Rapid Response: Rebranding IT By Creating Transformation Business Value
-
Upload
sam-pakrashi -
Category
Business
-
view
5.475 -
download
3
description
Transcript of Rapid Response: Rebranding IT By Creating Transformation Business Value
Sam PakrashiDirector, Cognizant
Rapid Response
Rebranding IT by Creating Transformational 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
“What got you here, won’t get you there.”
- Marshall Goldsmith
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.
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…
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”
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.
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
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.
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
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.
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
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.
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)
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
Impact of Rapid Response…(continued)
2007 2008
4
3
2
1
2007 2008
Quality (DPMO)
5σ
4σ
3σ
2σ
Average Lead Times (Months)
6σ
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.
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
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.
Thank YOU