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COBIT 5 Unlocked (the missing pieces): Deliver Business Value with IT! - How to build a CIO Office to deliver effective IT services and meet stakeholder expectations

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This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go …

This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here:
http://flevy.com/browse/business-document/cobit-5-unlocked-the-missing-pieces-deliver-business-value-with-it-how-to-build-a-cio-office-to-deliver-effective-it-services-and-meet-stakeholder-expectations-404

It is critical to build governance in to the execution of the Business and subsequently the IT Strategy. The objective of COBIT 5 is to help IT leaders provide a business view of the IT departments ability to create value and support enterprise goals through effective IT processes and build process capability and was developed by ISAACA to: - Develop process improvement, - Deliver value to the business, - Measure the achievement of current or projected business goals, - Benchmark and deliver consistent reporting, - Ensure organisational compliance.

Yet most COBIT 5 practitioners find it difficult to demonstrate the business value of a COBIT 5 investment and more compliance in a setting where most Business Executives would claim an increased focus on the needs of the business.

The COBIT 5 Unlocked (the missing pieces): Deliver Business Value with IT! series is a reply to ?How do we put the IT Strategy in place? and how do we communicate effectively with our stakeholders and provides a number of techniques and tools to understand how to meet stakeholder expectations where COBIT 5 can the be used to demonstrate how well this is done.

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  • 1. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Title: COBIT 5 Unlocked (the missing pieces): Deliver Business Value with IT! – How to build a CIO Office to deliver effective IT services and meet stakeholder expectations ISBN: 9781310296031 Official website: http://deliverbusinessvaluewithit.com/ AUTHOR Martin PALMGREN, EVP .COMMUNICATE Copyright COBIT 5 Unlocked (the missing pieces): Deliver Business Value with IT! – How to build a CIO Office to deliver effective IT services and meet stakeholder expectations Martin PALMGREN Published by .COMMUNICATE Publications at Smashwords Edition Inc Copyright 2013 .COMMUNICATE Publications KEY WORDS: COBIT 5, ISACA, IT Strategy, Governance, Compliance, Business Strategy, Deliver Business Value with IT Introduction It is critical to build governance in to the execution of the Business and subsequently the IT Strategy. The objective of COBIT 5 is to help IT leaders provide a business view of the IT departments ability to create value and support enterprise goals through  
  • 2. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. In order for the CIO and the IT Department to position as premium provider of IT services and focus on value to cost we need to understand the Business (IT) Strategy and how the IT department can deliver effectively to business objectives, that is to deliver business value with IT: - What is the Business’s strategy and plans? What is the current business model that IT has to support? Where could IT make a significant impact on the business? Are there any further opportunities to use IT? How can we leverage IT in a “Time to Market”, “Cost Effectiveness”, “Cycle Time” perspective? I look for “success stories” of recent IT projects that leverages business capabilities from a cost, demand and go to market perspective. If you are a CEO / CIO / IT Executive I would encourage you to join the “The CIO Office 2.0” a group dedicated to deliver business value with IT with + 850 international on invitation only CXO's @ http://www.linkedin.com/groups/CIO-OFFICE-20-3376230/about If you are in IT operations and you are a not a CEO / CIO / IT Executive I would encourage you to join the “Governance Office ” a group dedicated to deliver business value with IT from a non executive perspective @ http://www.linkedin.com/groups?groupDashboard=&gid=2479146 If you believe to be among the top 100 IT or Business leaders that leverage business value with “The editorial council” is a forum dedicated to the finest business and IT academics @ http://www.linkedin.com/groups/Deliver-Business-Value-IT-editorial-3807899/about Cheers Martin  
  • 3. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Manager at Toyota Material Handling Europe) Mats Hultin, CIO Saab Defence and head of one of the most business centric IT organisations that I have seen consider “Deliver Business Value with IT” series as a toolbox that all CIO’s or IT Executives would like to have at hand and consult on a regular basis as they start to Design, Build and Run Effective IT Strategy execution to business needs. What is in it for me or why should I read the “Deliver Business Value with IT?” series? All that you would like to know in regards of Martin Palmgren What is your current experience with the book topic? As transformation director I have worked both on the Business and IT side with clients but also on the consulting side (Big 6) where I have helped executives understand how to deliver business value with IT. I have also put out a number of books on the subject. What other business management topics are you interested in? Strategy both on the Business and IT side, Business Model Innovation, competitive analysis, IT Governance (COBIT 5), IT Sourcing, Cloud Computing, Strategy Execution, Balanced Scorecard Why do you think you would be best suited to write this book? The logics that I provide are international best in class and build on top notch best practice that I use and have used on an IT and Business Executive level. Where do you/your customers normally turn for information about or solutions to business problems? Gartner, Forrester, ACCENTURE, McKinsey, Booz Allen (Top 3). What do you see as the role of the book in the modern world of immediate online content? Where an article is an excellent opportunity to share a reflection or an observation the longer book format permit and end to end observation on a subject where a blog post or article would be to short. In my case I have used articles and blog post to reflect on different aspects and deliver them in a crisp format. The articles / blog posts have then been combined with other aspects of the story to form 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.  
