the case for continual realignment of the it function
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The Case for Continual Realignment of the IT Function
A Formicio point of view
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The purpose of this slideshow is to share a point of view
Today’s reality: Our world is becoming more digital Businesses are increasingly dependent
upon IT Most business innovations are IT-enabled Today’s IT delivery model depends upon
multiple partners and suppliers The context within which IT organisations
operate is continually changing
The challenge for IT leaders: Delivering sustained performance in an
ever-changing context
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Our point of view is based upon insights
and experience that we have gained over time
The aim is to inform and inspire
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The context within which an IT organisation operates is continually changing
Changes that shift context include:– New business strategies– Mergers/acquisitions/divestments– Disruptive technologies– New sourcing options
Changes in context can result in the IT organisation becoming misaligned:
– With the business units it serves– Across the different functions, units, partners
and suppliers
Shifts in context can be sudden or happen gradually over time
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Continual alignment is a pre-condition of
sustained performance
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Symptoms of misalignment can be many and various
‘Noise’ from business leaders Poor, or inconsistent, delivery of IT
services and service levels Business preferring to talk directly with
external IT consultancies or technology suppliers
Lack of responsiveness to business requests
Business constantly challenging IT costs Over-bureaucratic IT governance Disengaged IT staff IT perceived to be inhibitors of business
innovation
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Some misalignments are obvious, others
less so
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The underlying cause is often a lack of alignment across the three ‘domains of IT capability’
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IT Operating Model(HOW)
IT Operating State
(WHO)
IT Value Proposition
(WHAT)
The Value Proposition defines WHAT IT delivers to its customers and the value they receive
The Operating Model defines HOW IT resources are organised to deliver value
The Operating State defines WHO people think they are in terms of role, contribution and mindset. Is a principal driver of behaviour and engagement
Sustained performance is achieved when the three domains of IT capability are aligned across the IT organisation
and its external partners
IT’s Value Proposition must be aligned with the strategies of the business
IT Operating Model
IT Operating State
IT Value Proposition
(WHAT)
IT delivers value through: Delivery of IT services Design and implementation of
business solutions Enabling business innovation
Value is typically measured in terms of: Cost Fit for purpose IT-enabled business
solutions Business innovation
IT Value PropositionDefines WHAT IT delivers to its customers and the value
they receive
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IT’s Value Proposition is judged in terms of how it enables the business to achieve its strategic objectives
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Delivering Business Solutions
Enabling Business Innovation
Delivering Day-to-Day IT Services
Measure of business value
“Driving up the level of service at a year-on-year reducing cost”
“Fast discovery and timely development of business solutions”
“Number of innovative business ideas introduced”
IT’s Value Proposition Value discipline
Operational Excellence
Customer Intimacy
Thought Leadership
Not all businesses within an enterprise will require the same level of performance in each value discipline
However a threshold level of performance is required in each value discipline As the context changes, IT’s value proposition needs to reassessed and
recalibrated
IT’s value is defined by the Value Proposition ... and delivered through its Operating Model
IT Operating
Model(HOW)
IT Operating State
IT Value Proposition
An IT Operating Model comprises many facets, including: Processes Roles, skills and jobs Structure Governance Management systems Information and tools Internal and external resources
An IT Operating Model needs to be efficient, effective, reliable, scalable and agile
IT Operating ModelDefines HOW IT resources are organised to deliver
value
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Org.Design
Measurement
Services PortfolioSourcing
Governance
Processes
IT Operating Model
An IT Operating Model comprises a number of interrelated facets
Executive
Council
Core Process Council
Management Team
Management Team
Companies/BUs
Companies/BUs
OrganizationOrganization
SVPSVP Governance – structures that orchestrate development, funding, adjudication and execution of decisions
Organisational Design – structure of resources and individual competencies
Service Content Richness
Ser
vice
Lev
el Q
ual
ity Standard
Service
PremiereService
• Basic product set• Prime hours• Guaranteed coverage, e.g., - Response time - Repair time
• Basic product set• 24 x 7 hours• Premium coverage - Fastest response time - Fastest repair time
• Product set extensions• Mobile User• Advanced Technology Introduction• Other
ServiceOptions
Services Portfolio – aligned and segmented product and service offerings that meet business demand
