applying it research friday 31 may 2002 neil mccaffrey gartner: option 2. title page gartner: option...

Applying IT ResearchFriday 31 May 2002

Neil McCaffrey

research consulting measurement community news

Sydney University | Applying IT Research| 31 May 2002 | Entire contents © 2002 Gartner, Inc. All rights reserved.

Agenda

What is (IT) consulting?

Why use research?

Examples


What is (IT) Consulting?


What is consulting?

Consulting Advice Should Be:Consulting Advice Should Be:

Based on fact

Universally understood Relevant to the issue at hand

Perceptive


The Consulting Process — It’s just problem solving!

Develop situation, complication and ?

Propose hypothesis

Prove/disprove hypothesis

Present findings


Engagements usually address one or more of four questions

What should we do?

How should we do it?

Should we do it?

Why did it happen?

Key questions ...

Source: Barbara Minto; The Minto Pyramid Principle

How?

Why?

How do you know?

… then ...

How? — Steps

Why? — Reasons

How do you know? — Proofs

… by


IT context — the IS Management Process

Set DirectionImplement Plan

Manage Services

Review

Manage demand

How can we be more effective?

Manage supply

How do we do things

efficiently?

IS Management process

Key issue

Responsibility

Delivery

Corporate

IT&T

BU’s IT&T

ESP


Why use Research?


Research can provide answers to the “How? Why? How do you know?”

What should we do?

How should we do it?

Should we do it?

Why did it happen?

Key questions ...

Source: Barbara Minto; The Minto Pyramid Principle

How?

Why?

How do you know?

… then ...

How? — Steps

Why? — Reasons


… by

Well other organisations have done it like this...

How? — Steps

Product xyz provides the required functionality

Why? — Reasons

All of the 375 clients that have implemented this solution have finished in under three months



The type of research will vary upon the stage in the process

Set DirectionImplement Plan

Manage Services

ReviewIS Management process

TrendsForecasts

FrameworksApproaches

Estimating tools

ProcessesMethodologies

MetricsStandards


Examples


Telecom 12.70 $10.4K 72Insurance 9.42 17.4K 67Fin./Banking 8.66 19.1K 76Services 6.47 7.1K 78Retail/Wholesale 4.54 3.1K 73Hospitals 4.53 1.7K 72Utilities 3.86 5.6K 77Transportation 3.30 1.4K 77Manufacturing 2.99 4.1K 76

Total IT Spending as a Percent of Revenue will continue to increase highlighting a need to understand and apply investments strategically

IT Spending % Revenue

Central IS Budget Per Employee

IT Baseline/ Infrastructure

as % IS Budget

Key Technology Discontinuities

S/360Mainframe

PC-Client/Server

Web-Internet

1970

10.0%

Accelerating Business Unit Spending

North America

Western Europe

Asia/Pacific (Dev.Economies)5.0%

020102000199019801960

Source: US Department of Commerce/Gartner


Supply Chain Management in Transition

Nonlinear Supply ChainNonlinear Supply ChainBasis for Collaborative InteractionsBasis for Collaborative Interactions

InfrastructureInfrastructure

OEMOEM

ResellerReseller

C-CommerceC-CommerceNear real-timeNear real-time

Rich informationRich informationMany-to-manyMany-to-many

WorkflowWorkflowEnd UserEnd User

End UserEnd User

End

Use

rE

nd U

ser End U

serE

nd User

SupplierSupplier ContractContractManufacturerManufacturer

Linear Supply ChainLinear Supply Chain

E-CommerceE-CommerceManual (mail, fax, phone)Manual (mail, fax, phone)EDIEDIOne-to-oneOne-to-one

ManufacturerManufacturer

DistributorDistributor

RetailerRetailer

SupplierSupplier

End UserEnd User

Infra-structure

Infra-structure

DistributorDistributor


Independent Work

Mobile/Fully Digital

Reliance on Paperand Location

Office = LocationBandwidth rulesVisual interfacesPhysical environment

Office = ConnectionUbiquitous accessStandardised interfaceService-based

Office = AttentionWearable or mobile devicesWireless connectivityInstant-on

Office = CommunityVirtual communitiesWorkflowMonitoring and access

Need for Supervision

Office 2010 — The Wall Comes Down as inter-organisation and inter-site collaboration becomes the norm


Technologies to Keep on the ‘Radar Screen’

1) Automatic platform 1) Automatic platform adjustment as adjustment as generally adopted generally adopted standards. standards. Action: Action: Drive cross-LOB data Drive cross-LOB data synergies.synergies.