  • 4. Copyright 2013 Martin Palmgren EVP .COMMUNICATE COBIT 5 (ValIT, CobIT 4.1, RiskIT) provides guidance in the right direction it is imperative for the audit department to provide not only red or green light compliance check list, validate that a process is measured and managed or if IT has a dashboard, but to ensure that business process and notably those of support functions such as IT support new and ongoing business initiatives. Related Publications by Martin Palmgren @ Amazon http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&field-keywords=Martin+Palmgren Why Amazon? Amazon is the largest electronic bookstore. @ Smashwords https://www.smashwords.com/profile/view/martinpalmgren Why smashwords? Smashwords is the only publisher that permit a multi format packaging that is you can read the book on any electronic device that is you can use your laptop (PDF, HTML) and bring it with you on your slate and leverage “Deliver Business Value with IT” as a frame of reference. (Actionable Story Boards) @ Flevy https://flevy.com/seller/mpalmgre/ref=mpalmgre Why flevy? Flevy is a market place for premium business document. Share actionable storyboards and documents that I use with my high level clients. Flick out flick out the document / slide set on a pad / smart phone / lap top and start to share with your Colleagues, CIO, Business Executives and Board on the spot. 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. In the “Deliver Business Value with IT” Series Design, Build and Run an Effective IT (Service) Strategy to Business Needs https://flevy.com/browse/business-document/design-build-and-run-an-effective-it-service-strategy-to-business-needs-279/ref=mpalmgre Get Your Cloud Strategy Right  
  • 5. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 2. To avoid the “Marshmallow” momentum, focus on the business model 3. "Do we really need a CIO and IT department to bother us with technology when we can use the cloud?" 4. IT support business objectives and processes 5. How to build a CIO Office to deliver effective IT services and meet stakeholder expectations 6. To leverage IT for Strategic Advantage 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 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: -   The need for an “IT value proposition” (an IT Business Model and a Business (IT) Value Proposition), that is the competitive advantage that IT confer The criticality to acquire IT services end to end The need for IT Accountability The reason why IT strategies fail, and miserably
  • 6. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 4: IT support business objectives and processes The reader will learn that in order to align to Business Objectives and Business Processes the latter are Defined in the Business Service Catalogue, Requirements Information with IT Objectives and IT Processes are Defined in the IT Service Catalogue and supported by ITILv2 & 3 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. List of topics that will be covered in the chapter: We understand: - 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: How to build a CIO Office to deliver effective IT services and meet stakeholder expectations The material in this chapter is developed to provide pragmatic guidance on how to develop and execute your IT Strategy with a CIO Office to deliver effective IT services and meet stakeholder expectations. To effectively manage your IT resources has become business critical as we leverage business strategy execution with IT to: - Meet Demand and Cost drivers, “Time to market”, Cost effectiveness and Cycle Time. 6: To leverage IT for Strategic Advantage As the reader has appreciated that the IT Department should have a clear IT Business Model and Business (IT) Value proposition we will be able to fully leverage IT for a strategic business advantage.  
  • 7. Copyright 2013 Martin Palmgren EVP .COMMUNICATE http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/confirm-business-vision/ Figure 11: Articulate the Business Value Proposition: the Business Architecture: Figure 13: Translate the Business Vision Value Proposition Baseline: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/articulate-the-business-value-proposition/ Figure 12: Deliver http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/deliver-the-business-architecture/ to an IT Vision: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/translate-the-business-vision-to-an-it-vision/ Figure 14: Set the IT 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 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  
  • 8. 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. 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 the A-Z reference of how to execute and implement IT strategy from a CEO and CIO level perspective. Deliver Business Value further helps us understand how to leverage business concepts brought forward in: Blue Ocean Strategy (W. Chan Kim and Renée Mauborgne), Business Model Generation (Alex Osterwalder & Yves Pigneur), The Balance Scorecard, The Strategy Focused Organisation, Alignment, Strategy Maps, Mastering the management system, Managing Alliances with the Balanced Scorecard (Kaplan and Norton), Breakthrough IT: Supercharging Organizational Value Through Technology (Patrick Gray), The Marshmallow challenge and the Customer Journey by IDEO.”  
  • 9. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 environments. IT leadership requires a refresh of approaches, thinking and management practice to meet these new challenges; thus the value of the contribution of “Deliver Business Value with IT”.” (Jerry Luftman Ph.D., Professor & Managing Director Global Institute for IT Management) “I like Martin's practical approach of IT strategy. With his new “Deliver Business Value with IT” series, he is helping us work on actual paradigms we can find in today's organisations like how to find a business foundation for technology supported undertaking while using state of the art technology”  
  • 10. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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). “The “Deliver Business Value with IT” series provides a pragmatic approach to align IT initiatives to the business strategy and business objectives with the ability to measure the outcome (KPI’s). I particularly appreciate Martins capability to provide a metamodel of common IT frameworks as steps of the execution of the IT Strategy: Deliver IT services, - Ensure delivery capability (Governance), - Coherence (Architecture) and Security.” (Romain Hennion de Thyses, Governance and Architecture Director, Global Knowledge, VP ITSM France). “Information Technology has been a fundamental asset to excel in business  
  • 11. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. Track Record: Martin joins Altimus Partners (www.AltimusPartners.com) in 2012 as Associate, a specialist CXO Advisory management consulting firm with operations in NA and EMEA, and focus on sourcing strategy, adoption of cloud services, and deployment of technology business transformation in financial and non-financial markets. Martin founds .COMMUNICATE in 2006 to meet the GAP between the needs of the business and the solutions (value proposition) delivered by the IT department. He believes that in order for the CIO and the IT Department to position as premium provider of IT services and focus on value to cost we need to understand the Business  
  • 12. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. This is also true for the non brick and mortar references that have emerged from silicon valley. Amazon sells books and online store space + run applications on a cloud (mutualised storage space outside the firewall). Google the opportunity to find things + run applications on a cloud (mutualised storage space outside the firewall) + hosted services such as email (the opportunity to communicate in writing and keep a trace). Ebay enables the exchange of goods. Twitter provides a tool for self promotion and advertisement. Facebook fills the void of distance and keep the contact with your friends and the opportunity to make new acquantainces. Linkedin the opportunity to keep up to date with your professional network + some promotional features. The business model sets the direction enabled by best in class technology.  
