IT SUCCESS!

Towards a New Model for InformationTechnology

Michael Gentle

IT SUCCESS!

IT SUCCESS!

Towards a New Model for InformationTechnology

Michael Gentle

Copyright © 2007 Michael Gentle

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Contents

Introduction ix

Acknowledgements xiii

Abbreviations xvii

PART I BLINDED BY SPECS 1

1 In Search of Excellence the Fundamentals 3• The more things change, the more they stay the same 3

• A worldwide phenomenon 4

• How the traditional IT model started 5

• The construction industry trap 6

• The free lunch trap 7

• Houses of ill repute 8

• A business problem rather than an IT problem 10

• IT and original sin 12

• No sacred cows 12

2 IT 101 – The Basics for Non-Specialists 15• The process breakdown for traditional IT activities 15

• The process breakdown for business (i.e. non-IT) activities 16

• The fundamental difference between IT and non-IT activities 18

• 'That's not my problem!' – process ownership and behaviour 19

3 The Flaws of the Traditional Model 21• The unintended consequences of the waterfall method 21

• In search of a pizza parlour manager 22

• Who provides process expertise – client or vendor? 22

• When standard client–vendor relationships are possible 24

• When standard client–vendor relationships pose problems 25

• Is a standard client–vendor relationship possible for IT? 26

• The 'Statement of Requirements' (SoR) trap 26

• A poor to non-existent pricing model 28

• Should IT be run like a business (i.e. an ESP)? 30

• The limits of outsourcing 31

• Current IT organizational trends 32

• The ultimate litmus test to determine one's business model 33

• What model would be appropriate for IT? 34

PART II BUILDING A NEW BUSINESS MODEL FOR IT 35

4 Managing Demand 37• Managing demand – traditional model 37

• Managing demand – new model 39

• Capturing demand and identifying opportunities 41

• Prioritizing and approving demand 43

• Planning approved demand 49

• Linking demand to resource capability 49

• Approving demand based on portfolios 50

• The missing component in Project Portfolio Management 53

• Business cases are in the eye of the beholder 54

• Building the IT plan and budget 55

• Demand from a customer perspective 56

• Shaking off the chains of the construction industry 56

• Funding approved demand 58

• Roles and responsibilities 59

5 Managing Supply 61• Managing supply - traditional model 61

• Managing supply - new model 63

• Iterative development in practice 65

• Why prototyping has never become mainstream 74

• Is prototyping the answer to everything? 78

• Project critical success factors 79

• Maintenance - letting go of the M-word 79

vi Contents

• Delivery and implementation 81

• Service and support 81

6 Monitoring Costs and Benefits 83• Monitoring costs and benefits for traditional IT activities 83

• Monitoring costs and benefits for business (non-IT) activities 84

• Monitoring costs and benefits – new model 85

• Ownership and accountability for costs and benefits 86

• Cost–benefit analysis during the life of a project 87

• It is normal for costs and benefits to change! 88

• Portfolio performance monitoring 88

• Cost–benefit analysis after project delivery 89

7 Financials 91• The main categories of IT costs 91

• Ownership of IT costs for the regulation of supply and demand 92

• Who has the final say for IT investments? 92

• Allocations vs cross-charging 93

• Capturing costs for allocations and cross-charging 94

• Benefits as part of the P&L and annual planning 95

• Ongoing cost–benefit analysis for applications 96

• Reducing application lifetime costs 100

• The limits of financial ROI when applied to IT 102

PART III THE NEW MODEL IN PRACTICE 105

8 Players, Roles and Responsibilities 107• Players, roles and responsibilities – the business 107

• Players, roles and responsibilities – IT 111

• The new business–IT relationship 112

• The changing role of the business analyst 113

• The changing role of the developer 113

• Towards the merging of the developer and analyst roles? 114

• The changing role of the project manager 115

• The changing role of the operations department 116

• What role for PMOs? 117

• The role of External Service Providers (ESPs) 119

Contents vii

9 Getting Started 121• The business challenge 121

• The IT challenge 122

• Where to start 123

• How to start – from checklist to action plan 124

• From the status quo to first results 128

• From first results to asset management 133

• The role of best-practice methodologies 136

• How consulting companies can help 138

• How tools can help 139

• The costs of moving to the new model 140

• In closing – addressing the three fundamental questions 142

• Further reading 143

10 Case Study 145• The company 145

• The business problem 146

• The project context 146

• Building an IT–business partnership 147

• Kicking off the project 148

