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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 Business Insights : Deliver Business Value with IT ! series is a reply to the request from Business Executives of an introduction of ?How do we put the IT Strategy in place? where ?? Design: Spell out IT Activities from a demand and supplier side? provides a breakout for those that would like to 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.
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.

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  • 1. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Title: Business Insights: Deliver Business Value with IT! – Design: Spell out IT Activities from a demand and supplier side ISBN: 9781301485352 Official website: http://deliverbusinessvaluewithit.com/ AUTHOR Martin PALMGREN, EVP .COMMUNICATE Copyright Business Insights: Deliver Business Value with IT! – Design: Spell out IT Activities from a demand and supplier side AUTHOR Martin PALMGREN, EVP .COMMUNICATE 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 Business Insights : Deliver Business Value with IT ! series is a reply to the  
  • 2. Copyright 2013 Martin Palmgren EVP .COMMUNICATE http://www.linkedin.com/groups/Deliver-Business-Value-IT-editorial-3807899/about is a forum dedicated to the finest business and IT academics. 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  
  • 3. Copyright 2013 Martin Palmgren EVP .COMMUNICATE the book. The book can then be delivered in a paper, electronic or audio format. The question is not weather the book is valid as format or not, the challenge is to find writers capable to synthesis the big picture and deliver it in a chewable format and still retain the attention of the reader. But then again this is not only the challenge of 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 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 practintioners 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  
  • 4. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Related Publications by Martin Palmgren in a Storyboard Format 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. 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 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  
  • 5. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Each chapter has been conceived to be able to stand a consultation on a stand alone basis and cover key points. This might give to those that will read “Deliver Business Value with IT” end to end an impression of “deja vu” earlier in the book. Highlight: Focus on the BIG PICTURE! 1: To deliver Business Value with IT we need to Design, Build and Run an Effective IT (Service) Strategy to business needs We will take the reader and the business and IT executive team out of their “ivory tower” and in to “the valley of death” where we confront current “best in class IT practices” to what should be done that is to “support the execution of the business strategy with IT” as opposed to “how do we align business needs to how IT works” (that is Business IT Alignment) which is current best in class. We will leverage 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: 1. 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 2. The criticality to acquire IT services end to end 3. The need for IT Accountability 4. 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: 1. How to build an effective innovation process 2. Why current “best in class” might not be best in class at all 3. That Business focused technology can be a make or break factor as we innovate or reinvent a brand and business model  
  • 6. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 1. 2. 3. 4. That IT support business objectives and processes with Investment Management The need for Process Management A coherent Business Architecture The need for a defined direction and Market Position 5: Cloud computing thunder or lightening? How to draw the fluff out of the cloud and effectively support business objectives with IT The introductory 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. List of topics that will be covered in the chapter: We understand: 1. How to build and effective cloud strategy 2. That to cloud is a traditional “to make or to buy” decision 3. That a decision should either be demand or cost driven, if it is political this should be recognized. 4. 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 Business Strategy execution with IT we Focus on the IT (Service) Strategy The reader will learn the criticality for the CIO and the IT Department to position as premium provider of IT services and to 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 Business Strategy execution, "Time to Market", Cost Effectiveness and Stakeholder Expectations from an Executive, Business Unit, IT Management and IT Risk Management perspective.” List of topics that will be covered in the chapter: We understand: 1. The Business’s strategy and plans 2. The current business model that IT has to support  
  • 7. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 4. Develop the Business (IT) Service Strategy, 5. Build the Business (IT) Service Strategy, 6. Govern the Business (IT) Service Strategy, 7. Design the Technology Architecture, 8. Build the Sourcing Strategy, 9. Develop the Program Plan, 10. Leverage Business Strategy Execution 9: Build - Set IT processes and key performance indicators. The introductory material in this chapter is developed to provide pragmatic guidance on how to develop and execute your IT Strategy as you Set IT processes and key performance indicators (Build the IT Strategy) to support the Business Strategy and Business Objectives. List of topics that will be covered in the chapter: We understand how to: 1. Define the “to be” state with established KPI’s, 2. Design the IT Plan with a project portfolio, 3. Build An Effective (IT) Business Model, 4. Manage the Business of IT, 5. Develop & Manage IT Customer Relationships, 6. Manage Business Resiliency and Risk, 7. Manage Enterprise Information, 8. Develop and Manage IT Solutions, 9. Deploy Information Technology Services, 10. Deliver and Support IT Services, 11. Manage IT Knowledge 10: Run - Aligned to described ITIL activities and processes with a Service Strategy, Service Design, Service Transition, Service Operation: - Function, - Process, Service Improvement The introductory material in this chapter is developed to provide pragmatic guidance on how to develop and execute your IT Strategy Aligned to described ITIL activities and processes with a Service Strategy, Service Design, Service Transition, Service Operation: - Function, - Process, Service Improvement (Run the IT Strategy) to support the Business Strategy and Business Objectives. List of topics that will be covered in the chapter:  
  • 8. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Figure 5: Deliver effective business strategy execution: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/deliver-effective-business-strategy-execution/ Figure 6: The roadmap reflects stakeholder expectations: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/the-roadmap-reflects-stakeholder-expectations/ Figure 7: The ServiceStrategy support Business Drivers: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/the-service-strategy-support-business-drivers/ Figure 8: End to end industrialisation of business processes: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/end-to-end-industrialisation-of-business-processes/ Figure 9: The Business Strategy is executed by IT: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/the-business-strategy-is-executed-by-it/ Figure 10: Confirm business vision: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/confirm-business-vision/ Figure 11: Articulate the Business Value Proposition: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/articulate-the-business-value-proposition/ Figure 12: Deliver the Business Architecture: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/deliver-the-business-architecture/ Figure 13: Translate the Business Vision to an IT Vision: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/translate-the-business-vision-to-an-it-vision/ Figure 14: Set the IT Value Proposition Baseline: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/set-the-it-value-proposition-baseline/ Figure 15: Draw the Roadmap: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/draw-the-roadmap/ Figure 16: Design the IT Value Proposition: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/design-the-it-value-proposition/ Figure 17: Build the IT Value Proposition: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/build-the-it-value-proposition/ Figure 18: To Perform Effective IT Governance: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/to-perform-effective-it-governance/ Executive Summary: 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  
  • 9. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. If we assume that to deliver business value with IT we need to support business objectives, the integration of a new entity is an optimisation of the current IT strategy (how we support business objectives and processes). We would obviously need to understand (and hopefully have the opportunity) how the current IT run before the purchase (IT due diligence) with full IT Financial Management to figure out the actual cost of delivered IT services (cost, consumption, chargeback). Once services defined we can then decide where to run the applications that support the IT and or Business Service (server / internal / external cloud / outsourced provider). We also need to define the purpose of the purchase (invest / divest) in the overall corporate strategy where it is of little use and a significant cost to integrate all systems in to a common backbone if the company is to be divested only a few years later. We could use an IT Scorecard to ensure that stakeholder expectations are met from an executive 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. Endorsements “The “Deliver Business Value with IT” series provides a good overview of the ways a CIO can provide valuable and effective support to your company strategy. The reader 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  
  • 10. Copyright 2013 Martin Palmgren EVP .COMMUNICATE (Prof. dr. Wim Van Grembergen, University of Antwerp & Antwerp Management School, Information Technology Alignment and Governance Research Institute) “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.” (Alex van der Kruit, is a senior IT executive with extensive experience in building and leading service organisations, and directing change management initiatives for leading global corporations. He has held positions such as Service Delivery Director at CSC, General Manager IT at Swedish Match, and is currently Business Systems Manager at Toyota Material Handling Europe) “The “Deliver Business Value with IT” series is spot on. The role, use, provisioning, and expectations for IT are going through profound changes across the globe. The enterprise is demanding a higher velocity and more agile access to IT capabilities. Users are dismayed that they have better technology at home than they 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  
  • 11. Copyright 2013 Martin Palmgren EVP .COMMUNICATE IT” series, which I found to be very comprehensive and to the point. With the proliferation of public form of Cloud Computing, CIO's are threatened of their survival in the corporate world. Business units can readily meet their compute needs by purchasing services directly from service providers without using IT. These services come with predictable cost at given service levels with high degree of agility. IT organizations, on the other hand, are order takers. Martin's publication on designing, building and running an effective IT Strategy to meet business needs was developed to help CIOs create business value by addressing the following mega IT challenges: 1. How to transform IT from an order taker to a product and service organization; 2. How to make IT more agile to create value from a time-to-market perspective; 3. How to develop product and services that are fully aligned with business needs and, then, offer them at predictable cost with given service levels 4. How to provide effective IT Governance. There will be times when it will be more effective to buy services directly from Service Providers as opposed to building them in house. But those decisions should be made in a more methodical way. But, this will require for IT to administer a very effective and sound IT governance process. IT should be the keeper of the product and service catalog. “Deliver Business Value with IT” provides an excellent opportunity for CIO's to develop an effective IT Delivery model. Martin, thanks again for giving me the opportunity to review your publication. You really have done an excellent job with this publication. Good luck" (Rajesh Kumar, is a senior IT executive specialised in cloud, IT Transformation and IT Financial Management. He has held positions such as SVP Bank of America, IT Infrastructure and Finance and Director, Rackspace). “The “Deliver Business Value with IT” series is a comprehensive, concise and KPI focused publication. I have always agreed with the fact that IT services are a profit center. I call this "a business within a business" in actual fact a component of the business' federation of services. The CIO must only be a supporter and a facilitator who relies on architecture services to justify roadmaps and business IT strategies. Unfortunately, and is not only in my experience, many CIO's emerge from project management backgrounds and lack the wealth of knowledge “Deliver Business Value with IT” so nicely describes. CIO's would ideally come from a certified architecture background or subscribe to the approach and methodolgies suggested in the book. I would dare to suggest that specific charters must be defined and accepted for every role as part of governance. Many thanks for the opportunity to review this publication.” (Gabriel Maties, Enterprise Architecture Manager, Gala Coral Group).  
  • 12. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. Author Introduction Martin Palmgren is a seasoned Senior Business / IT Strategy and Transformation Executive that has addressed Strategy formulation and roll out for fortune 500 businesses internationally with a focus on how to ensure that the business strategy and objectives are supported by IT with an effective IT Strategy and Governance (that is how do we support business objectives and processes leveraged by IT and an effective IT strategy). Martin is an expert in “how to deliver business value with IT” where he works with both Business and IT Executives to reach this objectives and has delivered best in class practice with major actors in the Pharma, Bank, Manufacturing and Insurance Sector to articulate the “IT Business Model” “This is how we deliver effective IT services to the business” and the “Business (IT) Value proposition” “This is how we support business objectives with services in a time to market perspective”. He has over the last 2 years also addressed how to build an effective “Cloud Business Model” to take full advantage of the flexibility and cost advantage that new cloud solutions permit to improve “Time to Market”, “Cost Effectiveness” and “Cycle Time”. Martin has 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). He is an international thought leader and visiting professor at some of France’s top business schools, notably EDHEC where he intervenes on Innovation, Business Model Innovation, Strategy, IT Strategy (Execution), IT Governance, IT Sourcing, Cloud (Sourcing). He holds a Master in Finance from the University of Gothenburg. Martin is trilingual Swedish, English, French and fluent (operational) in German and Spanish.  