  • 13. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. It is due to his effort to build a solid infrastructure that David Giambruno @ Revlon has successfully turned a “we spend 80 percent of our resources to fire fight and hopefully keep the lights on” to one where 20 percent of the resources are spent on the run and 80 percent on how to deliver effective solutions to the business. Instead most IT departments are IT centric and focus on project management or to roll out frameworks (that have a specific function) to build business strategy. Once the “happy few” certified have managed to talk the IT Executive management in to how important it is to impose an excellent project management tool brought forward to develop software, or manage the IT architecture or how to ensure that IT and Business Processes are managed and controlled to build the IT Strategy we then feel obliged to  
  • 14. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 clients consume which product / service at a specified quantity and subsequently be billed for their consumption (nor how you will finance the future run and build)? This is however the reality for most CIO's! The focus of a servicebased model is to demonstrate how IT Delivers Value to the business, that is delivers services to business needs (cost effectively, or at least at a specified cost rate that permit to take qualified decisions) over time with an effective IT Business Model and Value Proposition. We see Total Cost of Ownership (TCO) as the corner stone to move further from "IT generates to much cost" where we can demonstrate who consumes what services (and should subsequently pay for what they consume) to obtain the means (investments) and ends (budgets). To run a cost effective IT Operation that delivers to business expectations and  
  • 15. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - 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. He also clearly indicated that where the logics spelled out in ITIL are excellent they are are a minimum requirement to build an effective IT Strategy to the needs of the business where the perspective has to be completed with a Design (Demand and Supply) and Build (supported by IT processed with clear KPI’s) phase to tie the strategic value piece with the operational elements of IT service delivery. “We are able to get the business hooked on new services and products as we actively propose new solutions to the business to leverage competitive advantage and keep the run in perfect shape. But the role as “gatekeeper of technology” to create business value can only be valid as the infrastructure runs smoothly. We have shifted the focus of to use 80 % of the budget for workarounds and fire fighting the keep the lights on and 20 % to propose new solutions to the business to an opposite 80 / 20 where 80 %  
  • 16. 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 were developed for the execution of the business strategy they can effectively be used to ensure that the IT Strategy support the Business Strategy. In short a Blue ocean is a new market created as we innovate and redefine value in regards of the perception of the customer / client. Where technology can be an accelerator value innovation is inherently linked to the customer value perception and can be delivered by both established players and new entrants (start ups). New markets created by established players are usually situated within their core business. Long standing excellence is rare but a brand name and a large  
  • 17. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 as an exercise to demonstrate the make or break factor of a project (strategy, innovation production, sales, marketing, R & D) and the importance of to produce a customer journey map and prototype. Each time I perfom the exercise it hits me how often the “Tadaa” moment turns in to the “Uuh” (translated in to that they did not get it) moment during the delivery of an IT project / IT strategy delivery. But rest assured this would also be valid for strategy, marketing, production, R & D, Sales and Delivery. http://www.marshmallowchallenge.com/TED_Talk.html Within the exercise we demonstrate how IDEO with a simple customer jurney map (day in the life of) formalised, modelised (prototyped if needed) and validated by the client permit significant improvement in effectivenes (that is productive and efficient) and the customer perception of the experince (in this case Amtrac and the General Portland Hospital).  
  • 18. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. Not half that bad case scenario: We bring in a Top 3 or Big 5 to perform a change excercise (preferable a very long slide deck of .ppt that if not produces nausea or panic puts the subject (participant) out (commonly called death by powerpoint) from exhaustion. The presentation should idealy be based on example of a project put in place for the production in a tooth paste / car factory (not our domain). If possible with a reorganisation so that a task that previously took 3 days now take 5 or 10. We cross our fingers an hope that the green light red light chart now will produce the desired effect.  
  • 19. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated. The IT Bottom line is that up to 40 % of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities and demonstrate that the current Business Model is supported effectively. The IT  
  • 20. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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-with-a-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. 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”.  
  • 21. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 , 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. 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 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 can be increased at an affordable cost, - How actual ongoing IT cost can be tracked or organised, - How cost effective IT improvement expertise can be found, - The most effective implementation of strategy to improve effective delivery of IT services. In order to successfully deliver business value with IT we could: 1) Create a committee of stakeholders affected by the IT investment, that would include IT managers and business unit managers. 2) Define intangible benefits of the IT  
  • 22. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. 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?  
  • 23. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - 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” & 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  
  • 24. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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” “Leverage Strategy with IT” http://www.brighttalk.com/community/it-service-management/webcast/534/23630 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 introduced, the IT department as effective broker of services (cost effective and that meet demand drivers). Where most IT department perform well, some decisions are still based on “gut feeling” or external pressure from executive management influenced by vendors / management consultants “as a strategy of survival” rather than on fact based logics. “Time to Market” – The notion of time to market is critical within the context of a business. The delayed launch of a product might erase up to 70% of potential earning (the rest is evaporated by the cost of the resources absorbed to solve the problems that delayed the launch). “Time to market” can be applied to the context of the IT department 1) in the frame of how well do we set up a new service (bundle of application with a coherent architecture) 2) How well do we support the business to  
  • 25. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 that I recently spoke to put it bluntly “if the internal IT Department can not deliver to our needs, they should at least get out of the way”. In order to deliver effective Business (IT) Alignment you need to leverage best in class technology (on paper compliance is not enough). The frameworks should be a point of reference and only the bits and pieces applicable and useful for the business should be rolled out (but you need to understand which framework represent which perspective and how to leverage  
  • 26. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 competitive (Benchmark Industry Market Forces) and New technological solutions that could change how current business is performed are explored, proposed and implemented. The demand and cost model is clear and long term risk / benefits are established We have identified the following critical success (benefit) / risk factors: - Total cost of ownership  
  • 27. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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-cycle-time/ 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 & Operational level. Strategic Intent: Product / service life cycle management: Interprets, models and articulates the strategic intent in to business strategy. Business Strategy: Process based Enterprise Architecture: Interprets, models and articulates the business strategy and ensures capability. Business & IT objectives: Project Portfolio Management: Interprets, models and articulates the business objectives and ensures capability. IT Strategy: Process based IT governance: Levers formulated operating processes with best in class IT solutions. Aligned on business requirements: Service Portfolio Management: Levers formulated operating processes with portfolio management. Software Asset Management: Application Portfolio Management: Levers formulated operating processes application portfolio management solutions. Infrastructure Asset Management: IT Infrastructure  
  • 28. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 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"  
  • 29. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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, - Conduct a constructive budget dialogue with the business: Total Cost of Ownership (TCO) with Cost Consumption and Chargeback / Showback, - Build and run an effective IT Business Model to Best Practice Frameworks. Figure 5: Deliver effective business strategy execution: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/deliver-effective-business-strategy-execution/  
  • 30. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Figure 7: The Service Strategy support Business Drivers: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/the-service-strategy-support-business-drivers/ 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. Where the Bottom Line is that to leverage competitive advantage with new technology is “nice to have”, to keep the business systems running is mission critical! Figure 8: End to end industrialisation of business processes: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/end-to-end-industrialisation-of-business-processes/  
  • 31. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. The notion of the IT department as a profit centre IT Services and the cost of a services delivered by the IT department is a notion that was introduced on a broader basis with ITIL V3 and confirmed with the introduction of CobIT 5. Where the IT department traditionally account for services delivered and billed by outsourced providers, services delivered by the IT department (outsourced services included) have not been formalised and broken down in to direct and indirect cost and related to the cost, consumption and chargeback of an engaged service.  
