1. The Case for Continual Realignment
of the IT Function
A Formicio point of view

2. The purpose of this slideshow is to share a point of view
Today’s reality:
 Our world is becoming more digital
 Businesses are increasingly dependent
upon IT
 Most business innovations are IT-enabled
Our point of view is  Today’s IT delivery model depends upon
based upon insights
multiple partners and suppliers
and experience that we
have gained over time  The context within which IT organisations
operate is continually changing
The aim is to inform
and inspire
The challenge for IT leaders:
 Delivering sustained performance in an
ever-changing context
© 2013 Copyright Formicio Limited 1

3. The context within which an IT organisation operates is
continually changing
 Changes that shift context include:
– New business strategies
– Mergers/acquisitions/divestments
– Disruptive technologies
– New sourcing options
 Changes in context can result in the IT
organisation becoming misaligned:
– With the business units it serves
– Across the different functions, units,
partners and suppliers
Continual alignment is
a pre-condition of
sustained performance  Shifts in context can be sudden or happen
gradually over time
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4. Symptoms of misalignment can be many and various
 ‘Noise’ from business leaders
 Poor, or inconsistent, delivery of IT
services and service levels
 Business preferring to talk directly with
external IT consultancies or technology
suppliers
 Lack of responsiveness to business
requests
Some misalignments
are obvious, others  Business constantly challenging IT costs
less so  Over-bureaucratic IT governance
 Disengaged IT staff
 IT perceived to be inhibitors of business
innovation
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5. The underlying cause is often a lack of alignment across the
three ‘domains of IT capability’
 The Value Proposition defines
WHAT IT delivers to its
IT Value customers and the value they
Proposition
(WHAT) receive
 The Operating Model defines
IT Operating IT Operating HOW IT resources are organised
Model State
(HOW) (WHO) to deliver value
 The Operating State defines
Sustained performance is achieved WHO people think they are in
when the three domains of IT capability terms of role, contribution and
are aligned across the IT organisation
mindset. Is a principal driver of
and its external partners
behaviour and engagement
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6. IT’s Value Proposition must be aligned with the strategies
of the business
IT delivers value through:
IT Value  Delivery of IT services
Proposition
(WHAT)  Design and implementation of
business solutions
IT Operating IT Operating  Enabling business innovation
Model State
Value is typically measured in terms of:
 Cost
IT Value Proposition  Fit for purpose IT-enabled business
Defines WHAT IT delivers to solutions
its customers and the value
they receive
 Business innovation
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7. IT’s Value Proposition is judged in terms of how it enables
the business to achieve its strategic objectives
IT’s Value Proposition Measure of business value Value discipline
Delivering Day-to-Day “Driving up the level of service Operational Excellence
IT Services at a year-on-year reducing
cost”
“Fast discovery and timely Customer Intimacy
Delivering Business
development of business
Solutions
solutions”
Enabling Business “Number of innovative Thought Leadership
Innovation business ideas introduced”
 Not all businesses within an enterprise will require the same level of
performance in each value discipline
 However a threshold level of performance is required in each value discipline
 As the context changes, IT’s value proposition needs to reassessed and
recalibrated
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8. IT’s value is defined by the Value Proposition ... and
delivered through its Operating Model
An IT Operating Model comprises
many facets, including:
IT Value
Proposition  Processes
 Roles, skills and jobs
IT
Operating IT Operating
 Structure
Model
(HOW)
State  Governance
 Management systems
 Information and tools
IT Operating Model  Internal and external resources
Defines HOW IT resources
are organised to deliver
value An IT Operating Model needs to be
efficient, effective, reliable, scalable
and agile
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9. An IT Operating Model comprises a number of interrelated
facets
Manage Customer Relationships
Manage Business-IT Portfolio
Processes – effective
Manage Enterprise Architecture and efficient
Discover
Business
Deliver
Business
Operate
Business processes delivering IT Operating Model Organisational
Design – structure of
-IT Solution Systems
predictable and
Potential s
resources and
Operate IT Infrastructure
Manage IT Supply repeatable services
Manage IT Organisation
individual
Org. competencies
Processes
Design
SVP Governance – structures
Companies/
BUs
Executiv
e
Council
that orchestrate Measurement – that
Management
Team development, funding, reflects outward-
Core
Process
Council adjudication and Governance Measurement facing business
execution of decisions
Organization
objectives and key
performance
Services indicators
Sourcing – segment Sourcing
Portfolio
suppliers, understand
their value proposition, Services Portfolio – Premiere Service
aligned and segmented
Service Options
develop the right • Basic product set
• 24 x 7 hours
• Premium coverage
- Fastest response time
•
•
•
Product set extensions
Mobile User
Advanced Technology Introduction
product and service
- Fastest repair time
• Other
relationships and
offerings that meet
Service Level Quality
Standard
Service
execute flawlessly
business demand
• Basic product set
• Prime hours
• Guaranteed coverage, e.g.,
- Response time
- Repair time
Service Content Richness
All the interrelated facets of the Operating Model need to be in
alignment in order to deliver the intended Value Proposition
© 2013 Copyright Formicio Limited 8

