Aligning IT - Allan Aitchison
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Allan Aitchison is an experienced IT Director with over 15 years in senior IT leadership roles. He brings broad experience in Utilities, Facilities Management, BPO outsourcing, Healthcare, Financial Services and blends a successful career in both client side and big 4 consulting. He has extensive international experience. Allan’s focus is on delivering business advantage through technology enabled change.
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Aligning IT - Allan Aitchison
- 1. Aligning IT Turning a cost center into a profitable business partner
- 2. IT Maturity • All business units need to support the company business goals • IT can reduce cost, increase profit and support company differentiation • IT needs to deliver the first 2 and should aspire to all 3 • It takes an aligned organisation to deliver this change • The whole of IT delivering together • IT and the business – to deliver the right priorities at the right time • IT and suppliers – to use appropriate partners
- 4. • There will always be prioritisation between operations, change program and IT Transformation • Parts of the plan will go faster than others • Momentum is vital – building on what works Typical Progress
- 5. • Doesn’t compare cost & benefits to industry benchmarks • Low ratio of capital to operational spend (below 5%) • IT Cost is the prime or only KPI • Conversations with the business are based on IT faults • Limited IT planning horizon • Limited links between IT and the business it supports A Typical Cost Managed Organisation
- 6. • Project Management Office refresh • Appropriate process for IT spend • Focus effort on a controlled number of changes • Measure and manage benefits • Refreshing IT’s KPIs • Service Management • Service Level Management • Release Management • Capacity Management • Tactical delivery plan • Team assessment • Team building • Quick wins to build momentum Progressing from a cost managed organisation
- 7. • Doesn’t compare cost & benefits to peers • Medium ratio of capital to operational spend (~20%) • A range of KPIs spanning cost and benefit • Limited IT planning horizon (~1 year) • Some links between IT and the business it supports • Limited conversations about company issues like customer and/or supplier engagement A Typical ROI Managed Organisation
- 8. • Business contribution • Business model influence • Operational excellence including business analytics • Connecting to customers • Automating/outsourcing back office functions • IT strategy • Transitions from ASIS to TOBE vision • Budget projections • Technology plan • Supplier management plan • Portfolio management / process / approval • IT Target Operating Model • Team maturity strategy • Redefined KPIs Progressing from a ROI Managed Organisation
- 9. • The same plan elements would still need to happen • Some elements will be undertaken with the Outsourcer(s) • Most elements will be undertaken within the insourced IT organisation and the business • Some potential changes may result in contractual changes Does Outsourcing Affect This?
- 10. • A large IT Team win • Massive increase in profit from IT • Great increase in IT team retention • More influence on the board What Will This Deliver?
- 11. • It is difficult • Changing how you work • Aligning your team, customers and suppliers • Using deliverable IT strategy based on a real appreciation of the ASIS state progressing to the TOBE state • Governance based on the IT strategy Why Doesn’t Everyone do it?
- 12. Allan Aitchison 0783 793 4086 Aligned IT Consulting Allan.Aitchison@AlignedIT.co.uk Speaker Details
Editor's Notes
- Modern IT is regularly being used to deliver differentiation or as a minimum strongly support business differentiation. CEOs drive optimisation from all parts of the business and IT is not a special case. IT supports many parts of the business but it can be so much more – when it is implemented correctly IT becomes a differentiator driving up market penetration, reducing cost delivering faster time to market. The model shown on the left shows IT maturity and the processes needed to support the change to the next step. Usually these steps are taken in parallel with the speed of change driven by the level of trust the business has with IT, moving from micro-managed high cost/low value organisation through to a low cost/high value peer contributor. The aspiration for IT should normally be to become a full partner to the business it supports – contributing ideas and proposals that could deliver differentiation or profit in exactly the same way as other operating business units. The business may not be ready for such a change – but progressing through these steps will continue to raise IT’s connection with the business and financial which will change this behaviour. Different organisations are at different maturity levels which can result in very different short and long term goals for IT. Delivering a transformation in IT will involve performing or at least checking all of the items listed – with the timings changing depending on maturity and company focus. The plan shown is deliberately simple to demonstrate the link between major change elements and IT maturity.