  • 32. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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/ Business Architecture Figure 10: Confirm business vision: http://deliverbusinessvaluewithit.wordpress.com/2013/03/02/confirm-business-vision/ Confirm Business Vision: Articulate strategic intent, Business objectives, Business drivers.  
  • 33. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. 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  
  • 34. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 Market Forces) and New technological solutions that could change how current business is performed are explored, proposed and implemented. IT provides competitive leverage As the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated in: An IT  
  • 35. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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, Acquire, construct and manage property, Manage environmental health and safety, Manage external relationships, Manage knowledge, improvement and change). The do-or-die questions boards should ask about technology In the “The do-or-die questions boards should ask about technology” Paul Willmott raises a number of questions that well recapitualtes what we have seen in this chapter: http://www.mckinsey.com/Insights/Business_Technology/The_do-or-die_questions_boards_should_ask_about_technology?cid=other-eml-alt-mip-mck-oth-1306  
  • 36. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 the right incentives? 8. Are we comfortable with our level of IT risk? Questions to ask: - Do we have a comprehensive understanding of the IT risks we face? - How is our level of IT risk measured, and is it aligned with the company’s overall risk appetite?  
  • 37. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - 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 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  
  • 38. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Leverage Business Strategy execution with IT Bottom line: we build a CIO office 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. Deliver IT Services to Business needs We Deliver IT Services to Business needs as we : - Focus on business objectives, Problem statement, The cause, The solution, Deliver a roadmap, To demand and cost drivers, Build the IT Business Model, For effective strategy execution, To meet stakeholder expectations. Focus on business objectives Every business is driven by strategic objectives that define how to compete in the marketplace. An effective IT Business Model ensures that business management : - Makes the most effective investments in IT, - Manage the resulting IT services with a high degree of quality & effectiveness Problem statement To leverage business strategy with IT we need to: -   Link IT to the Business Strategy Drive IT strategy into IT operations Set a baseline from which to measure IT performance Measure IT operational performance Improve IT performance and strategic contribution
  • 39. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Build the IT Business Model Key Steps : - Establish the Financial baseline Define the Service Portfolio – TCO by service Describe service consumption by customers – Chargeback Align business strategy and goals to drive IT goals Analyse IT processes and optimize efficiencies Build the IT business model For effective strategy execution Typical Transformation Initiatives where we need to provide GAP (As Is, To Be, ROI) - Mergers and Acquisitions (M&A) Data room Development Synergies & consolidation options Data Centre Migration, virtualization IT Organisational Transformation: Towards a Service Business Shared Service Centres, Outsource, Cloud & Benchmark Meet Stakeholder Expectations - Meet Stakeholder Expectations Effective Investments, Business focus, Best in class solutions, Competency, Direction, Develop in to a Business partner relationship. To meet stakeholder expectations We define a financial baseline from which to measure IT performance with : - IT Service Portfolio and TCO by service - Customer consumption of IT services – chargeback  
  • 40. Copyright 2013 Martin Palmgren EVP .COMMUNICATE (process) objectives and metrics. Competency How well is IT positioned to meet future needs? Baseline: To develop opportunities to meet future challenges Objectives: - Train and educate IT staff, Build IT staff expertise, Research in to emergent technologies, Pertinence, scalability, evolutivity of application portfolio. Direction In order to succeed IT need a clearly articulated business strategy: Objectives: - Evolve from a service provider to strategic partner, Provide mutualised solutions focused on to develop best in class capabilities, Support the achievement of company strategies and objectives, Become the “supplier of choice” of information services, Establish a forward looking enterprise architecture strategy that enables the use of technology as a competitive edge in the financial market place, - Become the “employer of choice” for career oriented IT professionals in the markets in which the group operates. Develop in to a Business partner relationship And more precisely: Objectives: - Become the supplier of choice for all information services, either directly or indirectly through supplier relationships, - To enable and contribute to the achievement of business objectives through effective delivery of value added information services, - Deliver timely and effective IT services at targeted service levels and cost, - Develop internal capabilities to continuously improve performance through innovation, learning and personal organisational growth.  
