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Commit100 | IT Blog - About Information Technology
Business analysis, IT Management, IT Strategy

The Technology Business Management Revolution

Learn how TBM gives technology leaders and their business partners the facts they need to collaborate on business-aligned IT investment decisions.

Excerpted from Technology Business Management: The Four Value Conversations CIOs Must Have With Their Businesses, published by the Technology Business Management Council.

Technology Business Management (TBM) is a value-management framework instituted by CIOs, CTOs and other technology leaders. Founded on transparency of costs, consumption, and performance, TBM gives technology leaders and their business partners the facts they need to collaborate on business-aligned decisions. Those decisions span supply and demand to enable the financial and performance tradeoffs that are necessary to optimize run-the-business spending and accelerate business change. The framework is backed by a community of CIOs, CTOs and other business leaders on the Technology Business Management Council.

While TBM applies common business management practices to IT — ones that have defined the modern, data-driven enterprise — it also represents nothing less than a business revolution in IT. As Brian Adams, CIO of WorleyParsons put it, “TBM represents the first real change to the way IT is managed that’s occurred during my 25-year career. Everything else has been evolutionary; TBM is revolutionary.” Adam’s viewpoint and his passion for TBM, have been shaped by his somewhat unique perspective. His career actually spans roles far beyond IT, including CFO, strategy and development, marketing, product quality, and customer satisfaction.

IT is not the first domain to undergo a similar revolution. In the 1970s and the 1980s, manufacturers implemented a data-driven approach to optimize their supply chains from procurement through production. For the first time, they used technology to connect supply to demand, in turn reducing inventories, cutting production times, and improving margins. Manufacturing resource planning (MRP), as this method was known, led to new manufacturing techniques, such as just-in-time (JIT) inventories and total quality management (TQM). MRP was a game changer, and it gave birth to today’s enterprise resource planning (ERP) software.

MRP and ERP

Figure 1: Applying MRP and ERP, manufacturers used technology and data to manage their supply chains

More recently, marketing departments have made similar changes. Just a decade ago, they were led by brand-savvy, creative leaders who made only gut-check decisions based on a knowledge of their products, buyers, and competitors. Marketing was a battle of wits, not data. Now, many chief marketing officers (CMOs) apply data to every aspect of their discipline. Using marketing automation tools and analytics, CMOs are working hard to connect every part of the marketing supply chain from website inquiries to qualified leads to active opportunities to closed deals. Many CMOs understand the conversion rates and costs at each stage of this supply chain, which they call the revenue engine. They continuously optimize that engine using data. Marketing is today quickly becoming as much science as it is art.

TBM and CRM

Figure 2: With marketing automation and CRM, CMOs use data to manage and tune their revenue engines to improve corporate returns

It works the other way around too. By measuring conversion rates, CMOs now understand the total cost of generating a single deal, what they call their customer acquisition cost. They use these facts to create a practical plan and a defensible budget. If the business needs 20% more transactions (deals) next year, it will need to fund a sufficient number of inquiries and leads at a known (historical) cost. The CMO’s budget request is now based on a formula based on facts and figures, not educated guesses and/or long-held assumptions.

Managing the Supply and Demand of IT

Now it’s your turn. IT must use facts to answer important questions about its own supply chain: How are your resources (money, people, and time) spent to deliver towers of infrastructure and other technologies? How are those resources used to deliver projects? How are your towers cobbled together into applications and services? How are those apps and services consumed by your business partners to generate revenue and manage costs? If you can make these connections, you can make decisions that improve efficiency, grow return on capital, and add business value. Further, you can change the conversations you have with your business partners.

IT supply cahin

Figure 3: With TBM, CIOs manage the supply and demand of IT

As with the marketing supply chain, you can look at yours in reverse. You can see precisely how business demand drives the cost of your apps and services, and in turn, you can identify the consumption of infrastructure towers and resources. This is powerful information. Not only does it help you create a financial plan based on how resources are actually allocated and consumed, it connects everything your people do to business outcomes.

