Terry White ovum 2012 keynote 2a
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IT transformation from "ICT" (tech focus) to "ACT" (business focus)
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Terry White ovum 2012 keynote 2a
- 1. Congress Keynote Modernizing IT to Meet Business Wants Ten Cool Things to do with your IT Department 17 May 2011 Terry White: Research Director CXO Advisor terryw@cxo-advisor.co.za +27 11 82 573 3887 1 © Copyright Ovum. All rights reserved.
- 2. Agenda The three roles of IT IT‟s new ACT Ten ways to ACT Recommendations 2 © Copyright Ovum. All rights reserved.
- 3. What IS the role of IT in the organisation? Is IT just EDP? Is IT‟s role to keep the lights on and the wheels turning? How much time does IT spend doing technology? And how much doing business? Should the CIO be on the Board? 3 © Copyright Ovum. All rights reserved.
- 4. What do CEOs want? Deliver IT without fuss, get involved in business improvement and give us appropriate leadership 4 © Copyright Ovum. All rights reserved.
- 5. Keep up the momentum Business Momentum IT without fuss Mass = staff, branches, geography etc. Speed = how fast and how dependent on continuity Direction = vision, mission, objectives Hygiene factor Ticket to the game 5 © Copyright Ovum. All rights reserved.
- 6. And do the important IT Business Momentum Information Leadership IT without fuss 6 © Copyright Ovum. All rights reserved.
- 7. Turn that sideways Information Business Momentum Leadership IT without fuss IT without Improve Information fuss business leadership results 7 © Copyright Ovum. All rights reserved.
- 8. What IT really does IT without fuss Improve Information business leadership results Technology delivery 76% 22% 2% IT without fuss Improve Information business leadership results What the CEO wants 60% 20% 20% 8 © Copyright Ovum. All rights reserved.
- 9. Getting from here to there is not a simple step 9 © Copyright Ovum. All rights reserved.
- 10. IT’s role? Is IT just EDP? Or is it ACT? – Applied Competitive Technologies? 10 © Copyright Ovum. All rights reserved.
- 11. Ten things to do to get IT’s ACT together ACT 1: The mandate ACT 2: Business results ACT 3: The white space in organisations ACT 4: Information leadership ACT 5: Applied technologies ACT 6: The technology life-cycle ACT 7: IT skills ACT 8: Outsourcing ACT 9: Business-like IT ACT 10: ACTing – implementing the idea 11 © Copyright Ovum. All rights reserved.
- 12. ACT 1: The mandate Deliver IT without fuss, get involved in business improvements, provide appropriate leadership IT‟s posture: What business understands and what IT understands It is a communication and clarity problem, not a mandate problem And it is a trust problem Demonstrate Business wants not competence business needs Business Meet focus Manage commitments goodwill 12 Next: Business results © Copyright Ovum. All rights reserved.
- 13. ACT 2: Business results When to talk about IT costs Never Also never The way to ACT is via business performance Not as librarians 13 © Copyright Ovum. All rights reserved.
- 14. ACT 2: Business results – talking about costs Crocodiles are your friends! Business results define IT performance IT costs are meaningless without a business context Year 1 Year 2 Year 3 Next year 14 Next: White Space © Copyright Ovum. All rights reserved.
- 15. ACT 3: The white space in organisations Content Process Business measures Benefits realisation Involved in business not Portfolio management delivering systems 15 Next: Information Leadership © Copyright Ovum. All rights reserved.
- 16. ACT 4: Information leadership Manage complexity – Management is: meaning and POEM attention Plan Organise Execute Monitor / Measure Appropriate leadership is Leadership is the management of: framed by the Meaning organisation Attention Self Trust 16 Next: Applied Technology © Copyright Ovum. All rights reserved.
