uGovernIT

A Practical Approach for IT Governance

Posts Tagged ‘IT Governance

CIOs are judged by the Results they Deliver!

leave a comment »

Close up shot of a caliper, measuring the word "Results".

My very good friend, and advisor, Ashwin Rangan, pointed out that in the early stages the CIO focussed on what needed to be done. Later they recognized that processes were needed to deliver technology.  This naturally led to identifying the tools that helped them.  Today’s focus, Ashwin argues, is all about the results they can deliver.  We can use a three stage framework for understanding the paradigm shift:  Corrective, Preventive and Results Driven.

The Shift From Corrective to Preventive

Let us look at how we measure our delivery of services.  SLAs helped CIOs  identify process bottlenecks, and helped them make the necessary corrections to improve the timeliness of the delivered services.  Surveys helped CIOs improve the quality of the delivered services.  While this is great, it was a corrective set of measures – not preventive.    The old adage “An ounce of prevention is worth a pound of cure” had not lost its luster.  CIOs realized the need to empower their organization to take proactive measures to prevent/mitigate gaps in the delivery of products and services they are entrusted to manage.

It was no different when CIOs delivered major IT initiatives.  They identified cost and schedule variance, and took corrective measures when they were off-track.  While corrective measures improve how CIOs delivered technology to the enterprise, preventive measures help them deliver more for less.  As an example, look at traditional project management tools.  Initially, they focussed on using cost and schedule variance as determinants of project success. The key thing they missed was “scope management”.  Scope creep accounted for delays and cost overruns about 70% of the time.  Agile methodologies mitigated this risk to a large extent by delivering projects on a specific schedule by controlling the scope of the delivered product.

The Shift From Preventive to Results Driven

CIOs used ITIL, and ITIL based tools, to help them be proactive.   ITIL, no doubt a great framework, caters to the older school of process adherence.  Most of the tools that support the CIO are focused on process adherence.  But the real challenge was not delivering the project or service efficiently, but did the CIO deliver the results the enterprise needed?

What is badly needed is an outcome focussed tool that helps the CIO define and deliver results to the enterprise.  CIOs need to walk the talk – they talk about the role of technology in transforming the enterprise, yet they fail to use the tools internally.  In an earlier blogpost I identified that “We are so involved with day to day challenges, we seldom get the time to use some of the same tools we are delivering to our customers. The solution is quite simple – we should think and act like CEOs of an IT company. Using Key Performance Metrics (KPMs) to help manage your IT as an enterprise, IT Analytics provides you the ability to prioritize your demand and allocate resources that best serves the interest of the enterprise.”  

However, shifting to Results Driven management is much more difficult.  It requires that IT is aligned to the Enterprise, and more important, the Enterprise has not just accepted the CIO to sit at the table, but to listen and act on the CIO’s advice as well.

Written by Subbu Murthy

October 11, 2015 at 1:51 pm

Five Rules of Thumb to help us Manage IT

leave a comment »

Lance Mooneys CartoonAs CIOs we are used to leveraging our experience and creating a cheat sheet (aka rules of thumb) to manage IT.  When IT was focused on costs, a few of the common measures were:

  • IT Benchmarks:    Our goal was always to be lower than others in our industry, particularly so if we reported to a CFO;  and if we were higher, we justified it by showing other indicators such as higher quality, customer satisfaction etc.
  • Adherence to Project Budget: We targeted actual versus planned consumption of financial and personnel resources to be within x% (we felt good if we were within 10%).
  •  Gaps in Process Automation: We kept the number of identified gaps to be minimal in the core business areas.  We were very good in creating new projects to cover these gaps.
  • Number of Planned New Services: Our goal was that the percentage of new services correlate with the allocated budget. We really did not care how many new services we created as long as they correlated with the IT budgets.
  • Duration of Service Interruptions: We maintained the average duration of service interruptions to be just a few and the impact mitigated in less than an hour.
  • Customer Satisfaction: We used a Likert scale to get responses and if we got within 25% of the top, we felt we had done a good enough job, and if we were within 10% of the top, we were bragging about it in CIO events.

All of these are important, but they do not help us keep the seat at the table.  As we shift our focus from managing cost to creating value for the Enterprise, what are the new “rules of thumb”?