Early TBM Successes

It is no coincidence that the development of TBM was influenced by someone who understands firsthand the challenges of managing supply and demand. Rebecca Jacoby, SVP of Operations at Cisco, started her career in manufacturing and supply chain roles, and at one point she was responsible for the global consolidation of Cisco’s supply chain. After becoming CIO in 2006, she advocated a management approach that addressed both the supply of and the demand for IT. For Jacoby, this went beyond the supply-chain management for only IT. Instead, it would fundamentally change the conversations that she and her team were having with their business partners.

“At Cisco, we recognized that in order to drive business value and innovation, we had to become a competitive provider of IT services. This meant, among other things, that we had to change the very conversations we were having internally and with our business partners. Our conversations and our vocabulary needed to move beyond technologies, SLAs and projects, to discussions about the tradeoffs needed to balance cost, quality, and value. Only in doing so could we free up resources for business growth and strategic execution. These tradeoffs are at the core of Technology Business Management.”
— Rebecca Jacoby

Jacoby went so far as to define those value conversations by setting standards for them. They included strategy alignments, IT portfolio planning, architectural reviews, and quarterly value discussions with stakeholders. They centered on value considerations — scope, source, architecture, quality of service, time to capability, risk — all balanced by a new dimension — cost. The result allowed her to align business and IT plans more closely, shape the portfolio of applications and services to meet the business’s needs better, tweak their technology stack to increase performance (even while reducing costs), and shape demand by putting a price tag on consumption. Now, as Chief Operating Officer, Jacoby is putting these practices to work beyond IT.

What is TBMStill, it’s not just former CFOs and supply chain leaders who are shaping TBM. Many CIOs who have spent a majority of their careers in IT also are putting their mark on TBM. Larry Godec has spent the majority of his career working in various IT roles — much of it as the CIO of First American, a leading provider of title insurance, settlement services, and risk solutions for real estate transactions.

In 2012, with the housing market starting to recover, Godec needed to shift his IT department to respond to the demands of a growing business. Godec recalls in great detail precisely when his TBM journey began — a budget meeting with his CEO Dennis Gilmore. “Dennis said, ‘We’re going to focus on growth.’ He told me I needed to know where we should be investing in customer-facing technology, because that’s what the business will need to compete.”

However, with a majority of his budget dedicated to supporting the existing IT estate, Godec needed to figure out how to shift resources quickly without putting the business at risk. He needed to see his resources in business terms, so he could collaborate with his CEO, CFO, and his line of business leaders on where to make the changes.

In a stroke of good timing, Godec heard what he needed to hear at a presentation by Tony Scott, then the CIO of Microsoft. “I was at Microsoft for a briefing by Tony when he showed this dashboard I had never seen. For the first time, I saw someone who put IT costs, resources, and investments into terms I could easily explain — by the applications and technologies that the business was using.”

Godec now saw the way to put everything he did into business terms. Godec’s first pass at TBM helped him create a simple portfolio view of the IT-business landscape, so he could have informed discussions about which apps and services were being consumed and by whom; how much he was spending on each of his major applications; and how much he needed to spend to support each line of business.

These facts led to several revelations about their portfolio. Many of the insights helped lead to cost reduction, while others led to the opposite conclusion. For example, by seeing for the first time the percentages of total spending on their app portfolio, they could justify increased investment in customer-facing technologies.

Other insights came in rapid succession, such as identifying end-of-life applications that were still consuming infrastructure and resources. In the end, these insights added up to significant budget savings and reallocations to more valuable purposes. Godec knew there were more, so he put his team on the hunt for new discoveries. His goal? Significantly reduce annual operating costs without reducing the quality of service and support. His team of only two people, mostly in their spare time, exceeded this goal in just a few months.

This is an important lesson. TBM isn’t necessary because IT is too expensive. Instead, it’s needed because your resources are in short supply. IT budgets of course never satisfy everything your business wants; but the real problem is that skilled people are hard to find and your business competitive clock is ticking faster and faster. You can’t afford to waste people or time. IT may represent less than a tenth of your business cost structure, but it is inextricably linked to your ability to compete, serve your customers, and reduce those business costs. Your IT capital must thus be invested wisely to create the most value.

Value is what TBM — this business revolution in IT — is all about.

