Session #: 487. Managing Change and Achieving Alignment in a Complex Environment. Lou Amato (AIG FS CIO) Myles F. Suer (HP)

Transcription

1 Title: Session #: 487 Speaker: Company: Managing Change and Achieving Alignment in a Complex Environment Lou Amato (AIG FS CIO) Myles F. Suer (HP) AIG and HP

2 Agenda Why is Alignment Important? Peregrine Market Testing The View from AIG: A Market Leader An Early View of DecisionCenter

3 Market Test Tested concept and potential value proposition against 40+ Global 100 CIO, CFO, and IT Managers Industries: Commercial Banks, Consumer Products, Electronics, Energy, Financial Exchange, Industrial Equipment, Insurance, Pharmaceuticals, Retail, Securities, Transportation Incorporated market analyst (AMR, Forrester, Gartner, IDC) into product concepts

4 The Questions 1. How do you allocate IT resources across the IT operations and projects landscape? How do you maintain this allocation? 2. What are your top three risk factors? Do you allocate more resources when there is higher risk? a. Is there a cost to poorly allocating available resources? 3. How is IT held accountable for performance? What happens when you fail to deliver quality of service to a critical business service? 4. Do you or your business customers know the cost for downtime or opportunity cost?

5 Results in Customer s Words Financial analysis does not bubble up the impact to help make better IT decisions Honestly, we do everything on a back of an envelope it is the best that we can do and we cannot see where or exactly how things change. Global 2000 Financial Institution The problem now is that the business is asking When you say you gave us 94% up time what got affected by the 6% and what was the cost of this downtime? Global 2000 Insurance Company Business risk is handled on an incident by incident basis We allocate risk in a reactive manner for IT amazing as a financial institution. When it happens, we allocate resources. Because we don t do it up front, we pay a cost for this. Global 2000 Financial Institution

6 Results in Customer s Words No connection exists between IT budget, service level promise, and service delivery For the CIO, the questions you answer are: What is my bandwidth to accept new services? How many FTEs do I really need? Today, you really can t answer these. Global 2000 Financial Institution Customer negotiations fail to consider what is best for the business Today, business people define stuff we get left to manage. However, we can t tell them that we cannot take on their project without additional resources. This is because we cannot show the impact they are creating for existing systems. Global 2000 Energy Company

7 Conclusions from Customer Research IT has become the fabric by which business is run Yet IT manages by paper, spreadsheet, and sometimes, crystal ball IT is almost always asked to do more with less and now to show it can drive tangible improvements to corporate performance IT leadership lacks the transparency to: Communicate its value to the business Continue to drive cost reduction Balance investment and service demand Drive end to end service delivery Negotiate with the business on new or changed business services requirements

8 Alignment Starts by Communicating to the Business in Their Language SLAs may prescribe an availability but this is not how customers think about service quality Business customers think IT should just work Business customer think of availability in terms of deviations and their impact to operations Availability and impact do not have a single value per time of day, month, quarter, or duration True customer alignment requires the customer and IT have the same understanding of the impact of IT performance

9 Let s Get A View from AIG # 9 Largest Company on the Fortune 500 $98.6 B in Revenue The largest insurance company on the Fortune ,000 employees in 120 countries 10,000 IT employees

10 AIG Financial Services Group 7 Major Operating Groups International Lease Finance Corp Air Craft Leasing AIG Financial Products Capital Markets American General Finance Domestic Consumer Finance AIG Consumer Finance International Consumer Finance Imperial AI Credit Premium Finance AIG Commercial Equipment Finance Equipment Leasing Mt. Mansfield Ski Resort 1 Corporate Operating Group Enterprise Risk Management Group Corporate Risk Management

11 AIG Financial Services Group 2006 Projected Financials Revenue $10.2 billion Net Income $2.7 billion 2006 Projected Headcount 19,000 Regions/Countries of Operations North America United States and Canada (All 50 states and PR) Latin America Mexico and Argentina Europe United Kingdom, France and Poland Asia Japan, China, Taiwan, Hong Kong, Philippines & Thailand Russia India

12 AIG Financial Services Group 9 Primary Data Centers American General Finance AI Credit AIG Financial Products ILFC Mt. Mansfield AIG Consumer Finance Enterprise Risk Mgt/CEF Evansville, In Jersey City, NJ Wilton, CT Los Angeles, Ca Stowe, VT Hong Kong Argentina Poland AIG Corporate Data Center Profile of NON Corporate run Data Center 1,200 total number servers excluding AS/400 s in AGF Branch Network 400 TB total disk storage capacity 190 employees FTE 20,000 total number desktops supported

