making agile transformation real

1© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm

has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Document Classification: KPMG Confidential

TBM Conference 2018

Making Agile

Transformation Real:

How TBM Enables

Modern IT Delivery

2© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 790273

Outside the enterprise

New technologies are entering the world at a

dizzying speed. And, they are enabling new

marketplaces and operating models never seen

before. Which, in turn, creates new competitors.

Who then propel new customer expectations

into the market.


Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 790273


Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 3© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Technology demand & complexity are increasing…

8 Billion internet

connected devices

69%Using IA within IT

40 Zettabytes of data in

the cloud by 2020

Business-led technology investment threatens

centralized IT

Customers and revenue dominate technology focus

and differentiate the digital leaders from the rest

As talent is scarce, sourcing is shifting away from

cost savings to filling skills gaps and increasing pace

Cost optimization remains a high priority as budgets

must shift from traditional IT operations to digital

transformation and innovation priorities

and disruption is forcing a shift in

traditional IT:

IT as a cost function is dead. The role of the CIO

needs to evolve to reflect this reality if they want to

remain a strategic partner to the business.

– Denis Berry,

Partner, KPMG in the U.S.




4


© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG

International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have

any such authority to obligate or bind any member firm. All rights reserved.

The top five board priorities in the next three years

86%

of CEOs consider their

companies to be active

disruptors1

81%

believe in placing greater

importance on trust,

values, and culture2

Greater speed to market

Digitization of the

business

Becoming more

data-driven

Building public trust

Implementing disruptive

technology2

To disrupt is to exist

A view of disruption

from the top

4






Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 5


© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm


How Is IT responding?




6




AgileDemand

Supply

The evolution of the IT operating model

Support

IT as technical

support, reactive

order taker

IT as bridge

between business

and technology

IT working together

with business as

strategic enabler




7




The evolution of the IT operating model

Support

IT as technical

support, reactive

order taker

Demand

Supply

IT as bridge between

business and

technology

Agile

IT working together

with business

as strategic

enablerLeading

organizations

• Scaling agile beyond IT - integrating front, middle,

and back office to deliver a truly connected enterprise

• Scaling technology efficiently

• Embedding an innovation culture into the value chain

Challenges for leading organizations

• Business / IT alignment

• Managing multiple delivery speeds and maintaining

legacy systems while adopting Agile

• Speed of change and agility vs business expectations

• Plugging the technology skills gap

Challenges with today’s models

Most IT

organizations today




8




Agile: No longer the destination, just a pit stop

Market

Speed

SupportDemand

SupplyAgile

Market SpeedTechnology integrated in business with no separate IT function

9





Market speed organization

The market speed

organization is the flexible

IT operating model that

enables the enterprise to

break down siloes between

functions, empower

employees, build holistic

customer experiences that

transcend touch points, and

create a connected

enterprise.

• Breaking down siloes

• Cross-functional agile teams

• Technology leaders working together

• Business managed tech supports incubation of new products and services

• Delivering complex products at scale requires the high-skilled capabilities of IT

• End-to-end product-aligned delivery capabilities

• Shifting enabling functions higher up the delivery cycle

• Scalable architectures built on ecosystems designed for change

• Reinforced by leadership at all levels

• Shared power and control

• Empowering teams to make rapid decisions

• Shift from project to product-mindset




What will the IT function look like in the future IT in the futureIT today

Control driven and risk averse

Deliberate, methodical, rigid practices

Project focus

Data rich, insight poor

Rigid organizational structure

Internally focused

Manual processes

Rules

Authoritarian

Technical skills above all

Collaborative with open sharing

Agile, iterative, scalable principles

Product focus

Data fuels the value chain, AI will power it

Connected community

Customer obsessed

Extreme automation

Influence

Forward-thinking servant leader

Empathetic, and decidedly human

10


© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any

authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.


Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 11




How can TBM help?




Our definition supported by our TBM capability framework

TBM

TBM enables the IT organization to gain

Transparency into the Cost, Quality,

Performance, and VALUE of their services.

TBM translates the cost of IT into a

language that everyone can understand,

allowing IT to move from a technology

order taker to a value creator.

Ideation, strategy,

& planning

Technology portfolio

management

IT financial

management (ITFM)

Advanced IT analytics

& data management




Our TBM capability framework helps IT meet the challenge

TBM

Ideation, strategy,

& planning

What technologies will meet the business objectives, and how do I plan and measure

that they do?

Technology ideationTechnology planning

and forecasting

Value management

& realization

Technology portfolio

management

How do I manage the technology portfolio for where to invest, divest, tolerate and why?

Project portfolio

management (PPM)

Service portfolio

management (SPM)

Application portfolio

management (APM)

IT financial

management (ITFM)

What is the true, transparent, and fully-burdened cost of technology?

Technology funding

framework & core

accounting

Total cost transparency

modeling (TCO)

Financial variance

management

Advanced IT analytics

& data managementHow do I integrate, rationalize and manage IT data? What insights can be drawn?