SOURCE

December 17, 2016by artemy@kirnichansky.com
IT Management, IT Policies, IT Strategy

Proper IT Governance starts with Proper IT Policies

01_bs_pp_itpolicies-01_wide

IT governance and Information Technology policies is not generally a hot topic for SMEs. However, planning business growth and development is impossible without a solid technology platform. Therefore, putting in the proper IT policies and practices to ensure that your infrastructure (be it done internally or outsourced) aligns with your business mission is essential.

In large enterprises and organisations, matters of IT policy are within the competence of the Chief Information Officer (CIO). Such organisations will have quite large and verbose IT policies, often revised by a lawyer for legal purposes. But an IT policy does not need to be a large volume of legalese to be meaningful and valuable for corporate governance.

Defining Scope and Responsibility

The scope of any IT policy should clearly be defined – what it enforces, who it applies to, who is the Policy Owner, etc. An important aspect to consider are internal and external governing documents (provincial or federal legislation) that directly applies to IT practices in your industry. For example, institutions dealing with private health information fall under the Ontario Personal Health Information Protection Act (PHIPA).

There may also be certifications that influence IT policies and standards that must be considered. For example, ISO certification mandates certain IT practices to uphold certification.

Each policy should clearly indicate who is responsible for implementing/upholding it (executive, user, external consultant, etc.)

What are the essential IT policies relevant to SMEs?

 IT Infrastructure Documentation

IT Documentation is critical for business continuity and knowledge retention about IT systems. The IT infrastructure documentation policy should establish a minimal list of documents to be created and maintained. Some examples of IT documents that are critical for any organisation:

  • IP address distribution table spreadsheet;
  • System and Network diagram;
  • Firewall access control list, or similar list of access rules;
  • Active Directory user audit spreadsheet, including security group membership;
  • etc.

Acceptable Use of Information Technology

The Acceptable Use policy determines what users can or cannot do with IT resources. It touches on things like who may use IT resources (authorisation), users’ responsibility, and limitation on personal use. 

Areas that are covered by Acceptable use would be:

  • Telephones
  • Computers
  • Internet, including social media, and could platforms
  • Email
  • Printers
  • etc.

Information Security

Arguably one of the highest concerns for some enterprises, as everyone tries to protect data leaks and security breaches due to high liability costs (as we discussed in our article on Cyber Liability). The policy should define and list the information (data) covered by it (Confidential company-owned data, private data, databases, hard copies, etc.) and cover areas like:

  • Domain Access and Accounts;
  • User and administrator passwords;
  • Remote Domain and Computer Access, including access by Third Parties;
  • Network security: firewall, Remote login and Administration, network segregation, wireless networks, etc. (in larger policies, there may be a separate policy on Network Security in addition to Information Security);
  • Antivirus protection;
  • External Storage Devices;
  • Email and Content filtering;
  • Portable computing and Mobile Devices;
  • etc.

IT Services and Standards

This policy should define what services that IT department provides and what standards should be followed. For example, shared network storage and access to it, printing, data retention and backup standards, etc.

IT Systems Management and Maintenance

This policy should deal with things like hardware replacement and rotation (how frequently), managing firmware and software updates, monitoring, day-to-day operations, etc.

IT Incidents

This should talk about how IT incidents are handled at your company, i.e. who is responsible for reporting incidents and to whom, what are the resolution times (SLAs), what are standard procedures in handling incidents, etc.

IT incidents should be differentiated by severity. IT Disaster Events should be separately defined and a separate policy for Disaster Recovery should be written.

Information System

The Information System is a an aggregation of all IT resources (hardware and software) that support key business processes. With respect to the mission of any company with a (moderately) complex value chain, it is important to understand how the information system serves the business process, and how well the two should align. Information system policies should define the standards for developing and auditing key business processes and information systems.

Commit100 has experience in developing and consulting on IT policy for SMEs, as well as performing IT audits to determine de-facto (existing but undocumented) IT policies and practices.

December 5, 2016by artemy@kirnichansky.com
IT Strategy, Software

Leveraging IT to save Millions

cutting_costs-100695377-large

FedEx has saved hundreds of millions of dollars by eliminating redundant applications and reorienting them in a service-oriented architecture.

FedEx has saved hundreds of millions of dollars by eliminating costly redundant and legacy technologies, using cloud analytics software to compare the cost and value of IT to the business. For CIO Rob Carter, the path to pare technical debt was paved with some painful discoveries.

rob carter

FedEx CIO Rob Carter.

