Developing IT Strategy by AndyGueritz

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									                                               Developing IT Strategy



                                                          Discussion Document

                                                                 19 May, 2003




                Contact
                Andy Gueritz
                +44 (1673) 838 150
                andy@sixhills-consulting.com




Developing IS Strategy                                             © 2003 Sixhills Consulting Ltd
     Context



      Typical IS Challenges                                                                                                  Illustrative

                                                       Architecture
                                                       • Complex, inflexible from past
                                                         integration effort
                                                       • Reliance on some key ‘legacy’
                                                         technologies
                                                       • Data not explicitly managed to
                                                         meet end user needs
           Productivity/Skills                                                            Projects
            • Scarce effective project                                                    • Rapidly changing requirements
              management skills                                                           • Larger and longer
            • Focused on traditional                           Difficult to meet          • Difficult to prioritise demand due to
              technologies                                      challenges at               rapid change and uncertainties
            • Insufficient resourcing flexibility to                                      • Increased complexity (need for
                                                               reasonable cost
              meet range of demands                                                         integration)
            • Insufficient qualified hires                                                • Need for new skills (business and
                                                                                            technical)
                                                                                          • Need for zero defects
                                                       Technology
                                                       • Becoming increasingly complex
                                                       • Shortening lifecycles
                                                       • More diverse (less homogeneity
                                                         on projects)
                                                       • Cannot meet leading edge
                                                         requirements



Developing IS Strategy                                                                                                © 2003 Sixhills Consulting Ltd   P1
     IS Strategy Development
     Key Drivers




                                             Structure
                                             Industry
                                                          Changing
                           Technical
                                                         Competitive
                         Considerations   IS Strategy      Forces




Developing IS Strategy                                                 © 2003 Sixhills Consulting Ltd   P2
      Approach


     IS Strategy Development Approach
     Major Activities

                                                                         3. Generate                                    5. Generate
        Step                   1. Set up         2. Assess Needs                              4. Evaluate options
                                                                            options                                      blueprints


       Major             • Finalise scope/   • Gather existing     • Develop dynamic        • Syndicate            • Define target
       Activities          objectives          materials             list of strategic IT     findings               architecture
                         • Establish         • Conduct               needs                  • Evaluate strategy    • Define final
                           programme           interviews, e.g.,   • Conduct                  options vs.            process set
                           governance          – IT                  workshops                success criteria     • Generate systems
                         • Appoint team        – executives        • Brainstorm             • Evaluate strategy      plan
                           leadership          – business and        – issues                 options vs. risks    • Develop business
                         • Establish team        operations          – constraints            and constraints        case
                         • Initiate data         management          – options              • Establish final IT   • Develop high
                           requests          • Review business       – priorities             strategy               level migration
                                               strategy, goals       – risks                  requirements           plan
                                               and objectives      • Review                                        • Review with key
                                             • Establish IT          preliminary                                     stakeholders
                                               strategic             findings with key
                                               requirements          stakeholders
                                               aligned with
                                               business
                                             • Establish success
                                               crtieria

Developing IS Strategy                                                                                                     © 2003 Sixhills Consulting Ltd   P3
     Strategy
     Aligning to Business Strategy                                                           Possible Strategic Framework

                                                                                                            Find new
                                                                                                          opportunities

                                                                                                                                   Innovation                Employ iterative
                                                                                                                                                              experimental
                                                                                                         Find new                                             development
          What                                                                                          sources of                                             approach
                                                                        Process                           unique
        Customers                                                                 Business
                          Strategy        Outcome           Focus                                          value
          Want                                                          People     and IT
                                                                                  Change              (competitive
                                                                       Systems                        advantage)
                                                                                                                           Value                      Risk
                                                                                                     Manage for                                                    Manage
                                                                                                     maximum                                                      the value
                                                                                                       value                       Efficiency, cost               detractors
                                                                                                                                       reduction


     IS Governance                                                                           Strategic Gameboard – Innovation Example
                                                                                                                            Radical                    Industry
                                                                                                                          Cannibalism                  Genesis
                                                          “Ordered                                                New
                  Decentralised      “Anarchy”
                                                           Liberty”

            Degree of
       decentralisation                                                                          Technology                                 Market
                                                                                                                                           Invention

