managing it as a business capstone 4596 april 2011
TRANSCRIPT
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Managing IT as a Business
Capstone 4596
April 2011
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Managing IT as a Business
Managing Organizations in the 21st Century Organizations must become more agile,
transparent, and innovative. There is great pressure to increase
efficiencies and productivity to reduce cost while improving customer value.
Organizational visibility and governance is more important than ever.
Business as usual won’t cut it! The dramatic economic and global pressures have placed extreme pressure on organizations to accelerate these changes.
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Managing IT as a Business Managing Organizations in the 21st Century
Common Organizational Challenges Do More with Less – Productivity, Cost Reduction Need for Innovation Revenue and Expense Pressures Transparency Be Smarter Increase Service Value Collaboration – Internally & Externally Variable Cost Structure
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Managing IT as Business Managing Organizations in the 21st Century
Common Organizational Requirements Visibility into the Organization Control – Metrics & Process to Manage Optimization – Continuous Improvement Transformational Change Leverage the Power of IT to Enable the Change
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Managing IT as a Business
The Importance of IT / Business Alignment Business execs have high expectations of
technology — but lower confidence that IT can deliver to these expectations. This is the new business technology alignment gap — a gap between expectations for technology and confidence in the IT organization. Members of the Forrester Leadership Boards CIO Group discussed this gap during recent meetings and shared their practices for closing it. Their strategy: Make sure IT is integrated with business planning — and make sure barriers between business and IT are minimized. Forrester, Dec 2008
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Managing IT as a Business
The Importance of IT / Business Alignment A recent article in Harvard Business Review
(“Radically Simple IT,” March 2008 Issue) advocates that Business and IT shouldn’t just be aligned, they should be “forged together.”
It is important that IT and Business work together in a team based collaborative process and develop a common set of metrics to measure performance.
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Managing IT as a Business
Key Questions that Strategic Plans Should Address - Gartner
Does the IT Strategy Substantiate Mutually Owned Expectations Developed by All Stakeholders?
Are Critical Drivers Influencing the Direction of the IT Strategy Accounted For?
Is the IT Investment Direction and Alignment With Business/Mission Needs and Priorities Made Explicitly Clear?
Does the IT Plan Contain Performance Measures That Can Gauge Progress and Success
Does the Plan Outline the Governance Process to Execute the Strategic Planning Process and Approved IT Investment Decision?
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Managing IT as a Business
The Importance of IT / Business Alignment Why is it so difficult?
Most IT plans do not indicate the business value and what strategic or tactical organizational benefit that the organization is trying to achieve.
The CIO must report the IT value and guide other executives on achieving and reporting the contribution of the investment on the other executives goals.
The CIO must have the ability to relate IT investments into business value. Art Jahnke
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Managing IT as a Business
The Importance of IT / Business Alignment Software Project Disasters
The 1995 Chaos Report was a landmark survey made by the Standish Group. This report is the study of IT project failure and is widely cited when IT project failures are being discussed
The respondents to the Standish Group survey were IT executive managers.
The total sample size was 365 respondents representing 8,380 applications.
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Managing IT as Business
The Importance of IT / Business Alignment Findings - The Standish Group research showed a
staggering 31.1% of projects would be cancelled before they ever get completed. Further results indicated that 52.7% of projects will cost over 189% of their original estimates. Based on this research, The Standish Group estimated that in 1995 American companies and government agencies would spend $81 billion for cancelled software projects and paid an additional $59 billion for software projects that would be completed, but exceeded their original time estimates and projects completed by the largest American companies had only approximately 42% of the originally-proposed features and functions.
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Managing IT as a Business
2009 Chaos Report --“This year's results … highest failure rate in over a decade”
33%44%
24%
Projects
Succeeded Challenged Failed
CHAOS Summary 2009 - Standish Group
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Managing IT as a Business
A Review of the IT Environment The Challenge : How to Leverage New
Technology to be more Innovative? Financial Pressures to cut spending Legacy Computer Systems 78% of IT Dollars spent to “Run the Trains” Human Capital Challenges Non Alignment between IT & Stakeholder
Requirements
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ITStrategy
Corporate Directionand Strategy
Core
KK
K K = Knowledge Workers
“Plan” “Build”
“Do the right thing”Strategic Vision -
Effectiveness
“Do it right”Assets of the Company -
Efficiency
Business
Enable Change
Information Technology
“Run”
K
IT ConsultingServices
Construction ManagementServices
Application ServicesTracer
Desktop Services
Managing IT as a Business
Increase levels of productivity – Run/Build
Migrate the IT investment $and/or resources to the high pay-off areas to the business.