  • 13. Copyright 2013 Martin Palmgren EVP .COMMUNICATE and offer: target and operational marketing identification (price, geographical zone, mix). Partner & competition bench. Development of an international partner program (+ 30 000 ads on a monthly basis). Martin also held the role of general secretary to the CEO the former CFO of a listed large French group and actively contributed to the overall strategy and was key to international development. Martin joins CAP GEMINI ERNST & YOUNG (Cap Gemini SA) in 1999 (– 2002) as an expatriate project manager affiliated to CGE & Y Sweden and direct report to the Chief Knowledge Officer (later CIO) on a group level. Objective: To leverage the groups presence, shorten go to market and win additional market share through best in class solutions to: deliver, share references, blue prints, delivered solutions, find experts and staff internationally. Mission: Client needs identification (audit, definition). Active participation in the conception and development and roll out of collaborative tools: my office, my connections (expert identification search database: 6000 competencies, 56 000 competency profiles with daily updates to local HR databases). Other assignments: Group initiative proposition articulation (business development): Cost optimization in the aerial, energy and utility sector (CA 20 M€), IAS (International Accounting Standards): development, implementation, evaluation and sector reporting. Client portfolio development: trend, brand and market analysis (CGE & Y, Buenos Aires, Argentina, 2002). CRM pilot offer group (CGE & Y Sweden, 2000 – 2002). Chapter 1. To deliver Business Value with IT we need to Design, Build and Run an Effective IT (Service) Strategy to business needs. 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 @ 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 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.  
  • 14. Copyright 2013 Martin Palmgren EVP .COMMUNICATE How poor IT Financial Management (accountability) set your business, CIO and IT department up for failure! If you owned an airline company would you accept that when you asked how many passengers that had been transported, which distances where the most profitable, how many tickets sold and at what price and if time tables and destination where kept as promised and the amount of gas consumed the reply that the planes had been kept in the air and that any constraints would hamper creativity (innovation). This is however the case for most businesses where the IT department on the premise that they "keep the lights on" should not be held accountable neither for cost nor delivery and IT Financial management is a bean counting mentality (when I spoke to a friend in a top 3 audit firm in regards of this phenomena he told me that whenever a client told him the to keep records of his business was a bean counting mentality he would by definition look closer and 10 times out of 10 would find the records to be revised and basic rules broken) and that to have clear accountability would hamper creativity (innovation). The bottom line is that most outsourcing is performed not to optimise cost but to get a minimum level of service delivered (and at least the illusion of service level agreements to be met). When you sign up as a student in business administration you learn how to assign cost, read and build a balance sheet, calculate and optimise cost in production (later as a business controller in the production chain you would project budgets based on ongoing business cost that is clearly spelled out). The question of IT budgets and IT controlling never came on the table and had it I believe that most students would have found it difficult to understand that cost, consumption and chargeback of a service (product) would not be defined and that business entities and subcontractors (tier outsourcing parties) would not define the cost of execution (manufacturing) and the validity of the information used for the billing (chargeback). The very reason why most IT Strategies fail and miserably The IT department needs to perform 3 things well: 1) understand the needs of the business, 2) how to build and run applications that meets the needs of the business and 3) to run an effective infrastructure. That is IT supports new emerging business initiatives that will eventually form the business strategy as they succeed or fail and the RUN. Yet most IT Departments: 1) has a poor understanding of the needs of the business, 2) are not very successful @ to build and run applications that meets the needs of the business and 3) do not run an effective infrastructure. We all know that infrastructure is unsexy.  
  • 15. Copyright 2013 Martin Palmgren EVP .COMMUNICATE where the blue print was not defined well enough to produce to the needs of the client in the first place (moving target dilemma). The bottom line is that we need to rapidly be able to understand modelise and deliver to the needs of the business and business objectives. If standardised solutions cover 80 % of the needs that would most likely be enough. To systematically capture (modelise) unique “tailored” business processes in a modelisation tool that are not industrialised is not only a waste of time but of enterprise resources (unless this would be required by the audit team). A coherent approach would be to identify business processes that support activities that could be industrialied with IT when needed and modelised if we cannot find a standardised solution off the shelf. Google, box.com, Salesforce and other hosted providers dispose of resources that most IT departments could only dream of to address specific subjects such as mail, document storage, CRM. Why reinvent the wheel when we can extrapolate on hundreds of manyears of cumulated knowledge (not to mention budgets funded by IPO’s) all in the name of “security”? 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  
  • 16. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Meet stakeholder expectations from an executive and business management perspective would this be among your current priorities You need to demonstrate how you Create Business Value and Optimise IT’s contribution to the business: - Service Portfolio optimised around business value - IT spend streamlined through in depth cost transparency - Measure IT performance with financial KPIs - Model customer consumption of IT services – chargeback - Optimise internal processes, controls, organisation - Demonstrate the value that IT contributes to the business - In the follow business critical areas: - Budget – Strategic Planning - IT Controlling - Simulate scenarios - M & A, data center consolidation, etc - Demonstrate IT’s contribution to the business - ITIL v3 implementations, BSM projects Where the Bottom line is that: 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.  
  • 17. Copyright 2013 Martin Palmgren EVP .COMMUNICATE external expenditure we were able to give it back to the business to invest in revenue driving initiatives. For Revlon, the more money R&D has to develop new products to get to our consumers and for marketing to tell our “product story” and get it out to our channels and use the media to talk about our glamorous products the more succesfull the business. Another change for Revlon is that it has become a cloud provider itself as we push our cloud out to suppliers and contractors. At the end of the day, we needed to rapidly collaborate with our eco system that is our community of vendors and suppliers, and enable them to interact with us easily where the bottom line is to drive growth for Revlon.” 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 permitted a major improvement to the business both from a capability and performance perspective to a fraction of the cost, and provided the IT department with 600 resources to perform other tasks. The IT department will have to rapidly shift their business model from “reward and remuneration in concordance to how many people that I manage” to a model related to the value delivered to the business with a Focus on the Business Bottom Line that is: 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 or will see the go to market trend with the business as direct customer grow significantly. Transform the IT Business Model A number of approaches to strategy execution have evolved over the last years, but  
  • 18. Copyright 2013 Martin Palmgren EVP .COMMUNICATE traditional competitive (structuralist) strategic thinking and to grow demand and profits for the company and the industry as we use blue ocean (reconstructionist) strategic thinking. The third and final part describes the two key implementation principles of blue ocean strategy that would include tipping point leadership and fair process, essential for leaders to overcome the four key organisational hurdles that can prevent even the best strategies from being executed. The four key hurdles comprise the cognitive, resource, motivational and political hurdles that prevent people involved in strategy execution to understand the need to break from status quo, find the resources to implement the new strategic shift, keep your people committed to implementing the new strategy, and from overcome the powerful vested interests that may block the change. In the book the authors draw the attention of their readers towards the correlation of success stories across industries and the formulation of strategies that provide a solid base create unconventional success – a strategy termed as “Blue Ocean Strategy”. Unlike the “Red Ocean Strategy”, the conventional approach to business to beat competition derived from the military organisation, the “Blue Ocean Strategy” tries to align innovation with utility, price and cost positions. The book questions the phenomena of conventional choice between product / service differentiation and lower cost, but rather suggests that both differentiation and lower cost are achievable simultaneously. The authors ask “What is the best unit of analysis of profitable growth? Company? Industry?” – a fundamental question without which any strategy for profitable growth is not worthwhile. The authors justify with original and practical ideas that neither the company nor the industry is the best unit of analysis of profitable growth; rather it is the strategic move that creates “Blue Ocean” and sustained high performance. The book examines the experience of companies in areas as diverse as watches, wine, cement, computers, automobiles, textiles, coffee makers, airlines, retailers, and even the circus, to answer this fundamental question and builds upon the argument about “Value Innovation” being the cornerstone of a blue ocean strategy. Value Innovation is necessarily the alignment of innovation with utility, price and cost positions. This creates uncontested market space and makes competition irrelevant. Business Model Generation by Alex Osterwalder & Yves Pigneur also provides models based on the concepts brought forward by blue ocean strategy. Chapter 2. To avoid the “Marshmallow” momentum, focus on the business model I regularly perform an innovation cursus where we use the Marshmallow challenge http://www.marshmallowchallenge.com/TED_Talk.html as an exercise to demonstrate the make or break factor of a project (strategy, innovation production,  
  • 19. Copyright 2013 Martin Palmgren EVP .COMMUNICATE business and IT processes was business critical and would demonstrate that the IT Strategy is business centric and that the IT department understands the Business, Business objectives and the Business strategy. (Context B) A business or IT internal client wants to industrialise a process or a bundle of services with IT. We decided to use the same consultants as for the six sigma initiative (below) to capture business processes. The problem is that the business people are to busy to do their job (and might not be able to formalise their processes). And if their work is automatised we might chuck their work out on the cloud or an outsourced provider as well (the last time they spoke to a consultant their colleague was fired (sorry made redundant, sorry given the opportunity to seek new challenges))? Obviously they do not get it. Step 2 - Synthesize: (Context A) The captured processes are modelised in a process modelisation tool and will sit in a cuppord. (Context B) The captured processes (in the case of the industrialisation effort) delivered by the somewhat reluctant users are translated by a business analyst in to user requirements. These are then transferred to managment for verification. The 300 pages document sit on a disk somewhere for 3 weeks to 3 months before it is shipped of for programming. Step 3 - Generate Ideas: The user requirements are programmed. Step 4 - Refine: The end user team is brought in 18 months after to validate the application. Hmm they might not have gotten it either. At least we avoided a fist fight… Step 5 - Implement: The project sponsor refuses to sign off the project budget because the coulour of beige of the application is not right. We and they know that this is due to the fact that the modelisation did not correspond to the needs of the client in the first place and certainly not 18 or 36 months down the road (not to mention thousands of man hours). Phase 2. - Solve the problem: We realise that the customer experience and the services delivered by IT does not work / might not be perceived to be effective and the green light red light charts that we produce to demonstrate that we are able to keep the lights on during critical periods of the run performs the effect that we thought it would. Best case scenario: We convince the executive team to leverage social media and post the business strategy via facebook and twitter for the IT personnel to appreciate it in a crisp 140 characters format Next best case scenario: Walk your dead dog. This scenario would typically implicate a subject matter expert that would come in for an hour or 2 compare the Information system to a car, a boat or an engine where the new technology is a paradigm shift. The IT team that have participated gets all worked up because the analogy used that relates back to the early 19th century is so descriptive for our current cloud deployment. We build this really great presentation on how to leverage the cloud much as henry ford revolutionaised the personal transport industry with his you can have any coulour you like as long as it is black concept to optimise cost.  
