21st Century CIO

Taking IT and Business Alignment to the Next Level

I recently read an article in “Midmarket CIO” entitled “Business technology is the challenging next step in IT Transformation.”  The article challenges CIO’s to take IT and Business Alignment to the next level.  It challenges CIO’s to get beyond simply complying with business needs and challenges IT leaders to have an opinion and a willingness to stand with non-IT leaders. 

Makes sense to me.  I’ll bet every CIO wants to be a trusted advisor to the business leaders in their organization, to be able to challenge them on business strategy and direction.  Most CIO’s are very smart and strategic and can help bring innovative ideas to their business counterparts to further growth, efficiency, and innovation.

To me, though, a price of entry for having these conversations is that CIO’s need to demonstrate that they have their own “house in order” before they can start telling business leaders how to be more innovative.  Most IT organizations are held together with chewing gum and bailing wire, utilizing spreadsheets and home-grown tools for managing projects, operations, resources, and budgets.  And this causes CIO’s to constantly be in reactionary mode, struggling to give the business information on why projects are constantly late and why IT can’t get to all the pent-up enhancement requests.  This is what I call “managing through the rearview mirror.”  When IT organizations don’t have an integrated system for managing projects, operations, resources, and budgets, they are constantly going to be looking in the rearview mirror for something that might be coming at them from behind.

A strong IT Governance process and A strong IT Governance process and tool can help CIO’s get out of the business of “managing through the rearview mirror” and into the business of looking forward and being proactive.

IT Governance and Lessons from the Outsourcers

Good IT Governance has numerous benefits for running an IT organization.  A solid understanding and control of resources, work effort, and costs will drive better decisions.  Having that information readily available, on-demand, will drive more timely decision making.

There are many sources CIO’s and IT organizations look to for guidance and examples on governance models such as: standards bodies like the Project Management Institute (PMI) and the IT Governance Institute® (ITGI),  capability models like  CMMI and COBIT®,  analysts like Gartner, Forrester, and IDC,  industry peers, independent consultants, vendors, etc. 

Another reference point and perspective to consider that is often overlooked is the firms’ that provide IT Outsourcing services.  These companies are running a business on running IT for you, the outsourced IT organization.

The outsource contract is a multi-year agreement and typically structured with an upfront cost or liability with payback (and hopefully profitability) in the later years.  Ultimately, these companies are closely managing contract profitability, client satisfaction /contract health, and renewal.  Outsourcers have the responsibility to manage a long-term relationship and deliver short-term (daily) results.  What becomes interesting in terms of Governance models is the means by which a successful contract is managed to meet the margin, profitability and renewal targets.  Common attributes of a successful outsource relationship are: frequent communication and expectations management, detailed estimates/scope, clear delineation of roles and responsibilities, service agreements, responsive change control, flexible sourcing/staffing, and predictive delivery.

As an IT organization, what if you approached each Business Unit you support as an outsource contract?  Companies who have instituted an internal charge back system or a zero cost approach to IT in some ways are ahead in terms of incorporating many of these attributes in order to provide transparency and cost control.  However you do not need to be implementing an internal chargeback system or implementing a shared service model to benefit from having a healthy contract discussion with the lines of Business about the business. 

Here’s a bonus challenge for your IT organization: Act as if the contract with each line of business is reviewed and renewed annually!  What would each of their account plans look like?

IT Governance - Why Before How

IT Governance often represents a new way of doing business: An IT Governance training strategy must incorporate change management.

An initiative as impactful as an IT Governance Solution typically requires an organization to implement new roles, processes and automation. The changes can appear daunting for many employees whose first experience with the new techniques is in a training class.

Training must be planned with the recognition that it is a critical mechanism for getting employees to adopt change. Given the extent of change that can come with IT Governance, planning the training must start with something that many organizations overlook: a training strategy.


A thoughtful training strategy defines the desired end results, and identifies risks and issues –including change management issues. Creating a training strategy helps create a training plan that addresses change and delivers the desired end results through the training curriculum and classes.

An IT Governance training strategy that addresses the changes facing an organization helps ensure the changes are adopted when the training is complete. It is well understood that employees are more motivated to support an initiative when they understand the goals of the initiative. The goals for the PPM initiative should be defined well in advance of the training, when the business case for the initiative is developed. The business case is the basis for describing why the changes associated with a PPM initiative are occurring.