 

The journey began in 2009, when Carter realized the shipping giant’s application portfolio had ballooned to more than 2,600 applications, the result of organic growth and acquisitions across the company’s express, ground, freight and office units. Carter showed business colleagues the equivalent of a hurricane tracking chart depicting the applications, which included more than 14,000 custom interfaces and served as a painful demonstration of IT’s spiraling cost and complexity.

“We’re trying to weave business value into this mess but we simply can’t do it this way,” says Carter, who described the meeting in a keynote speech at the Technology Business Management conference in San Diego earlier this month.

fedex mess

Carter created a tracking chart that shows 2,600 applications and more than 14,000 custom interfaces.

FedEx adoption of IT harkens to co-founder and CEO Fred Smith, who was among the first corporate leaders to realize that technology was essential for running the business. The company created the first automated package shipping system for PCs and in the mid-1990s was one of the first businesses to enable business-to-business transactions on its website. More recently, it created SenseAware, an early commercial internet of things implementation used to track packages.

Technical debt path is paved with business ambition

Carter, who became the company’s CIO in 2000, says FedEx had essentially created so much complexity that it impeded service delivery and increased costs for his business peers. There was no obvious, easy solution.

“We had created a world where we spent too much time looking out the windshield ahead of us and not looking in the rear view mirror and recognizing that we were collecting technical debt as we went along,” Carter says.

A 2010 meeting with Apptio CEO Sunny Gupta helped Carter chart a new course. Apptio pioneered technology business management (TBM) tools designed to help CIOs measure the cost of running IT against the value the solutions generate for he business. Apptio’s software-as-a-service solution crunches its clients’ IT and financial data and spits out granular metrics covering the various costs incurred by running any piece of software and hardware.

Apptio helped FedEx track the cost of each discrete app, including the hours to develop and maintain each tool, the cost of infrastructure to run it, among other data points. For instance, by turning off a single transaction, IT could save 4,000 MIPs, the computing measurement associated with mainframe software. Carter says the information provided clarity, helping IT identify areas where it could winnow its application sprawl and eliminate other inefficiencies.

The path forward goes through SOA

FedEx began reinventing its application portfolio as a service-oriented architecture (SOA), in which loosely coupled services are provided by application components.This initiative, a kind of everything-as-a-service approach, enabled FedEx to funnel data calls from hundreds of apps to manage requests for address and identity management data through a single service. Underlying infrastructure, including network, compute, storage and security was delivered via a private cloud.

Apptio’s software also uncovered a glaring inefficiency in FedEx’ aircraft maintenance operations. For years, engineers inspected aircraft by climbing up and down the planes and then driving a golf cart to a shack, where they would enter data into an inventory management system, which costed $10 million annually. To streamline the process, the IT team created Workbench, which enables engineers to inspect aircraft and input data via tablets and smartphones. The software costs $2 million a year.

“We are several hundred million dollars cheaper because we keep finding unique ways to drive value,” Carter says. FedEx is applying some of the savings to emerging technologies such as TRON, a Bluetooth-enabled sensor that offers a lower cost way of tracking packages.

Perhaps just as importantly, the data Apptio’s software helped Carter present various scenarios and recommendations to the business on both product and process changes – efforts he believes will bear more fruit as the company accelerates its adoption of agile development and DevOps practices. “When the business and IT partner and work together all I have to do is get out of the way and watch good things happen,” Carter says.

FedEx has good company in TBM, with 40 of the Fortune 100 companies using Apptio. Microsoft, Cisco, First American, Freddie Mac, Stanley Black & Decker say they are in various stages of implementing Apptio’s software to create better alignment between their IT costs and business value.

For those that haven’t begun the journey, Carter offered the following advice: “Get started. It takes some time to really get your arms around the complexity of environments. It’s time for our industry to mature in a way that takes a lot of guess work out of what costs what.”

Source: cio.com

Our comment:

Commit100 has experience developing software for helping companies streamline operations and reduce costs. Read our article about the custom software development we did for our customer in the plastics industry. Click to read.

 

November 25, 2016by artemy@kirnichansky.com

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