  1. Spend at least 20% on Innovation: If you are spending less than  20% of your IT budget on projects that bring innovation and increased value to the enterprise, you are not likely to get traction at the leadership table.  This generally means that you should be spending less than 50% of the IT budget in maintaining your core IT systems to meet your business needs. Not that this includes applications (licensing, support, changes, etc.) and the infrastructure (data center, network, voice/multimedia and user devices).  If you are spending more, you are likely not leveraging the current technology (Cloud, Mobile Computing, SaaS, etc).  This also implies that managing IT should cost less than 10% of your IT expenditures.  This includes all management costs including the cost of the office of the CIO, PMO, tools you use for service desk, project management, reporting, etc. This implies you have a hands-on management team and are leveraging modern IT management tools – not legacy and onerous IT Governance practices.
  2. Spend at least 20% on shared services:  Build efficiency by sharing services.  Many services are found in more than one part of the organization or group. CIOs recognize this as an opportunity and have funded the development and implementation of shared services.   The services are delivered based on defined measures (KPIs, cost, quality etc.).  Examples of shared services are salesforce automation, employee on-boarding, business project request, adjudication and execution, financial reporting, content management, compliance and other core business activities that are typically not part of an ERP.
  3. Discretionary Projects Should Have an ROI:   Today, the businesses expect you to treat IT as an investment.  What is the return you are providing to the enterprise?  If you carefully observe the proposed metric, there is no specific ROI value I have proposed.  These depend on the type of project.  As a CIO, you should be very proud if you are thinking about ROI. The very fact that you are providing an ROI puts you in a different category of CIOs.
  4. Work Backlog Should be Less than 6 to 9 Months: The business units always wants more IT than you have resources available.    Good CIOs recognize that if you have a very huge backlog, you will be constantly prioritizing and triaging business project requests.  This leads to political friction.  You can minimize it by reducing the backlog.
  5. Most Projects Should be Less Than 6 Months in Duration:  This is probably the most difficult to achieve.  There may be a few that are necessarily longer term, but your goal should be that longer projects should be an exception – not the rule!  Businesses are fickle – they change their needs constantly.  Shorter projects help avoid costly mistakes.  Breaking up complex projects into smaller ones (each one having their own value proposition) is the best way to mitigate IT risk.  In fact in our tool, we have crafted a special 6 Month Project Methodology that combines agile and traditional waterfall models into a nimble yet managed project request and delivery process.

Written by Subbu Murthy

October 11, 2015 at 1:49 pm

The Six Stages of a CIO

with one comment

CIO Icon

Background

Over the past several months, I have been researching how best to sell ourintegrated IT Governance solution to a CIO. Being a CIO myself, I realize it is not an easy task.  One of the studies I started was analyzing the different CIO archetypes.  We have seen many theories on the different CIO archetypes.  CIO Executive Council indicates that the CIO role is made up of 3 CIO archetypes, specifically; 1) Operational/Functional (Business relationship: Service provider; 2) Transformational (Business relationship: Partner); and 3) Business Strategist (Business relationship: Peer).  Earlier this year, I felt we needed a more contemporary taxonomy for classifying CIOs. The taxonomy I proposed was on the background where the CIOs come from.

Imagine a three dimensional grid with one axis being business background, the other being technology background, and the third being the leadership skills. Since it is difficult to show a three dimensional grid in a blog, I developed two 2×2 grids. The two grids are separated by leadership skills – those who have it and those who do not. This framework helped me define our market.  Our target was CIOs who exhibit leadership skills to run IT like a business. They feel that their role is no different than that of a CEO of a IT company.

CIOs Based on Age

One of my colleagues asked me why I had not considered the “age factor”.   My first reaction was that age will be an absolutely weak differentiator.  Besides, you cannot discriminate based on age.  So why even look at this analysis.  Strangely enough, if you look at HR consultants they discuss why it is important to understand the various age groups and develop an organization culture that meets the needs of the different segments.  From purely a sociological perspective, I started wondering if these age based segments have any relevance in developing the CIO Archetypes.    I used the common accepted terms for identifying different age groups.  The one from Bank of America was simple and elegant.  They used six age groups: Late Millennials, Millennials, Generation X, Late Boomers, Baby Boomers and the Senior Set.  I looked around my network to see if I knew CIOs in the various age groups.  I have a network of several hundred CIOs, and over the years, I have developed a friendship with them. I found them in all age groups but one – I knew of none under 25.  For the rest of the groups, I asked what was the dominant characteristic of the CIO.  I tried the two frameworks identified in the previous section.  All age groups had overlaps and there was no clear differentiator.  When existing frameworks failed to deliver any meaningful results, a new idea emerged.  I focussed on what would be the focus if I were in the respective age groups.

If I were to be a Late Millennial (under 25), I may be focused on learning the role.  If I were a Millennial and had the CIO title, it is likely I would be in a small to mid sized firm with an eye for growth.  If I were a Gen X, then I likely would be trying to move ahead by leaping firms and gaining expertise in different verticals.  If I were a Late Boomer, I may be peaking in my job, gaining business acumen and maturing as a CIO.  If I were a Baby Boomer, I would probably be feeling that I have learnt all that is there to learn (personally speaking, learning never stops)and my focus may have shifted to stabilizing my job.  If I have climbed the hill and entered the Senior Set, I may be shifting to sharing and coaching. The good news is that there is a role for the CIO to play independent of the vintage!