  • 41. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - With a clear Baseline, Business (IT) Value Governance, - Business (IT) Governance. Business (IT) Programme Business (IT) Investment Business (IT) Process Management Captured in a Strategy Map & articulated in a Collaboration Theme Captured in a Strategy Map & Canvas articulated in a Collaboration Theme Scorecard To execute Business (IT) (IT) Service Strategy supports Business (IT) Roadmap reflect stakeholder Conceived in to a solid Story The IT department as effective broker of services? Support Business Objectives To ensure stakeholder “Buy In” You have to see IT from a customer perspective and address stakeholders priorities: - Realise return on investment Ensure that proposed services are competitive in the industry IT Costs are transparent IT competencies are at least equal to the competition IT pricing is fair and clearly aligned with consumption IT services are clearly defined and benchmarked Understand Stakeholder Expectations To get the IT Service Management Fundamentals right: - Focus on demand and cost drivers in a business perspective: Run IT as an effective service business Meet your customer needs, where Demand drivers are critical in the roll out of IT Service Management Deliver strategy execution IT provides competitive leverage Priorities from an Executive Management Perspective: -   IT supports the achievement of strategic business objectives IT Delivers value to expenditure IT costs are managed effectively IT risks are identified and managed
  • 42. Copyright 2013 Martin Palmgren EVP .COMMUNICATE As we position IT as an added value activity we need to: - Ensure that the IT and Stakeholder departments have clear objectives, processes and indicators with clear accountability and responsibility, - Achieve best in class status as IT service provider and strategic partner, - Maximise purchase power and operating effectiveness, - Lever technology investments, - Optimise technical Architecture and application support cost. Deliver to Stakeholder Expectations In order to do so we need to: - Align IT plans and activities with business goals and needs, - Align Stakeholder (internal and external) and employee effort toward objectives with clear processes and metrics, - Establish measures to evaluate the effectiveness of the IT organisation, - Stimulate and sustain improved IT performance, - Achieve balanced results across stakeholder groups. With a Clear Baseline - IT contribution to company goals and objectives - IT optimisation of business processes - IT service proposition: At what cost, Are these services competitive within the industry, What new services could make us more competitive ? - IT service consumption: Who pays for the services, How can services be improved ? Business (IT) Value Governance - The establishment of informed and committed leadership - The definition and implementation of a value governance framework and work processes - The definition of portfolio characteristics - The alignment and integration of value management with enterprise financial planning - The establishment of effective governance monitoring - Continuous improvement of value management practices Business (IT) Governance  
  • 43. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Business (IT) Process Management How to align and lever operating, management and support processes through the effective implementation of IT. Do we perform them in the right manner ? 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 ? 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. Captured in a Strategy Map The Stakeholder Strategy Map: Formalises stakeholder outcomes to deliver value. Objectives of the Stakeholder Strategy Roadmap: - 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. & Canvas, articulated in 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  
  • 44. Copyright 2013 Martin Palmgren EVP .COMMUNICATE I have previously introduced "non traditional IT" notions such as "Time to Market", "Cloudsource", "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 instored, the IT department as effective broker of services (cost effective and that meet demand drivers). Where most IT department perform well, some decisions are still based on "gut feeling" or external pressure from executive management influenced by vendors / management consultants "as a strategy of survival" rather than on fact based logics. "Time to Market" - The notion of time to market is critical within the context of a business. The delayed launch of a product might erase up to 70% of potential earning (the rest is gummed by the cost of the resources absorbed to solve the problems that delayed the launch). "Time to market" can be applied to the context of the IT department 1) in the frame of how well do we set up a new service (bundle of application with a coherent architecture) 2) How well do we support the business to launch a new service / execute the business strategy supported with IT (when needed). "To Cloud source" – Cloud computing is the result of 2 trends. 1) The survival of salesforce.com (that is to outsource data in an application that we have decided not to buy / run on an internal server) 2) the decision of amazon, google and other cloud (external storage space) providers to leverage their capability to buy and run server parks more effectively then an IT department would / could (external cloud). A decision to run applications on a server outside the firewall can be motivated by cost or demand (time to market) where an architecture and applications are set up to rapidly respond to the needs of the business. The "service bundle" can then either be brought inside the firewall and run on an internal cloud or continue to run on the cloud provider’s server (outside the fire wall). "Make or buy" - To outsource / cloudsource (external cloud) is a traditional "make or buy decisions", 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 / cloudsource 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  
  • 45. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Can we attract/retain the talent we need to support the business? Risk - Are the organization’s assets and operations protected? - Are the key business and technology risks being managed? - Are proper processes, practices and controls in place? Design Key Performance Indicators We Design Key Performance Indicators : - Corporate Contribution User Orientation Operational Excellence Future Orientation Corporate contribution - Control of IT expenses percentage, over or under IT budget, allocation to different budget items - IT budget as a percentage of turnover - IT expenses per staff member - Business value of the IT function percentage of the development capacity engaged in strategic projects relationship between new developments/infrastructure investments/replacement investments - Business value of new IT projects financial evaluation based on ROI, NPV, IRR, PB business evaluation based on information economics User orientation -   Preferred IT supplier Percentage of applications managed by IT Percentage of applications delivered by IT Partnership with users Index of user involvement in strategic applications Applications index of user involvement in developing new applications User satisfaction Index of user friendliness of applications Index of user satisfaction Process Management
  • 46. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Assess the Business (IT) strategy Develop an understanding of the Business (IT) Strategy and how the IT department will deliver effectively to support strategy execution: Objective: To develop a comprehensive understanding of the business environment and future direction in order to identify areas of strategic IT opportunities and as the basis to develop the IT strategy. Benefit: A Clear business vision and direction avoids dispersed, conflicting, non-value added activities and costs and enable a clear focus on the chosen markets / products / services. The establishment of an agreed business vision provides an understanding for how IT can/should contribute to business objectives and how ROI can be driven from IT investments. As you establish the need for and agree on the scope/focus of the IT strategy engagement, it is important to develop a sense of the business environment and future direction. This understanding of the organisation’s present and future is documented and is used to determine how IT will be leveraged. It should be clearly understood that this activity is not intended to build the business vision but to support the roll out of an established business vision. The purpose of this activity is to understand the business, its internal and external environment and make explicit any unstated or inadequately articulated business values and vision elements to build a firm platform for the project. Assess the Business (IT) strategy 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  
  • 47. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Confirm Internal Environment / Competencies In order to assess the internal environment and competencies a broad evaluation of the human, financial, productive, physical and technological resources of the company is conducted with the purpose to identify the company’s distinct competitive strengths that is distinct competencies of the business (strengths), as well as the required competencies that need to be developed (weaknesses) to close the “GAP”. Confirm Business (IT) Strategy, Objectives and Goals The business strategy and plan based on available data follows logically from it. The organisation’s business imperatives, strategies, goals and objectives with Critical Success Factors within the control of the organisation are identified and documented. Confirm monitoring / evaluation procedures IT is a key enabler for performance measurement to determine how the organisation has planned to measure performance and the mechanism for monitoring and taking corrective action both for the Business and the IT Business. Key Performance Indicators (KPIs) are identified and defined for each strategic initiative and Business Driver and Objective. Key performance indicators are identified for the IT Value Baseline as well as the Business Baseline. Demand and Cost Drivers should be taken in to account, that is how well does the IT Service Strategy respond to business needs to execute the set strategy and optimise Total Cost of Ownership per user. Validate the Business (IT) Strategy Does IT support strategy execution with a clear IT Business Model and Value Proposition articulated in a service strategy? 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  
  • 48. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. 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. The current role of IT It is useful to involve business managers in the determination of the current role of IT. The IT management definitions and governance model should be used to develop a picture of the existing role of IT in the organisation. Scope/opportunities for improvement To identify opportunities for improvement and get a first, high level, view of the potential benefits available to the organisation, we map the Business Strategy with Business Drivers and Objectives to the current IT service strategy. The gap should be used to determine the scope of possible improvements. In addition to the benefits the opportunities are likely to bring in, a preliminary identification of the associated risk and cost is made. The scope / opportunities are validated and recorded on the ‘As-Is’ process model to ensure that the widest possible acceptance of this picture is achieved among management and staff not only involved in but are affected by the process. It should be noted that the opportunities identified in this task will primarily have a business focus. This analysis results in the first view of the Business (IT) Strategy business case. Opportunities with an overall business improvement may have been identified earlier. The role of IT as an enabler of the business should now be examined and specific IT opportunities identified. This analysis will be supported by an assessment of existing IT that is being undertaken. At this stage, specific IT opportunities will likely be high level and cover Strategy Execution Focused opportunities with Business Drivers and Processes: improved time to market, reductions in inventory and faster customer response among others. The IT high level opportunities will provide the focus for the activities in the subsequent IT ‘To-Be’ model development.  