                         Central         “User               “IT                                             Existing
                                      Initiative”       Dictatorship”                                                      Incremental          Competitive
                                                                                                                          Improvements         Displacement
                                   Loose                               Tight                                                 Existing                 New
                                    Enforcement of corporate-wide policies                    Source: S. Kaplan                         Markets




Developing IS Strategy                                                                                                                                            © 2003 Sixhills Consulting Ltd   P4
     Capability
     Organisation                                                                            Prioritisation
                                Business Influence           Decision                                                                                Proposed Application Development
                                • Business strategy           Filter                                                                                               Efforts
                                • Management model
                                • Business size

                                Organisation models                                                         „Disruptive‟                            Sustaining                        Infrastructure                                               Small Projects
                                          Centralised
                                       Coordinated
                                                                                                                                                                             Scorecard
                                    Decentralised                                                                                                                                  Reward
                                                                                                                                                                                                                  Weigh-
                                                                                                                                                                                                                   ting
          Market Influence                                                                                                                                                    Financial Impact                     20%
          • Customers             BU1 BU2 BU3 BU4 BU5
                                                                                                                                                                              Strategic Alignment
                                                                                                                                                                              Service Value
                                                                                                                                                                                                                   16%
                                                                                                                                                                                                                   14%                   Fixed Project Budget




                                                                                                                                                                                                                            SCORE
          • Competitors                                                                                     H
                                                                                                                                         NPV of Project                       Operational Process
                                                                                                                                                                              Optimisation
                                                                                                                                                                                                                   10%
                                                                                                                                                                                                                                              £ fixed cap x
                                                                                                                    ?
                                                                                                                                                                                                                                                                     Decline
          • Threats
                                                                                                                             c                                                Compliance and                       20%




                                                                                              Feasibility
                                                                                                                                                                              Audit Control                                                             c
                                                                                                                                                                 Approv       Technology                           20%
                                                            Criteria                                                                                             e            Alignment
                                                                                                                                                                                                                                                    c

                                                                                                                              ?
                                                                                                                                                                                                                                                                     Accept
                                IT Influence                • Cost effectiveness                                    X                                            Decline              Risk
                                                                                                                                                                                                                  Weigh-
                                                                                                                                                                                                                                                c
                                                                                                                                                                                                                   ting                   c
                                                                                                            L
                                • IT vision                 • Value at Risk                                                              1 2 3 4     5 6 7 8                  Business                             50%                     1 2      3 4        5




                                                                                                                                                                                                                            SCORE
                                                                                                                L                    H
                                • Systems ownership         • Efficacy                                              Attractiveness                  Project                   Projec0t
                                                                                                                                                                              Technology
                                                                                                                                                                                                                   30%
                                                                                                                                                                                                                   20%
                                                                                                                                                                                                                                                  Project

                                • IT target architecture    • Ownership and accountability



     Intangible Assets                                                                       Tangible Assets, including Architecture
                                                                                                                                 Not this …                                                                                But this …
                                                                                                                                                                                                 Client Direct                  Client Back-Relationship Mgr

                         Mountaineers
                                                                                                                                                                                                                                    office
                                                                      Intangible Assets                                                                                                            Contact
                                                                                                                                                                                                     ~~~
                                                                                                                                                                                                                                                                      Info/
                                                                                                                                                                                                                                                                    services
                                                                                                                                                                                                                                                                   (e.g. D&B)
                                                                                                                                                                                                     ~~~
                                                                                                                                                                                                       ~~~
                                                                                                                                                                                                     ~~~
                                                                                                                                                                                                       ~~~
                                                                                                                                                                                                       ~~~




                                                                       Relationships                                                                                                                                                 Internet
                                                                Reputation and Trust                                                                                  Channel                                            Contact
                                                                                                                                                                                                                                         Relationship
                                                                                                                                                                                                                         Handling
                                                                                                                                                                    Management                                                           Management             External




                                                                                                                                                                                             Messaging Backbone
                                                           Knowledge and Information                                                                                                                                                                           Interfaces


                                                                                                                                                                                                                         Payments

                                                                      Leadership and                                                                                      Product                                                    Account

                                                                      Communication                                                                                       Servicing                                                 Management

                                                                                                                                                                                                                                                 Fund

                            Support team                         Culture and Values
                                                                                                                                                                                                                                              Management