- 17. ACT 5: Applied technologies Without fuss is more Business Focus Getting to 20% important than IT • Introduce strict IT governance • Standardise your operations • Automate all your operations, to reduce the Business IT is seen to be need for IT involvement expectations active business partners who do • Outsource: This is a complex answer as it the IT without makes the “without fuss” part of IT someone fuss else‟s problem – but it requires strong supplier management Current IT spends most • Manage IT like a business: Business will business of its time doing only have confidence in IT‟s abilities if they perception behind the see IT run like a business, using business of IT IT scenes activity disciplines and techniques Focus • What else? 17 Next: The life-cycle © Copyright Ovum. All rights reserved.
- 18. ACT 6: The life-cycle Development Late life Early life Monthly costs Running 18 © Copyright Ovum. All rights reserved.
- 19. ACT 6: The technology life-cycle (cont.) Go live Breakeven Cumulative costs 19 © Copyright Ovum. All rights reserved.
- 20. ACT 6: The technology life-cycle (cont.) Cumulative costs 20 © Copyright Ovum. All rights reserved.
- 21. ACT 6: The technology life-cycle (cont.) Cumulative costs 21 © Copyright Ovum. All rights reserved.
- 22. ACT 6: The technology life-cycle (cont.) Cumulative costs 22 © Copyright Ovum. All rights reserved.
- 23. ACT 6: The technology life-cycle (cont.) Good enough now Source, then buy, then – not perfect later build (SAAS, then COTS, then Bespoke) Cumulative costs 23 Next: Skills to ACT © Copyright Ovum. All rights reserved.
- 24. ACT 7: IT skills IT Roles ACT Roles Technology Business 100% - Without fuss Leadership Supply Involvement External Focus World trends, Business Management Skills Industry trends, Strategic mgt, Technology 75% - trends IT Management Skills relationship mgt, e.g. project mgt of information, management, financial analysis, service management, vendor and contract mgt, IT assets, procurement, 50% - business skills information management, communication 25% - Business wants IT to Technical Skills manage demand e.g. languages, tools and network administration 0% - 24 Next: ACT and Outsourcing © Copyright Ovum. All rights reserved.
- 25. ACT 8: Right-sourcing – The ACT Profile Efficiency = Service / Cost / Risk Source, then buy, then build Maturity – governance, „without fuss‟ (SAAS, then COTS, then Focus Bespoke) Paths of action – people, options Business wants IT to Manage IT, don‟t do IT manage demand 25 Next: Business-like IT © Copyright Ovum. All rights reserved.
- 26. ACT 9: Business-like IT Revenue Acquisition Production Delivery Sales / Marketing Finance HR HR IT IT Supply Chain Management Supply Chain Management Program Office Program Office IT ‘Revenue’ IT Production IT Demand IT Delivery Mandate Plan Management Run Model Build Business IT Finance The language wants IT IT HR of business is to manage IT for IT finance demand IT Supply Chain Management 26 Next: Implementation © Copyright Ovum. All rights reserved.
- 27. ACT 10: ACTing – implementing the idea Planned implementation 100% Actual implementation 50% according to managers Actual implementation according outsiders 10% Adapted from Strategic Management: Alex Miller Good enough now – not perfect later Why implementation fails: Organisational immune system Business Complexity decides IT Interconnectedness priorities Big bang – is it real? Business decides Choose one thing what’s valuable Do it well Repeat Do three in a year 27 Next: Recommendations © Copyright Ovum. All rights reserved.
- 28. Underlying logic to choosing IT initiatives IT without fuss Improve Information Business Leadership Results Strengthen Strengthen Meaning Attention Capabilities Engine Change delivery Create Change the business Change the environment Differentiate model Business Improve Improve the business Change the strategy Improve value driven IT services Engine Looming threat Service Service the business supply service Respond to external Momentum line Regulation Broken Fix forces Run the engine Business decides Deliver IT priorities 28 © Copyright Ovum. All rights reserved.
- 29. Allocation Funding & The finance Budgeting and Accounting language of business is finance IT Financial Demand Rationale / Service management Objectives / costing Policies Value Operational Service Management utilisation chargeback 29 © Copyright Ovum. All rights reserved.
