Download - Optimising Sourcing during a Slowdown
Optimising Sourcing during a Slowdown
Ashley MudfordCIO
New Zealand Food Safety Authority
CIO ForumJune 2009
Purpose?
…thinking options…
…to help you to be more effective…
Sourcing
• Increasing revenue
• Decreasing cost
• Releasing effort
Presentation Structure
• Your Organisation’s Context
• Options to think about
Principle 1
Business expectations will influence how you make change and/or optimise
sourcing
Gartner Segmentation Model... Plus the Ability to Collaborate and Influence
Expected IT Role:
Tactical/Utility
ExpectedIT Role: Strategic/ Transformational
Business: Market Follower/Risk-Averse/Mature
Business: Market Leader/Risk Taker/High-
Growth
• Works well with others• IT value over time, not just cost• Business process focus, but
solution-driven• High business alignment
The Team Player
• Anticipate business needs• Minimized governance• Service over cost• Don't hinder the business
The Butler• Full business/IT integration• Managed risk• No distinction between IT and
business governance• What, not how
The Entrepreneur
• IT cost containment• Predictability/reliability• Governance as self-
protection• Continual unit cost
improvement• Benchmarking for
justification
The Grinder
Gartner Predictions
At least 60% of large IT organizations will divide into at least two organizations by 2012, one working on
sourcing and delivery of infrastructure, another on architecture and change.”
Source: Gartner, John Mahoney, Dec 2007
“Their (architects) role within leading enterprises is moving from a technology focus to a focus on
business processes and relationships”
Depending upon which quadrant your team fits will determine how you
approach sourcing and make change
Principle 2
The business’ perception of your providing value will influence the extent
of change
Service Level Maturity Model
Integrated
Aligned
Functional
Initial
• Few performance metrics
• Little emphasis on measurement and improvement
• Clear IT service tower definitions
• Functional metrics (IT tower-based, vertically focused)
• Metrics used to track performance over time
• Business oriented (horizontally aligned)
• Analysis of root causes drives improvements
• Metrics to understand the business impact of IT performance
• IT metrics completely integrated with business-unitobjectives and represented in terms of business results
• Ability to segregate IT resources by business process
• Leading indicators of bus. processes clearly understood
• Problems prevented through proactive analysis
CharacteristicsSLA Maturity Levels
5
4
3
2
1
Preventive
Gartner research has found that there are five levels of service level maturity. Possible to undertake a rapid evolution, but not feasible to skip evolutionary steps entirely.
Principle 3
The business’ perception of your degree of alignment and integration will help
determine your value
Governance
Chief Executive & Board
Strategic BusinessProcess 1
CorporateGovernance
Strategic Project 1
IMProgramme
HRProgramme
Policies & Procedures Programme
etc Programme
Shared Services
Business Interaction
CIO Files & Records Management
Group
Business Consultation
Group
Application Management Committees
Business Programme
of Work
Business Service Delivery Meetings
Web Programme Management
Business Team Meetings
OrganisationStaff Updates
IMNewsletters
So…
Where does your programme fit on these models?
Depending upon your model… what is your focus?
Key tool
• By Function/Service– What it delivers– What does it comprise– Total cost– Cost per ‘event’ per ‘person’ per ‘year’– Options for change– Options for cost/service changes– What is delivered for each option– What is not delivered for each option– The risks for each option
• Business decision on what they can live with
Projects
• Review project benefits – Stop– Slow down– Delay– Continue
Grinder… then…
• Review core business & stop doing non-core stuff• Confirm SLAs• Improve internal IT (& business) processes
– efficiency– effectiveness– transparency– cost
• Cost Benefit Analysis for outsourcing• Cost Benefit Analysis for different delivery options
– shared services– cloud computing– Software as a Service
Grinder… then also…
• Consolidate/standardise/rationalise– systems– organisation– equipment
• Review licensing (conditions & alternatives)• Review contracts against cost & service levels• Review contracting regime against overlaps• Review technology for value• Benchmark• Find alternative sources of revenue
– Shared services– consultancy
Entrepreneur… then…
• Drive Grinders to make efficiencies & savings – IT&T– Applications
• Review what resources are required to support business innovation– Architects– Analysts
• Work with the business to initiate innovation: – Model business processes (end-to-end)– Identify business process improvements– Make measurable stretch improvement targets (reduce xxx process by
xx% from ‘$a’ to ‘$b’ and ‘x’ time to ‘y’ time)– Support organisational change– Support benefit realisation
SLA maturity is low… then…
• Work out how you can get to the next level of maturity with existing resources
• Implement simple (to business) reporting matrix – It costs $100 per person per year to provide ‘this’– Deliver x,000 per year
• Market service improvements to the business
• Mind you… if you’re starting now, you’re probably too late for immediate benefits…
Governance is low… then…
• Research benefits for effective Governance
• Identify key organisation influencers
• Promote need for Governance
• Actively support establishment of organisation governance model
Business Interaction is low… then…
• Research benefits for increased business interaction
• Develop interaction plan• Identify key business influencers • Promote need for increased business interaction• Make it happen • Use it to market programme achievements
What you are after is…
The Business… – Having a high level of transparency and
understanding of what you do– Advocating your case for what you can and
can’t accomplish and at what price
But also remember…
Really good people are hard to get irrespective of the state of the economy