• Feasibility study and defining a solution 149

• Building the business case 150

• Project approach 151

• Product evaluation – buy or build decision 151

• Building a prototype 152

• Results 154

• Timescales 155

• Three months later 155

• One year later 156

• Two years later 156

• Main lessons learnt (on the plus side) 156

• Main lessons learnt (on the minus side) 157

• Comments with respect to the new model 157

• Reader feedback 158

Index 159

viii Contents

Introduction

Insanity is doing the same things over and over again and expecting different results. (Albert Einstein)

Why this book

I have been in the IT profession for over 25 years, during which time the industry has gonethrough one of the most rapid paces of technological change in its history – one could almostsay in history, period. Today, systems are more often bought than built, and IT project cyclesare measured in months rather than years. And yet, despite these monumental changes, I stillfeel as if I’m in a kind of a time-warp: the issues we used to grapple with when I was a pro-grammer-analyst in shorts are still very much with us today, namely how to deliver reliablesolutions in acceptable time frames, at acceptable costs and with clear business benefits –which is very different from delivering solutions on time, within budget and to spec which,as we’ll see in this book, are concepts which don’t lend themselves very well to the IT pro-fession.

When I started out in IT in the early 1980s, we didn't have all the answers. Today though,we can be reasonably sure of what they are; while there will always be new technologiesand management trends to learn, we can comfortably say that the four decades from the1970s to the new millennium have provided us with a sufficiently critical mass of experi-ence and lessons learnt. But this is where the logic breaks down: if success is the resultof experience, trial and error, then IT should be one of the most successful sectors outthere! Certainly, the average IT organization has had more than enough experience interms of failed projects, budget overruns and user dissatisfaction. And yet, the time-warpcontinues.

x Introduction

Einstein once said that insanity is doing the same things over and over again and expecting dif-ferent results. By this definition, IT as a profession is totally insane! We are ultimately like BillMurray in the film Groundhog Day: we get up every morning and do essentially the samethings, hoping that this time round our lives will get back on track. Like the hero in the film, Ithink that things will only change once we finally accept the truth – and do something about it.

The result is this book.

What this book is

This book identifies the fundamental reasons why, despite the enormous technologicalprogress in computers over the past 50 years, most IT departments remain unsuccessful,where success is defined as the ability to deliver reliable solutions in acceptable time frames,at acceptable costs and with clear business benefits.

Most books which try to explain this situation focus on one or more of the usual suspects likeproject management, governance or best-practice methodologies. As laudable and necessaryas most of these topics may be, they don't address the root causes of the problem. In otherwords, you can score full marks on any of these components, e.g. have excellent project man-agement and level 3 certification in the CMMi methodology, but still be unsuccessful in theoverall scheme of things.

This book therefore takes a step back and challenges the fundamental model under which IToperates, which likens building software to the construction industry, with the IT departmentthe equivalent of a contractor who is supposed to deliver systems on schedule, within budgetand to spec. As we all know, this rarely happens, yet this premise drives the whole way thatIT departments have been operating from the beginning, with an over-emphasis on contractu-al obligations and compliance rather than on the actual delivery of workable results.

This book proposes an alternative model by walking through the end-to-end processes ofan IT department, covering subjects like demand management, investment planning, iter-ative development and application-level asset management – including the roles andresponsibilities required to make it all happen, and proposals for how to get started.

In a radical departure from conventional wisdom, one of the most fundamental things thisbook will show is that the delivery date of a project really represents the first key milestoneafter which the rest of the work starts, rather than the end point of a sacrosanct project planafter which any additional work is considered an anomaly.

The ultimate objective of this book is for readers 10-20 years from now to be able to lookback on the traditional IT business model and say ‘to think we used to work like that in thetwentieth century!’.