  • 20. Copyright 2013 Martin Palmgren EVP .COMMUNICATE wonder if we can chuck the IT department out to the cloud. Then the cloud provider could deal with users that are not happy. I wonder if the cost cutting genious that we brought in last year is available. On his recommendation we consitently cut the cost of IT for the (mobile) sales force. At the end of the day as they did not have an office or a fix computer why should they need a lap top? Not to forget that we made substantial economies on software licenses and storage space. Phase 4. - Set direction: We have the impression that we might not be on top of things and should add a bit of governance. The Internal audit department confirmed this impression as they confirmed that we clearly lacked focus due to the absence of an IT Dashboard. Best case scenario: As we where quite happy with the Big Change report , the first page does after all look smashing, and the weight of the paper makes my table more stable. We decide to once more bring in our favourite consultants. At the end of the day if the six sigma task force initiative had a few bumps it was not due to the fact that the principles that where implemented where directly applied from the Toyota production chain (they are after all very good at car construction) but certainly due to the fact that the users did not get it. Even though the delivery cycle now takes 180 days compared to 30 before at least it is measured and we can bench cost to competition. Now to the point, as the audit team requires an IT dash board we asked our consultants to deliver one that looks smashing and the audit team is satisfied. The best part is that we now feel that we have effective governance in place and that they did not have to bother neither the IT executive team nor the business or the IT team. Worst case scenario: We had a meeting with the business consultant that convinced us that for IT to demonstrate that we support the business we should modelise all 15 00 business processes (I wonder why executive management put an end to this effort ?) This time we will demonstrate how we execute the IT strategy to the business strategy as we will implement a full audit framework! 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 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  
  • 21. Copyright 2013 Martin Palmgren EVP .COMMUNICATE   Burburry have taken the a lead in the how to leverage business innovation with IT, notably with social as a key enabler through a “Facebook” driven platform that drives innovation bottom up where employess connect to share best practise on how to set up stores and sell products and even compete internally on a daily basis who sold more in “discussion groups” set up by the teams not by management. I would invite you to discover an interview @ http://blogs.hbr.org/video/2012/12/how-burberry-manages-talent.html?cm_mmc=email-_-newsletter-_cant_miss_update-_-hbrcm020813&referral=01087&utm_source=newsletter_cant_miss_update&utm_medium=email&utm_campaign=hbrcm020813 To support business strategy execution 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. Figure 1: We articulate the Value proposition with a storyboard: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/we-articulate-the-value-proposition-witha-storyboard/ 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.  
  • 22. Copyright 2013 Martin Palmgren EVP .COMMUNICATE teams to articulate and formulate objectives on a project / program basis for improved execution with an extended GAP, risk and added value analysis captured in a DARCI (Decision taker, Accountable, Responsible, Consulted & Informed). A Collaboration Theme Scorecard The Collaboration Theme Scorecard Sets process objectives, Identifies: levers for joint actions and wins, metrics and initiatives on a short, middle & long term basis. Objectives: - Set process objectives,- Identify levers for joint actions and wins,Identify metrics, Identify initiatives on a short, middle and long term basis. Levers: Joint: Steering committee, development committee, project teams, crossfunctional teams, process improvement teams and functional improvement teams. To deliver Business Value with IT, we need to integrate the notion of effective IT delivery as a core process across the organisation. With the contribution of Jerry Luftman I have earlier referred to Michael Porter. In terms of Porter’s Value Chain (http://hbr.org/product/competitive-advantage-the-value-chain-and-your-p-l-applying-michael-porter-s-value-chain-framework-to-your-business/an/8890BC-PDF-ENG ), IT has to become a part of the core processes instead of being a separate support function. The role of the IT Department and the business stakeholders need to change to a strategic partnership, rather than service provider and internal customer. We need to view the IT portfolio as an integrated portfolio of enterprise services. Total Value of Ownership of IT (IT TVO) is a notion that is if not more at least as important as Return on Investment (ROI) and Total Cost of Ownership (TCO). Positive IT TVO could concern: - Greater customer satisfaction, - A more differentiated service offer, - Stronger customer relationship, - Increased ability to meet the needs of the business and clients, - Lower direct cost, - Better use of assets, Faster cycle time, - Increased accuracy, - Higher level of customisation or precision, Higher added value, - Simplified processes, - Higher customer retention, - Greater market share, - Ability to execute on set strategy and enter new markets. Priorities from an Executive Management Perspective: - The investment leverages the execution of the business strategy, - Enhance the value of the business, - Improve customer retention and increase the market share. Priorities from a Business Unit Management Perspective: - IT investment proposals are understood in terms of expected Business Outcomes, - The effort needed to reach the set outcomes and the risk involved, - The risk associated with IT investments are in line with the business acceptable risk profile, - IT investments are aligned with the business strategy. Priorities from an IT Management Perspective: - Provide predictable cost and budget levels, - Determine which IT resources can be applied to the firm’s core mission, - Define the current cost and services of IT operations, - How service levels  
  • 23. Copyright 2013 Martin Palmgren EVP .COMMUNICATE This approach permit effective allocation of resources as we provide participants the opportunity to better understand the problems and opportunities that exist and how projects can be leveraged across the organisation to facilitate the integration of IT and support business objectives and processes and hence enhance the value of the business. As we leverage IT to: - Substantially reduce the cost of business processes, - Lower the costs of customers and suppliers, - Differentiate, - Develop new IT features to differentiate products and services, - Reduce the differentiation advantages of competitors, - Focus products and services at selected market niches, - Create new products and services that include IT components, - Develop unique new markets or market niches with the help of IT, - Make radical changes to business processes with IT that dramatically cut cost, improve quality, efficiency, or customer service and shorten time to market, - Manage regional and global business expansion, - Diversify and integrate into other products and services, - Create virtual organisations of business partners, - Develop inter enterprise information systems that support strategic business relationships with customers, suppliers, subcontractors, and other stakeholders. IT must be responsible for profit and loss from a business perspective By Daud Santosa (Chief Technology Officer, Member of the Board @ the Open Group and Distinguished Chief IT Open Group) “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. “Deliver Business Value with IT” 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. ” 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. Further the IT Department and the (Enterprise) Architecture team must promote a continuous competitive market position as we deliver cost effective (productive and efficient) IT service to business needs and are able to demonstrate that we do so. To build and demonstrate IT success we need to Focus on the Business Bottom Line: that is 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.  
  • 24. Copyright 2013 Martin Palmgren EVP .COMMUNICATE to implement EA to deliver immediate business results. We would typically start to implement EA in different domains of the architecture. It all depends on where the needs of the organisation, culture, and skill set resides. The common challenges that I have seen in most organisations would be that the: - Line of Business continues to develop new projects or add new features with the current existing business applications, IT organisation continues to replace old hardware and add new hardware / software to support new business requirements, has no standard technologies & IT governance, continues to adopt new emerging technologies. We begin our EA journey as we address the spelled out points on a short and long term basis. The primary focus of EA would be to support the future business and new projects first. Based on the drivers, we can begin to create future IT services, shared infrastructure, Enterprise Solution and new cost model to deliver sustainable growth and premier services as we focus on: The Business Bottom Line that is How fast we can 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. *A shared service centre has 2 objectives 1) to provide unique talent as we pool resources that can focus on core competency rather than to have multiple service delivery centres where resources would spend 1/ 25 of their time on a competency or be underused. 2) we increase service delivery quality and reduce the cost of delivery of a service. To do so we need to define services (activity + process + business oriented KPI’s) with cost. A decision to put in place a shared service centre can only be valid as we have a clear business case with ROI and total cost of ownership (cost, consumption, chargeback) and can follow up on the actual cost of service delivered and benchmark the latter to competition / the market. Chapter 3. "Do we really need a CIO and IT department to bother us with technology when we can use the cloud?" 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” &  
  • 25. Copyright 2013 Martin Palmgren EVP .COMMUNICATE If we assume that to deliver business value with IT we need to support business objectives, the integration of a new entity is an optimisation of the current IT strategy (how we support business objectives and processes). We would obviously need to understand (and hopefully have the opportunity) how the current IT run before the purchase (IT due diligence) with full IT Financial Management to figure out the actual cost of delivered IT services (cost, consumption, chargeback). Once services defined we can then decide where to run the applications that support the IT and or Business Service (server / internal / external cloud / outsourced provider). We also need to define the purpose of the purchase (invest / divest) in the overall corporate strategy where it is of little use and a significant cost to integrate all systems in to a common backbone if the company is to be divested only a few years later. We could use an IT Scorecard to ensure that stakeholder expectations are met from an executive 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. See also: “Get your IT Service Strategy right” http://www.brighttalk.com/community/it-service-management/webcast/534/23630 “Leverage Strategy with IT” http://www.brighttalk.com/community/it-service-management/webcast/534/22934 “Run IT as a Service Business!” http://www.brighttalk.com/community/it-service-management/webcast/534/21389 Can we leverage the cloud to transform the IT department in to an effective broker of services? 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  
  • 26. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 where the IT Department support the business functions to simplify processes that can then be industrialised (automatised) when needed and on the cloud (external or internal) for speed / cost effectiveness when applicable. “Social media and the cloud” - Social media applications can either be run as in example 1) by an external provider to whom you outsource the data (Facebook* would be one example) or as in example 2) where an application / a bundle of applications that respond to the needs of the business “for example to interact with our customers” would run on an external or internal cloud. “Make or buy” – To outsource / cloud source (cloud) is a traditional “make or buy decision”, that is “do we perform this well internally at benchmarked cost or do we outsource for success”. One of the critical decisions in apple’s current success was to outsource a manufacturing that was defunct (cost / quality) and did not meet the expectations of the final customers. But to outsource / cloud source effectively as well as to validate the successful set up of a shared service centre, we need to understand the cost of the service delivered before and after the set up function (the cost to change provider should be taken in to account in the business case). “Cost and Demand drivers” – With “to keep the lights on”, to optimise the cost of the services delivered is among the critical functions of the IT Department. Demand drivers are linked to the business emerging needs to support the execution of the business strategy with IT when needed. “An IT Business Model and Value Proposition” – To obtain funds in the business 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 (leadership) 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  