“IT4IT” MDM

& governance

Balanced &

integrated scorecards

Predictive

analytics




TBM capabilities across operating modelsIdeation, Strategy, and Planning

• Demand process consolidated under

the PMO, MBA-style business cases

• Business demand is captured

periodically throughout the year as

part of annual planning cycles

• Contained within IT, application

and/or tech specific

• Demand (project) and Request

(operational) processes connected

• Increased focus on efficient

architecture function helps

consolidate demand and drive to one

system/platform

• Lean business cases, leading

indicators

• Architecture function focus shifts

from systems/platforms to value

streams & SOA

• Product-oriented business cases

• Collaborative effort, especially with

customer-facing products

IT for IT

Support

IT as technical

support, reactive

order taker

IT for the Business

Demand

Supply


business and

technology

Agile

IT working together

with business

as strategic

enabler

IT for the Customer

Market

Speed Technology

integrated in

business

IT for the Product

Market Speed Example: A leading energy company, IT groups are given a small “innovation” budget each year to

be used at the discretion of the functional leader to invest in new ideas for their business. These small investments

consistently deliver the highest ROI of any investment made year after year.




TBM capabilities across operating modelsIT Financial Management (ITFM)

• Minimal visibility. Managed using

traditional accounting structures

• Cost centers aligned to business

units

• Resource-based views

• Full TCO transparency enabled with

purpose built tools

• Services aligned to business units

• Lean funding model (for dev)

• e.g. Finance funds resources and

vendors, then IT and business

determine what they build

• Product funding model (for ops)

• Accountability across the

organization, product owners carry

the accountability of managing

technology COGS

Market Speed Example: A leading insurance company re-aligned resources to specific products, and shifted to

funding resources rather than projects. This allows product owners manage the backlog and determine where IT

resources invest time.

IT for IT

Support

IT as technical

support, reactive

order taker

IT for the Business

Demand

Supply


business and

technology

Agile

IT working together

with business

as strategic

enabler

IT for the Customer

Market

Speed Technology

integrated in

business

IT for the Product




TBM capabilities across operating modelsTechnology Portfolio Management

• Annual portfolio management

process

• Resources are typically aligned to

the business via cost center

• Portfolios managed in silos, e.g.

tech, application, and platform, ITIL

service focused (i.e. tech catalog)

• Project and operational portfolios are

connected

• Costs and activities mapped to

business services

• Agile portfolio

• Value stream portfolio (IT for the end

consumer)

• COGS vs SG&A portfolios

• Much of the traditional technology

portfolio now sits in the business

P&Ls and is managed there through

an iterative process

Market Speed Example: A leading insurance company activity manages their portfolio of applications and projects

by continuously reviewing their value to the company

IT for IT

Support

IT as technical

support, reactive

order taker

IT for the Business

Demand

Supply


business and

technology

Agile

IT working together

with business

as strategic

enabler

IT for the Customer

Market

Speed Technology

integrated in

business

IT for the Product




TBM capabilities across operating modelsAnalytics and Data

• Disconnected metrics

• Data is application specific, not

leveraged across the enterprise,

metrics are function specific, not tied

to business strategy

• Balanced scorecard by service

• Use of performance scorecards tied

to clear objectives and some

business strategies. IT data becomes

integrated and balanced

• Velocity (speed), Epics (new

projects), Value Streams (variance

reporting)

• New data sources to support the

agile portfolio and value streams

• Data becomes predictive and

automated to support DevOps

• Supply vs Demand, price variance,

SLAs, customer experience

• IT metrics are tied to product

profitability, customer experience

and trust (e.g. Trust.salesforce.com)

Market Speed Example: A leading pharmaceutical company leveraged their BI capabilities with their TBM data to

highlight improvement opportunities

IT for IT

Support

IT as technical

support, reactive

order taker

IT for the Business

Demand

Supply


business and

technology

Agile

IT working together

with business

as strategic

enabler

IT for the Customer

Market

Speed Technology

integrated in

business

IT for the Product




TBM will accelerate your journey to the future IT in the futureIT today

Control driven and risk averse

Deliberate, methodical, rigid practices

Project focus

Data rich, insight poor

Rigid organizational structure

Internally focused

Manual processes

Rules

Authoritarian

Technical skills above all

Collaborative with open sharing

Agile, iterative, scalable principles

Product focus

Data fuels the value chain, AI will power it

Connected community

Customer obsessed

Extreme automation

Influence

Forward-thinking servant leader

Empathetic, and decidedly human

18


© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any

authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.




Key actions your TBM organization can take to reduce friction and support change

Start small and pay attention to the entire operating

model. Think about piloting in small areas first. Fund

a small innovation budget or fund a product owner.

Learn, adjust, iterate, and expand.$

Get your TBM office involved. Bring transparency to

all. Start thinking about your organization value

chains and products, and how to align your models

and process.

Find and develop partner champions across the

organization, not just within IT. Help IT leaders

articulate value that IT is bringing to the enterprise.

Thank you

© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent

member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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such information without appropriate professional advice after a thorough examination of the particular situation.

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for KPMG audit clients and their affiliates or related entities.

22





Dynamic investment

Think like a VC and dynamically reinvest resources and capital for winning ideas.

In the future, the IT portfolio will have business investors inside the organization, who will act like venture capitalists, being brought many ideas, making many small bets, having transparency to performance against value objectives, and dynamically reinvesting resources and capital for winning ideas.

Fund products

before details

are defined

Catch bad ideas

faster with

leading indicators

and practicing

fail-fast methods

Delegate trust

to business

and technology

leaders by

enabling new

tools, data,

and analytics to

make smarter

and faster

decisions

Report velocity and

value to the board

making agile transformation real

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