done in weeks with a top down  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE IT Management needs to transform their business model: - Move from a cost center centric to a Service based model - Manage a Portfolio of Services-enable cost / value optimization - Efficiency of each Service - Effectiveness of each Service - Manage IT performance on a cost per unit and consumption basis - Compete on the open market - Benchmark and measure apples to apples Create demand In a recent conversation that I had with David Giambruno, CIO Revlon, he mentioned his ability to get the business hooked on new services and products as he actively propose new solutions to the business to leverage competitive advantage and keep the run in perfect shape. But the role as “gatekeeper of technology” to create business value can only be valid as the infrastructure runs smoothly. David has over they years shifted the focus of to use 80 % of the budget for workarounds and fire fighting the keep the lights on and 20 % to propose new solutions to the business to an opposite 80 / 20 where 80 % of the budget is used to enhance the capability of the business. He also clearly indicated that where the logics spelled out in ITIL are excellent they are are a minimum requirement to build an effective IT Strategy to the needs of the business where the perspective has to be completed with a Design (Demand and Supply) and Build (supported by IT processed with clear KPI’s) phase to tie the strategic value piece with the operational elements of IT service delivery. Govern It is crucial to build governance in to the execution of the Business and subsequently the IT Strategy. COBIT 5 helps IT leaders provide a business view of IT’s ability to create value and support enterprise goals through effective IT processes and build process capability and can be used to: Develop process improvement, Deliver value to the business, Measure the achievement of current or projected business goals, Benchmark and deliver consistent reporting, and ensure organisational compliance. Shift focus from customers to non-customers Salesforce.com have over the last year demonstrated the ability to shift focus from the traditional customer (that in most cases had no desire to implement the “hosted provider solution” as it would significantly reduce the dependency on legacy applications that stakeholders and a significant number of employees had build their career on). A recent acquisition by the business management at France’s major airline  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE The execution of the defined business strategy is often a mystery (missing link) both on the Business and the IT side. The truth is that regardless of how well the executive team draws out the strategy in the boardroom the bottom line is that the business initiatives that were supported by clients succeeds, those not supported by clients (that do not get it) fail and disappear. The CIO and IT department hence needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. The CIO and IT Department that sit around and wait for the Business Strategy to be formalised to build an IT strategy and vision might not make the 18 months magic mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated. IT contributes to business objectives The IT service proposition is aligned to the business strategy as: Stakeholder expectations are understood and IT propose a service portfolio that correspond to Demand and Cost drivers, Business Contribution, Cost, Consumption & Chargeback is identified, Focus is on perfect order business transactions, Services are effective (demand and cost drivers identified), Services are competitive (Benchmark Industry Market Forces) and New technological solutions that could change how current business is performed are explored, proposed and implemented. IT provides competitive leverage As the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated in: An IT Business Model “This is how we deliver IT services to the business” and a Business IT Value proposition “This is how we support business objectives with services in a time to market perspective”. The Business (IT) Strategy, link to operations We Link Strategy and Operations as we Develop the Strategy, Translate the Strategy, Plan Operations, Monitor and Learn, Test and Adapt the Strategy, Execute Procedures and Initiatives. Business (IT) Tactics  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE 1. How will IT change the basis of competition in our industry? Questions to ask: - Who are our emerging competitors? - How is technology helping us win against traditional and new competitors? - How can we use technology to enter new markets? 2. What will it take to exceed our customers’ expectations in a digital world? Questions to ask: - How does our customer experience compare with that of leaders in other sectors? - What will our customers expect in the future, and what will it take to delight them? - Do we have clear plans for how to meet or exceed their expectations? 3. Do our business plans reflect the full potential of technology to improve our performance? Questions to ask: - Has the P&L opportunity and threat from IT been quantified by business unit and by market? - Will our current plans fully capture the opportunity and neutralize the threat? - What is the time horizon of these plans, and have they been factored into future financial projections for both business and IT? 4. Is our portfolio of technology investments aligned with opportunities and threats? Questions to ask: - How well is our IT-investment portfolio aligned with business value with regard to opportunities and threats? - How well does the portfolio balance short-term and long-term needs?  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE - How is our level of IT risk measured, and is it aligned with the company’s overall risk appetite? - How are we reducing our IT risk on an ongoing basis? - Who is responsible for overseeing the level of IT risk? 9. Are we making the most of our technology story? Questions to ask: - What are the key messages we should communicate? - How, when, and to whom should they be communicated? The CIO and the IT Department need to position as premium provider of IT services and focus on value to cost. In order to avoid the "do we really need a CIO and IT department to bother us with technology when we can use the cloud?" the CIO has to ensure that the business strategy and business objectives are supported by IT (from a Business and IT architecture perspective). Where the IT Strategy support Strategy execution, "Time to Market", Cost Effectiveness and stakeholder expectations from an Executive, Business Unit, IT Management and IT Risk Management perspective. To deliver business value with IT we need to Focus on the Business Bottom Line: How fast can we get our products and services to market “Time to Market” & how can the IT department support the business from a Cycle Time and Cost Effectiveness perspective. The IT Bottom line is that up to 40 % of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities and demonstrate that the current Business Model is supported effectively. The IT department should facilitate the access to IT services to support new and current business initiatives. The business strategy emerge out of a number of initiatives that are successful or not. The IT department need to support the “Run” of day-to-day operations as well as new projects. The Cloud might particularly be of interest within this frame. IT must be responsible for profit and loss from a business perspective and be managed like a business. The fact is the technology will play a bigger role in order for business to thrive in the future. The level of implication of IT varies as it depends on  
  • Copyright 2013 Martin Palmgren EVP .COMMUNICATE business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. The CIO and IT Department that sit around and wait for the Business Strategy to be formalised to build an IT strategy and vision might not make the 18 months magic mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated.