Dr. Donn Di Nunno

Transcription

1 GOVERNANCE AND TECHNOLOGY CONSULTING W H I T E P A P E R Business Solutions That Raise Performance Outcomes Written By: Dr. Donn Di Nunno Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste. 350, Herndon, VA Tel: Fax: Engineering, Management & Integration, Inc. All Rights Reserved.

2 Whether the application is for the front office, back office, warehouse, or customer-facing operations, IT enables efficient business solutions and can significantly impact an organization s ability to achieve and sustain higher performance levels. It is rare to find business solutions in which IT systems have no impact on performance. Whether the application is for the front office, back office, warehouse, or customer-facing operations, IT enables efficient business solutions and can significantly impact an organization s ability to achieve and sustain higher performance levels. However, too often the business solutions approach begins with the system selection and the assumption that selecting a system is implementing a solution. This wrong assumption is often followed with, if a system worked well for other performance leaders, then we should adopt it to attain those same improvements. Both assumptions produce wrong conclusions and costly mistakes that could have been easily avoided with an inexpensive and honest self-assessment. So called best practices can contribute to higher performance, and maturity models abound that assemble these practices into implementation sequences. So, why are less than 40% of organizations meeting or exceeding their performance targets? A majority of organizations are not effectively implementing appropriate practices that enable them to develop and leverage the outcomes. They are implementing changes that are not valuable, that are based on promises that are not within reach, or that are applied too narrowly across the organization or too quickly abandoned to produce benefits. High-performance organizations build performance from core competencies and use IT as a tool to innovate, creating more effective business models, while simultaneously increasing productivity. They take a pragmatic and step-wise approach to technology adoption and integration. They also consolidate and standardize business processes to manage the total IT portfolio. This stepwise approach is far more effective than massive technology insertion. To help organizations better apply business solutions that achieve higher levels of performance, EM&I has developed a step-wise maturity approach that is tailored from an initial assessment. With this approach, business solutions are engineered that are uniquely shaped by the organization s capabilities and needs. Value is returned immediately because changes that are aligned to organizational strategic goals are applied at the appropriate maturity layer. This approach is based on facts not promises. Figure 1 shows the integrated quadrants of Business value with ITO engineering. A six-step evolutionary life cycle provides continuous performance momentum and process improvement with effective solutions efficiently implemented. It logically constructs (working from top-right to bottom-left) an optimally effective enterprise portfolio from collaborative plans and a workforce environment that builds on a LOW Engineering Efficiency HIGH IT Transformation Increase Business Value IT Renovation Data Management 1. Moving Data Information Integration 2. Synchronizing Systems Project/System Portfolios 3. Leveraging Functionality Process/Product Rationalization 4. New Services, Alignment Plans/People Collaboration 5. Strategic Partnerships Increase Technical Value Enterprise Portfolio Optimization 6. Agile Organizations Business Adaption Business/ITO Realignment LOW Business Effectiveness HIGH Figure 1 - EM&I - Integrating Business & Engineering Capabilities 1