  • 27. Copyright 2013 Martin Palmgren EVP .COMMUNICATE forces the business to define services and service level agreements (as well as cost, consumption, chargeback) with an IT Business Model that is if not optimised at least focused on immediate business priorities and drivers (demand and cost). Build and demonstrate IT success To build and demonstrate IT Success we need to focus on the Business IT roadmap; that is how do we (as CIO, IT Department) support business objectives and processes leveraged by IT and an effective IT Service strategy. Where we 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. This is achieved as Business objectives and Processes (captured in the Business Architecture) are supported by a strategy execution focused IT architecture where Business objectives: We would like to increase sales by 25%, how can the IT Department support the Business in this effort and what will be the impact on the budget of the IT Department? , are supported by IT objectives: This would translate in to, on the business (IT) side: 1) which business processes are concerned with the increase and how do we support them today and how do we anticipate the increase (applications, infrastructure, support)? 2) Is there an opportunity to further industrialise processes (off the shelf applications, build)? 3) Supported by hardware (laptop, (i)pad, smart phone)? 4) Can we spell out the cost? On the IT side we need to understand 1) which services that are concerned (increase / decrease in demand) and if we need to modify / provide new service bundles, 2) do we provide a cost effective and secure IT architecture and that permit the rapid development of new business services 3) Business cases, that is can we spell out the cost? 4) can we ensure that services / applications are up and running (business continuity)…. Deliver effective IT services to business needs We Deliver effective IT services to business needs as we understand that At the end of the day Business Executives take the decision to out / 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 IT department is unable to deliver services in a time to market perspective, IT propose an effective service portfolio that correspond to Demand and Cost drivers. IT contributes to business objectives as The IT service proposition is aligned to the business strategy: 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  
  • 28. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Per seat, basis, - How does customers currently pay for these services, - What is the backlog of new unfulfilled IT demands? - What processes does IT perform? : - How do these processes compare to best practices? - What are the cost drivers on an activity basis? IT Decision are based on Total cost of ownership As Customers pay for services that they use decisions are made based upon cost, not politics. IT is incented to reduce cost and compete and users do not request unnecessary demands. KPI’s become established to measure performance SLA are put in place. IT Decisions are ROI Based IT is effectively managed as we a Establish Baseline with Cost, Consumption, Chargeback. Build a service based business model of IT that is based on IT Service Management. Perform Business Case & Best Practise Bench Mark with GAP (As Is, To Be, ROI) and Track Realisation of ROI Outcomes. The IT Strategy is Effectively Leveraged As Initiatives are effective and stakeholder oriented we can perform effective: Mergers and Acquisitions (M&A) with Data room Development and Synergies & consolidation options, - Data Centre Migration with GAP (As Is, To Be, ROI), - IT Organisational Transformation Towards a Service Based Logic with GAP (As Is, To Be, ROI), - Shared Service Centres, Outsource, Cloud & Benchmark with GAP (As Is, To Be, ROI). Figure 2: Time to Market, Cost Effectiveness, Cycle Time: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/time-to-market-cost-effectiveness-cycletime/ We focus on Time to Market, Strategy Execution With Vision, Principles and strategy: Strategic Intent: set by the Board, Executive Management, Business operations management with objectives on a: Strategic, Tactic  
  • 29. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Time in months to break even for new or enhanced IT services (Investment < €100,000), - Time in months to break even for new or enhanced IT services (Investment b/w €100,000 and €250,000), - Time in months to break even for new or enhanced IT services (Investment b/w €250,000 and €500,000), - Time in months to break even for new or enhanced IT services (Investment b/w €500,000 and €1,000,000), - Time in months to market for new or enhanced IT services (Investment < €100,000), - Time in months to market for new or enhanced IT services (Investment b/w €100,000 and €250,000), - Time in months to market for new or enhanced IT services (Investment b/w €250,000 and €500,000), - Time in months to market for new or enhanced IT services (Investment b/w €500,000 and €1,000,000), - Time in months to respond to major business shifts, - Time in weeks to complete projects that address an identified business exposure or opportunity (< 20% of total annual revenue), - Time in weeks to complete projects that address an identified business exposure or opportunity (20-40% of total annual revenue), - Time in weeks to complete projects that address an identified business exposure or opportunity (4060% of total annual revenue), - Time in weeks to complete projects that address an identified business exposure or opportunity (60-80% of total annual revenue), - Time in weeks to complete projects that address an identified business exposure or opportunity (More than 80% of total annual revenue), - Time in weeks to close an identified IT skill or capability gap, - Average time in weeks to fulfill a simple information need, - Average time in weeks to fulfill a medium information need, Average time in weeks to fulfill a complex information need, - Average time in weeks to create the enterprise information management strategic plan, - Time in weeks to report on compliance status of the information architecture, - Average time in weeks to set up a simple technical interface for a user of a defined data content source. Cost Effectiveness (Key Performance Indicators): - Total IT budget as a percentage of revenue, - Total IT budget per FTE, - IT expense per FTE, - Personnel cost of the process "manage the business of IT" per €1,000 revenue, - Systems cost of the process "manage the business of IT" per €100,000 revenue, - Personnel cost of the process "develop and manage IT customer relationships" per €1,000 revenue, - Systems cost of the process "develop and manage IT customer relationships" per €100,000 revenue, - Personnel cost of the process "manage business resiliency and risk" per €1,000 revenue, - Systems cost of the process "manage business resiliency and risk" per €100,000 revenue, - Personnel cost of the process "manage IT knowledge" per €1,000 revenue, - Systems cost of the process "manage IT knowledge" per €100,000 revenue, - Personnel cost of the process "develop information and content management strategies" per €1,000 revenue, - Systems cost of the process "develop information and content management strategies" per €100,000 revenue, - Personnel cost of the process "define enterprise information architecture" per €1,000 revenue, - Systems cost of the process "define enterprise information architecture" per €100,000 revenue, - Personnel cost of the process "manage information and IT knowledge resources" per €1,000 revenue, Systems cost of the process "manage information and IT knowledge resources" per €100,000 revenue, - Personnel cost of the process "perform enterprise data and content management" per €1,000 revenue, - Systems cost of the process "perform enterprise data and content management" per €100,000 revenue, - Personnel cost of  
  • 30. Copyright 2013 Martin Palmgren EVP .COMMUNICATE unavailability of network, - Response times per category of users, - Percentage of jobs done within time, - Efficient help desk function, - Average answer time of help desk, Percentage of questions answered within time. Future Orientation (Key Performance Indicators): - Training and education of staff, - Number of educational days per person, Education budget as a % of total IT budget, - Expertise of the IT staff, - Number of years of IT experience per staff member, - Age pyramid of the IT staff, - Research into emerging technologies, - % of budget spent on IT research General Business Management. To support the business Strategy Set Business processes and key performance indicators (Build): 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. Figure 3: Connect information: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/connect-information/ Connect information to take qualified decisions We Connect information to take qualified decisions as Financial, Budget and Actuals, Projects, Contracts, Business Cases, Resource Allocation, IT Assets, IT Services, IT Metrics, Chargeback, Business goal Alignment information is structured in an IT Financial Management Model that can be used to support the prices set in the Business and IT service catalogue. Figure 4: IT support Business Objectives: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/it-support-business-objectives/ 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,  
  • 31. Copyright 2013 Martin Palmgren EVP .COMMUNICATE A Roadmap The Roadmap (derived from the logics presented in “Managing Alliances with the Balanced Scorecard”, by Kaplan, Norton, Rugelsjoen, Harvard Business Review, January–February 2010, p. 114 – 120) http://hbr.org/2010/01/managing-alliances-with-the-balanced-scorecard/ar/1 reflects stakeholder expectations from an Executive Management, Business Unit Management, IT Management and IT Risk Management perspective where: Stakeholder Expectations Drives Business (IT) Objectives that Delivers the Business (IT) Road Map executed by Employees & Organisation. Figure 7: The Service Strategy support Business Drivers: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/the-service-strategy-support-businessdrivers/ The Service Strategy support Business Drivers as Business (IT) Drivers Drives Demand and Cost Drivers and Delivers the (IT) Service Strategy that is Executed towards Metrics. IT provides competitive leverage. Priorities from an Executive Management Perspective: IT supports the achievement of strategic business objectives, IT Delivers value to expenditure, IT cost is managed effectively, IT risk is identified and managed, Targeted inter company IT synergies deliver to schedule, We have a clear vision towards which we expect the IT department to deliver. IT delivers to demand and cost drivers. Priorities from a Business Unit Management Perspective: IT supports the achievement of tactical business objectives, IT delivers perceived added value services and at a reasonable cost, IT delivers to operational and service level agreements (commitments), IT investments positively affect business productivity and the customer experience, We have a clear process vision to which we expect the IT department to deliver. The IT Strategy support Business objectives as we meet Priorities from an IT Management Perspective: We understand stakeholder expectations and propose a service portfolio that correspond to both Demand and Cost drivers with a focus on perfect order business transactions, We develop the professional competencies needed for successful service delivery, We capture organisational knowledge to continuously improve performance, The IT and Stakeholder departments have clear objectives, processes and indicators with clear accountability and responsibility to deliver to set objectives. 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.  
  • 32. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 Manage financial resources: - Perform planning and management accounting, Perform revenue accounting, - Perform general accounting and reporting, - Manage fixed-asset project accounting, - Process payroll, - Process accounts payable and expense reimbursements, - Manage treasury operations, - Manage internal controls, Manage taxes, - Manage international funds/consolidation Acquire, construct and manage property: - Design and construct/acquire nonproductive assets, - Maintain nonproductive assets, - Obtain, install, and plan maintenance for productive assets, - Dispose of productive and nonproductive assets, - Manage physical risk Manage environmental health and safety: - Determine environmental health and safety impacts, - Develop and execute environmental health and safety program, Train and educate employees, - Monitor and manage environmental health and safety management program, - Ensure compliance with regulations, - Manage remediation efforts Manage external relationships: - Build investor relationships, - Manage government and industry relationships, - Manage relations with board of directors, - Manage legal and ethical issues, - Manage public relations program Manage knowledge, improvement and change: - Create and manage organisational performance strategy, - Benchmark performance, - Develop enterprise-wide knowledge management (KM) capability, Manage change Run the IT Business effectively To run the IT business effectively and leverage the execution of the business Strategy and objectives with IT we need to make educated investments (on paper compliance and KPI indications is nice to have but not enough!): 100% of the value impact is in the execution of the process of the supported services over the entire service life cycle “order to bill”. Financial Management for Business and IT Services 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.  
