Transformational IT: The 5 secrets of CIO leaders in difficult times

Transcription

1 Transformational IT: The 5 secrets of CIO leaders in difficult times Mark Jeffery Managing Partner, Agile Insights LLC and Director of Technology Initiatives Center for Research on Technology and Innovation Kellogg School of Management mjeffery@agileinsights.com 1

2 Overview Context The IT business divide The complexity of enterprise technology Survey results of 179 Fortune 1000 firms and 50 Federal Government agencies Case examples FedEx Northwestern Memorial Hospital United Airlines Leadership insights: 5 secrets of the leaders 2

3 IT in the average company is a mess.. Layer 3 System Architecture Layer 2 Software Architecture Layer 1 Hardware Architecture Layer 0 Software and Hardware Vendors and Communities 3

4 Fortune 500 Example 800 different development platforms 800 strategic management systems 8 ERP systems 8 CRM systems 10 ecommerce systems 20 authentication systems 19 separate integration and messaging environments 17 search instances and vendors 7 not integrated Service Oriented Architecture (SOA) infrastructure platforms 95% of Investment 5% of investment Majority of past investments focused on delivering new projects and not on renewing the core infrastructure 4

5 Research Insights: Few organizations have optimized IT management 44% Do not have applications and infrastructure well documented 47% Do not centrally track projects 50% Believe their IT staff do not understand metrics like ROI and IRR 58% Do not have well-defined criteria to define project success 65% Do not track project benefits 75% Never consider a project s option value 85% Do not use earned value to track projects Source: Kellogg School study of 179 Fortune 1000 firms by Prof. Mark Jeffery 5

6 There are no problems only opportunities 6

7 IT Management Maturity Benchmarking results of 179 Fortune 1000 firms Maturity Level Defined Managed Synchronized Centralized project oversight Annual IT-business leadership meetings Frequent business IT leadership meetings Capabilities Standards Documented Infrastructure Defined process for selecting IT investments Financial metrics Asset classes IT alignment with strategy Risk management Measured project management Tracking of project business benefits Consider option value Portfolio software High performing organizations have better sales growth, ROA, and shareholder equity relative to competitors Source: Kellogg School study of 179 Fortune 1000 firms by Prof. Mark Jeffery 7

8 Case Examples 8

9 FedEx Source: Brian Bitain Hazard a guess what this is? 9

10 Application Interfaces After 1 Month After 3 Months Source: Brian Bitain 3 Months of effort made a huge difference 10

11 Northwestern Memorial Hospital Strategic Plan Goals To Provide the Best Patient Experience from the Patient s Perspective To Recruit, Develop and Retain the Best People who Share the Organization s Values and Achieve Results Financial Performance (Added ) Source: Tim Zoph, CIO NMH 11

12 NMH Best Patient Experience Strategic Goal Eight Objectives Deliver the Most Effective Care Based on Clinical Evidence Deliver Care That Is Safe and Without Error Coordinate Care So That It Meets Each Patient s Unique Needs Deliver Care That Is Timely and Convenient Be the Trusted Source of Information Offer Advanced Expertise through Research and Education Provide the Best Physical Environment In Which to Receive Care Improve the Health of the Communities that We Source: Tim Zoph, CIO NMH Serve 12

13 Built Infrastructure To Support Best Patient Experience Objectives From Fragmented Resources Focused on Compliance, Accreditation, and Corrective Actions q Management Engineering q Quality Strategies q Clinical Quality q Case Management NMH Awarded the 2005 National Quality Healthcare Award To Coordinated Division Leading Efforts to Define, Measure and Improve the Patient s Experience Best Practices from any industry Collaborative Teams including Nurses, Physicians and Technical Support Staff IT platforms not isolated clinical systems 13 Source: Tim Zoph, CIO NMH

14 Platforms not Projects! Joint Strike Fighter CTOL Conventional Takeoff and Landing CV Carrier Variant STOVL Short Takeoff / Vertical Landing Insight: Standardize IT infrastructure and build extensible 14 platforms not siloed applications

15 United Airlines: Functional Silos Leads to Redundancy and Lack of Strategic Investment Divisional Functional Business Units Customer Experience Reservations Sales Marketing Revenue Management Mileage Plus E-Commerce Airport Operations UAX Flight Operations United Services Onboard Service Security & Safety Strategic Sourcing Experience Finance Human Resources Legal Investor Relations Application Teams Customer Experience Reservations Sales Marketing Revenue Management Mileage Plus E-Commerce Airport Operations UAX Flight Operations United Services Onboard Service Security & Safety Strategic Sourcing Experience Finance Human Resources Legal Investor Relations Technology Infrastructure Organizational Footprint Financial Cost Structure 15

16 Metric 2007 Base Case Future Portfolio Value Creation Cost Productivity Velocity of Asset Renewal Investment Mix Time to Market Time to Develop Funds approved without comprehensive review of benefits Projects approved without benefits case Limited measurement or accountability for benefit realization post-delivery Spend is 20-30% higher than it should be Total replacement cost of asset base unknown No asset renewal strategy in place 4% Strategic Spend 96% Tactical/maintenance Industry Std: 266 days UA Best: 166 days UA Average: 523 days Business Value Opportunity Exceeds $XX Customer Experience: Revenue Optimization: Airline Operations: Enterprise Shared Svcs: $100M - $120M cost reduction Renewal of systems, self fund operating cost increases Significant asset base refreshed 50% 5 7 year asset renewal plan in place Renewal of 15% - 20% of assets annually Common IT platform in place for possible merger scenario or new business operating model 36% Strategic Spend 64% Tactical/maintenance Best: 3-5 Months (10 FTE) Average: 3-5 Months (10 FTE) UA Avg 2x worst than standard Time to Deploy 6 8 weeks for field changes Unpredictable service level and quality CF Flight Delays: Operational Excellence Operational Impact: Mission Critical Systems Downtime: Problem tickets: Failed Changes: 16 All deployments within hours; guaranteed success and automated rollback Operational Impact.5hrs /day Failed changes 0.5% CF Flight Delays:100 hrs Secure enterprise Exceed compliance standards

17 Summary 5 Secrets of the Leaders (1) Jointly define the IT strategy and multiyear roadmap (2) Create strong central IT governance with significant business involvement (3) Run IT as a business (4) Consolidate, standardize and centralize operations (build platforms) (5) Strengthen IT performance measurement processes Communicate, Communicate, Communicate 17