  • 49. Copyright 2013 Martin Palmgren EVP .COMMUNICATE An IT Business Model & Value Proposition with : - Service strategy (ITIL) Delivery capability (VALIT, COBIT, RISKIT, CMMI, eSCM, ITDB) Architecture (TOGAF) Security (ISO 9000, 20/ 27 000) IT Review An assessment of the existing The 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. IT Benefits Review Benefits from IT investments can be assessed by reviewing the earlier IT strategy and Business Plans and undertaking an audit of whether the identified benefits were achieved. In the absence of a unified business case, individual business projects undertaken in the past should be assessed for benefits delivery.  
  • 50. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. Technology Review 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.  
  • 51. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Prepare the “service strategy” business case Draw the future Business (IT) Service Strategy: Key Questions: How will the business operate in the future and how should the IT Business model operate to meet the identified needs? Objective: To define how the business will operate in the future and to provide insights into how the proposed IT Business Model and Value Proposition can be developed. Benefit: Identification and quantification of IT enabled business improvements. Business (IT) Vision The Business (IT) Vision set to strategic direction, stretch targets and design principles will be developed to conceive a ‘To-Be’ Business (IT) Model and Value Proposition. The model specifies objectives and drivers to the required level of detail and identifies the types of measures which will apply to each part of the organisation. A range of different scenario, based on a combination of strategic objectives and business drivers and technology will be created to start with. The benefit / risk / cost / 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  
  • 52. Copyright 2013 Martin Palmgren EVP .COMMUNICATE accepted best practice. This set of principles and guidelines will define the “vision” for use of information technology. This vision may be impacted by constraints from the existing information architecture and technology infrastructure. It is essential that the business and information technology teams, if separate, work together on this task. Security Security defines how the IT Business will ensure IT RISK and Business Continuity in the future. The Security perspective provides the basis to identify projects and standards required to achieve to the desired future state. Determine competencies/skills required The ‘To-Be’ IT Service Strategy model and the IT departments role in the strategy execution roll out requires a new set of competencies and skills to deliver the required level of performance that include both business and information technology skills at a management and operational level. An outline of the ‘To-Be’ organisation structure identify skills and talent at different levels is developed as part of this task. Gaps in competencies and skills are identified and are used as an input in the sourcing strategy. Prepare the “Service Strategy” business case The last step is to prepare a set of “Service Strategy” business cases that define the projects required to deliver to the ‘To-Be’ Business (IT) Strategy Execution Model. A business case will identify tasks, resources, time lines, milestones, benefits and risks of identified projects. Build the Business (IT) Service Strategy - Build the Business (IT) Service Strategy Develop the Information Architecture, Develop Applications Architecture, Define Information/Applications Architecture Principles & Standards, - Revisit and update business cases.   Implementation Policies/
  • 53. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 to details, particularly if packaged software is the most likely solution, as this will define the physical architecture. That said a conceptual applications architecture can be a useful start for a package selection process and can help to guide decisions if to an integrated package is required or whether two or more packages interfaced with each other is possible and desirable. As with the information architecture, it is useful to identify application owners consistent with business ownership. Define Information/Applications Architecture Implementation Policies/ Principles & Standards Once the information and applications architecture has been defined, a set of policies, principles and standards for implementing this architecture has to be established. This will include policies and principles for package preferred solutions, replacement of applications/modules, integration and interface standards for current and future components of the information and applications architecture and responsibilities for maintaining architectural compliance. Revisit and update business cases The process to define the information and data architecture can highlight issues that may have an impact on “business cases”. This include package solutions, location / ownership / consistency of information or applications as well as insufficient benefits, service levels and additional cost to the initial estimation. We Govern the Business (IT) Service Strategy - Govern the Business (IT) Service Strategy, Define the role of the IT Department and scope of the IT function Define IT management principles and policies Define IT management practices Define Critical Success Factors and Performance Metrics Define the IT Organisational structure Govern the Business (IT) Service Strategy: Market dynamics and organisational growth result in a continuous demand on the IT business for new technology enabled solutions. As a result the business and IT  
  • 54. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. We Design the Technology Architecture - Design the Technology Architecture Define architecture framework, design principles and policies, Identify “best practice” and “key trends”, Define technical constraints, Identify technology classes, Define Blue Prints, Define Core Technology, Define Site Technology Models, Define the Enterprise Technology Model, Summarise models and define technology cost and risk. Define architecture framework, design principles and policies: Question: What technology components are needed to support strategy execution with the information and application architecture in the future? Objective: To develop a set of technology blueprints for an integrated set of information system components, together with a framework of standards and principles to ensure that components will operate effectively together, and adapt readily to the evolving needs of the business and supports strategy execution. Benefit:  
  • 55. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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. Identify technology classes We use the framework identified to define specific technologies or classes of technologies that will be used to implement the design. As we identify and prioritise the various issues to be addressed by the framework we agree on best practices, and then identify and evaluate alternatives (where possible) that will enable an effective migration from the As Is to the To Be. Once preferred alternatives have been identified for all of the framework topic areas, the team conduct a systematic review to identify and resolve gaps and inconsistencies among the various design principles and guidelines, as well as conflicts with business drivers and other framework constraints. If existing policies or contracts specifies the use of predefined products they should be clearly identified, since they may influence the selection of other technologies or products.  