  • 33. Copyright 2013 Martin Palmgren EVP .COMMUNICATE workflows. These are then Broken down in to Key Activities Performed to Responsibility and Accountability Charts (RACI). The logics in chapter 4 clearly links back to CobIT 4.1, ValIT, RiskIT. They are then Measured by Performance indicators (Embedded in Service Catalogue per Service), Outcome Measures, Maturity Models (CMMI, ITIL continuous process improvement) Audited with Control Outcome tests Derived from Control Objectives Audited with Control Design Test Implemented with Control Practices. IT support business objectives and processes with Investment Management We align and lever operating, management and support processes through the effective implementation of IT. Do we do the right things? The strategic question: The investment Is in line with our vision, Is consistent with our business principles, Contributes to our strategic objectives, Provides optimal value, at affordable cost, at an acceptable level of risk. Do we reap the benefits? The value question: We have A clear and shared understanding of the expected benefits, Clear accountability for realising the benefits, Relevant metrics, An effective benefits realisation process over the full economic life cycle of the investment. Process Management We align and lever operating, management and support processes through the effective implementation of IT. Do we perform them in the right manner? The architecture question: The investment: Is in line with our architecture, Is consistent with our architectural principles, Contributes to the population of our architecture. Do we perform them well? The delivery question: We have Effective and disciplined management, delivery and change management processes, Competent and available technical and business resources to deliver: The required capabilities, Organisational change required to lever capabilities. Figure 9: The Business Strategy is executed by IT: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/the-business-strategy-is-executed-by-it/  
  • 34. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Set the IT Value Proposition Baseline: Set fundamentals of a service business, Process view, Establish Total Cost of Ownership and IT baseline with cost/value/risk, Activity based financial view, Service portfolio view, Value contribution view, Customer consumption view. Figure 15: Draw the Roadmap: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/draw-the-roadmap/ Draw the Roadmap: Construct the IT Business Model and Value Proposition, Define IT “to be state”: “where we need to go”, “where we are now” & “how we need to proceed” with established KPI’s, Report gap analysis findings, Design IT plan through a project portfolio, Cost out the plan (budget), Develop consensus, business case for change. Figure 16: Design the IT Value Proposition: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/design-the-it-value-proposition/ Design the IT Value Proposition: Design the service strategy, Articulate governance principles, Define project teams, Engage customer ‘buy in’, Design KPI’s, Define & validate service pricing, Design the performance measurement system. Figure 17: Build the IT Value Proposition: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/build-the-it-value-proposition/ Build the IT Value Proposition: Implement the project portfolio, Engage Organisational change, Control IT (measure outcome to set objectives), Capture KPI’s & Measure performance, Enforce governance. Figure 18: To Perform Effective IT Governance: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/to-perform-effective-it-governance/ To Perform Effective IT Governance: Transform the IT Business Model, Measure KPI trends and targets, Meet business objectives, Control cost, Measure Delivery performance, Manage change, Continuous service & process improvement, Process roll out (articulation & integration), Execute strategic intent.  
  • 35. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Objectives and Plans There is a understanding of the: Extent to which long term plans are coherent and logical, Extent to which short term plans are appropriately costed and timetabled and the Consistency with overall goals and objectives. Financial plans Appropriateness of detail, Clarity with which assumptions have been stated, Extent to which profit / return criteria has been evaluated, Evidence of appropriate scenario and sensitivity analysis, Evidence of appropriate key performance indicators. Communication and buy in There is an understanding of the Extent to which the strategy has been communicated and the Extent to which staff performance towards the business IT strategy is recognised. Meet stakeholder expectations There is an understanding of the Suitability of the IT strategy, Feasibility of the IT strategy and the Acceptability of the IT strategy. Deliver IT services to business needs We understand that At the end of the day Business Executives take the decision to out / 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 IT department is unable to deliver services in a time to market perspective, IT propose an effective service portfolio that correspond to Demand and Cost drivers. 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  
  • 36. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 teams to articulate and formulate objectives on a project / program basis for improved execution with an extended GAP, risk and added value analysis captured in a DARCI (Decision taker, Accountable, Responsible, Consulted & Informed). A Collaboration Theme Scorecard The Collaboration Theme Scorecard Sets process objectives, Identifies: levers for joint actions and wins, metrics and initiatives on a short, middle & long term basis. Objectives: - Set process objectives,- Identify levers for joint actions and wins,Identify metrics, Identify initiatives on a short, middle and long term basis. Levers: Joint: Steering committee, development committee, project teams, crossfunctional teams, process improvement teams and functional improvement teams. To leverage business strategy execution with IT 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,  
  • 37. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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? - Do we have effective value-assurance processes in place to mitigate execution risk? 5. How will IT improve our operational and strategic agility? Questions to ask: - How does our business and IT agility measure up with that of our competitors? - How do our IT plans increase our business and IT agility? - Are our sourcing relationships increasing or reducing our agility? 6. Do we have the capabilities required to deliver value from IT? Questions to ask: - Do we have the capabilities needed to drive full value from our existing IT systems? - What are the weakest links in our capabilities? - Do we have enough IT-literate executives? - What is our plan for upgrading capabilities? 7. Who is accountable for IT and how do we hold them to account? Questions to ask: - What is our operating model for IT, and is it aligned with our business priorities? - Who is accountable for delivering business value from IT—both overall and by activity? - Are those accountable being measured using business-friendly scorecards that create  
  • 38. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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)? 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. If we assume that to deliver business value with IT we need to support business objectives, the integration of a new entity is an optimisation of the current IT strategy (how we support business objectives and processes). We would obviously need to understand (and hopefully have the opportunity) how the current IT run before the purchase (IT due diligence) with full IT Financial Management to figure out the actual cost of delivered IT services (cost, consumption, chargeback). Once services defined we can then decide where to run the applications that support the IT and or Business Service (server / internal / external cloud / outsourced provider). We also need to define the purpose of the purchase (invest / divest) in the overall corporate strategy where it is of little use and a significant cost to integrate all systems in to a common backbone if the company is to be divested only a few years later. We could use an IT Scorecard to ensure that stakeholder expectations are met from an executive  
  • 39. Copyright 2013 Martin Palmgren EVP .COMMUNICATE draw an IT strategy leveraged by the cloud to: - Establish an appropriate Cloud sourcing strategy, - Identify capabilities that could be cloud sourced, - Develop appropriate approaches for cloud sourcing activities, - Manage risks throughout their cloud sourcing activities, - Identify, select and negotiate with service providers, - Conduct service provider governance and performance management, - Manage relationships with service providers. We Cloud Source to: Meet Demand and Cost drivers, Focus on “Time to market”, Cost effectiveness and Cycle Time, Provide an optimised Sourcing Strategy and Leverage Business Strategy execution. Peer see competitive advantage? Is there a peer see competitive advantage in the adaptation of the cloud? In a recent conversation with a CIO the obvious question of the peer see competitive advantage in the adaptation of the cloud was raised. 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 run 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 the external cloud 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. Meet Demand and Cost drivers On a high level the cloud can be seen as “storage”, a large server that can be used inside the firewall an “Internal” or “Private” Cloud or outside the firewall an “External” or “Public” cloud. The decision to leverage the “cloud” is either cost (TCO) or demand driven (deployment of services (processes) with an underlying application structure). The “Public” cloud has the advantage to permit a “rapid” modelisation / development / run of a services that can then be brought inside the firewall as needed (ref. NASA).  
  • 40. Copyright 2013 Martin Palmgren EVP .COMMUNICATE To demonstrate how IT contributes to Business Objectives we need to build a Blueprint (Road Map) to meet business objectives and stakeholder expectations leveraged by an effective IT Service Strategy. It should support an end-to-end perspective on how to get the IT strategy right, “Canvassed”, with and support Service Strategy (ITIL), Delivery Capability (IT – CMF, COBIT 5 (ValIT, CobIT, RiskIT, CMMI, eSCM), Architecture (TOGAF) Security (ISO 9001, 20 000, 27 001). To deliver IT Services to business needs as we meet stakeholder expectations, we Focus on the Business (IT) Strategy Execution to Leverage strategy with IT and Build a Business (IT) Service Strategy where we Design the IT Service Strategy & Portfolio, Perform Effective IT Management with a strategy execution focused IT Service Strategy as we “Canvas” the Business (IT) Vision. We will demonstrate how IT contributes to business objectives with: - A common problem statement, - A common problem context, - A proposition, - A Business (IT) Strategy Statement (What), - A Business (IT) Strategy Road Map (How), - A Business (IT) Service Strategy, - An (IT) Business Model and A Business (IT) Value Proposition. Common Problem Statement Scope: To provide a perspective on how to leverage strategy with IT and design an IT Service strategy that focus on strategy execution to: - Support the development of a Business oriented IT strategy, - Work with business entities to understand their business strategies and processes and ensure alignment of their IT strategies with the corporate IT strategy, - Drive the development and implementation of IT policies and standards, - Work with Audit and Internal Control to ensure compliance to set policies and standards, - Implement IT governance forums, processes and controls, and manage the necessary communication channels and tools, - Implement Project Portfolio Management and deploy the necessary Project Management tools and practices, - Capitalise experience and define IT guidelines for Mergers & Acquisitions and Build strong organisational capabilities for strategic planning and IT governance. Objective of the session is to follow up on the call I had with Martin regarding the Global IT planning needs: To Support the development of a group-wide IT strategy, Work with business entities to understand their business strategies and processes and ensure alignment of their IT strategies with the group-wide IT strategy, Drive the development and implementation of IT policies and standards across the group, Work with Audit and Internal Control to ensure compliance to Group policies and standards, Implement IT governance forums, processes and controls, and manage the necessary communication channels and tools, Implement Project Portfolio Management and deploy the necessary Project Management tools and practices, Capitalize experience and define IT guidelines for Mergers & Acquisitions, Build up strong organisational capabilities for strategic planning and IT governance.  
