Terry white cxo advisor strategic alignment keynote ppt

© Copyright Ovum. All rights reserved. Ovum is an Informa business 1

Industry Congress Keynote

Herding cats; getting your ducks in a

row; aligning IT initiatives with the

business - and other clichés

Terry White

CXO Advisor

[email protected]

23 May 2012 (death slot)

mailto:[email protected]



© Copyright Ovum. All rights reserved. Ovum is an Informa business. 2

Agenda

Ah, let’s just see what happens!


Let’s talk about ‘alignment’

The cat sees the

dog!



Cat decides to do

something about

dog



The cat and dog

square off



Here comes

trouble!



Or maybe not…


Let’s think about stereotypes

Every day, without

fail, this cat and dog

go for a walk

together


How relevant is IT?

Never done the ‘I’

And the ‘T’ is a commodity


So what should IT do?

ACT!

Applied

Competitive

Technologies

Technically focused CIOs have a limited future

60%

Application /

use of

technology

to achieve

business

results

20%

Using

technology to

achieve

competitive

differentiation

20%

Managing

and

governing

technology


The qualities of a CIO: www. enterprisecioforum.com

“Courage – to reimagine IT;

Clout – to guide IT through a period of creative destruction;

Astuteness – to build on good results”

Sources of CIO success

IT related: 12%


So how do we deal with alignment?

Without mentioning technology…

…or costs

Maybe some ROI

And never any jargon

… except financial jargon

It’s always a commercial issue

Costs are one side of the equation

But many IT projects have no ROI

A sure way to switch off the executive

A sure way to switch on the executive


Cost

Return Cost / Return

Choosing which projects to do

How do we choose IT

initiatives that align with

business strategy /

objectives?


How do we apply some clarity and purpose to our IT

portfolio decisions?


First some homework


What business really wants from IT

• CEOs and General Managers say:

Deliver IT without fuss,

get involved in business improvement

and give us appropriate leadership

This forms the basis of the 3 Role Model:

• IT without fuss (ITWF)

• Improve business results (IBR)

• Information Leadership (IL)


Budgeting for the three roles

Momentum line

IT B

ud

get and In

vestm

ent

The funding needed for IT to maintain business momentum

exactly as it is:

• No additions or subtractions

• No new users, branches, processes etc.


Broad categories

Momentum line

Run the IT Engine

Improve

Business

Results

Defend business momentum

IT without fuss

(IT for IT)

Improve Business

Results

(IT for business)

Information

Leadership

(IT for change)

Improve IT

IT B

udget

Strategic

Opportunity


There are 16 categories of IT budget

IBR

Respond to

external forces

Service the business

Improve the business

Differentiate

the business

Run the engine

ITWF

Broken Regulation

IT services supply

Engine

service

Improve

Different

infrastructure

Business value driven

Differentiate using IT

Strengthen

IT

Strengthen

Engine

IL

Looming threat

Change the

strategy

Meaning Attention

Change the competitive environment

Momentum line

Should do

Can do

May do

Must do

Doing

IT B

ud

get and In

vestm

ent

Service

Improve

Differentiate

Fix

Deliver


Comparisons can be revealing

Both spend the same…

Which is better according

to this benchmark?

Organisation 1 May (Differentiate)

Organisation 2 May (Differentiate)


What do we expect from our IT investments?

Each category of the portfolio has different result expectations

Service

Improve

Differ-

entiate

Fix

Deliver

ITWF IBR IL

Should do

Can do

May do

Risk Cost Time

Sustainability Risk PoA

PoA

Tactical Risk

PoA Strategic Risk

Strengthen

IT

Strengthen

Engine

Meaning Attention

Momentum line

Must do

Doing

ROI = IRR + >40% **

ROI > IRR

ROI = Breakeven? Benefits realisation Baseline

Risk Cost efficiency Time

Hit rate >70%

PoA

Time < 2yrs

Hit rate > 50%

PoA

Horizon 1-3 yrs

Hit rate > 30%

PoA

Horizon – 1-20 yrs

PBP CVA PoA

BTL- PBP CVA

Risk NPV/Time

Risk Cost, PoA Ops CVA

Historical CVA Ongoing Benefits TCO


Your portfolio is step one in project mapping & budgeting

Period 1

Period 2 Period 3

5

18

13

16 19

3 15

12

7

17 6 9

10 11

The Budget

4

2

1

14

20

8


Position initiatives by class

• What type of project? (IT, Business, Strategic)

• What is the business imperative? (Deliver, fix, service…) 3 4

2

5

18

13

16 19

15

12

7

17 6 9

10 11

14

20

8

1


0 20 50 10 20

0 30 40 10 20

0 40 30 30 0

40 5 20 5 30

60 10 10 0 20

5 30 40 20 5

0 0 50 0 50

10 10 30 10 40

0 30 10 40 20

0 60 0 40 0 0 60 0 40 0

Differ-

entiate

Exp

Ret Risk PoA Urg Strat

Paths of

Action Urgency

Expected

Return Strategic Fit

Risk

Mitigation

What utility do we expect from each initiative?

These are the „class rules‟

which weight what we expect

from each area of IT activity


Estimating the utility contribution per initiative

0 40 20 40 0

0 30 20 10 40

10 40 20 30 0

30 10 40 0 20

x

x

x

x

Init.

Utility

40 5 20 5 30

0 60 0 40 0

0 30 40 10 20

0 60 0 40 0 0 24 0 16 0

12 5 8 0 5

0 24 0 12 0

0 9 8 1 8

Initiative

score

Class

utility rules

Initiative

contribution

Initiative 1 ITWFX

Initiative 2 ITWFI

Initiative 3 IBRX

Initiative 4 IBRC

Initiative ID Initiative

Class

40%

26%

36%

30%

Exp

Ret Risk PoA Urg Strat

Paths of

Action Urgency

Expected

Return Strategic Fit

Risk

Mitigation

Ranking results

Utility

Initiative 1

Initiative 3

Initiative 4

Initiative 2

Pure ROI

Initiative 4

Initiative 3

Initiative 1

Initiative 2


Now add a bit of magic

Rank initiatives by approved ‘utility rules’

Alignment achieved!


Projects/initiatives can be scored and prioritised

IBR

Differentiate

IBR

Improve


Utility can be compared

across roles and classes

It is possible to define cut-offs by

utility, or by

affordability


In summary

Utility trumps ROI and cost

Utility rules per class set business expectations and improve

understanding

Initiatives are not projects until they are budgeted for

You set your project budget by scoring the utility contribution per

initiative and multiply by the utility rule for the class of initiative

Initiatives that don’t make the cut, stay in the initiative portfolio

Benefits realisation plans revolve around expected utility

Alignment to business priorities and strategy is a given

Terry white cxo advisor strategic alignment keynote ppt

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