  • 56. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 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 1: 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 components shared with suppliers/customers and/or with outsourced service providers. The enterprise technology model is concerned with connecting the site models developed in the previous sub-task. Once application and database functionality has been bundled in user workstations, and these workstations have been distributed into representative sites and attached to local networks, it is possible to model a network that responds to the aggregate demand for system and network bandwidth resources. The enterprise technology model is also concerned with system and network management requirements as they exist as a result of connecting the sites.  
  • 57. Copyright 2013 Martin Palmgren EVP .COMMUNICATE business drivers and objectives? Objective: The objective is to create a model to meet the IT services strategy required by the organisation and how it should be packaged for optimal delivery. This leads to a definition of the resources (skills and competencies) required to support and manage defined services effectively. Service levels and key performance indicators to monitor and manage each service ‘bundle’ are also developed to ensure the effective management services. Benefit: Define the value of services required to support the business requirements and identify the best sourcing options for IT to meet business performance objectives. The IT sourcing strategy identifies IT services required by the organisation and the resources (skills and competencies) required to support and manage services effectively. The sourcing strategy also specifies how the required services will be “bundled” for optimal delivery and identify services provided internally by parts of the organisation or by external providers. Key performance indicators to monitor and manage each service ‘bundle’ are developed for the effective management of services. Develop a service architecture: The Service Strategy is developed with input from the IT Assessment, Demand Side Architecture, Technical Architecture and preliminary reflections on governance to structure an architecture of the IT services. The architecture clearly identifies services (in-house and outsourced) required by the organisation with skills and competencies required to effectively manage the required services. Establish guiding principles As we develop and define the service architecture, the next step is to define the service delivery options that will in turn will be influenced by how the services are “bundled”. As a consequence, a number of sub tasks have to be performed iteratively to ensure that IT services are optimally “bundled” and realistic options identified. To establish guiding principles to take decisions on to in-source or outsource services the key elements considered include available skills and competencies, cost, potential for improved productivity, effectiveness and user satisfaction to meet demand and cost drivers.  
  • 58. Copyright 2013 Martin Palmgren EVP .COMMUNICATE process, this way you will be in a good position to ensure the business value of the transformation. Clearly articulated milestones and changes in the scope of work needed are critical to a balanced agreement. The scope should address things such as transition/transformation management, objectives, methodology, high-level schedule, roles and responsibilities of each party, the content of the forthcoming detailed project plan, third-party transitions, security transition, procedures manual development, personnel transitions, a description of how cross-tower services will be implemented (such as change management, incident management, problem management, configuration management and service level reporting), and a description by tower of the changes that will be implemented. 5. Pricing – Expect your outsourcing costs 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 with an updated business case Established program management principles A strategy implementation plan A change program to set target Identify and prioritise work streams and projects with Required skills and competencies Prepare an implementation plan for Program implementation with an organisation monitoring and management mechanism IT Contributes to business objectives and provide competitive leverage 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  
  • 59. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Tasks and work streams required to deliver the Business Case are reviewed to identify dependencies. The timing, ROI and contribution to business objectives is reviewed to set delivery priorities that will reflect quick wins necessary to demonstrate early success of application “bundle” considerations such as availability of resources. Identify and plan for required skills and competencies It is important to identify skills and competencies required to deliver the program. The skills and competencies for each major stream and project should be identified separately and synergies to share resources agreed on. This will require a review of priorities. Prepare the implementation plan Resource requirements for each work stream and project along with delivery milestones are reviewed to prepare an implementation plan. It is possible that the Business case change as a result of Stakeholder priorities. Suitable sponsors are identified and scope, timing, cost, risk and benefit cases validated. Contingency plans are developed and incorporated in the implementation plan. A preferred option for delivery is identified and documented. Prepare for program implementation The implementation of the program plan involves a number of activities such as to define roles and responsibilities, the establishment of an appropriate program organisation, the set up of processes for risk management, issue resolution, quality management as well as program governance and communication. 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  
  • 60. Copyright 2013 Martin Palmgren EVP .COMMUNICATE stakeholder outcomes to deliver value for all parties (partnership) and a The Collaboration Theme Scorecard to set process objectives & Identify : levers for joint actions and wins, metrics and initiatives on a short, middle & long term basis. The Business (IT) Strategy link to operations Link Strategy and Operations - Develop the Strategy Translate the Strategy Plan Operations Monitor and Learn Test and Adapt the Strategy Execute Procedures and Initiatives Business (IT) Tactics Map Strategic Themes - Financial Perspective Customer Perspective Process Perspective Learning & Growth Perspective Create a High Performance Culture Business (IT) Context Define Market Position - New entrants Suppliers Substitute products or Services Buyers Existing Competitors Captured in a Strategy Map The Stakeholder Strategy Map: Formalises stakeholder outcomes to deliver value. Stakeholder Strategy Roadmap:  
  • 61. Copyright 2013 Martin Palmgren EVP .COMMUNICATE Conceived in to a solid story In order to do so we need to: Objectives: - Levers: - Chapter 6. To leverage IT for Strategic Advantage Value, Profit, People – What is your unique competitive advantage? To leverage IT to execute on the set business strategy we need to effectively focus on: Value, Profit and people aligned to create a unique competitive advantage. The tandem is an excellent metaphor for the Business IT relationship. Where Information Technology can accellerate “Go to market”, “Cycle time” and “Cost effectiveness” it is for the Business to set direction and for the IT Department to support the business model. This is also true for the non brick and mortar references that have emerged from silicon valley. Amazon sells books and online store space. Google the opportunity to find things + run applications on a cloud (mutualised storage space outside the firewall) + hosted services such as email (the opportunity to communicate in writing and keep a trace). Ebay enables the exchange of goods. Twitter provides a tool for self promotion and advertisement. Facebook fills the void of distance and keep the contact with your friends and the opportunity to make new acquantainces. Linkedin the opportunity to keep up to date with your professional network + some promotional features. The business model sets the direction enabled by best in class technology. Why it is critical for the business to acquire the IT Service Portfolio End to End 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.  