  • 41. 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 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, Develop and counsel employees, - Reward and retain employees, - Redeploy and retire employees, - Manage employee information Manage information technology: - 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 Manage financial resources: - Perform planning and management accounting, Perform revenue accounting, - Perform general accounting and reporting, - Manage fixed-asset project accounting, - Process payroll, - Process accounts payable and expense reimbursements, - Manage treasury operations, - Manage internal controls, Manage taxes, - Manage international funds/consolidation Acquire, construct and manage property: - Design and construct/acquire nonproductive assets, - Maintain nonproductive assets, - Obtain, install, and plan maintenance for productive assets, - Dispose of productive and nonproductive assets, - Manage physical risk  
  • 42. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Priorities from a Business Unit Management Perspective: - IT supports the achievement of tactical business objectives, - IT delivers perceived added value services and at a reasonable cost, - IT delivers to service level agreements (commitments), - IT investments positively affect business productivity and the customer experience, - We have a clear process vision towards which we expect the IT department to deliver: ISO 38 500, VALIT, COBIT, RISKIT, ITIL Business objectives are reflected in the IT Strategy Roadmap Priorities from an IT Management Perspective: - We understand stakeholder expectations and propose a service portfolio that correspond to both Demand and Cost drivers with a focus on perfect order business transactions - We develop the professional competencies needed for successful service delivery, - We capture organisational knowledge to continuously improve performance, - IT and Stakeholder departments have clear objectives, processes and indicators with clear accountability and responsibility to deliver to set objectives: ISO 38 500, ITIL, VALIT, COBIT, TOGAF 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: VALIT, COBIT, RISKIT, COSO, ISO 9001 ISO 20 000 / 27 000. 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! Chapter 7. Logics for IT Sourcing (Internal, Shared service center, Out, Cloud) To source “right” has become business critical. We Source IT to: Meet Demand and Cost drivers, Focus on “Time to market”, Cost effectiveness and Cycle Time, Provide an optimised Sourcing Strategy and Leverage Business Strategy execution. Please find an actionable story board format designed to permit you to flick out the  
  • 43. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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, Develop and counsel employees, - Reward and retain employees, - Redeploy and retire employees, - Manage employee information Manage information technology: - 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 Manage financial resources: - Perform planning and management accounting, Perform revenue accounting, - Perform general accounting and reporting, - Manage fixed-asset project accounting, - Process payroll, - Process accounts payable and expense reimbursements, - Manage treasury operations, - Manage internal controls, Manage taxes, - Manage international funds/consolidation Acquire, construct and manage property: - Design and construct/acquire nonproductive assets, - Maintain nonproductive assets, - Obtain, install, and plan maintenance for productive assets, - Dispose of productive and nonproductive assets, - Manage physical risk  
  • 44. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 cloud (Internal, External). Do we buy or do we lease (Investment or operational expenditure)? Platform as a Service (PaaS) In the PaaS model, cloud providers deliver a computing platform that would typically include operating system, programming language execution environment, database, and web server. Application developers can develop and run their software solutions on a cloud platform without the cost and complexity to buy and manage the underlying hardware and software layers. With some PaaS offers, the underlying computer and storage resources scale automatically to match application demand such that cloud user does not have to allocate resources manually. Infrastructure as a Service (IaaS) In this most basic cloud service model, cloud providers offer computers, as physical or more often as virtual machines. Private (Internal) 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. Hosted Applications We leverage Hosted Applications, as the application is contracted and sit on a  
  • 45. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Develop the Business (IT) Service Strategy, Build the Business (IT) Service Strategy, Govern the the Business (IT) Service Strategy, Design the Technology Architecture, Build the Sourcing Strategy, Develop the Program Plan, Leverage Business Strategy Execution. 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. @ 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 This is an introduction to the subject with a full version of the chapter to be published on a stand alone basis. Design the Business (IT) Value Proposition, as we understand demand and cost drivers the IT department deliver effective services. Define services: - Clearly defined portfolio of products and services and aligned to business goals and priorities, Cost is understood for each service with a TDABC analysis for resource capacity, Asset consumption by service is established, - Best practice Asset Management practices are in place and IT leverages frameworks. We provide best in class services to business needs Market definition: - Customer base and demand is clearly defined: - Who is consuming what services, - Prices / SLA’s for services are established and Internal rates compared to outside marketplace for IT (Make or Buy). And solutions as needed with a focus on business value Business proposition: - Options are presented to management: In-house, shared services, outsourcing, cloud sourcing, - Key IT projects deliver value as planned, Strategic IT opportunities are identified but not articulated, - The Board will be presented with risk assessment decisions on critical initiatives, - Position IT services in relation to the competition and industry, - IT analyse competitor's IT initiatives. To leverage competitive advantage we provide clear guidelines Governance is in place: - Best practices processes continuously improved, Governance blueprint designed and operating. IT investments reflect: - The strategic intent of the Board, - Business goal and priorities, - A clear IT portfolio of projects and services, - A Service Portfolio alignment to business goals and priorities, - IT investments deliver a good return on investment, - The IT Steering Committee will initiate a strategic IT competitive analysis.  
  • 46. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Develop an understanding of the Business (IT) Strategy and how the IT department will deliver effectively to support strategy execution: It is critical to develop a clear and comprehensive understanding of the business strategy and the operating environment: - 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? Confirm business vision It is important to understand both the vision and the extent to which it has been communicated throughout the organisation and “bought in to” by Stakeholder, key influencers and end users. In the event of a nonarticulated vision for the organisation, it should be agreed that a consensus approach is required to build one. A visioning workshop should be conducted with key stakeholders. The Business Direction and Structure: - 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 further opportunities to use IT? Confirm External Environment The Business Profile developed should have identified a large number of organisational and industry key issues. These will set the direction and focus of the review of the strategic analysis and highlight material areas which have not been considered / ignored in the development of the Business (IT) Strategy plan. An analysis of the external environment will involve: political, economic, social and technological forces impact the business, suppliers and customers, threat of new entrants, possible substitution effects, the competitive arena and the business relative positioning. Confirm linkages to partners To identify and document business drivers and objectives linkages that the organisation has with partners (suppliers and customers) and to establish whether business advantage can be created and captured in the 5 forces framework. Where systems related opportunities of improvement depend on third party links these should  
  • 47. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Focus on the validation of the IT strategy and direction. Where certain areas are less focused, dispersed or contradict elements of the Business (IT) strategy it is necessary to undertake incremental strategic analysis. The extent to which this is necessary or desirable depend on if the area of concern is fundamental to the entire Business Strategy & impact on the Business (IT) Strategy. Develop a high level picture of the Business (IT) Strategy A high level picture of the Business (IT) Strategy contains a description of the Business Strategy with Business Drivers and Objectives, how IT support strategy execution, the needed competencies and resources. This picture is developed as we consider a number of aspects of the Business (IT) Strategy such as the subsequent value chain, process architecture, information/data architecture, organisation charts and skills and competencies. ‘As-Is’ model To develop a high level picture of the Business (IT) Strategy in terms of how it is organised and where activities are carried out we conceive a strategy articulation model with Business Drivers and objectives. The strategy articulation model is then translated to the Business (IT) Strategy. Determine the leverage of IT to support strategy execution The extent to which IT is used as an organisational asset is an indication of Key Business Stakeholders Perception of IT as critical lever and drives the value the organisation places on it. This in turn will determine the nature and quality of information technology in use in the organisation. The importance of IT on the board’s agenda usually provides a good indication of the value the organisation places on IT. A SWOT analysis could be performed on the IT Strategy to highlight critical “hot spots”. Identify high level IT Strategy enabled business opportunities To identify the opportunities offered by IT and to determine the scope and potential role in organisational change we have to understand that change range from organisational transformation to performance improvement. The perceived scope of IT as an enabler will also help focus effort on downstream activities in the IT strategy development programme. Identify Focus Areas To identify the areas of the organisation that are critical to the success of the business strategy we focus on business drivers and objectives. This involves to map prioritised IT objectives to high level business drivers and objectives.  
  • 48. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Summarise analysis An agreement to the business design/transformation principles reached, it is important to document the analysis undertaken and prepare a short summary report. The report will be useful as a signed off document that can be revisited during the engagement where the ‘To-Be’ model is developed. We articulate the Business (IT) Strategy We articulate the current Business (IT) Service Strategy with an IT Business Model & Value Proposition with Service strategy (ITIL), Delivery capability (VALIT, COBIT, RISKIT, CMMI, eSCM, ITDB), Architecture (TOGAF) and Security (ISO 9000, 20/ 27 000). Assess the As – Is of the Business (IT) Service Strategy Draw the current Business (IT) Service Strategy: Scope The focus of the SCOPE as a part of the service strategy at this stage is limited to the assessment of existing IT in order to develop an ‘As-Is’ picture. IT Review An assessment of the existing IT Business Model and Value proposition with a Service Strategy, IT Delivery Capability, Architecture and Security model is an essential and integral part of the IT strategy engagement. The nature and extent of the assessment will vary in each engagement. This assessment provides the ‘As-Is’ picture that will be the point of departure for the Business (IT) Strategy. Inventory of the existing IT and plan review scope and detail As a first step, the IT Value Baseline is set with Demand and Cost Drivers that is how well does IT support strategy execution and the Total Cost of Ownership per user with Cost, Consumption and Chargeback. This information is used to develop a high level picture of the IT organisation. The scope of the review should be established in terms of the components to be included and the depth of analysis to be carried out. The proposal itself should, in most cases, identify the components and the level of detail for the review. IT business issues identified in the stakeholder dialogue should be highlighted. Understand and assess overall Alignment of IT to the business The purpose of this task is to understand how well existing IT is aligned to the business. The effectiveness of the IT strategy and the extent of IT leverage to the business strategy can be assessed as we determine that IT investments match with business priorities and the extent of IT support to business requirements and priorities.  