Written by Subbu Murthy

October 11, 2015 at 1:45 pm

Revisiting IT Analytics

leave a comment »

We are so involved with day to day challenges, we seldom get the time to use some of the same tools we are delivering to our customers. The solution is quite simple – we should think and act like CEOs of an IT company. Using Key Performance Metrics (KPMs) to help manage your IT as an enterprise, IT Analytics provides you the ability to prioritize your demand and allocate resources that best serves the interest of the enterprise.

From the IT perspective, Analytics can be classified into four types: Financial, Business Alignment, Request Source and Resource Analytics. Financial Analytics help understand IT using a Project Portfolio approach. Business Alignment Analytics focus on the value IT brings to the Enterprise. Resource Analytics helps understand how to deliver technology efficiently. Request Analytics helps identify the source of the technology needs and indicates the technology maturity of the organization.

As an illustration of the use of Analytics, consider the challenge of managing a portfolio of projects. It is very difficult to visualize the project performance without developing a common project assessment framework. Yet, common frameworks have the challenge that each project is unique and may have specific characteristics. To help resolve this issue, an IT Analytic can be developed to provide a project score. The project score can be used to assess the impact of the project using a Portfolio Management approach. Suppose we want to assess the project portfolio using a set of Financial Analytics. We can define each project using a common set of evaluators using measures such as budget variance, schedule variance, scope changes (“churn”), and also a set of measures that are unique to the project. These measures are weighted specific to each project but all contribute to a common scale such as 0 to 100. To illustrate the use of Business Alignment Analytics, we can use the same project portfolio, except the projects are now scored on the value they bring to the Enterprise and how closely they match to the business needs. Similarly, we can develop Request Analytics which essentially map the project scores to requesting organizations. Early stage companies may show a higher use of technology, say for example, in engineering and marketing to drive innovation and create demand, whereas mature enterprises will show a balanced use of technology across the enterprise. As technology is resource intensive, Resource Analytics (utilization and demand) are essential to triage and develop an IT plan that best meets the enterprise needs.

Using IT Analytics is a simple and effective mechanism to visualize each project in the portfolio. Clearly, the Project Portfolio Analytic does not replace the functions of the PMO, but facilitates management by providing a mechanism to quickly see trends and issues, and drill down to understand the direction and develop a IT strategic plan.

Written by Subbu Murthy

February 20, 2015 at 1:00 am

Is “Shadow Sourcing” here to stay?

leave a comment »

We have heard of shadow IT (also referred to as “rogue IT”). Shadow sourcing (“Rogue Sourcing”) is a result of shadow IT directly sourcing technology solutions from providers without IT’s approval. I actually prefer the term shadow to rogue, and I also have eShadow Sourcingncouraged CIOs to understand why shadow IT exists and refine the IT approach to meet user needs and focus on less obtrusive IT Governance processes.

Consultants have created a plethora of adjectives to differentiate themselves from outsourcers: smart sourcing, right sourcing, strategic sourcing and the like. Now shadow sourcing? Before the reader frowns, I will freely confess that I created it. Please view me as a career CIO who coined this term and not as a consultant.

To provide a bit of a background, IT is facing the daunting task of delivering more for less. The result is that users (like marketing, finance, operations) are seldom getting their projects done by the internal IT department. Naturally they resort to outsourcers. A very harsh phrase to use, but shadow sourcing refers to IT sourcing by non-IT departments. Of the many challenges with shadow sourcing, the three that kindle their way to the top are: management overhead, higher costs, and lack of a review and credentialing process potentially leading to poor delivery quality.

The way to mitigate shadow sourcing is not to outlaw it, but accept it as a weakness in the IT department in how it is managing user requests. IT governance helps facilitate decision making across all users. This prevents IT from independently making and later being held solely responsible for poor decisions. The guiding principle is to deliver value to the business without injecting onerous controls that stifle productivity. To achieve it, the IT Governance framework should provide complete transparency on IT activities and make it simple for users to make, monitor and prioritize IT requests. In order to achieve transparency, IT management will need to establish controls and processes to deliver quality technology solutions on time and within allocated budgets.

Outsourcing can actually enable effective IT Governance as it provides a scalable resource base to work in conjunction with internal IT resources. IT can transform itself as a nimble service based organization taking advantage of outsourcing. This will significantly mitigate the risks of shadow sourcing.

Written by Subbu Murthy

October 27, 2014 at 3:25 pm

Posted in IT Governance

Tagged with ,

Apple Stores – An Unique Experience

leave a comment »

Apple changed the way retail outlets appear to the public.  It is not just how they appear to the public, but they encourage the potential buyers to play with the product, collaborate and make their experience very enjoyable.  Not to mention the experts they have to help when needed.  Microsoft, Disney and Tesla are all imitating their style.