- 30. Providing, planning for, allocating and managing IT financials IT intensity Funding & Budgeting Allocation and drives finance Accounting funding IT Financial Demand Rationale / Service management Objectives / costing Policies Business decides Value Management Operational utilisation Service chargeback what’s valuable Managing the cost / use / value relationship 30 © Copyright Ovum. All rights reserved.
- 31. Business wants IT to The manage language demand Allocation of Funding & Budgeting and finance Accounting business is finance Managing the IT Financial business Demand Rationale / Service Managing management costing side of IT Objectives / Policies the IT finance side of IT finance Value Operational Service Management utilisation chargeback 31 © Copyright Ovum. All rights reserved.
- 32. IT costs are meaningless without a business context Without fuss is more important than IT Business wants not business needs Business wants IT to manage demand Good enough now – not perfect later Source, then buy, then build (SAAS, then COTS, then Bespoke) Business decides IT priorities Business results define IT performance Involved in business not delivering systems Business decides what’s valuable Appropriate leadership is framed by the organisation The language of business is finance IT intensity drives funding Manage complexity – meaning and attention 32 © Copyright Ovum. All rights reserved.
- 33. Thank you – any questions? Terry White: Research Director CXO Advisor terryw@cxo-advisor.co.za +27 11 82 573 3887 33 © Copyright Ovum. All rights reserved.
Notas do Editor
- Is IT these days just Electronic Data Processing?Is IT just a supplier and operator of a commodityHow much business does IT do?Does the CIO LEAD their organisation?
- Most IT people do not see these words: “Without fuss”, “Involved” and “Appropriate”. For most CEOs these are the most important words.
- IT’s delivery of the technology that runs the business is seen by CEOs as backroom, hygiene factor stuff. And this doesn’t ADD value – It might maintain value, but so does electricity, sewage, water, etc.
- Business wants IT to help them increase their momentum.And on CEO said leadership is: New products, new markets, new channels – Full stopIs today’s IT involved in improving business results actively, and does IT help their organisation develop new products markets and channels?
- One Managing Director asked us how much time IT was spending in each of these areas. (Not cost). Our research indicates…. (next slide)
- IT is currently spending most of their time in delivering the technology.If there’s a challenge to this breakdown its most often that it is weighted too much in the IBR and IL space.But CEOs want a different profile of activity from their IT departments.
- Making the change is NOT easy – It means new IT organisation, using different skills, and doing different things. It means resetting the function of IT – It’s role, posture in the organisation, mandate and funding priorities.
- So today’s in-house IT functions seem to be technology focused. Not focused on business wants, on “I” not “T” and on the not on commodity of technology.I believe that IT needs to rebrand itself into ACT. The T = 20%, the A= 60% and the C=20%.CEOs want a different profile from Group IT functions as well: T=10%, A=40% (common cross organisational systems), and C=50%So the role of regional IT functions differs from the role of the corporate IT function as well.
- Here are some ideas that I think will help IT move towards ACT.But fill in your own ideas as well.Once you’ve made the decision to move from “T” to ACT the opportunities present themselves.
- Firstly IT can’t vote itself into the ACT role.They need to have the deep ‘no holy cows’ discussion about what business wants from them. And limit their ‘yes-but’ responses.Trust is NOT about delivering against SLAs. SLAs represent less than 30% of ACT’s commitment to their organisation.Have the discussion. I have put in a bunch of ACT principles – set in stone?
- CIOs set themselves up for failure by talking costs. They give business only one topic of conversation. Talking costs does not talk to business wants. The use of IT or even the information element of IT. It drives the conversation back to commodity speak. Commodities are something you compare prices against. ACT is about use, Information, and about business results.One MD said to me: “You IT people act like librarians – you buy books, catalogue them, track them, store them, even fine us when we bring them back late…. But you’re damned if you’re going to read them”. Peter Drucker again? No I in IT.