  • 49. Copyright 2013 Martin Palmgren EVP .COMMUNICATE against plan, resources used, strategic alignment, what would happen if it was stopped, etc. IT management practice definitions could be used to score specific aspects of project management processes. Assess Stakeholders Priorities, Maturity and Satisfaction Stakeholder priorities, Maturity and Satisfaction should be assessed to complete the understanding of the reasons for the existing effectiveness of IT in the organisation. Stakeholder priorities can be assessed by structured interviews of selected stakeholders to understand users priorities, IT skills, involvement in and satisfaction with IT. Alternatively, a user maturity assessment can be made via a workshop with IT and business representatives (or separately if needed) - any significant differences in views can be a measure of misalignment between IT and the business. User satisfaction across different services provided by IT such as Operations, Supply of solutions and Support can be measured and assessed with Key Performance Indicators. Review of Information Assets The detailed review of the information assets is used to determine the extent to which assets match the importance that the business attach to them. The review of IT resources of an organisation covers the assessment of the quality, security, accessibility and availability of information. Assess IT Talent and Organisational Skills In order to develop an IT skills and competency profile to support the development of the IT strategy, it is important to undertake an assessment of the skills and competencies of the IT staff. This review can be completed with an activity analysis of staff to support the development of a talent profile. An IT skills survey questionnaires can be appropriately conceived and distributed. An activity questionnaire can also be distributed or alternatively, timesheets can be analysed. The results should be analysed and staff experience, skills, competency and activity profiles prepared and results summarised. Results should clearly identify strengths and weaknesses of existing staff in the context of the relevant business strategy. An understanding of the nature of existing and planned technology, how it is organised and the extent to which it is used, contributes to a complete understanding of IT resources. Any assessment of the existing and planned technology should cover hardware platforms, operating systems, systems software and development tools, networks and any other components including third party solutions. The review should be focused on the ability of the technology architecture to support business requirements. This analysis is best undertaken through conversations with  
  • 50. Copyright 2013 Martin Palmgren EVP .COMMUNICATE time profile associated with each of the scenarios can be used to eliminate less attractive propositions. Sourcing alternatives should also be considered while developing the ‘To-Be’ Business IT model. If consistent with business principles and priorities, it is possible that certain ‘non-core’ services should be a candidate for outsourced supply based on Demand and Cost Drivers (internal / external shared service centre, outsourced or cloud(out)sourced). Set stretch targets A preliminary benefits case is assembled with stretch targets for a management high level view. The objective of this benefits argument is to provide management with an overview to assess different opportunities. The benefits argument is used by management to prioritise opportunities (technological and other constraints such as resources may limit the range of available alternatives) and categorised into: Quick wins and significant longer term benefit opportunities. Quick wins deliver result in a short timeframe in an early stage of the programme and is necessary to gain the momentum needed to obtain buy-in and commitment necessary for a larger change programme. Consolidate Business IT opportunities of improvement To develop the Business (IT) Model the strategic preferences of identified stakeholders are used to develop themes to address business / information technology opportunities. The latter could range from “to extend the value chain to customers and suppliers” to support the business strategy or use of new technology to underpin performance improvement. Opportunities should reflect the Business Strategy that is: Strategy execution, Business objectives and drivers. Input from best practice models, industry benchmark and technology practices should be used to identify available opportunities. To meet stakeholder needs, incorporate new technologies to out perform competition and capture revenue are some examples of strategy considerations to improve business performance. Improvement opportunities are formulated and grouped as common elements to evaluate available options. Service Strategy The Service Strategy defines how the Business (IT) Strategy will be structured in the future. The Service Strategy perspective provides a basis to identify the projects required to achieve to the desired future state. Delivery Capability  
  • 51. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Build the Business (IT) Service Strategy, - Build the Business (IT) service strategy, Develop the Information Architecture, - Develop the Information Architecture, Develop Applications Architecture, - Define Information/Applications Architecture Implementation Policies/ Principles & Standards, - Revisit and update business cases. Question: What is the structure of services, applications, information and data needed to support the business in the future? Objective: To identify how services, applications, information and data will be structured to support the ‘To-Be’ business architecture. Benefit: Increase the flexibility of information systems to adapt to changing business needs and provide the information needed to manage the business. Develop the Information Architecture The information architecture provides the framework for the organisation and management of information in the organisation. In this step data entities are defined, their relationships are identified, entity process relationships established and a logical model created. Subsequently a physical model can be designed which is influenced by data security and access considerations and constrained by the application architecture and technical infrastructure. Workshops are conducted to identify key information in the business. Further techniques, such a data normalisation, can be used to rationalise data group and link data. The exercise is best performed with a small group of talent with at least one experienced data modeller. The results is then validated with a wider business audience for buy-in and verification. Workshops are used to identify responsibilities for ownership and maintenance of critical information and data the establishment of appropriate business drivers and subsequent processes included. Develop Applications Architecture The applications architecture identifies the applications components and their structure and defines how information will flow and be processed. The two main inputs for this work are the information architecture and the business architecture. Applications are to support a sub-set of the business architecture with a clear demand cost drivers benefit logic. Software availability and industry practice should be clearly linked to the benefits logic. Applications architecture workshops should be conducted around business processes to develop the architecture through the participation of IT business analysts and business representatives. This process may require several iterations of workshops and desk analysis, however, it is important not to go to far in  
  • 52. Copyright 2013 Martin Palmgren EVP .COMMUNICATE objectives and identify subsequent services and technology solutions as a cost effective provider of services. Define IT management principles and policies A framework to steer IT in the organisation will include the involvement of top management in the management of the IT function, the nature and extent of leadership to be provided by the business in specific IT initiatives and the principles of distribution, ownership and management of IT resources. Total Cost of Ownership is an essential part of this equation with cost, consumption and charge back. In addition to the definition of the involvement and responsibilities of the business, management principles and policies will also define the manner in which investment in IT will be managed, standards and processes for investment proposals and policies for the review and approval of proposals. Guidelines for programme / project / benefits management will also be defined with overall organisational principles: how many IT functions should there be and their respective role? Define IT management practices To define the desired IT management practices and processes we need to understand that not all management practices will be important for the future and we should focus on the key practices that need to be improved. We need to identify a prioritised list of practices for which improvement programs should be kicked-off as part of the overall program plan. In addition, the IT Business Strategy should clearly relate to how it supports the Execution of the Business Strategy. Define Critical Success Factors and Performance Metrics Define critical success factors and subsequent performance metrics. Industry best practice is used to identify performance targets and metrics. The performance of the IT function is then measured to the identified metrics. Compensation services can develop a reward and recognition program to encourage and support performance, retention, morale, shared learning and organisational development. It is critical to focus on perfect order transactions. Metrics should be cascaded top down to support strategy execution rather than bottom up. Define the IT Organisational structure Define the IT organisational structure with the distribution of IT staff and the identification of line and staff reporting relationships in line with the overall IT management principles defined earlier.  
  • 53. Copyright 2013 Martin Palmgren EVP .COMMUNICATE The architecture framework defines the general design principles that will the guide development of the technology blueprints. In addition to establishing common approaches to general architectural requirements such as flexibility and scalability, the framework provides standards and guidelines for a number of common system design and integration issues. These are based on the application of industry and technology best practices to the overall business information requirements that have been defined in previous activities. The framework also identifies technology standards that will be used to implement the infrastructure. Identify “best practice” and “key trends” The purpose of this activity is to gain a complete understanding of what are considered to be best practices with regard to IT architecture, both from the point of view of the client's industry, and from the point of view of key trends in the IT industry itself. As we conduct systematic research through relevant public and private sources we identify and assesses key trends in the application of specific information technologies and approaches by competitors and other key players (customers, suppliers, etc.) in the industry. IT trends may be related to a variety of industryspecific factors: Changes in business architecture as a result of process redesign and organisational restructuration; Widespread adoption of specific technologies; Changing industry dynamics requiring closer integration of value chains, etc. We focus on the impact of business change on best practice in regards of IT infrastructure design to complement performed research of business and technology sources. The team will review and confirms result, conduct follow-up research as needed, and then documents findings in the form of a summary of best practices that highlights impact on the architecture framework and blueprints. Define technical constraints To understand the technology gaps developed we use the As – Is To – Be to identify technical constraints. All relevant factors that may have an impact on the technical architecture are considered: Business/information and data architecture, technology architecture, plans for major enterprise package solutions, vendor/product commitments, legal/regulatory requirements. We identify, analyse, and document constraints on the definition of guidelines and design principles, and the selection of technologies. As we work with project sponsors and relevant stakeholders (primarily in IT management) to identify potential impact we conduct interviews and review existing documentation as necessary to determine what the actual constraints are, how they affect the infrastructure, and under what conditions they might be overcome.  
  • 54. Copyright 2013 Martin Palmgren EVP .COMMUNICATE architecture will be able to deliver, cost and risks involved in the construction. This reassessment may lead to modifications in the proposed architecture. Define Core Technology We define the core technology components to form the technology infrastructure with hardware, operating systems, systems software and networking components (communications protocols, standards and security considerations). The definition will include technology infrastructure standards at the enterprise and site levels and clearly identify preferred growth and integration paths. It will also include a definition of the technology to be used to interface with supplier /customer systems and outsourced service providers. Define Site Technology Models As we define the technology at different sites we identify boundaries between technology owned by business divisions and external services. Captured in a blueprint they form the site technology model. As the architecture is completed and describe the functionality, topology, and technology for all of the applications, databases, and common services within the scope of the initiative, we turn to the definition of technology components upon which the applications and data will be deployed across the enterprise. As the architecture describe the "upper" layers of technology, the technology blueprint defines the "lower" layers: Data management, access and security, Operating system, Messaging, Network, Hardware. We define the site technology models in two steps. Step one: the team develops a serie of site models, each of which defines the configuration of technologies that will be used for each platform component (workstations, servers, LANs, etc.) in a specific type of site (site types are defined as logical locations with similar technological requirements). For example, the logical location "branch office" may turn out to represent two site types, "large branch" and "small branch" if the difference in the number of employees leads to the use of different technologies to support the same applications and data.) Step 2: As the site models are defined, the team completes the overall blueprint by the development of an enterprise model for how network technology (hardware, software, and services) will be used to connect the various sites. Define the Enterprise Technology Model As we draw the enterprise technology model we present a definition of the way the organisation’s technology infrastructure will be organised and managed; specific hardware, software and network components and identity responsibilities for maintenance, operation and support together with technology infrastructure  
  • 55. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 Where synergies exist between services they are grouped for effective / optimal sourcing. It is important to ensure that they are “bundled” to set the scope and ensure that the proposition is of interest for service providers. Evaluate sourcing options  
  • 56. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. Develop the Program Plan Develop the Program Plan, - Update Business Cases, - Establish Program Management Principles, - Develop a Strategy Implementation Plan, - Develop a Change Program to set target, - Identify and prioritise work streams and projects, Identify and plan for required skills and competencies, - Prepare the implementation plan, - Prepare for program implementation, - Set up program organisation, - Set up program monitoring and management mechanism. Develop Program Plan: Question: How do we sequence tasks needed to support the business strategy and what resources do we need? What are the capital investments and operating expenses over the next 5 years to implement the plan? How do we manage risk and change during implementation? Objective: The purpose of this step is to develop an implementation strategy and plan to effectively manage the transition from the ‘As-Is’ to the ‘To-Be’ state. Benefit: Business buy-in, ownership and commitment to the transition plan and its benefits. Update Business Cases The business cases developed in the earlier phase are updated. They should contain details of tasks and activities required to be carried out, timing and sequence and resources and responsibilities. Establish Program Management Principles Program management principles are established to provide guidance to the implementation team of the effective management and administration of all projects in the program. A workshop is conducted to identify all program risks, barriers and critical success factors for successful implementation. Appropriate lifecycle methodologies, work breakdown standards and project management tools are also identified in this workshop.  
  • 57. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Set up program organisation A well funded and politically endorsed program is essential for the successful delivery of a major program with dedicated resources and an independent reporting structure. This includes to define roles and responsibilities, reporting relationships of the Program Manager, Project Managers and independent Work stream Leaders. Resources committed to the Program are also clearly identified and authority structures defined. Set up program monitoring and management mechanism A program performance monitoring and management mechanism is established to ensure that the benefits identified are delivered on time, to budget and the required quality. This include the establishment of milestones and a set of performance measures that will guide the program roll-out together with processes for risk management, issue resolution, quality management and program reporting and communication. Chapter 9. Build - Set IT processes and key performance indicators To set IT processes and key performance indicators we : - Define the “to be” state with established KPI’s, - Design the IT Plan with a project portfolio, - Build An Effective (IT) Business Model, - Manage the Business of IT, - Develop & Manage IT Customer Relationships, - Manage Business Resiliency and Risk, - Manage Enterprise Information, - Develop and Manage IT Solutions, - Deploy Information Technology Services, - Deliver and Support IT Services, - Manage IT Knowledge. 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. @ 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 This is an introduction to the subject with a full version to be published on a stand alone basis.  