13 AIG Financial Services Group Where We Are Outages are evaluated subjectively Monthly performance and status reports are received with various statistics: System Availability Network Availability Messaging Availability Voice Services Availability Help Desk and Incident Management Statistics There is no linkage between infrastructure and business processes and services

14 AIG Financial Services Group Where We Need To Be A move to fact based discussions with business on IT performance Produce information, not just raw data Evaluate outages objectively and minimize their business impact Better evaluation/information leads to Investment justification on technology spend Efficient allocation of limited resources Develop the linkage between infrastructure and business processes and services Enhanced Business Continuity/Business Impact Analysis drives recovery priorities

15 AIG Financial Services Group Where We Need To Be continued Operational Risk IT spend on improving system availability must be assessed in a consistent framework with overall business investment AIG is developing on Economic Capital model that will assess return on investment based on actual Risk Capital required Risk Capital consists of Insurance Risk, Credit Risk, Market Risk and Operational Risk (OR) OR includes losses resulting from system failures Through simulation, we can estimate an operational loss distribution based on business impact OR analysis complements our existing business case approach for IT infrastructure/security investments Such investments are often not directly revenue generating OR analysis allows us to evaluate the benefits of such investments in terms of operational loss avoidance

16 Thank You!

17 Early View of DecisionCenter

18 DecisionCenter Product Components DecisionCenter Tm DecisionCenter Analytics Tm DecisionCenter Optimization Tm IT Performance Analytics Business Impact Analytics

19 The DecisionCenter journey With DecisionCenter Optimization Planning = Simulation & Optimization Source = Service Management History Today Planning = One Dimensional Risk = Manual Calculation Service Delivery = Availability Measurement = Simple Reporting With DecisionCenter Analytics Risk = Impact Quantified by Service/Line of Business Service Delivery = Historical Business Impact Measurement = IT Performance Analytics

20 IT Performance Analytics Available 3rd Calendar Quarter Problem Statements Quality of service is increasingly limited by the quality of IT s processes IT metrics need to be relatable to business customers and IT strategies Metrics need explicit tie backs to strategies and objectives All the easy cost reductions have been taken; identifying hidden inefficiencies has become more difficult Customers have become more sensitive to the quality of service delivery

21 IT Performance Analytics Scorecard

22 DecisionCenter Product Components DecisionCenter Tm DecisionCenter Analytics Tm DecisionCenter Optimization Tm IT Performance Analytics Business Impact Analytics

23 Business Impact Analytics Core Capabilities Makes use of a business service catalog and ownership relationships Taps into the historical service management availability and incident management record Captures departmental interrelationships and then relates them to the business services catalog Establishes business impact rules for the impact of degraded performance or downtime from the business service or departmental view Runs the historical availability and incident management record against business impact rules Aggregates and display impact at any layer of indenture enterprise, line of business, department, business service, or data center

24 Business Impact Analytics Creates An Aligned View of Service Delivery Line of Business Line of Business Line of Business Line of Business Line of Business Line of Business Line of Business Line of Business CRM CRM Billing Billing ValueCenters aggregate impact by organizational entity BusinesServices aggregate impact by service or set of services

25 DecisionCenter Product Components DecisionCenter Tm DecisionCenter Analytics Tm DecisionCenter Optimization Tm IT Performance Analytics Business Impact Analytics

26 Making better more informed IT decisions! IT Decisions Staffing Choices Service Objectives Infrastructure Choices

27 DecisionCenter System Architecture Business goals Operational constraints DecisionCenter Analytics Optimization IT management decisions Staffing Choices Service Objectives Infrastructure Choices IT incidents ServiceCenter Active CMDB Enterprise Discovery AssetCenter IT results Decision Optimization Minimizes enterprise impact by focusing service portfolio response time and resolution times Understands impact of a new service introduction upon existing business services Determines the allocation of people across service teams needed to ensure service delivery

28 Enabling Proactive, Closed Loop Service Management Create impact based service levels Run DecisionCenter simulation Create business Impact rules Export to service management Incident data store Start Capture business service impact Create rules based tickets Focus service delivery Utilize service performance history

29 DecisionCenter Suite Benefits Provides key indicators needed to evaluate process and staff efficiency, service delivery, and compliance Translates historical performance into the language of the business Determines the costs for budget change to the service portfolio and to the business Determines bandwidth needed to take on new or changing business services Creates transparency needed for customer negotiation on availability, cost, and risk Enables reduction of overall staffing cost by driving impact based service delivery objectives Moves customer dialogue to a fact based discussion

30 Q&A