We also allow our users to meet and collaborate, touch and feel our product and provide personalized support. The interesting part is that we do not even make a hardware product.  We actually have software that helps CIOs run the business of IT.  Instead of looking over the shoulder, they can leave the department to self manage with our tool.  The CIO can always know in real-time the status of the IT spend, status of projects, resource allocation and utilization, status of the infrastructure, and the status of the services delivered by IT and automated measures to assess how well IT is functioning.  A pure coincidence that our CTO is a famous app developer on the iPhone.

Written by Subbu Murthy

December 10, 2013 at 12:23 am

Posted in IT Governance

Tagged with

Using the Technology Capability Framework as a Guide

leave a comment »

A useful context for understanding the overall IT governance requirement for medium to large IT organizations can be found in the following Technology Capability Framework.

The framework helps enterprises better understand the objectives of IT governance and the associated IT leadership orientation and capabilities for 3 major maturity levels of governance in an orderly progression. Once this framework is understood, IT Leadership can conscientiously plan and take actions that build an IT governance capability that provides ever-increasing value to the business.

The Service Management maturity level is focused on efficiency in handling a variety of user requests including help with user technical problems, requests for new capabilities and services such as setting up a new employee with the required hardware and application services or in managing IT incidents and delivering solutions to restore services. Service Management can also help with application deployments as well as tracking and managing the configuration of deployed resources and assets. Emphasis is on quickly resolving requests with solutions that work the first time and controlling the impact to achieve a known condition. Reporting against SLAs for problem response is provided along with a variety of user defined dash boards reporting on active requests by priority, tickets created by category. Also trend reporting, response time/trends and days to resolve by priority are a few of the views that are useful. User satisfaction input at the completion of a problem resolution is helpful along with periodic user satisfaction surveys for both the direct users and their management. A good service management process framework is based on ITIL best practices and reduced process variation is a key objective.

IT leadership orientation for this level of IT governance is focused on developing processes in conjunction with business users for such processes as on boarding new employees, acquiring hardware and software for employees and standing up infrastructure for new locations. IT leadership must develop relationships and interact with the business unit management to understand its needs. In addition IT leadership focuses on standards, processes and training for technical IT resources to ensure an efficient service management operation that meets the enterprise needs.

The Project Management maturity level is focused on justifying, planning and executing major project and IT technology initiatives that involve significant costs and resources and inherent risks. Capabilities for this level include easy to use standardized project plan construction, understanding and visualizing resource and infrastructure constraints to achieve on time results. In addition the governance application must help users understand and visualize resources and estimated costs at completion and measure the changing direction of risks. It is also important to highlight problems and constraints for timely resolution so it is clear to the user what action is required to address the issue.

End users and management users of the project management governance application must be able to see and understand projects with related dependencies. The application should help users understand and visualize total portfolio resources and costs and understand and visualize categories and enterprise impact as well as aid in project/initiative prioritization and rejection or postponement. The governance application should allow for a classification of the project and enable a clear linkage back to the core business requirement(s).

IT leadership orientation for this level of IT governance is focused on working with business management and building relationships. IT leadership interacts with the business unit management to understand their needs and define approval and review processes, ensuring the appropriate business unit participation in the project/initiative and fostering PM skills training and best practice disciplines through well understood PMO structures. IT Leadership works with business management to determine user discretionary spending limits and other thresholds and incorporates these into the application work flow and user authorities. Connectivity to mobile devices is also required for users of the project management governance application.

The Resource Management maturity level is focused on enabling the longer term business blueprint and enabling major impacts that can transform the organization. Deep and powerful analytics are central to achieving this goal. At this level, IT management works with the prioritized project portfolio to determine budget needs for the current operating budget and capital needs over the planning horizon. The resource management governance application helps the IT leadership understand and visualize the flow down of business requirements into IT requirements. Project lists and dashboards help both IT leadership and business management understand and visualize the total enterprise portfolio associated cost and resource requirements. Summarized views of resource requirements help ensure adequate management of the resource demands by resource type and help avoid project/initiative slowdowns due to resource shortages. Dashboards are based on business intelligence and use data analytics to help assess how well IT is performing. This includes assessing ROI of IT investments, managing a portfolio of projects, conducting IT assessments, and maintaining an IT Balanced Scorecard as a benchmark of the value created by technology investments.

In this maturity level of governance, IT Leadership has a “Seat at the Executive Table” and participates in business planning and strategy. The capability of dashboards and the analytical capability to understand data and causal relationships promote new and powerful understanding of the business dynamics. IT Leadership takes the lead in this type of information discovery and presentation for the benefit of the executive team. IT Leadership becomes a trusted member of the executive team to provide fact based analysis that can be trusted for critical decision-making.

 

Written by Jeff Crowell

June 8, 2012 at 9:39 am