3 WHITEPAPER Business Solutions That Raise Performance Outcomes rationalized foundation of assets products and processes that are leveraged by projects of synchronized and architected information that is efficiently managed and distributed. This integrated approach does not require that all components necessarily align and be directed from one unifying steering board. This is not reality; nor is it the intent. However, organizations have found that it is counterproductive to have departments operating autonomously rather than collectively. How is it possible to establish a balance? The cynic would say that IT organizations seek business alignment only to secure their funding; the optimist would view alignment as getting everyone working in harmony. The reality is a practical balance of sustained management commitment - that includes financial support - with the recognition that competing tension is a fundamental technique when orchestrating harmony. The highlevel approach is straightforward, but the implementation detail is more multi-dimensional. High-level summary of the approach: Standardized and integrated resource management data and processes, Reduction of implementation costs by eliminating duplicative investments, and Streamlining and building repeatable processes, Tuning performance outcomes w/ effective and efficient solutions. Business Solutions Engineering Details: 1. Data management Moving data from source to destination is the product and cash flow of the new economy. While data is owned by the business, its management is often the responsibility of the IT organization. Data that is timely, relevant, concise, accurate, complete, secure, and unique is valuable and its creation, quality, distribution, use, and retirement must be managed with as much care as with other business assets. Knowing the uses of data and identifying critical data rules that define an organization s architecture are prerequisites to initiating improvements. Organizations at this level build communications capabilities and automate business operations. They may mature systems acquisition, extend infrastructure, improve financial reporting, or provide information assurance. Understanding data services leads to better information management. 2. Information integration Synchronizing systems to enable information to be efficiently collected, analyzed, stored, and reported is a fundamental strategy for renovating IT services and streamlining the value chain. Providing reliable information to all levels of management is critical to success. Proprietary data is a stumbling block and determining what is core and what is peripheral to successful operations is a top management issue. A well-defined Communication Plan that details what information is provided to stakeholders and what media, frequency, and security are required is a valuable unifying force for any organization. Organizations at this level focus on requirements management, budgets and their investment process, assessments and benchmarks, and IT maintenance. This integration sets the stage for better investments and IT project selections. 3. Project and system portfolios Leveraging functionality is a solution for many organizations conscious of the high costs of legacy systems and high risk of IT development projects. These organizations require business case development to justify projects and investments and are defining migration plans to transition from existing applications to future environments. Leading organizations engineer solutions that provide a return on the IT investment while reducing risks. Organizations at this level begin portfolio management and performance measurement to enable resource management, organizational change management, and business transformations. 4. Process and product rationalization Consolidating common processes and aligning systems and investments enables the cost savings to be invested into new services. Innovative solutions arise when organizations focus on core capabilities - freeing up maintenance staff to devote time to development or enabling higherrisk and higher-payback business opportunities to be undertaken. Leaner and meaner organizations become high performers that find adopting and adapting to changing business needs to be much easier. Organizations at this level realign strategic plans and business systems, integrate solutions through technology, and focus performance management using incentive programs. Vision and strategic plans become the source of action plans. 5. Plans and people collaboration Strategic partnering in these new ventures is much more successful once the core capabilities (e.g. operational excellence, customer intimacy, product leadership) are well established and processes have matured using centers of excellence. It fact, these capabilities are the characteristics that partners seek and that drive competitive advantage in establishing effective relationships and competitive advantage. From outsourcing to mergers and acquisitions, from external globalization to internal reorganizations, managers and staff are empowered through collaborative plans based on a factual performance foundation. Customer relationships are more productive too when processes, plans, and staff expertise are managed effectively. 2

4 Organizations at this level build value networks and customer relationship management systems that provide superior products or services that target customer groups and engage suppliers. 6. Enterprise portfolio optimization Agility speed and flexibility for optimum productivity, quality, value, risk or focused business propositions and trade-offs will raise and sustain higher performance levels, because the foundation has been laid and layered to reinforce core capabilities and management controls. When plans and performance are linked from strategy and vision to customer wants and needs, to base lined processes, and to individual performance contributions, then optimal performance is realized. Organizations at this level have become adept at demand management and change and have maximum visibility to drive performance. To sustain optimization it might be appropriate to spin off portions of the organization and begin each division at earlier levels of this life cycle. Customer Satisfaction Stage 2: Customers & Employees Input Stage 1: Assessment & Gap Analysis Strategic Success Factors Process Performance Stage 3: Process/Product Measures Figure 2 - Performance Measurement Stages EM&I has learned many lessons in our support of customers evolution through these changes. We offer consulting, facilitation, assessment, planning, and implementation support at all levels of organizational maturity. For example, performance improvements are a continuous evolution throughout the life cycle. As Figure 2 shows emphasis on external and lagging indicators come before organizations can rely on internal and leading indicators. EM&I leads goals surveys, supports architecture development, researches customer and employee satisfaction, benchmarks processes and product performance, and helps organizations build effective balanced scorecards. Eight Performance Guidelines: Individual Accountability Stage 4: Performance Accountability 1. Improve performance and value by viewing enterprise systems as a continuum. EM&I views enterprise solutions and the benefits they deliver along an evolutionary continuum (see Figure 1). Most organizations find themselves thrashing between a reactive to proactive status (i.e., process/product integration to planning/people collaboration). High-performance businesses continue to push their enterprise system capabilities. They approach enterprise systems as more than discrete starting and ending projects but rather as ongoing business value enablers. Information and technology are part of an evolutionary business program that always seeks new innovations to add value. 2. Optimize enterprise architecture to establish a foundation and direction. Components of enterprise architecture (e.g. process, technology and data) must work together to deliver value. EM&I s experience has shown that those organizations who deliver the all-important enabling technology solutions (e.g. application servers, portals, integration brokers, common platform, integrated development and operations frameworks, customer demand management) produce the best enterprise solution performance. By reducing the number of disparate technology platforms and business functionality they also reduced related maintenance and skilled resource costs to enable effective and efficient business operations. 3. Target tangible business benefits by accelerating value creation and distribution EM&I research shows that over 30% of organizations do not have a business case that identifies specific benefits when they implement enterprise solutions, and over 50% do not capture and allocate benefits back to the investment once implemented. However, leading organizations that proactively track expected benefits report that they achieve benefits significantly earlier than those that do not actively measure benefits (i.e., those that measure reactively with no advance predictions or targets). The focus is on bottom-line benefits while ignoring the top-line practices is ineffective. The supply chain is an area of significant opportunity for achieving high performance. Top organizations incorporate the supply chain into their business strategy and devote significant attention to extracting the value. These organizations use mutually beneficial enterprise solutions to collaborate with their suppliers and customers to drive innovation and process improvements. 4. Understand core competencies and evaluate outsourcing options. In addition to outsourcing technical infrastructure and platforms, EM&I believes organizations should consider targeted applications management and business process outsourcing. In most cases, when organizations consider business process outsourcing, it is the 3

