Ideal IT Alignment: People & Capital Allocation

Transcription

1 Ideal IT Alignment: People & Capital Allocation Technology Solutions Conference June 24, 2005 Moderator: Speaker: Steve McCrystal Kiran Garimella GE Healthcare Financial Services

2 What does alignment mean to you? IT should be service provider not a heavy-handed monopoly. Get competitive! Do not force each other into undesirable actions Partner with the business, be part of strategic planning IT provides forward-thinking solutions IT views company as customer IT should be responsive Good communication, services are easy to use, results are correct, ensure compliance Business and IT have skin in the game; both share in the rewards Business and IT trust each other IT anticipates where business is going Pitch Title /2

3 Maturity of Alignment: Spectrum View What IT? Where is IT? No process maps I have no clue what our transactions are, let alone the cost per transaction Business and IT have a dialog We realize processes are important We have an inventory of transactions Business pitches IT All processes mapped & traceable I know cost per transaction, in real-time No Clue We are getting there We are the Best Focused on Infrastructure Focused on Projects Focused on Business Architecture Keep costs low Keep the lights burning Build capabilities React quickly Keep costs low Keep the lights burning Be proactive think ahead Turn around on a dime Build capabilities Keep costs low Pitch Title /3

4 Maturity of Alignment: CMM View Optimized No need to snap fingers Managed IT and Business agree when to snap fingers Proactive IT jumps before Business snaps fingers Reactive IT jumps when Business snaps fingers Chaotic IT zigs when Business zags Pitch Title /4

5 OK, why bother? Horribly intricate mathematical model for Cost of mis-alignment of IT and Business = = Loss of time to market (lack of agility) Missed opportunity costs Cost overruns Cost of re-construction 2% of gross lease fundings Focus on non-priority projects Point solutions 50% efficiency 75% failure rate; 60% attributable to mis-alignment (I.e., overall 45% wastage) Customer dissatisfaction Customer attrition Result: Cost of Mis-Alignment is HUMONGOUS!!! Pitch Title /5

6 Making sense of ROI.or, trying to IT Doesn t Matter It does, but. Poor ROI Innovation 120 Cost / Payback Cost Return Obsolete Functionality Time Too many $$ on integration (non-value add) $1 saved forgives $X of unrealized growth Commoditization, Competitive pressure Pitch Title /6

7 Being aligned means IT Does Matter Innovation Tangible ROI New project funding 70 Cost / Payback Cost 1 Return 1 Cost 2 Return Time Be agile understand business cycles Commoditization, Competitive pressure Understand competitive pressure & time to market Pitch Title /7

8 The effect of mis-alignment Takeaways of surveys of 2895 C-level execs and staff from by multiple organizations on sources of competitive advantage (in decreasing priority): 1. Product or Service Excellence 2. Staff Skills 3. Customer Intimacy 4. Agility 5. Business Process 6. Brand Perception 7. IT 8. Access to Finance 9. Supply Chain Excellence 10. Strategic Partnerships Pitch Title /8

9 The root causes of mis-alignment Lack of communication Lack of credibility and trust True costs of ownership are not stated Poor project management practices Lack of coherent technology strategy Pitch Title /9

10 So, how do we fix the problem? Strategic Balanced Scorecards Business Program Reviews Business Management Tactical Project Management Tollgating Operational Process Management Business Activity Monitoring Pitch Title /10

11 Project Inception to Project Delivery the Wing-to-Wing Process GM All BPRC Set Overall Business Priorities Project Idea More Info Proposal To BPRC BPRC Evaluation Resolve If Necessary Reject Strategic Alignment Tactical Alignment Operational Alignment Communication & Oversight T1 T2 T3 T9 Quality Accept D M A II C IT PMO Initiate T0 T4 T5 T6 T7 T8 Define Design Develop Deploy Project Management Pitch Title /11

12 BPR: Business Program Review ensuring focus on high-value initiatives The goal of the BPR is to: Ensure that all projects address the business priorities Project prioritization Focus the Enablers (IT, Quality, & Finance) to work on high-value initiatives Identify and track value of projects Resolve conflicts between projects contending for common & scarce resources Anyone can propose a project Pitch Title /12

13 Prioritizing Project through BPR Initiatives Projects Charter? Champion 0. Must Do I1 I2 I3 I4 I5 I6 I7 Rel Rating Capacity -> Utilization -> Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Project Champ Pitch Title /13

14 PMO: Project Management Office the Party Whip The PMO is responsible for: Capacity Planning Resource Allocation Constraint Analysis and Resolution Project Administration Project Schedule Planning and Execution Release Schedule Planning and Execution Overall Risk Management Inter-Project Dependencies: Identify Conflicts Pitch Title /14

15 Operating Mechanisms Process/Body Purpose Owner Frequency Notes BPR General communication, status updates BPRC Monthly BPRC Call Hear new requests Decisioning, reprioritization BPRC (CFO, CQO, CIO) Twice a month First and third Monday of every month, 7:00 am. Quality Work through DMAIC CQO Weekly IT Work through SDLC CIO Weekly PMO Quality/IT Project Oversight PM TBD Pitch Title /15

16 Challenges Getting face time with CEO and CFO Establishing a smooth operating rhythm Attendance at BPR meetings No Enterprise Platform for managing projects What survey respondents said: Changing priorities & resource allocation Keeping up with wacky ideas IT representation at strategy meetings Disjointed IT teams: getting their attention, making them work together (Regulatory) compliance New mindset: change is not optional Outsourced resources do not know our business Pitch Title /16

17 Some hints wink, wink Hint 1: You know you have a major problem if you have forgotten what your CEO and/or CFO looks like, or when you do bump into them, they say Hint 2: You know you haven t gotten off the ground yet if your CEO and/or CFO says Hint 3: You made a good start, but you know the new process hasn t sunk in yet if your CEO and/or CFO says What are you doing these days? Justify to me why you are doing this project? Why are you spending all this money? Remind me why we are doing this project. Hint 4: You know the new process is well-established if your CEO and/or CFO insists on stealing your thunder and explaining your projects at town hall meetings. Pitch Title /17

18 Best Practices & Recommendations Stick with it! It will pay off Keep the rhythm going. Keep the shop open and maintain consistent hours even if there are no customers Minor in business Make Business take co-owernership of alignment with IT Hold Business accountable for realizing value of IT Turn ad-hoc into repeatable Future-proofing Make IT process-centric Re-engineer processes keep them current & fresh Pitch Title /18

19 Best Practices & Recommendations Keep up the enthusiasm (hint: quicker projects!) Leverage / reuse prior work Fix the process first Manage project well say No often, but be agile! Insist discipline in documentation protect corporate knowledge Development to be driven by methodology Be skeptical! Pitch Title /19

20 When all else fails. Pitch Title /20

21 Pitch Title /21