  • 58. Copyright 2013 Martin Palmgren EVP .COMMUNICATE process "manage business resiliency and risk" per €100,000 revenue, - Personnel cost of the process "manage IT knowledge" per €1,000 revenue, - Systems cost of the process "manage IT knowledge" per €100,000 revenue, - Personnel cost of the process "develop information and content management strategies" per €1,000 revenue, - Systems cost of the process "develop information and content management strategies" per €100,000 revenue, - Personnel cost of the process "define enterprise information architecture" per €1,000 revenue, - Systems cost of the process "define enterprise information architecture" per €100,000 revenue, - Personnel cost of the process "manage information and IT knowledge resources" per €1,000 revenue, Systems cost of the process "manage information and IT knowledge resources" per €100,000 revenue, - Personnel cost of the process "perform enterprise data and 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 Corporate Contribution Key Performance Indicators would include : - 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 Return On Invetment, Net Present Value.  
  • 59. 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 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, Develop and counsel employees, - Reward and retain employees, - Redeploy and retire employees, - Manage employee information Manage information technology: - 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 Manage financial resources: - Perform planning and management accounting, Perform revenue accounting, - Perform general accounting and reporting, - Manage fixed-asset project accounting, - Process payroll, - Process accounts payable and expense reimbursements, - Manage treasury operations, - Manage internal controls, Manage taxes, - Manage international funds/consolidation Acquire, construct and manage property: - Design and construct/acquire nonproductive assets, - Maintain nonproductive assets, - Obtain, install, and plan maintenance for productive assets, - Dispose of productive and nonproductive assets, - Manage physical risk  
  • 60. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Software Asset Management. Application Portfolio Management: formulated operating processes application portfolio management solutions. Levers Infrastructure Asset Management. IT Infrastructure Portfolio Management: Levers formulated operating processes with IT infrastructure portfolio management. An Effective (IT) Business Model An Effective (IT) Business Model where we Manage Information Technology. To Manage Information Technology Business Drivers & Processes from a Cost Effectiveness and Cycle Time perspective we need to: 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 and Manage IT Knowledge. Chapter 10. Run - Aligned to described ITIL activities and processes with a Service Strategy, Service Design, Service Transition, Service Operation: - Function, - Process, Service Improvement. 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. @ 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 This is an introduction to the subject with a full version to be published on a stand alone basis. Understand and meet your stakeholders expectations Our experience is that where IT is perceived to fail to deliver to business expectations the Business (IT) Model (IT delivery capabilities to strategy execution) and Value proposition (Services) is often broken or non-existent (demand and cost drivers not understood or not communicated well enough). This is why a shared services or outsourcing solution is put in place since it forces the business to define services and service level agreements (as well as cost, consumption, chargeback) with an IT Business Model that is if not optimised at least focused on immediate business priorities and drivers (demand and cost). At the end of the day, business executives take the decision to outsource 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  
  • 61. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 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 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  
  • 62. Copyright 2013 Martin Palmgren EVP .COMMUNICATE “Leverage Strategy with IT” http://www.brighttalk.com/community/it-service-management/webcast/534/22934 “Run IT as a Service Business!” http://www.brighttalk.com/community/it-service-management/webcast/534/21389 Build and demonstrate IT success To build and demonstrate IT Success we need to focus on the Business IT roadmap, that is how do we (as CIO, IT Department) support business objectives and processes leveraged by IT and an effective IT Service strategy. Where we 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. This is achieved as Business objectives and Processes (captured in the Business Architecture) are supported by a strategy execution focused IT architecture where Business objectives: We would like to increase sales by 25%, how can the IT Department support the Business in this effort and what will be the impact on the budget of the IT Department? are supported by IT objectives: This would translate in to, on the business (IT) side: 1) which business processes are concerned with the increase and how do we support them today and how do we anticipate the increase (applications, infrastructure, support)? 2) Is there an opportunity to further industrialise processes (off the shelf applications, build)? 3) Supported by hardware (laptop, (i)pad, smart phone)? 4) Can we spell out the cost? On the IT side we need to understand 1) which service that are concerned (increase / decrease in demand) and if we need to modify / provide new service bundles, 2) do we provide a cost effective and secure IT architecture and that permit the rapid development of new business services 3) Business cases, that is can we spell out the cost? 4) can we ensure that services / applications are up and running (business continuity)…. Deliver effective IT services to business needs We Deliver effective IT services to business needs as we understand that At the end of the day Business Executives take the decision to out / 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 IT department is unable to deliver services in a time to market perspective, IT propose an effective service portfolio that correspond to Demand and Cost drivers. IT contributes to business objectives as The IT service proposition is aligned to the business strategy: Stakeholder expectations are understood and IT propose a  
  • 63. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Business (IT) Road Map executed by Employees & Organisation. The Service Strategy support Business Drivers as Business (IT) Drivers Drives Demand and Cost Drivers Delivers the (IT) Service Strategy that is Executed towards Metrics. IT provides competitive leverage. Priorities from an Executive Management Perspective: IT supports the achievement of strategic business objectives, IT Delivers value to expenditure, IT cost is managed effectively, IT risk is identified and managed, Targeted inter company IT synergies deliver to schedule, We have a clear vision towards which we expect the IT department to deliver. IT delivers to demand and cost drivers. Priorities from a Business Unit Management Perspective: IT supports the achievement of tactical business objectives, IT delivers perceived added value services and at a reasonable cost, IT delivers to operational and service level agreements (commitments), IT investments positively affect business productivity and the customer experience, We have a clear process vision to which we expect the IT department to deliver. The IT Strategy support Business objectives as we meet Priorities from an IT Management Perspective: We understand stakeholder expectations and propose a service portfolio that correspond to both Demand and Cost drivers with a focus on perfect order business transactions, We develop the professional competencies needed for successful service delivery, We capture organisational knowledge to continuously improve performance, The IT and Stakeholder departments have clear objectives, processes and indicators with clear accountability and responsibility to deliver to set objectives. 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! 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  
  • 64. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Manage external relationships: - Build investor relationships, - Manage government and industry relationships, - Manage relations with board of directors, - Manage legal and ethical issues, - Manage public relations program Manage knowledge, improvement and change: - Create and manage organisational performance strategy, - Benchmark performance, - Develop enterprise-wide knowledge management (KM) capability, Manage change Run the IT Business effectively To run the IT business effectively and leverage the execution of the business Strategy and objectives with IT we need to make educated investments (on paper compliance and KPI indications is nice to have but not enough!): 100% of the value impact is in the execution of the process of the supported services over the entire service life cycle “order to bill”. IT support business objectives and processes We align to Business Objectives and Business Processes Defined in the Business Service Catalogue Requirements Information with IT Objectives and IT Processes Defined in the IT Service Catalogue supported by ITILv2 & 3 workflows Broken down in to Key Activities Performed to Responsibility and Accountability Charts (RACI). Measured by Performance indicators (Embedded in Service Catalogue per Service), Outcome Measures, Maturity Models (CMMI, ITIL continuous process improvement) Audited with Control Outcome tests Derived from Control Objectives Audited with Control Design Test Implemented with Control Practices. Investment Management We align and lever operating, management and support processes through the effective implementation of IT. Do we do the right things? The strategic question: The investment Is in line with our vision, Is consistent with our business principles, Contributes to our strategic objectives, Provides optimal value, at affordable cost, at an acceptable level of risk. Do we reap the benefits? The value question: We have A clear and shared comprehension of the expected benefits, Clear accountability to realise the benefits, Relevant metrics, An effective benefits realisation process over the full economic life cycle of the investment. Process Management  
  • 65. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Organisational change, Control IT (measure outcome to set objectives), Capture KPI’s & Measure performance, Enforce governance. To Perform Effective IT Governance: Transform the IT Business Model, Measure KPI trends and targets, Meet business objectives, Control cost, Measure Delivery performance, Manage change, Continuous service & process improvement, Process roll out (articulation & integration), Execute strategic intent. 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. Objectives and Plans: There is a understanding of the: Extent to which long term plans are coherent and logical, Extent to which short term plans are appropriately costed and timetabled and the Consistency with overall goals and objectives. Financial plans: Appropriateness of detail, Clarity with which assumptions have been stated, Extent to which profit / return criteria has been evaluated, Evidence of appropriate scenario and sensitivity analysis, Evidence of appropriate key performance indicators. Communication and buy in: There is an understanding of the Extent to which the strategy has been communicated and the Extent to which staff performance towards the business IT strategy is recognised.  
  • 66. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. A Strategy Canvas, articulated in a The Stakeholder Strategy Map Formalises stakeholder outcomes to deliver value for all parties. The strategy canvas allow the teams to articulate and formulate objectives on a project / program basis for improved execution with an extended GAP, risk and added value analysis captured in a DARCI (Decision taker, Accountable, Responsible, Consulted & Informed). A Collaboration Theme Scorecard The Collaboration Theme Scorecard Sets process objectives, Identifies: levers for joint actions and wins, metrics and initiatives on a short, middle & long term basis. Objectives: - Set process objectives,- Identify levers for joint actions and wins,Identify metrics, Identify initiatives on a short, middle and long term basis. Levers: Joint: Steering committee, development committee, project teams, cross functional teams, process improvement teams and functional improvement teams. We deliver effective business strategy execution 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 (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),  
  • 67. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 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). 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  
  • 68. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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, - Meet stakeholder expectations from an executive and business management perspective would this be among your current priorities  
  • 69. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 permitted a major improvement to the business both from a capability and performance perspective to a fraction of the cost, and provided the IT department with 600 resources to perform other tasks. The IT department will have to rapidly shift their business model from “reward and remuneration in concordance to how many people that I manage” to a model related to the value delivered to the business with a Focus on the Business Bottom Line that is: 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 or will see the go to market trend with the business as direct customer grow significantly. Transform the IT Business Model A number of approaches to strategy execution have evolved over the last years, but 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 where 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  
  • 70. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 teams to articulate and formulate objectives on a project / program basis for improved execution with an extended GAP, risk and added value analysis captured in a DARCI (Decision taker, Accountable, Responsible, Consulted & Informed). A Collaboration Theme Scorecard  
  • 71. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - 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? - Do we have effective value-assurance processes in place to mitigate execution risk? 5. How will IT improve our operational and strategic agility? Questions to ask: - How does our business and IT agility measure up with that of our competitors? - How do our IT plans increase our business and IT agility? - Are our sourcing relationships increasing or reducing our agility? 6. Do we have the capabilities required to deliver value from IT? Questions to ask: - Do we have the capabilities needed to drive full value from our existing IT systems? - What are the weakest links in our capabilities? - Do we have enough IT-literate executives? - What is our plan for upgrading capabilities? 7. Who is accountable for IT and how do we hold them to account? Questions to ask:  
  • 72. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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.