In addition to knowing the high level goals of the initiative, goals should also be defined by role, so each person knows how his or her function supports the project. Every person should be educated on the goals of every role – with the “whole picture,” employees will understand their roles better, and will collaborate more effectively with their peers after the training.

What does your organization do?  How do you handle change management?

Where have the services gone?

The Center for Collective Intelligence (http://cci.mit.edu) at Massachusetts Institute of Technology (MIT) is established around the basic research question: "How can people and computers be connected so that-collectively-they act more intelligently than any individuals, groups, or computers have ever done before?"

I think this is a fantastic opening question to any software (or services) company looking to establish a solid value proposition.  Or to take the position of any IT executive, how will the software connect with my organization, both people and processes, to allow my business to act more intelligently?

While the research and purpose of this Center is much larger and more impactful than a specific software application, it does generate a number of tactical questions and observations relevant to the current state of software today... web 2.0, the Cloud, Software-as-a-Service, On Demand... 

Where have the services gone?
The increase of business and enterprise-class software moving to a software as a service (SaaS) or On- Demand model has influenced more than just shifting the infrastructure and models used to host and run the software, cloud based computing has also shifted the cost and service model for corporate software. The services involved with implementing SaaS applications have come under intense price pressure and are demanded to be "in-line" with a model of no up-front costs, recurring license subscription, and in many cases a free trial in some form.  On a side note, Lincoln Murphy, Managing Director at Sixteen Ventures recently published a good paper titled, "The Reality of Freemium in SaaS" (http://sixteenventures.com).  In many cases implementation services in today's SaaS world means customer self-service or a nominal service charge for a limited configuration and training.  Many thanks to the advances in technology and user interface design.  So who is responsible for the success of a SaaS implementation and what is success in the SaaS world?  In other words, who is responsible for connecting the people and computers?

In the past, the vendor or large system integrators would include the program and project management, communications, change management ...with the scope of work.  This was accepted and "in-line" with a model of multi-million dollar software license purchases, hundreds of thousands of dollars in capital expenditure, and million dollar plus implementation service contracts.  Successes and failures aside, in essence the vendor or system integrator signed up to partner with the customer to manage the process integration and change management that goes with the software.  Today the project war room is gone, and the "Change Agent" is not included with a SaaS or "Freemium" model!

There is a new partnership model emerging that brings a fresh approach to providing services.  The ultimate measure of success for a SaaS business is renewals.  Interestingly, this brings the customer and the vendor closer together on the measure of success, adoption and value realization.   The exit criteria has not changed...the exit criteria is gone!   

What has not changed is the need for strong sponsorship and leadership to change the business and systems so they may collectively act more intelligently.  Critical to the success of any initiative and not to be taken lightly even though the upfront commitment in $$$ may be gone.  Who will step up in your organization to deliver the leadership and drive change management needed for success?  Who will connect the people and the computers?

Tracking Time - How Should My Organization Do It?

When a new customer signs up with Innotas and begins working with their Customer Success Manager, one of the first topics centers around Time Management.  While most customers want to track time for their IT resources, they don’t always know what types of activities to track, how granular to track, or what the benefits they can get from tracking time.  The rest of this post will discuss the benefits and some basics around different ways to track time.

Innotas Customer Success Managers help customers get up and running tracking time as part of their IT Governance implementations to provide one or more of the following benefits:

• Provide breakdowns of time spent on Project, Maintenance/Application Support, and Administrative activities
• Help pinpoint Systems that are taking up too much resource bandwidth to maintain and may need to be retired
• Historical views into where time is spent by IT resources allows you to shift resources to higher priority and higher value activities.

Once a customer decides which benefits are important, the next step is to decide which activities to track time against.  Most customers decide on one, two, or three of these categories:

• Project Work – these are your strategic projects and other smaller projects that have a defined start and target date.  Resources will be allocated to portions of the project or individual tasks for detailed project plans.  Almost all customers track project work as it is the most discretionary (albeit, highest value producing) work performed.
• Maintenance Work – this is typically referred to as “Keep the lights on (KTLO)” and encompasses everything from working help desk tickets, to service requests, to operation tasks, to application break/fix activities.  Most organizations don’t plan to track this at first, but quickly realize that most of their work is performed here and that this area has the greatest potential for optimization.
• Administrative Work – this covers meetings, holidays, vacation, etc.  Customers are split on this one – some report on it and some simply lower resources’ available capacity to take this into account (for example, instead of capacity of 40 hrs/wk, capacity is set at 36 hrs/wk).