5 result of a strategic decision to focus the organization s resources and management attention on core competencies. Additionally, outsourcing and the use of global resources can lower the total cost of ownership and reduce risk. However, outsourcing must take into consideration requirements management and oversight of quality. 5. Modify processes before customizing enterprise system applications, and buy before building. Enterprise systems should be customized only when tangible business benefits can be identified. Define, early in the process, those business processes that are unique to the business in terms of driving differentiated business capabilities for competitive advantage. For most organizations, less than 20% of processes qualify for customization. There must be a structured business case submission and approval processes even for those changes all other routine, non-strategic processes, use standardized applications. 6. Proactively embrace change don t just manage it. To embrace change, managers must be able to get their arms around it and that implies an effective performance measurement system to deliver the new system s benefits as described in the business case. Active ownership and accountability are critical to making sure an organization is ready for new enterprise functionality. Apart from active participation and sponsorship, a fully integrated stakeholder change enabling structure is crucial. This stakeholder value network, responsible for driving business value and readying the business, customers, and suppliers, will define the business metrics, proactively helping manage enterprise business readiness and transformation. 7. Use real-time, factual enterprise performance information at all levels of decision-making. According to EM&I research, improved decision-making is the number one benefit sought by organizations when they implement enterprise solutions, yet only about 60% achieve desired levels of improved performance. Our experience shows that accurate, consistent and complete real-time information must be a starting point, not the destination. The good news is that technology is enabling effective performance visibility (e.g. new sources of data combined with cheaper data storage and faster processing power and more effective data analysis) enabling organizations to gain actionable insights in real time. 8. Use customer/employee insight to expand the base and secure customer/employee loyalty. Too often, enterprising solutions are technically sound, but fail to deliver benefits from the customer s perspective. Be more than a supplier. Use customer insight, for instance, to proactively offer products and services and create a stronger bond with customers. Employees that are actively involved in planning or who are well-trained and informed of performance objectives become productively engaged and are an excellent source for process improvements and savings. Engaged and empowered employees reflect well on the organization when dealing with customers. Few organizations can afford to be on the bleeding edge of new technologies, but every organization interested in achieving higher levels of performance should have a process in place to assess new technologies to become early adopters or fast followers as technologies become proven. Managing the integration of IT and business solutions ensures value is realized before changes disrupt the benefits. EM&I s business solutions engineering approach to sustained performance improvement most certainly requires new enterprise architecture, infrastructure, and governance, and the associated risks, interactions, and unintended consequences can be destructive to organizational assets and strategies. EM&I experience can mitigate these risks, provide objective insight to reveal impacts, and provide proactive consultation to smooth out the implementation and establish a practical long-range strategy for achieving high performance. About the Author: Dr. Donn Di Nunno CCP, CDP. is an expert in metrics for software process and product improvement with over 29 years in software engineering. Mr. Di Nunno s areas of specialization include: IT Metrics & Measurement, Quality Management and Process Improvement, Data analysis, Systems Re-engineering, Design Recovery and IT Portfolio Management. Donn joined EM&I as a Chief Engineer in From 1997, he worked at META Group as a Program Director and Sr. Research Analyst in performance measurement. He was also a Sr. Consultant with Computer Sciences Corporation s (CSC) Center for I/S Asset Management. He examined, integrated, and deployed emerging technologies for improving productivity and quality in legacy system environments. He established the quality assurance department and was the QA Manager for CSC s contract on the National Flood Insurance Program in About EM&I: Engineering, Management & Integration (EM&I) Incorporated is a client-focused, management-consulting firm bridging the gap between business and technology. Our teams of highly skilled specialists provide clients engaged in technology intensive business situations with solutions geared to reduce risks and ensure successful results. In an ever-changing business environment, we support our client agencies in four key areas: Strategy, Architecture, Business Solutions, & Governance. Please visit for more information. Contact EM&I: If you are interested in hearing more about EM&I s services to the government and private sector or would like to discuss potential teaming arrangements, please contact Dr.Malcolm Slovin at Engineering, Management & Integration, Inc. All Rights Reserved. 3