6) Digital signatures are a top 10 cost saver 6) Digital signatures are a top 10 cost saver in > 50% of enterprises. in > 50% of enterprises. Action: Focus on policies as much Action: Focus on policies as much as technologies, use internally sooner as technologies, use internally sooner rather than later. rather than later.

4) Transactional data 4) Transactional data increases 20 to 30 times.increases 20 to 30 times.Action: “Rearchitect”Action: “Rearchitect”B/O for scalability.B/O for scalability.

2) 80% of corporate 2) 80% of corporate customer interaction is customer interaction is electronic. electronic. Action: Invest in staff Action: Invest in staff training and prepare a training and prepare a labor redeployment labor redeployment strategy.strategy.

3) Privacy and security3) Privacy and securityissues begin a period issues begin a period of intense political of intense political debate. debate. Action: Drive an Action: Drive an industry consensus and industry consensus and lobby.lobby.

5) Decision support staffing triples 5) Decision support staffing triples over 2000 levels. over 2000 levels. Action: Rethink hiring strategy Action: Rethink hiring strategy and skills inventory.and skills inventory.

7) Bandwidth increases 7) Bandwidth increases 100 fold over 2000 levels, 100 fold over 2000 levels, but demand increases more. but demand increases more. Action: Reinforce functionality Action: Reinforce functionality over “featurality.over “featurality.””

8) More than 75% 8) More than 75% of customer feedback of customer feedback analysis is automated.analysis is automated.Action: Guard the Action: Guard the “crown jewels.”“crown jewels.”

20042004 20062006 200820082002200220002000 20102010


Transaction volumes/ values are also predicted to grow aggressively — has the customer base been profiled against early adopter industry verticals and product types?

0

10

20

30

40

50

60

70

80

90

100

• Few companies transact regularly (4 txns is an anecdotal hurdle rate)

• Enterprises that purchase more than 1% of inputs electronically are almost nil

• Substantial portion of activity is “sourcing” with few actual transactions

Man

ufac

turi

ng

Fin

anci

alS

ervi

ces

Dis

trib

utio

n &

Ret

ail

Bus

ines

s S

ervi

ces

All

ent

erpr

ises

To purchase To sell

%

Hong Kong & Singapore e-Business Survey(1)

Source (1) Hong Kong and Singapore medium/large enterprise e-marketplace usage survey Q4 00 (203 enterprises) (2) Asia Pacific e-Marketplaces survey

% of companies that have used marketplaces

0 5 10 15

Textile mills

Desk/Off ice supplies

Logistics/SCM/Warehouse Services

Industrial machinery and equipment

Paper

rinting and publishing

Textiles and clothing

Construction materials

Chemicals

Consumer electronics

Top 10 transaction value by product type (%)(2)

• The most popular commodities to date that have been traded in e-marketplaces are consumer electronics, chemicals and construction materials

• The number one position of consumer electronics correlates with a general early adoption of new technologies by this industry (this is a target industry for Ariba)

• Has the correlation between heavy users of trade finance such as retailers and the food industry and their rate of technology adoption been tested?


Each IT function has a different level of complexity and business value to the Service Provider and Service Receiver

Some IT functions have now become a standardised commodity and are of lower of business value (e.g. Data Centre Operations) than other functions (e.g. Systems Integration). These lower value functions can be easily outsourced to one of the many providers which exist in the market without compromising business value. As the complexity of the IT function increases, so to does the value to the business and the relationship complexity which is established to manage the delivery of the function. Each organisation will have a different positioning of its IT functions.