  • 62. Copyright 2013 Martin Palmgren EVP .COMMUNICATE did not correspond to the needs of the business in the first place and certainly less so 18 or 36 months (processes modelled and defined by a consultant, translated and programmed) down the road. The CIO and IT department needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. The CIO and IT Department that sit around and wait for the Business Strategy to be formalised to build an IT strategy and vision might not make the 18 months magic mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated. Reconstruct Boundries Would you sign up to run a retail business operation where you do not know what clients consume which product / service at a specified quantity and subsequently be billed for their consumption (nor how you will finance the future run and build)? This is however the reality for most CIO's! The focus of a service based model is to demonstrate how IT Delivers Value to the business, that is delivers services to business needs (cost effectively, or at least at a specified cost rate that permit to take qualified decisions) over time with an effective IT Business Model and Value Proposition. We see Total Cost of Ownership (TCO) as the corner stone to move further from "IT generates to much cost" where we can demonstrate who consumes what services (and should subsequently pay for what they consume) to obtain the means (investments) and ends (budgets). To run a cost effective IT Operation that delivers to business expectations and leverages the execution of the set strategy (1) you would need to build a clear IT Service Strategy (what services do we deliver to the business) with Total Cost of Ownership per user with: cost (how much does each service cost), consumption (how much does the individual user consume) and chargeback (consumed services are allocated "charged back" on an effective cost basis to the business units) (2) in order to be able to provide the means (necessary investments) and ends ( budget). With the right support (best in class technology) this can be done in weeks with a top down (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  
  • 63. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - Efficiency of each Service - Effectiveness of each Service - Manage IT performance on a cost per unit and consumption basis - Compete on the open market - Benchmark and measure apples to apples Create demand In a recent conversation that I had with David Giambruno, CIO Revlon, he mentioned his ability to get the business hooked on new services and products as he actively propose new solutions to the business to leverage competitive advantage and keep the run in perfect shape. But the role as “gatekeeper of technology” to create business value can only be valid as the infrastructure runs smoothly. David has over they years shifted the focus of to use 80 % of the budget for workarounds and fire fighting the keep the lights on and 20 % to propose new solutions to the business to an opposite 80 / 20 where 80 % of the budget is used to enhance the capability of the business. He also clearly indicated that where the logics spelled out in ITIL are excellent they are are a minimum requirement to build an effective IT Strategy to the needs of the business where the perspective has to be completed with a Design (Demand and Supply) and Build (supported by IT processed with clear KPI’s) phase to tie the strategic value piece with the operational elements of IT service delivery. Govern It is crucial to build governance in to the execution of the Business and subsequently the IT Strategy. COBIT 5 helps IT leaders provide a business view of IT’s ability to create value and support enterprise goals through effective IT processes and build process capability and can be used to: Develop process improvement, Deliver value to the business, Measure the achievement of current or projected business goals, Benchmark and deliver consistent reporting, and ensure organisational compliance. Shift focus from customers to non-customers Salesforce.com have over the last years 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.  
  • 64. Copyright 2013 Martin Palmgren EVP .COMMUNICATE The CIO and IT department hence needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed. The CIO and IT Department that sit around and wait for the Business Strategy to be formalised to build an IT strategy and vision might not make the 18 months magic mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated. IT contributes to business objectives The IT service proposition is aligned to the business strategy as: Stakeholder expectations are understood and IT propose a service portfolio that correspond to Demand and Cost drivers, Business Contribution, Cost, Consumption & Chargeback is identified, Focus is on perfect order business transactions, Services are effective (demand and cost drivers identified), Services are competitive (Benchmark Industry Market Forces) and New technological solutions that could change how current business is performed are explored, proposed and implemented. IT provides competitive leverage As the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated in: An IT Business Model “This is how we deliver IT services to the business” and a Business IT Value proposition “This is how we support business objectives with services in a time to market perspective”. The Business (IT) Strategy, link to operations We Link Strategy and Operations as we Develop the Strategy, Translate the Strategy, Plan Operations, Monitor and Learn, Test and Adapt the Strategy, Execute Procedures and Initiatives. Business (IT) Tactics 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  
  • 65. Copyright 2013 Martin Palmgren EVP .COMMUNICATE - How is technology helping us win against traditional and new competitors? - How can we use technology to enter new markets? 2. What will it take to exceed our customers’ expectations in a digital world? Questions to ask: - How does our customer experience compare with that of leaders in other sectors? - What will our customers expect in the future, and what will it take to delight them? - Do we have clear plans for how to meet or exceed their expectations? 3. Do our business plans reflect the full potential of technology to improve our performance? Questions to ask: - Has the P&L opportunity and threat from IT been quantified by business unit and by market? - Will our current plans fully capture the opportunity and neutralize the threat? - What is the time horizon of these plans, and have they been factored into future financial projections for both business and IT? 4. Is our portfolio of technology investments aligned with opportunities and threats? Questions to ask: - How well is our IT-investment portfolio aligned with business value with regard to opportunities and threats? - How well does the portfolio balance short-term and long-term needs? - 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:  
  • 66. Copyright 2013 Martin Palmgren EVP .COMMUNICATE 9. Are we making the most of our technology story? Questions to ask: - What are the key messages we should communicate? - How, when, and to whom should they be communicated? The CIO and the IT Department need to position as premium provider of IT services and focus on value to cost. In order to avoid the "do we really need a CIO and IT department to bother us with technology when we can use the cloud?" the CIO has to ensure that the business strategy and business objectives are supported by IT (from a Business and IT architecture perspective). Where the IT Strategy support Strategy execution, "Time to Market", Cost Effectiveness and stakeholder expectations from an Executive, Business Unit, IT Management and IT Risk Management perspective. To deliver business value with IT we need to Focus on the Business Bottom Line: How fast can we get our products and services to market “Time to Market” & how can the IT department support the business from a Cycle Time and Cost Effectiveness perspective. The IT Bottom line is that up to 40 % of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities and demonstrate that the current Business Model is supported effectively. The IT department should facilitate the access to IT services to support new and current business initiatives. The business strategy emerge out of a number of initiatives that are successful or not. The IT department need to support the “Run” of day-to-day operations as well as new projects. The Cloud might particularly be of interest within this frame. IT must be responsible for profit and loss from a business perspective and be managed like a business. The fact is the technology will play a bigger role in order for business to thrive in the future. The level of implication of IT varies as it depends on 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? ,-  
  • 67. Copyright 2013 Martin Palmgren EVP .COMMUNICATE and innovative technology solutions to improve competitiveness, demonstrated and articulated.  

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