- This first step demonstrates to the business that IT can manage its priorities – managing change and operations within agreed timescales, budgets and still operate to service levels. Successful delivery of this step creates a degree of trust that IT can be trusted with its budget and is the foundation for the subsequent step. Customer understanding – it is can be all too easy to retreat into the comfort zone of the IT organisation, but gaining an understanding of the business and business leaders breaks down many barriers. Getting to understand the drivers and language is a foundation behind creating the transformation. There are bound to be times of tension through this journey so having a firm relationship with the business will help. Project Management Office refresh – The project management office is a central team supporting rigour in IT. Making certain that the budget is properly managed and accounted for, with appropriate levels of sign-off is vital as IT will be judged on this performance. Understanding the current spend profile may show far too many concurrent projects – diluting the ability to deliver as critical elements of the team continue to be stretched across multiple projects. Benefits measurement and through this management – concentrating projects in delivering customer benefits. Discussions with project sponsors regarding managing project benefits rather than scope management demonstrates how PMO is acting for them in maximising benefit for the cost. Refreshing IT’s KPIs is important – as this draws a line about part performance and sets in place a base line to demonstrate improvement. Balanced scorecards normally have 4 quadrants and benefit from leading and lagging indicators and industry benchmarks. A suggested minimum set of KPIs are as follows: Financial – Capital budget spend vs phased spend, Operational budget spend vs phased spend, Cost of IT per staff member Customer – Operational service levels vs service level, IT Supply vs. Demand, Live projects vs planned stage, Live projects vs phased budget, live projects vs planned benefits Learning and Growth – Planned education spend vs phased actual, Tactical delivery plan vs actual Internal business measures – Profit from IT, Lost profit due to downtime, current IT estate vs. agreed minimum versions Service Management - it is possible that changes from one part of the IT team can affect other parts of the IT team Service Level Management gaining an understanding on what the customer really needs, what is documented or written in contracts and what the currently being delivered is vital for the credibility for this step. If the current resources are insufficient for the delivery of the service or the level of focus in IT needs to be improved this is all part of the dialog with the business and within IT. Release Management forces these teams to agree the scope of releases and when they are ready to be released. Release Management also allows the pace of change for customers to be managed. Capacity Management given that a future strategy is not fully known, project current growth against current utilisation – to make certain there is at least 1 year’s capacity growth. Tactical delivery plan – the creation of a plan to improve the knowledge and skills of at least key staff is an investment that will provide dividends as the transformation gathers pace. Understanding the team, finding its strengths and working with the team to build their cohesion. Delivering a change involves team work, and as with many team sports engaging with customers and the IT team and delivering quick wins will create momentum. Success really creates a culture and expectation for improving standards and creating more success.
- This step is difficult to achieve without first being able to demonstrate good levels of communication with the business, and successful delivery of an IT service. This does not mean that it should be started only after delivery of the first step – but progress will become much easier as IT becomes a trusted business unit in the organisation. Business contribution Business model influence – IT holds a unique place in the businesses it supports – as it needs to support all of the business. This allows IT to suggest ways for the business to work better, to standardise processes or to rationalise processes. Operational excellence – understanding how to make companies become more efficient and finding best practice involves collating and comparing large amounts of data. An earlier element in this plan involved creating a balanced scorecard for IT, creating a coherent balanced scorecard for the company follows a similar process – but will need organising as scorecards will need to be consistent to allow summarisation up the management structure and support a process of finding and recording why one business unit is better or worse to be able to capture best practice that can then be applied throughout the organisation. An increasing number of organisations are using IT to actively manage their business, gaining agility by collating operational data and automating responses – creating a data driven company. Project delivery – once IT starts to gain a reputation for delivery it can start to deliver wider scope projects delivering the business element as well as the IT element and it can refine or replace existing PMO activities. Connecting to customers – many companies use IT to help manage their communications with existing and potential customers. This can involve collating information from many sources and span customer history, marketing campaign hierarchies, customer models, propensity models, prospect data as well as data from a multitude of other sources. This would result in either a tailored automated response for each customer independent of channel the customer is using or if customers are managed through more manual processes, tailored summaries of information about the customer for staff to respond to. Business and IT strategy – gaining a full view of the business strategy helps IT to be able to suggest improvements and allows time to be able to deliver more effectively and efficiently. These plans contain business vision, budget, projects, organisational, technical, sourcing approach, supplier plans, staff training plans and refined KPIs measuring success in defining and delivering strategy. IT Team alignment - to be efficient and effective IT has to be prioritised towards a common set of goals. These goals are documented in the strategy. Having a strategy allows IT at multiple levels connect with the business to help refine or deliver the strategy. This approach connects the IT team with the business and creates or improves the levels and quality of communication between these teams and keeps IT aligned. Supplier management - the strategy contains the portfolio of projects which contain within it assumptions on what products and services will need to be procured to support the strategy. It is also possible that third parties were used in strategy creation. Understanding how important third parties are, and medium term plans containing planned purchase quantities and costs can be used to shape discussions with third parties – if the products of services are key, create differentiation or has few competitors then the relationship becomes vital and more effort to retain or enhance the relationship should be invested. Portfolio management – the timescales for IT strategies should be 3-5 years and optimising the portfolio of projects usually follows a different pattern to shorter focused portfolios. Dependencies should be actively sought across the portfolio to minimise scope and risk and maximise reuse. This work optimises risk, time to market and risk. This process can be reversed as the start dates get too close. Managing cost at a portfolio level allows a single project to deliver a low risk introduction to this technology/technique. Running each project as a profit/loss also means IT Target Operating Model – gaining an understanding of what needs to be achieved can provide insight into how the IT team should be structured and what processes will be used regularly. This can be used to create an IT Target Operating Model – creating an organisation that best fits the customer need. Team maturity strategy – as with the Target Operating Model, a maturity strategy can be built to support growth in individual IT team members to grow into the Target Operating Model Supplier management plan – a plan gaining agreement within your company about which suppliers are key and containing how you will work differently and what you are willing to share/give up to get it. This documents your negotiating position and the roles you will take in this negotiation. Redefined KPIs – these might show the relationship between IT effort and the lag to business outcomes and showing progress through IT Strategy. The IT strategy is only good if it is kept up to date. A process should be in place to keep this updated and approved regularly so that progress can be seen to be done and approval given to the next set of priorities.
- The individual plan elements listed should be undertaken – but with outsourced elements – focused on reviewing the business need, contract service levels and actual performance to gain an understanding of: Does the outsourced service provider deliver what is needed to support the business now? Does the outsourced service provider deliver continue to meet future needs of the business? When does the contract come up for renewal? Which party owns the intellectual property for the service? How competitive is the market for similar services? How difficult is a potential move likely to be?