RELATIONSHIP COMPLEXITY

BU

SIN

ES

S V

AL

UE

DesktopOperations

HelpDeskData

Center Operations

ApplicationsDevelopment

ITConsulting

BusinessContinuation

BusinessStrategy

Consulting

SystemsIntegration

ApplicationManagement

Asset Management

NetworkOperations


Gartner Research: ERP II Magic Quadrant — Service Intensive

VisionariesNiche Players

Challengers Leaders

As of 5/01

J.D. Edwards

OraclePeopleSoft

SAPLawson

Epicor

Great PlainsNavison

Sys Union

Sage

Agresso

VisionariesNiche Players

Challengers Leaders

Ability toExecute

As of 5/01

J.D. Edwards

Oracle

PeopleSoft

SAP

Lawson

CODAQSP

Walker

Completeness of Vision

Large scale solutions Medium scale solutions


GlobalSystems

Product line variety

Manufacturing complexity

Global synergies

Site age

Corporate ownership

• Multiple platforms

• Multiple model variants• Few platforms/model variants

• Large domestic assembly (CBU)

• CKD, 60% local content

• High content/process overlap

• Low content/process overlap

• Mature (brown field)

• New (green field)

• Wholly owned subsidiary

• Associate company

A review of reference sites showed five key drivers in a bespoke/ERP decision

ERP(SAP R/3)

• Full SUP import

• Joint venture


Example — Sourcing Strategy

Data Center

Desktop

Networks

Voice

Applications

IT Service Effective

Service Desk

StrategicValue

Efficient RiskExternalSourcing

HighMedium LowSourcing Decision Matrix

Core vs Non CoreCompetencies**

Core

NonStrategic

Non-core

Strategic Value

Outsource

Retain

Outsourceor Spin Off Business

Outsourceor Re-skill/

Re-toolStrategic

Utility(Cost Focus)

FrontierEnhancement(Productivity Focus)

Time andMaterials Cost Plus Business

Benefit-BasedShared

Risk/RewardGain ShareFixed PriceFee for

Service

Single Provider

Best of

Breed

Branded

Services

Joint Ventur

e

InsourceGeneralPrime

Deal Type

Governance Model

Pricing Model

A sourcing strategy identifies how internal and external resources will be identified and applied to support the IT strategy. The sourcing decision is based on a range of criteria but primarily it comes down to ability to execute the required IT strategy and the efficiency of existing operations. The ITOA undertaken in Step 2.1 will determine how efficient existing IT operations are.

For any functions being outsourced, Gartner has identified 3 types of deals an organisation can enter into. In addition, there are 7 governance models and 7 pricing models that can be selected to suit an organisation’s business objectives. In combination these form an outsourcing strategy. This assessment will be performed for Tata Steel’s IT functions.

Once it has been determined what to outsource vs retain an organisational impact assessment will be undertaken using Gartner’s IS-Lite framework.


Originate Negotiate Protect Track/React

Fulfill Settle

Authentication,qualification

Credit verificationCertificate validation

Payment,credit guaranty

EscrowLetter of credit

Credit provision

Cheque, ACH, wire, lockbox, FEDI

Disbursementand collection

Receivablesmanagement

Factoring, “securitization”

LoansLeases

Function Offerings Examples

Identrus,Open Ratings

eCredit, Oinke,eLease

Tradenable, Bolero, TradeCard

Clareon,VeriSign

Orbian,eTime Capital

Financial Elements of Value Chain


Example — Enterprise I/T Architecture leverages current investments and is extended by components identified by Gartner as leading or emerging practices I/T Architecture Framework

Layer 9 – Architecture

Governance

Layer 1 - Presentation

Layer 5 - Platform

Layer 6 - Network

Layer 2 – Business Services

Layer 3 –Technology Services

Layer 4 - Data

Incr

easi

ng

ly p

hys

ical

def

init

ion

Incr

easi

ng

ly lo

gic

al d

efin

itio

n

• Windows/Pc• Green Screen• IVR• Web TV

• Pager• Browser• Portable Handheld Devices

• Business Objects• Workflow Services• Document Management Services• Content Management Services

• Business Intelligence Services• Email Services• OLAP• Payment Services

• Integration Solutions• Static Library Services• Dynamic Library Services• Systems Management• Data Management*