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Managing IT as a Business
Transforming IT to Achieve Dramatic Business Improvement
Unpredictable
Missed Delivery Dates
Over Budget
Ineffective Productivity Measurements
Rationed Staff
High Cost
Unpredictable
Missed Delivery Dates
Over Budget
Ineffective Productivity Measurements
Rationed Staff
High Cost
Reliable Reliable
On TimeOn Time
Within Budget Within Budget
High ProductivityHigh Productivity
Variable CapacityVariable Capacity
Lower Fixed CostLower Fixed Cost
Reliable Reliable
On TimeOn Time
Within Budget Within Budget
High ProductivityHigh Productivity
Variable CapacityVariable Capacity
Lower Fixed CostLower Fixed Cost
TransformationProcess
TransformationProcessCurrent StateCurrent StateCurrent StateCurrent State Future StateFuture StateFuture StateFuture State
CONTROLCONTROLCONTROLCONTROL
OPTIMIZATIONOPTIMIZATIONOPTIMIZATIONOPTIMIZATION
VISIBILITYVISIBILITYVISIBILITYVISIBILITY
Three-Phase Implementation
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Managing IT as a Business
A Review of the IT Environment Legacy Systems
Run on Mainframe Technologies Senior Programmers Close to Retirement Work not Generally Documented Operating Systems Expensive Not Agile or Client Centric Difficult to Integrate with Newer Technology
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Managing IT as a Business
A Review of the IT Environment Legacy Systems
Recent research reports indicate that integration is increasingly becoming the focus for many businesses. Organizations face the challenge of integrating various and distinct business applications together with their existing legacy systems, in order to create an effective business and enhance productivity.
Top IT experts conclude that 78 percent of an IT budget is spent just managing existing system and software infrastructures
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Managing IT as a Business
A Review of the IT Environment Legacy Systems
This is bad news for any organization looking to reduce IT costs. The fact that 78 percent of your IT budget is spent maintaining existing systems means less money for IT innovation and for alignment with business processes. It means that psychologically, IT managers have more of a stake in keeping current systems running, rather than looking for better ways to manage technology.
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Managing IT as a Business
Standard Processes Managing with Metrics Automation
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Managing IT as a Business
Defined Standard/Repeatable Processes Process/Performance/Product Metrics Quality Focus Standard Cost Model End to End Process Management Rock Solid Metrics Based Management Continuous Improvement
Productivity Quality
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Managing IT as a Business
Dramatically Lower Unit Costs Continuous Cost Reductions Higher Quality Improved Visibility Increased Controls Asset Optimization Increased IT Business Value
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Imp
rove
d C
apa
bilit
y L
eve
l
4-7 months
VISIBILITYClassify and Capture
Work, Metrics, Resources and Time
Implement Workflow Processes
Streamline & Craft Work Processes
Managing IT as a Business
CONTROL
OPTIMIZATION
Cumulative Timeline
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Managing IT as a BusinessSoftware Process –
a set of activities, methods, practices and transformations
that people employ to Develop and Maintain Software and associated products.
- Mark Paulk, et al., The Capability Maturity Model, SEI
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Managing IT as a Business
Standard Process Enables … Realization of Methodology Benefits
Repeatable (Consistent, Reliable, Predictable) Execution
Common Language to Communicate Activity, Status, Issues
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Managing IT as a Business
Standard Process Enables … Realization of Methodology Benefits Quality Plans and Improvement Strategies
Discrete Units of Work for Performance Specification and Impact Assessment
Defined Quality Control Activities Implement Quality Assurance Strategy
Meaningful Process Metrics
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Managing IT as a Business
Standard Process Enables … Realization of Methodology
Benefits Quality Plans and Improvement
Strategies Tool Usage Benefit Maximization
Deployment of Tool Across Organization Feedback/Tuning Experience
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Managing With Metrics
Managing IT as a Business
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Managing IT as a Business Why Metrics are Important
Business Goals - Define and Track Progress
View Support Costs by Application/Program
Enables Capacity Planning Conduct Periodic Customer Reviews
Based on FactsStamp out Anecdotal Management
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Managing IT as a Business
There is general agreement among practitioners that Standard Process and Managing with Metrics need to occur, but they haven’t.
Why? Hard to Get Started Hard to Achieve Consistency Hard to Avoid Entropy Hard to Institutionalize
We need help to ease the effort – The Answer - Automation
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Managing IT as a Business
Software maintenance productivity can improve at rates of 10% to 40% PER YEAR
- Capers Jones, Calculating the Value of PI
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ITStrategy
Corporate Directionand Strategy
Core
KK
K K = Knowledge Workers
“Plan” “Build”
“Do the right thing”Strategic Vision -
Effectiveness
“Do it right”Assets of the Company -
Efficiency
Business
Enable Change
Information Technology
“Run”
K
IT ConsultingServices
Construction ManagementServices
Application ServicesTracer
Desktop Services
Managing IT as a Business
Increase levels of productivity – Run/Build
Migrate the IT investment $and/or resources to the high pay-off areas to the business.