10. The Operating State of IT is a reflection of who they ‘think
they are’
WHO people ‘think they are’ is defined
by:
IT Value
Proposition  The degree to which their values are
aligned with those of the organisation
IT
IT  The type of work they are asked to do
Operating
Operating
Model
State  Their relationship with colleagues
(WHO)
 Their relationship with their manager
 Methods and style of communication
Operating State  The degree to which they feel
Defines WHO people think they empowered
are in terms of role,  The degree to which they feel they
contribution and mindset. Is a are learning and developing as IT
principal driver of behaviour
and engagement
professionals
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11. The Operating State can be viewed on a spectrum across
four facets
Low performance High performance
Easily stopped
Resignation Possibility Resourceful
Little accountability
Accountable
Risk-averse Power
Risk-taking
Frustrated
Ambitious
Narrow thinking Separateness Connectedness Holistic thinking
Independent action Coordinated action
Finger pointing
Identity Responsible
Sub-optimising Optimising
Fear and Safety
Avoid conflict Suppression and Resolution Address conflict
Distrustful Trustful
Undiscussables
Contention Straight talk
Kill the messenger Safety
Look for the fatal flaw Arrogance and Inquisitiveness
Looking for possibilities
Defensiveness and Receptiveness
Trust authoritative views Challenging status quo
Don’t admit failure Learning Learn from failures
‘Not invented here’ Open to new ideas
© 2013 Copyright Formicio Limited 10

12. Continual Alignment is an organisational capability that
needs to be developed
 Alignment does not come naturally: it
takes conscious and deliberate effort
IT Value  Alignment is an organisational
Proposition
(WHAT)
capability
 Organisational capabilities are
IT IT
Operating Operating embedded in the way things are done
Model
(HOW)
State
(WHO)
and are not lost when individuals
leave
 Organisational capabilities comprise
Accountability for continual
shared mental models, frameworks,
alignment rests with the IT
leadership language, skills, mindsets, beliefs,
conventions and experiences that
collectively drive behaviour
© 2013 Copyright Formicio Limited 11

13. The first step is to assess the degree of misalignment
1. Conduct an assessment to identify
the critical areas of misalignment
2. Identify root causes of misalignment
3. Prioritise critical areas for
realignment
4. Define the specific actions to close
the gaps
Sustained 5. Implement the actions
performance is an 6. Track progress to realignment
outcome of continual
alignment
At the same time develop alignment as an organisational capability
© 2013 Copyright Formicio Limited 12

14. Our point of view on IT Alignment revisited
1. The context within which IT organisations operate
is continually changing
2. When IT organisations under-perform it’s often as
a result of a lack of alignment across the three
‘domains of IT capability’
3. The three domains of capability are IT Value
Proposition, IT Operating Model and IT Operating
State
The quest for 4. Each of the three domains comprise facets that
alignment is never also need to be aligned
ending: as the 5. Alignment is an organisational capability that
context changes
so does the need
needs to be developed
to realign 6. Accountability for alignment rests with the IT
leadership
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15. The power that comes from having a shared point of view
Having a shared point of view is a powerful
tool for collective leadership. It can bring
clarity and balance. It can create a context
where everything makes sense, people know
exactly who they are, what is needed and
why they’re here. Effectiveness is maximal,
yet actions seem minimal. Everything flows
as it should.
Developing a point of view takes time and
effort, but the outcome will be worth it.
The Formicio Team
© 2013 Copyright Formicio Limited 14

16. This is an Insight Presentation by Formicio
We offer insights, capabilities and experience that will help you
understand and improve your organisation’s future.
Specifically we can help you:
 Explore alternative futures.
 Transform organisations to an improved future.
 Develop capabilities needed to ‘pull’ your organisation into an
improved future.
One of our specialist areas is IT transformation
© 2013 Copyright Formicio Limited 15

17. For further information contact ...
David Trafford
david.trafford@formicio.com
Peter Boggis
peter.boggis@formicio.com
+44 (0)20 7917 2993
www.formicio.com
© 2013 Copyright Formicio Limited 16