Measurement – that reflects outward-facing business objectives and key performance indicators
Processes – effective and efficient processes delivering predictable and repeatable services
Sourcing – segment suppliers, understand their value proposition, develop the right relationships and execute flawlessly
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Manage IT Organisation
Manage IT Supply
Operate IT Infrastructure
DiscoverBusiness
-ITPotential
DeliverBusinessSolutions
Operate BusinessSystems
Manage Enterprise Architecture
Manage Business-IT Portfolio
Manage Customer Relationships
All the interrelated facets of the Operating Model need to be in alignment in order to deliver the intended Value Proposition
The Operating State of IT is a reflection of who they ‘think they are’
WHO people ‘think they are’ is defined by: The degree to which their values are
aligned with those of the organisation The type of work they are asked to do Their relationship with colleagues Their relationship with their manager Methods and style of communication The degree to which they feel
empowered The degree to which they feel they
are learning and developing as IT professionals
Operating StateDefines WHO people think they
are in terms of role, contribution and mindset. Is a principal driver of behaviour
and engagement
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IT Operating
Model
IT Operating
State(WHO)
IT Value Proposition
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The Operating State can be viewed on a spectrum across four facets
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Power
Easily stoppedLittle accountability
Risk-averseFrustrated
Narrow thinkingIndependent action
Finger pointingSub-optimising
Avoid conflictDistrustful
UndiscussablesKill the messenger
Look for the fatal flawTrust authoritative views
Don’t admit failure‘Not invented here’
ResourcefulAccountableRisk-takingAmbitious
Holistic thinkingCoordinated action
ResponsibleOptimising
Address conflictTrustful
Straight talkSafety
Looking for possibilitiesChallenging status quo
Learn from failuresOpen to new ideas
Resignation
Separateness
Fear and Suppression
Arrogance and Defensiveness
Possibility
Connectedness
Safety and Resolution
Inquisitiveness and Receptiveness
Identity
Contention
Learning
Low performance High performance
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Continual Alignment is an organisational capability that needs to be developed
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Alignment does not come naturally: it takes conscious and deliberate effort
Alignment is an organisational capability
Organisational capabilities are embedded in the way things are done and are not lost when individuals leave
Organisational capabilities comprise shared mental models, frameworks, language, skills, mindsets, beliefs, conventions and experiences that collectively drive behaviour
Accountability for continual alignment rests with the IT
leadership
IT Operating
Model(HOW)
IT Operating
State(WHO)
IT Value Proposition
(WHAT)
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The first step is to assess the degree of misalignment
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1. Conduct an assessment to identify the critical areas of misalignment
2. Identify root causes of misalignment3. Prioritise critical areas for
realignment 4. Define the specific actions to close
the gaps5. Implement the actions6. Track progress to realignment
Sustained performance is an
outcome of continual alignment
At the same time develop alignment as an organisational capability
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Our point of view on IT Alignment revisited
1. The context within which IT organisations operate is continually changing
2. When IT organisations under-perform it’s often as a result of a lack of alignment across the three ‘domains of IT capability’
3. The three domains of capability are IT Value Proposition, IT Operating Model and IT Operating State
4. Each of the three domains comprise facets that also need to be aligned
5. Alignment is an organisational capability that needs to be developed
6. Accountability for alignment rests with the IT leadership
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The quest for alignment is never
ending: as the context changes so
does the need to realign
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The power that comes from having a shared point of view
Having a shared point of view is a powerful tool for collective leadership. It can bring clarity and balance. It can create a context where everything makes sense, people know exactly who they are, what is needed and why they’re here. Effectiveness is maximal, yet actions seem minimal. Everything flows as it should.
Developing a point of view takes time and effort, but the outcome will be worth it.
The Formicio Team
© 2013 Copyright Formicio Limited
16© 2013 Copyright Formicio Limited
We offer insights, capabilities and experience that will help you understand and improve your organisation’s future.
Specifically we can help you: Explore alternative futures.
Transform organisations to an improved future. Develop capabilities needed to ‘pull’ your organisation into an
improved future.
One of our specialist areas is IT transformation
This is an Insight Presentation by Formicio
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For further information contact ...
© 2013 Copyright Formicio Limited
David [email protected]
Peter [email protected]
+44 (0)20 7917 2993www.formicio.com