rapid response: rebranding it by creating transformation business value

19
Sam Pakrashi Director, Cognizant Rapid Response Rebranding IT by Creating Transformational Business Value

Upload: sam-pakrashi

Post on 17-Jan-2015

5.475 views

Category:

Business


3 download

DESCRIPTION

Speech for the Thought Leadership Series: Managing in a Down Economy, at the Leadership Mindshare Forum, New York, January 2009.

TRANSCRIPT

Page 1: Rapid Response: Rebranding IT By Creating Transformation Business Value

Sam PakrashiDirector, Cognizant

Rapid Response

Rebranding IT by Creating Transformational Business Value

Page 2: Rapid Response: Rebranding IT By Creating Transformation Business Value

Agenda

What is Rapid Response?

Why the Disconnect between IT and Business?

Responsiveness: Addressing the “Long Tail” Drives Customer Satisfaction

Business Innovation: Changing the Game One Customer at a Time

Tipping Point: Doing More with Less

What’s Different About Rapid Response

Anatomy of a Rapid Response Center

Key Elements of the Value Proposition

Evolution of Rapid Response

A Case in Point: How Rapid Response Changes Perceptions

Building Brand Equity

Page 3: Rapid Response: Rebranding IT By Creating Transformation Business Value

“What got you here, won’t get you there.”

- Marshall Goldsmith

Page 4: Rapid Response: Rebranding IT By Creating Transformation Business Value

What is Rapid Response?

Strategic Framework• Creates a responsive and reliable brand while

optimizing costs in a down economy

Lean Principles• Leverages tried and true Lean principles to manage

demand, lead times and throughput

Customer Satisfaction

• Enhances customer satisfaction by addressing “moment-of-truth” transactions

Business Innovation • Creates value one customer at a time; thereby

facilitating business model innovation

Brand Equity• Radically changes the IT brand and builds political

capital for more strategic initiatives

Rapid Response solutions can help transform IT into a cutting-edge 21st century service organization that responds and adapts to the demands of external customers and business stakeholders, thereby reshaping the very brand of IT.

Page 5: Rapid Response: Rebranding IT By Creating Transformation Business Value

The Disconnect Between IT and Business

The answer lies in not what IT does, but what is perceives to be trivial and chooses not to do.

Does IT adequately support critical business objectives like lowering operating costs?

• 42% of respondents said “Yes”

Does IT play a meaningful role in increasing workforce productivity?

• Only 45% of respondents said “Yes”

Does IT enable business innovation that drives competitive advantage?

• Only 40% of respondents said “Yes”

Source: Forrester Study on the Effectiveness of IT, September 2008

Forrester Study reveals a major disconnect…

Page 6: Rapid Response: Rebranding IT By Creating Transformation Business Value

Responsiveness: Addressing the “Long Tail” Drives Customer Satisfaction

The manner in which IT handles such “moment-of-truth” transactions, defines its brand as a service organization.

Strategic “Lights-On”

Number of Requests

Effo

rt

Business Driven

IT Funded IT/Business Funded

Com

plex

ity

Business Value

Technology Projects

Strategic Business Transformation

“Lights-On” Support

Business Requests That Drive

Operational Excellence

LowHigh

Hig

h

The Long Tail The Missing Link

“The Third Bucket”

Page 7: Rapid Response: Rebranding IT By Creating Transformation Business Value

Business Innovation: Changing the Game One Customer at a Time

Listening to the Customer

• Paying attention to the voice of the customer

Addressing Customer Pain Points

• Dealing with “moment-of-truth” transactions

Understanding Customer Preferences • Adapting to subtle shifts in customer expectations

Tailoring Solutions for Each Customer (N=1)

• Leveraging “co-created value networks” to build customer value one customer at a time

Creating New Business Models• Leveraging technology to create new ways of

engaging the customer

Listening to the customer and adapting business models to address fundamental changes in customer preferences requires a seismic culture shift, a mind shift from “we know it all” to making an effort to really understand the changing needs of the customer.

Page 8: Rapid Response: Rebranding IT By Creating Transformation Business Value

Tipping Point: Doing More For Less

Rebranding IT while optimizing costs without sacrificing strategic priorities

More Effective and Efficient

Infrastructure Spend

Application Spend

Strategic Business Transformation

Savings

Focus on Strategic Initiatives

Optimization Transformation

Why Rapid Response? Why now? The confluence of external and internal financial constraints, along with heightened customer expectations, has created an obvious “tipping point.

Doing nothing is simply not an option. As economic conditions worsen, the inability of IT to take care of immediate customer concerns will erode the credibility of IT beyond repair.