                                                                                                                                                                                                                     Txn                Query            Query
                                                                                                                                                                                                                  Database             Database         Database
                                                                                                                                                                        Data
                                                              Skills and Competencies                                                                                Management
                                                                                                                                                                                                                           Control & Management Information



                Spectators
                                                                                                                                                                                                                           Underlying N-tier server architecture
                                                        Source: DTI                                                                                                                                                (e.g., web, app, database) secured with firewalls




Developing IS Strategy                                                                                                                                                                                                              © 2003 Sixhills Consulting Ltd              P5
     Performance
     Performance Improvement                                                                                                  Linking Business and Technology Dimensions
                                                                                                                               PHASES OF BUSINESS CHANGE
                                           Organisational                           Lean                                       Facilitate accelerated
                                              Change                             Production                                    change                                                                                Develop alliances/
                                                                                                                               • Make continuous                                                                      partnerships with
                         Internally                                                                                              improvements                                                                      leading edge providers
                          Focused                5-7% savings                   15-20% savings                                 • Make change a way of life
                                                   2–3 years                       1–2 years
                                                                                                                               Tackle the fundamental
               Degree                                                                                                          business structures
                                                                                                                               • Change the structure of costs                       Outsource critical path activities
                 of                                                                                                              and service                                         • Introduce new skills
               Control                           Industry                         Structural                                   • Make simultaneous                                   • Introduce new technologies
                                               Co-operation                        Change                                        improvements in cost and
                                                                                                                                 quality
                                                Initiatives
                         Externally
                                                                                                                               Improve base level
                          Focused              10-15% savings                   20-25% savings                                                                         Outsource non core activities
                                                                                                                               performance parameters
                                                  2–5 years                        1–2 years                                                                           • Reduce costs
                                                                                                                               • Improve service levels
                                                                                                                                                                         – Improve service
                                                                                                                               • Reduce costs – Improve
                                                                                                                                 quality
                                                                                                                                                                       Non integrated         Application links/ Fully integrated
                                          Long Term                                        Short Term                                                                                           user interface    core systems
                                                  Implementation Time frame                                                                                                         DEGREE OF TECHNOLOGY CHANGE



     Technology Cost Management                                                                                               Unit Cost Dynamics
                    Typically ~20% of total expense                                                                           Unit
                                                                                                                              Cost
                       Platform                                                         Manual                 Marketing/
                                                      Applications                                                                                                                         High
                                                      z                               Processing               Distribution
                                                                                                                                                                                                       Re-engineer           Acquire
               • Sourcing
               • Lifecycle management
                                                • Development investment
                                                  prioritisation
                                                                                                                                                                                                        production         volume and
      Short-   • Asset management               • Maintenance budget                                                                    X            Ability to ‘ride the
                                                                                                                                                                                                       environment         technology
       term    • Standardisation                  optimisation                                                                                       curve’                             Ability
               • Outsourcing                    • Development outsourcing
                                                • Application Architecture                                                                                                              to shift
                                                  Standardisation
                                                                                                                                                                                          the
                                                                                                                                                                                        curve
               • Demand management                                                                                                        Ability
               • 'Demystification' of end-user charges
                                                                                                                                          to shift                                                        Focus                Gain
               • Governance revision             • Value chain restructuring (allowing application redesign)
                                                                                                                                            the                                                         elsewhere             volume
                                                                                                                                           curve
               • Architectural restructuring     • Process re-engineering
               • Systems merger/                 • Market restructuring
      Long-      simplification                                                                                                                                                             Low
                                                                                                                                                     Volume
       term    • Data centre consolidation
                                                                                                                                                                                                       Low                          High
                                                                                                                                                                                                          Ability to „ride the curve‟




Developing IS Strategy                                                                                                                                                                                            © 2003 Sixhills Consulting Ltd   P6
     Making Change Happen
     Assessing Magnitude of Change                                                                                                                    The Generic Change Process
                      First Order                                     Second Order                                          Third Order



            Culture            Technology                        Culture              Technology                    Culture            Technology                  Think                          Plan                                Do                                  Check