• Network Management• Directory Services• Security• Firewall• Application Server

• RDBMS• Unstructured Data

• Sequential Files• OODBMS

• Intel-PC• Mainframes• PDA/Pocket PC• Mobile Phones

• Windows 9x, 2x, NT• OS/390• Windows CE

• TCP/IP• SNA• Frame Relay• ATM

• ISDN• Ethernet• DSL• Wireless

• SDLC• Microwave

Layer 7 – Systems Development Environment

• Use Cases• Object Service

Based Design• Object Oriented

Development• Change

Management• 3GL• Testing• Implementation

Guidelines

• Architecture Office

• Vitality• Compliance• Communicati

on

Layer 8 –

Management

Services

• Security• Backup &

Recovery• Availability &

Performance• Change Mgmt• Event

Monitoring & Mgmt

• Transaction Monitoring and Integrity

• Help Desk• SLAs


Within the IS-Lite Framework there will be an IT organisation structure appropriate for delivering IT services

QualityAssurance

Office ofArchitecture

andStandards

RelationshipManager

ProductOffice

RelationshipManager

Office of Enterprise IT

BUManagement

CIO BUManagement

ProjectManager

ProjectOffice

ProjectManager

BUApplicationsDevelopment

Team

DevelopmentServices

FunctionalApplicationsDevelopment

Team

Competency Centres

Change Management

Advanced Technology Group

Process

Requirements

Assessment

Specification

Design

Build

Test

Developmentmeasured

foreffectiveness

Infrastructure and Production Support

Consolidated Service Desk

Network Apps. Data SystemsTraining Admin.

End User

Productionmeasured

forefficiency

Maintain

Support

Tier 3 Support

Tier 2 Support

Tier 1 Support

Support

Gartner will recommend the appropriate IT organisational structure to deliver services, in an efficient and effective manner. The final structure will depend on what IT functions are retained by Tata Steel versus outsourced. Different skills are required to manage external service providers versus managing internal staff.

An example structure is shown below. The structure will depend on how “big” the final IT organisation is and what functions it performs

Outsourced to external service providers

Embedded in the business


Benchmark — Information Technology Overview Analysis

0

5,000

10,000

15,000

20,000

25,000

30,000

Exp

endi

ture

($'

000)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Cos

t pe

r U

ser

($)

Occupancy 781 592

External 0 2,373

Personnel 8,003 8,750

LAN / Shared Services 4,019 4,900

Software 2,200 2,651

Hardware 4,690 7,187

Cost per User 2,462 3,307

XYZ Peer XYZ Peer

Characteristic

Minimum Average MaximumComplexity 7.84 7.19 7.86 9.29Number of Users 7,567 4,523 5,691 8,116

Cost per user $2,462 $1,117 $3,307 $6,828

Infrastructure Costs per User $1,461 $411 $1,886 $4,301

Personnel Costs per User $1,000 $562 $1,156 $1,961External Costs per User $0 $127 $265 $566

Cost per FTE $86,885 $57,068 $72,690 $97,685

User per FTE 79.86 40.53 67.73 80.73

FTEs by Cost 92.11 120.38

FTEs by Users 92.11 113.10

Desktop Cost per User $775 $233 $1,233 $2,392

Peer Group

XYZ

0%

10%

20%

30%

40%

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

Normalised Key Metric Value

Exp

endi

ture

Per

cent

age

DistributedComputing

Midrange UNIX

Wide AreaNetwork

Midrange NT

IT Help Desk

ApplicationsDevelopment

ApplicationsSupport

0.74

1.28

1.15

1.45

0.89

1.61

1.73

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

Distributed Computing

IT Help Desk

Midrange UNIX

Midrange NT

Wide Area Network

Application Support

Applications Development

Normalised Key Metric ValuePeer Normalised to 1

applying it research friday 31 may 2002 neil mccaffrey gartner: option 2. title page gartner: option...

Documents

sydney university

entire contents

title page gartner

use research

type of research

consulting process

neil mccaffrey gartner

hand p erceptive slide