Rapid Response

(Business Critical Requests)

Business Funded, Outsourced

A Responsive and Reliable IT Brand

Customer Satisfaction

Page 9: Rapid Response: Rebranding IT By Creating Transformation Business Value

Rapid Response: How It Actually Works

Little’s Law

Sm

all

req

ue

sts

Me

diu

m r

eq

ue

sts

La

rge

re

qu

est

s

Incoming Service Requests

WIP

Tier 1 (24 Hrs)

Tier 2 (48 Hrs)

Tier 3 (72 Hrs)

PM

O

(Pri

ori

tiza

tion

)

Bus

ines

s A

naly

sts

Little’s Law in Action

Lead time = WIP

Productivity

The Rapid Response model borrows a fundamental “Lean” concept known as Little’s Law. Little’s Law allows for effective prioritization and sequencing of incoming requests, thereby reducing lead times without impacting capacity or quality.

Page 10: Rapid Response: Rebranding IT By Creating Transformation Business Value

What’s Different About Rapid Response?

Demand Management

Lean Execution

Increase utilization and reduce wait times by:

• Managing demand by platform

• Reducing estimation delays

• Prioritizing based on business criticality

• Sequencing requests by resource availability and technology platform

Responsiveness, Reliability, and Cost

Optimization

Pricing Signals

To a large extent, Rapid Response mimics the notion of global shared services, where delivery for services is centralized across business functions. However, there are fundamental differences in the demand management, execution and pricing models.

Rapid Response is different from traditional Shared Services in three fundamental ways:

Increase responsiveness and lower costs by:

• Delivering fixed lead times (SLA’s)

• Managing the work-in-process / throughput

• Calibrating fixed and variable capacity

• Enhance productivity through automation, standardization and specialization

Increase transparency and predictability by:

• Managing demand using price signals

• Creating a tiered service model (platinum, gold, silver) for differentiated levels of service

• Creating a service catalog for standard requests to influence buying decisions

Page 11: Rapid Response: Rebranding IT By Creating Transformation Business Value

Program Mgmt

Business Analysis

Technical Analysis

Quality Assurance

Program Manager

Business Analysts

Technical Analysts

Quality Analysts

• Prioritize Requirements• Sequence Jobs• Route requests• Monitor Performance

• Define Requirements• Estimate Scope• Create Test Cases• Facilitate User Acceptance

• Develop Applications• Conduct System Testing• Manage Deployment

• Create Standards• Automate Scripts• Deliver High Quality

Rapid Response

Program Management Demand management and project prioritization hold the key to successfully delivering projects within promised lead times. The program office also tracks project performance using a balanced scorecard.

Business Analysis

Technical DevelopmentUsing the “agile” development methodology, co-located technical teams are organized vertically by application platforms. Each application tower has a minimum fixed capacity or “anchor resources” both onsite and offshore to build a sustainable knowledge base that drives productivity gains.

Accuracy in the requirements definition phase enhances speed and quality of delivery. Since these business analysts are not allocated by project but by process, they develop a deep understanding of the customer, which drives customer satisfaction and retention.

Quality AssuranceEnsuring the highest achievable quality at the lowest reasonable cost is the primary value proposition of the Rapid Response model. Quality assurance is important for enhancing the brand from a reliability standpoint, but so is the adherence to enterprise architecture and standards.

Anatomy of a Rapid Response Center

Typically, delivery is conducted in an onsite-offshore model with a 30:70 staffing ratio, though ratios may vary by platform and request type. Outcome-based service level agreements enhance the effectiveness of the model.

Page 12: Rapid Response: Rebranding IT By Creating Transformation Business Value

The primary value proposition includes responsiveness, reliability, and cost optimization.

Rapid ResponseR

espo

nsiv

enes

s

Cost Optimization

Managed Services Automation

Dem

and

Mgm

t

Spec

ializ

atio

n Reusability

Standardization

Reliability

ResponsivenessTimely resolution to business-critical problems at a reasonable cost with high quality is a powerful value proposition for any stakeholder. Business executives are usually willing to pay a premium for faster service or a higher priority, if the occasion so demands.

Reliability

Cost Optimization

The ability to deliver results consistently and predictably is critical to all organizations. Standardization and reusability help drive predictability. Rapid Response allows for standardization across the enterprise because it leverages a common set of tools, knowledge artifacts and templates.

A Rapid Response framework allows these requests to be handled cost effectively through better demand management, standardization and specialization, all of which drive productivity gains. Moreover, since the business usually bears the development costs, the IT budget remains largely unscathed. In short, Rapid Response allows IT to do “more with less.”

The Rapid Response Value Pyramid

Page 13: Rapid Response: Rebranding IT By Creating Transformation Business Value

Evolution of Rapid Response

Va

lue

Managed Services

Automation

Rapid Response solutions are best implemented in three phases that progressively build on the effectiveness and efficiency of the model as demand scales.

Lean

Responsiveness StandardizationProductivity

Enhancement

Time

Phase 1 Phase 2 Phase 3

Cost

Phase 1: ResponsivenessPhase I focuses on reducing lead times by leveraging Little’s Law. Lead times are reduced by effectively managing demand flows, which minimize wait times first and then, through specialization, processing times.