                                                                                                                                                                                                                    Develop Systems
            People                  Tasks                        People                 Tasks                       People                  Tasks
                                                                                                                                                                                                           Coordinate Business Change                                                 Make
                                                                                                                                                         Identify               Initiate
                                                                                                                                                                                                    •   Credit                   •     Product management                             Live
                                                                                                                                                                                                    •   Sales and Marketing      •     IT
      • Affects only tasks                       • Affects not only tasks but the                          • affects ALL aspects of the                                                             •   Operations               •     Compliance, legal and risk
                                                   roles of the people performing                            organisation.                                                                          •   Brand                    •     Finance
                                                   them                                                    • intensive initiatives will also drive                                                  •   Customer Services        •     Third Party Providers
                                                                                                             fundamental changes in culture
                                                                                                             (e.g., values, traditions, power
                                                                                                             structures, relationships, etc.)
        Source: O’Hara, Watson and Kavan, 1999




     Moving Minds                                                                                                                                     Managing Programme Risk
                                                                                                                                         … and        1. Taxonomy of Risks                                               2. Project Lifetime Risk Profile
                                            Discover                       Deepen               Develop               Deliver
      Transformational                                                                                                                   sustain!!!    Financial   Consistency of Objectives                              Risk
      Change Process Mobilise
                                                                                                                                                       Integrity   Holism of planning
                                            What works/                 Deeper analysis         Initiative design    Initiative                                    Sensitivity to Assumptions
                                            what needs                  & quick wins;           and the change       delivery                                      Estimating error                                                                                           Reducible
                                            fixing?                                             plan                                                               Information Quality
                                                                                                                                                                   Fraud
                                                                                                                                                                                                                                      Situational
                                                                                                                                                       People      Accountabilities
                                                                    We‟re starting                                                                                 Culture
                                                                    to address this                                                 We have a                                                                                                                                 Not reducible
                                                                                                                                  strategy and a
                                                                                                                                                                   Morale / Commitment                                                Systemic
                                                                                                                                                                   Skills & Capabilities
      Rational          Political                                                                                                 plan for future                  Communication (objectives, expectation setting)            Start                                     End
                                                                                          It‟s tough but                              success
                                                   Optimistic




                                                                                          we can get a
                                                                                                                                                                   Personalities & Partiality
                                                                                                                                                                                                                         3. Process & Guiding principles
                                                                                              solution                                                 Processes   Supplier Execution Performance
                                                                                                                                                                   Supplier Relationship Control                                     Assess
             Emotional          Stakeholder
                                                                                                                                                                                                                                                  Ri sk                       Risk        Action

                                                                                                                                                                   Scope of Supplier Control                                          Risks       ~~~~~
                                                                                                                                                                                                                                                  ~~~~~
                                                                                                                                                                                                                                                          5
                                                                                                                                                                                                                                                          4
                                                                                                                                                                                                                                                                              ~~~~~
                                                                                                                                                                                                                                                                              ~~~~~
                                                                                                                                                                                                                                                                                      5
                                                                                                                                                                                                                                                                                      4
                                                                                                                                                                                                                                                                                          ~~~~
                                                                                                                                                                                                                                                                                          ~~~~


                               emotional state                                                                                                 Time                Degree/rapidity of change
                                                                                                                                                                                                                                                                              ~~~~~   2   ~~~~
                                                                                                                                                                                                                                                  ~~~~~   2

                                                                                                                We‟ve fixed                                                                                                                                        Develop
                                                                                                                                                                   Clarity of requirements / Certainty of Demand                                                     Risk
                               • Customers                                                                      some things
                                                                                                                                                                   Specification
                               • Employees                                                                      and have a                                                                                                                                          Mgmt
                                                   Pessimistic




                                                                                                                way forward                            Systems     Security                                                           Re-assess                      Plan
                               • Management                                                                                                                        Scale / Mission Criticality                                          Risks
                               • Shareholders                                                                                                                      Customer Visibility
                               • Regulators                                                                                                                        ‘Religious' Bias
                                                                                This is
                                                                                                                                                                   Complexity - Compatibility/Multiplicity of systems                                         Execute
                                                                             bigger than
                                                                                                                                                                   Capability/Fitness For Purpose                                                               Plan
                                                                             we thought
                                                                                                                                                                   External Component Performance




Developing IS Strategy                                                                                                                                                                                                                                         © 2003 Sixhills Consulting Ltd      P7

								
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