What this book is not

This book is not about concepts, management trends or strategy. Nor is it about IT value, gov-ernance strategies, running IT like a business, etc. Not directly in any case, because it wouldbe impossible to talk about IT in the real world without referring to some of them. However,they will logically emerge at the appropriate time, usually indirectly as supporting argumentsrather than as separate subjects needing to be developed. Finally, needless to say, this book isdefinitely not about technology.

Who this book is for

This book is for all those constituents – from ‘grunts to execs’ – with a vested interest in hav-ing an IT department that meets business needs in acceptable time frames and at acceptablecosts:

• The whole IT department, and not just the CIO and senior IT management. It is unfortu-nate that the vast majority of books for IT target either executives, with a focus on man-agement and strategy, or practitioners, with a focus on technology. This book tries tobridge that gap by talking to both segments, because successfully changing IT will requirebuy-in from across the board.

• The rest of the business, from executive sponsors to actual users of IT systems

Qualifiers

• IT Projects vs Business Projects: though all IT projects or IT-enabled projects are ulti-mately business projects, we will use the term IT projects to underline the fact that IT isthe enabler (as opposed to, 'non-IT' or business projects like, for example, building a newfactory).

• IT vs IS: Though some organizations distinguish between IT (Information Technology, orthe operations group that manages the infrastructure and ‘keeps the lights on’) and IS(Information Systems, or the development groups in contact with the business and respon-sible for developing and delivering production applications), such a distinction would beoverkill for this book. We therefore use the general term IT to refer to the entire IT depart-ment. This happens to correspond to how the rest of the business views the IT departmentanyway.

• New model? What new model? In this book we will often refer to ‘the new model’ or ‘theproposed model’ as an alternative to the traditional model. Most of the recommendationshowever, e.g. iterative development or portfolio-based investment planning, are anything

Introduction xi

but new. Indeed, most readers will probably already have come across them in the courseof their work, by reading books or articles or by attending industry events. However, suchtips, techniques and approaches are usually presented as ‘point solutions’ to a particularproblem, e.g. to increase the quality of requirements or to increase business alignment –but rarely as part of an overall solution which tries to address the fundamental way inwhich we work from an end-to-end perspective. This explains why it is very difficult tofind a book that talks about, for example, both iterative development and portfolio man-agement as solutions to a common problem.

Even those recommendations which I’d like to think originate in this book (e.g. investmentplanning based on estimates rather than contractual numbers, and application-based asset man-agement) will no doubt already be in use somewhere in the world. In putting together this‘new’ business model therefore, what I have essentially done is to draw on my own experiencesand on those of a whole industry and to cherry-pick those approaches which I believe providea good starting point for a fundamentally new way of working.

Reader feedback

In an Internet age, writing is fortunately no longer a one-way street. I therefore activelyencourage your feedback by visiting my website at www.michaelgentle.com where you canshare your thoughts – and even respond to a snap survey (one question only – we’re all busypeople!) about how useful you found this book.

xii Introduction

Acknowledgements

As any author knows, you can’t successfully bring a book to market without the help of oth-ers (besides the publisher). It’s one thing having a great idea and producing a draft manuscriptfrom it, but it’s quite another thing altogether turning it into a finished product. The 80/20 ruleapplies to writing too: 80% of the total effort is required to produce the first draft of a manu-script – inevitably replete with inaccuracies, inconsistencies and bad grammar – and theremaining 20% is necessary to turn it into something which people will actually read.

I would therefore like to pay a sincere tribute to all those people who had the unenviable taskof finding time in their already-busy schedules to critically read through all or part of the man-uscript. Not only did they manage to highlight inconsistencies and areas of disagreement, butthey also helped to round off some of the rough edges of my writing style.

So many thanks to (in alphabetical order):

• Anne Barraque-Curie, Associate Program Director, Gartner Executive Programs, whosomehow managed to squeeze a review into a very busy time of the year, and whose feed-back from the first draft reassured me that the main thesis of the book rested on a firmfoundation.

• Catherine Lewko, VP of Finance at Danone, whose unique combination of finance, busi-ness and IT experience (few people manage to successfully straddle all three areas) inglobal companies helped to firm up the financial elements in this book.

• Frederic Dufour, pharma industry consultant and former Business Planning and ReportingManager at GlaxoSmithKline, whose real-world experiences in working with IT enabledhim to validate the main themes of this book.