- This is the ‘crocodile graph’. If the crocodile’s mouth is open (the momentum and IT cost lines diverge) then IT is probably doing well in the cost domain. But the real issue is the business context in which the IT costs are incurred.One CFO told me that he had as much money as IT wanted. He just needed to understand what these funds were doing for the business. And his CIO seemed unable to tell him… So no funds available for IT. Sorry.
- There is ‘white space’ in any organisation that IT can claim for themselves. I also call this the latent strengths – for example IT is great at mapping processes, but what happens after the system is delivered. Who tracks process change, who optimises processes? Also IT is at the centre of information flow in their organisation. What are they doing with that information – just processing it for the business?IT can play a role in driving business measures – but they need to start with defining IT in terms of business performance.
- Leadership is about managing meaning: E-mail might mean great things to the average organisation, but it is the kiss of death to post-office. In the same way Ipads, and Kindles may be the death-knell for paper producers.However just identifying a technology that means something to your organisation is pointless unless you can manage the organisation’s attention. You need to conduct impact studies, feasibility and pilot projects to get the attention of business. Also if you don’t manage ACT in a business-like way, then don’t expect business to pay attention to you – you’re a bystander department.And I’ve talked about managing trust.
- This slide is deceptively simple. To get the “without fuss” bit right, IT has to rethink everything about how they deliver technologies.
- The next series of slides talks to the completeness of IT’s perspective. We often present one month’s data, or even one year’s data. We need to track all system’s life-cycles for the entire life-cycle.What also often happens is that we allow business to cut development costs, but the on-going cost burden is high. By cuting development costs, we often skimp on testing, documentation, and move functionality into phase two. This is likely to result in a much higher operational cost over the life-cycle of any system that we put in place.But who shows their business this view?
- This is a cumulative view – and we’ve added the benefits (or expected benefits)
- However benefits realisation is often patchily implemented – hard political decisions have to be made, change management has to be implemented….
- …..And we seldom get all the benefits that were postulated…
- Add the ‘cut costs during development’ view…
- And put it all together – costs cut during development + delayed and incomplete benefits means that IT doesn’t and cannot add value.
- Moving from IT commodity supply to ACT means that skills and competencies change dramatically. ACT manages the IT supplier, they don’t deliver the technology.
- If you outsource – the IT supplier – then your role changes. Go for service and risk reduction as well as possible cost efficiencies.You can ‘import ‘ IT maturity. But you need to test for this maturity before selecting your supplier. The cycle for securing IT should be sourcing the service on demand, or buying an off the shelf product. And only when all avenues have been exhausted should you build something. (Even then, get someone else to build it for you).
- Business will only respect and trust IT (therefore IT can only move to ACT) when IT runs themselves in a business-like way.So ask the ‘not holy cows’ questions as to what is the business of the IT department.
- What to do?Choose something to do (explore all options, and prioritise), then do it well. Don’t try to do everything – you will fail.Also realise that business has its priorities and imperatives – they won’t wait for IT to get its act together – they’ll just bypass the IT department (Remember the bystanders?) And this is even more likely in today’s world of SaaS, off the shelf, and mobility.It’s almost too late for IT… You have to think radically differently about yourselves if you are to catch up, let alone get ahead of the game.
- We have an IT initiative prioritisation model that puts the decisions into business hands – they can make decisions with confidence using this model.The model obviously goes much deeper than this – simplified yes, but not simple.
- If IT doesn’t talk finance, they might as well be mute. Notice I don’t say talk costs. Talk finance… in all its forms
- We haven’t time to go through the concept of IT intensity – but understand that it’s the business perception of how much technology business needs to: Run the business, or to thrive, or to bypass competitors. If business wants to use IT competitively, then they must fund IT appropriately. “You can’t cut costs to greatness”.BUT IT MUST EARN THE FUNDING!
- These are all the principles stated before. On one slide.