The final step is to decide how granular to track time against the buckets above.  Some of the questions that Innotas Customer Success Managers use to help determine this are listed here:

• Project Work  - For projects, you can typically track time at the project, summary task, or task levels.  Each level adds a slightly higher amount of required setup, so simply choosing task level as it is the most granular isn’t always the best choice.  Some questions to help determine the level:
• How detailed are my project plans?
• How detailed are my resource assignments to projects?
• Do I have consistency in my project plans?  Do I use templates for project plans?
• Do I capitalize projects or portions of projects?  Do I capitalize based on specific tasks or work items, or based on a percentage by resource type?
• Maintenance Work – For Maintenance work, time is usually tracked at the application level with several buckets to capture the different types of work (ie, enhancement, break/fix, support, etc).   Some customers also ask about tracking time to individual service requests or help desk tickets.  There is really only one question for this area – what are you going to do with the data you get back?  The answer to that question will help drive the setup of your applications.  Understanding how much time is spent on break/fix for a particular application is important, but understanding how much time was spent on each break-fix item may not be (and may introduce unnecessary overhead on your resources).
• Administrative Work – For Administrative work, time is almost always tracked in a set of customer-wide buckets.  Similar to Maintenance work, ask what you plan to do with the data.

Please feel free to comment or ask questions to keep the discussion going.

Innotas IT Governance and PPM

Welcome to our new blog that will be focused on how to get the most out of Innotas. In these posts, we will discuss many "how should we" and "why should we" questions aimed at improving your PPM and IT Governance practices using Innotas. Our goal is to share our domain expertise gained through many years of experience working with IT Governance solutions and our customers. Posts will link theory with practice by providing examples of how customers use Innotas to improve the business of IT.

While we have several topics planned, this will be an interactive blog - ideally, suggestions for topics will come from our readers and be driven by comments on the blog posts. You can submit ideas by simply commenting on this blog post, through Twitter at #Innotas, or through our LinkedIn group. Many of the discussions here will be translated into documentation and/or how-to videos
The first few topics will include

•How much detail do I need when planning resources?
• What are the tradeoffs between task-based timesheets vs project-based?
• What does Capacity and Demand show me?

Many more will follow, so please check back soon or reply to this post to suggest additional topics. For an overview of Innotas IT Governance, you can watch a 5 minute demo on our website.

Welcome

Welcome to our new 21st Century CIO Blog, where we will contemplate the topics and issues affecting today's CIO including Technology Innovation, IT Governance Best Practices, Partnering with the Business, and the Business of IT.

The experiences shared in this blog will be extremely practical, drawn upon from our shared experiences. My posts will be based on my experience running technology organizations and delivering hundreds of technology projects over the course of 25 years, but perhaps the most interesting stories I have to share will come as a result of the meetings I have with CIO's around the country and the world. One of the greatest benefits of my job is that I have the privilege of meeting with CIO's, listening to their experiences, and understanding the challenges they face daily.

In looking at the challenges facing today's CIO, I'm struck by the recent IBM study of 2,500 CIOs entitled, "The New Voice of the CIO." This groundbreaking study interviewed (in-person, mind you) 2,500 CIOs in 78 countries and 19 industries and discussed their challenges, changing demands, and strategies. One of the most striking statistics is that an impressive 55 percent of their time is spent on activities that spur innovation and 45 percent of their time is spent on more traditional CIO tasks related to "managing the ongoing technology environment." How does this statistic compare to what I commonly hear from CIO's:

• "We spend 25% of our time on strategic activities and 75% of our time on KTLO (Keep The Lights On) activities." CIO, large media and entertainment company
• "IT has a poor reputation for delivery ... the business can't rely on IT." CIO, Major University
• "IT needs to be more fact and data-driven, rather than gut-feel." CIO, Health Care Organization

These are the most common quotes I hear from CIOs. Are these at odds with the results of the IBM study? I don't think so. I think the IBM study is actually a leading indicator of where CIOs are going: they're spending most of their time helping the business, but realize they also need to help themselves.

This is a classic case of the cobbler's children having no shoes. I'm struck by the fact that over $3.4T is spend annually on IT, but most IT organizations currently manage themselves on a cobbled-together system of spreadsheets and PowerPoint presentations!

I believe that the most innovative CIO's are working hard to align the strategic objectives of the business with the activities being done in the IT organization. And they're doing it with facts and data. You can't align the business with IT, unless you know the priorities of the business ... and you can't align IT with the business without knowing where IT spends its time. It's all about facts and data.