Monday, August 5, 2013

How to Improve IT Management Capabilities?

IT is trending towards becoming 'service' elastic and on-demand which moves faster, more flexible, and more resilient.

 IT Management is a strange animal, in that the capabilities are there, the data is there - but the motivations are often confused. IT tends to measure itself against trivial things IT considers important but are often less important and impactful in the business lens. When IT does not reach a higher level of customer satisfaction, is it due to lack of IT capabilities, lack of IT management capabilities; or low maturity management of IT overall?

1. The “Key” of “Key Performance Indicators”

Technology is trending towards becoming 'service' elastic and on-demand which moves faster, more flexible, and more resilient - but how does that stack up against business objectives and goals? Is that fiscally responsible?

  • More importantly, perhaps, is the notion of Key Performance Indicators. Answering those fuzzy questions such as "How well is IT serving the business?" and "Can IT do better?" requires not only hard evidence from IT components and capabilities - but also requires the ability to aggregate 'business sentiment' and convert that into something tangible on a display. You also have to ask yourself who the audience is? Often times the audience for IT performance metrics is IT itself ...but is that the ultimate consumer of IT? The answer is no - so it's time IT grew up and learned how to effectively measure itself.  
  • From IT performance perspective, measure what it matters, to reflect the business value: Make sure IT and business are always on the same page. IT metrics need to evolve to something that matters to the business audience, at the same time that "business sentiment" needs to get put into something more tangible. It almost sounds like a translation issue - two different languages/cultures that need to find a common ground. Can the right metrics do that, or is that asking too much? The set of KPIs include:
-IT Value Indicator (optimize process, improve productivity)
-IT Innovation Indicator (end customer retention, revenue growth)
-IT Investment Indicator (long term vision vs. quick win etc) 

2. Management of IT Takes the Board/Leadership Team’s Commitment

An effective IT management takes not only the strong IT leadership but also needs to have the collaboration and fully support from the top leadership team.

  • Effective IT management means understanding every island of operation and every workflow process. It is through this comprehensive understanding that a CIO would be able to identify true cost savings, workflow optimizations, and additional revenue opportunities. IT is about using technology to lower costs, improve operations, and increase revenue. However, where to get the data from? It takes organizational-scope support to manage business information life cycle. In some cases, IT organizations lag behind the LOB counterparts and no standard system of record. In fact, IT seldom has standard processes across all of the different teams. So, while the scorecard is valuable, IT needs to address the underlying disparate tools approach as well as to understand holistic information in order to improve management capabilities. 
  • More explicitly, IT failure is caused by the management of IT rather than just IT management. The responsibility for evaluating the performance of IT investment lies squarely with the C-Level/board leadership team. It is not a function that can be handled only inside the IT department or by IT managers. They do not have all the information needed, they do not have all mechanism & authority to collect that information and they do not have all the skills necessary to evaluate the information. Without effective guidance/support from the board, the managers in the IT department are perhaps working in the dark -Mushroom management. 
  • IT Executive Scorecard that has pre-built KPIs reflects best practice measurement areas across IT holistically. It is balanced scorecard oriented and looks at IT Value, Customer satisfaction, operational excellence and future orientation. KPIs are grouped into these different buckets to reflect financial, SLA, project health, people etc measurements. It's an effective tool to enable executives and leadership team to improve management of IT via quantifiable and qualitative data. 

3. How to Improve IT Management Capabilities

The strategic planning should start with a clear picture of its own enterprise application landscape at a minimum and preferably understanding of its own IT capabilities and practices maturity relative to its industry. The enterprise architecture provides a framework in which sound strategic planning can happen grounded in present state realities so a full accounting of the perceived risks and rewards can avail itself of the decision-making process. 

  • Portfolio Management Capabilities: Portfolio management is essential to successful corporate governance and as such, a comprehensive fusing of a firm's strategic capabilities, tightly coupled in one organization would implement and oversee governance. Embodied in a Portfolio Management Office, there are six programs - IT strategic planning, enterprise architecture, capital programming, assets management, risk management and projects management. 
  • Communication Capabilities: Speak the language of business. IT inability to measure and have a transparent and agreed-upon way to measure the value they bring to the organization means they lose the trust of those who fund their livelihoods. Business oriented KPIs and scorecards help to standardize this and fill the business/IT language/culture gaps.  
  • People Management Capabilities: Either managing IT talent or customer/vendor relationship, people are usually the weakest link, while IT is pervasive these days, this will come about as more people begin to interact with and understand IT and what can be provided, from discerning customers, demanding CxOs to enthusiastic vendors, identify and cultivate the people management capability via following fundamental IT principles: first people – then process – then technology in that order. Develop and nurture a high-performing IT team, strive to be leaner and more business-focused. 
A highly-capable IT is a key business differentiator, but keeps in mind, IT is still the means to the end, not the end, the end is to fulfill the business vision and execute business strategy smoothly to achieve the expected business result.


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