Phase 2: Standardization

Phase 3: Productivity

Phase II focuses on cost optimization through implementation of outcome-based SLAs and enhanced quality through standardization.

Phase III focuses on driving significant increases in productivity by automating value-added processes.

Page 14: Rapid Response: Rebranding IT By Creating Transformation Business Value

A Case in Point…

The Problem

• Repeated delays were occurring in the shipping of sales samples for its health division, resulting in customer dissatisfaction and a frustrated sales organization.

• A request to build an in-house solution that would reduce lead times and costs remained unaddressed for more than six months due to lack of bandwidth.

Remarkable Results…

• Responsiveness: Lead times have been reduced by 50% to 1.5 days

• Cost Optimization: Annual cost savings of $400,000 by eliminating third party vendor

• Productivity: Reduction in rework has increased productivity significantly

• Customer Satisfaction: Customers are delighted with the new lead times

Situation

Challenge

Approach

Results

Understanding the Root Cause

• Sales representatives would enter the orders for product samples in an in-house Lotus Notes application. Since the order fulfillment process was outsourced to a third-party vendor, the same orders had to be re-entered manually in the vendor’s application. Processing delays were caused by duplicate entries that compounded downstream errors.

A global industrial goods manufacturer is one year into its implementation of a Rapid Response Solution. The first phase has just been completed. The results, so far, have been quite remarkable.

“Rapid Response has been a true savior. It has allowed our department to cut lead times and costs by simplifying and automating non-value-added tasks. Our customers are thrilled with the lead times that we deliver to them now. Besides, we would have never achieved our

budget goals without the rapid turnarounds on process and technology enhancements.”

The Rapid Response Way

• Create an in-house application with integrated ordering and shipping functionality

• Create appropriate business workflow rules

• Estimates completed the day of the request

• Development completed within two months of start date

• Project completed in 228 person hours (two part-time developers)

Page 15: Rapid Response: Rebranding IT By Creating Transformation Business Value

Impact of Rapid Response…

2006 2007

80%

60%

40%

20%

2007 2008

1600

1200

800

400

2006 2007

Productivity (Requests / FTE)

60

50

40

30

2000 Applications

Requests

Customer Satisfaction

2008 20082006

Top-two box customer satisfaction has increased by about 40% in 2 years

Demand for Rapid Response has grown five-fold during this period

Productivity has nearly doubled due to specialization, standardization and proper demand management

Customer Satisfaction

Overall Demand

Productivity

Page 16: Rapid Response: Rebranding IT By Creating Transformation Business Value

Impact of Rapid Response…(continued)

2007 2008

4

3

2

1

2007 2008

Quality (DPMO)

Average Lead Times (Months)

2007 2008

70

60

50

40

Hourly Blended Rate ($)

20092009 2009

Responsiveness

Reliability

Cost Optimization

Lead times have dropped in some cases from six to 12 months to two to four weeks, depending on the scope, primarily due to better demand management.

Since services are delivered by resources dedicated to a specific application tower with the highest levels of proficiency, quality remains exceedingly high, in terms of number of production defects (4.5 sigma, measured in DPMO)

Cost avoidance due to the rate differential (adjusted for productivity) is already 33% of original spend. Migration to a managed services model will further accelerate savings. In addition, productivity has increased nearly 50% year on year.

Page 17: Rapid Response: Rebranding IT By Creating Transformation Business Value

Building Brand Equity

Something ventured, something gained.

Customer Delight• Delight customers by processing “moment-of-truth” transactions promptly

Business Innovation• Facilitate business model innovation by addressing the needs of individual customers

Rebranding of IT• Reposition the IT brand as a responsive and reliable service organization

Political Capital • Creates tremendous political capital for more complex strategic initiatives by delivering quick wins

Competitive Advantage• Companies that embrace innovative solutions like Rapid Response will emerge stronger

Page 18: Rapid Response: Rebranding IT By Creating Transformation Business Value

References

Marshall Goldsmith, “What Got You Here Won’t Get You There”, Hyperion, New York, NY, 2007.

Marc Beaujean, Jonathan Davidson, Stacey Madge, “The Moment of Truth in Customer Service,” McKinsey Quarterly, 2006.

Survey conducted by Forrester Research, September 2008.

Chris Anderson, “The Long Tail: Why the Future of Business Is Selling Less of More,” New York, NY, Hyperion, 2006.

C.K. Prahalad, M.S. Krishnan, “The New Age of Innovation: Driving Co-Created Value through Global Networks,” New York, NY, McGraw Hill, 2008.

Malcolm Gladwell, “The Tipping Point: How Little Things Can Make a Big Difference,” New York, NY, Back Bay Books, 2000.

Michael George, “Lean Six Sigma for Service,” New York, NY, McGraw Hill, 2003.

Page 19: Rapid Response: Rebranding IT By Creating Transformation Business Value

Thank YOU