The high cost, lack of senior sponsorship, and resistance to change often hinder a thorough transformation strategy that can benefit not only the IT department but also the other business units. In today’s tough economy, cutting costs is the phrase most often uttered by senior leadership.
But cutting costs doesn’t address the realities of today’s IT departments, which needs to proactively prevent issues and outages. At a time when CIOs are pressed to do more with less funding, one investment can change the direction of the department and improve satisfaction across all business units: a transformation strategy that provides a roadmap for future efforts.
The Perils of Piecemeal Programs
Part of the “doing more with less funding” strategy is to implement piecemeal programs. Someone in senior management will suggest “going into the cloud”, using software as a service (SaaS) or infrastructure as a service, or exploring server and application virtualization as a cure-all for all the IT department’s woes. By extension, this is supposed to improve the IT department’s performance and increase satisfaction across the business units. The problem with looking at IT as a Band-Aid solution is that there is no cohesive plan, and the IT department ends up putting out fires, reacting to different problems instead of proactively building an infrastructure and software applications that provide the business with processes in place to, quite simply, get things done.
- A holistic and strategic perspective
- Executive sponsorship and leadership
- Due diligence and discovery
- Cultural acceptance
- Technology best practices
IT is the foundation for a successful business. A sound transformation strategy is the springboard that the IT department can use for other initiatives, including IT Infrastructure Library (ITIL), Capability Maturity Model Integration (CMMI), and Application Portfolio Rationalization (APR). When a company chooses to look at IT as a full strategy, rather than a piece-by-piece solution, the entire company benefits, not just the IT department.
Using Transformation Strategy to Mirror Business Strategy for Success
Every business is in it to make money. Marrying the IT strategy to the business strategy creates a cohesive vision that allows the IT department to be closer to the business and help the business meet its objectives.
A large, multi-national engineering company’s Chief Administrative Officer (CAO) hired a very strong consulting firm to plot its transformation strategy. The company had locations in 80 countries, revenues of $9-10 billion, and had grown from a $1 billion company largely through acquisitions. However, the acquisitions meant approximately 40 different corporate cultures had been merged under one umbrella in the past decade. Because of the global nature of the company’s work with large construction projects worldwide, IT needed to be close to the individual projects. The company also had approximately 20 different IT groups within the company, as well as its U.S.-based core group and groups for each different business unit. The IT department as a whole needed to be responsive and information-driven but still have standards and processes that overlapped across every facet of the departments under the IT umbrella to improve efficiency.
The consulting firm examined every IT unit and process as part of the transformation strategy. It found that, for starters, personnel were not logically organized. IT reported to a senior executive; the CIO reported to another senior executive whose duties also included human resources and procurement, among others. The geographic and vertical IT customers were pleased with IT, but at the corporate level, they were frustrated. Adding to the challenge, no one in senior leadership realized that IT is what enables the business to move forward.
Also as part of the transformation strategy, the consulting firm dug deeply into the business to interview users. It found 99% of the people – hard to find people that didn’t want to be found – that were needed in order to delve into the problems that the business was facing. When the consulting firm presented its findings and reports to the company, the executives were amazed at how in-depth it was. The company had wisely chosen a consulting firm that gave them more than they expected.
The recommendations from the consulting firm allowed the engineering company to marry their business strategy to their IT strategy. Using best practices in transformation strategy, the firm endorsed changes in leadership and changes in IT concepts, including how IT would be deployed, where IT would be aggregated into more consolidated units, and what needed to be relaxed. By going back to basics, the consulting firm built an IT transformation strategy that seamlessly integrated with the company’s business strategy and served as the foundation for other IT initiatives.The consulting firm stayed involved in every step of the process, making themselves available for phone calls every week and sharing information on an ongoing basis.
The company benefitted greatly from the transformation process. The affected business areas enjoyed annual savings between 15-22%, post completion. This has freed up cash flow to fund new marketing sales and technology initiatives going forward.
As a result, the company was better able to serve the local customers and the Board at corporate headquarters.
Being Strategic, Not Tactical
A transformation strategy requires looking at IT as part of a cohesive strategic plan, not just a “necessary evil”. In order to properly leverage the benefits of a transformation strategy, the firm should be able to break through cultural barriers within the organization to find out what really does need to be changed. It will be important to have a standardized interview process involving all the key stakeholders; both business unit, customers and internal services providers alike, probing to find out where the gaps in service lie. If you use external transformation experts to assist in the process, they will aggregate the data, illustrating where the delivery of different IT services falls, usually using the typical 1-5 scale of quality. This is an empirical raw data view that most organizations will typically have not seen in this format before.
A good consulting firm will also have a high-level person in charge of the transformation strategy. In the case of the aforementioned engineering company, the person leading the project was a former CEO of a $12 billion company, with 2,200 people reporting to him.
If you decide to use external experts, they should continue to stay involved with the project to closure. For the transformation strategy to form and take hold, the consultants will need to stay close to the project’s internal sponsor and key stakeholders so that there will be no surprises as the transformation process unfolds. This way, the company can also guide the consulting firm if the transformation strategy doesn’t resonate correctly within the organization.
The Keystone of a Transformation Strategy
With a transformation strategy, the organization’s leadership must be willing to effect meaningful change. High-level sponsorship is key to the success of the strategy. When senior-level executives are on board and ready to change, then it’s time to start the transformation that will build a strong foundation; for not just IT initiatives; but for the rest of the business as well.
Getting the high-level sponsorship requires executives to be bold and assertive because corporate cultures usually resist change. Knowing this, it is imperative to be implementing a change management strategy in concert with the transformation process. Additionally, building a robust internal communication plan will help the staff understand the rationale behind both the strategy and tactics being employed. We have found a direct correlation between staff awareness with staff cooperation and morale.
Once the sponsorship is in place and the transformation strategy has begun, the possibilities in the IT department and across the organization are limitless. The transformation strategy, which will align with the overall strategy of the business, can be used as a stepping stone to other possible intensive implementations, employing ITIL, CMMI, APR or ERP Best Practices. These strategies, along with the possible tactical use of outsourcing, consolidation and building a shared services group can transform IT from just another department into a powerhouse within the organization that proactively manages and gets tangible results. In the end that is what the CEO and Board of Directors will relate to and continue to proactively support.