You have been appointed Information Technology manager of a company in which IT systems are viewed as expensive and misaligned with the business strategy. Recent IT implementations have overrun their budget and schedule, and the company's board is considering outsourcing its IT support function. In addition, an important merger with a competitor must take place in the near future, if at all possible. Fears have been expressed that the IT systems of the competitor company may not be compatible with your own company's Systems.
Describe how you could achieve and maintain alignment between IT systems and the business strategy, using Portfolio Management techniques.
Show how you could use Gate Methodology to ensure that new IT projects would be delivered on time and to budget.
Describe the risks of IT Outsourcing and suggest ways to overcome these risks.
Show how you would carry out a Due Diligence exercise to investigate the board's fears of incompatibility between the merging companies.
ACHIEVE AND MAINTAIN ALIGMENT BETWEEN IT SYSTEMS AND BUSINESS STRATEGY
In today's business environment, every CFO is faced with shrinking budgets, overextended staff, and taxed resources. With these constraints, finding new ways to make better use of resources and budget can be the difference between success and failure. Making informed decisions that align with the organizational goals is - and will continue to be - critical as companies continue to conserve their resources in managing day-to-day operations.
With its foundations in financial theory, portfolio management has become a popular technique that is being used by more and more CFOs as a way to systematically choose enterprise investments, including applications, assets, projects, and vendors. Portfolio management provides a set of business processes that, when consistently applied, allow an organization to choose and execute on technology investments that return measurable value. After adopting portfolio management techniques, many organizations:
· Rapidly identify and consolidate or eliminate unnecessary costs;
· Clearly prioritize initiatives and re-allocate funding to support those initiatives; and
· Accurately balance appropriate levels of portfolio risk.
Business and IT executives differ in their perceptions of strategic and operational IT issues, from IT's strategic role to its performance. Many of these business leaders believe IT is tactically focused and that the best technology innovations come from the business side. Unless significant changes are made, those differences may continue to define-and possibly limit-IT's strategic roleIT must fundamentally change the way it operates in order to deliver value to the business. If IT fails to make this shift, it risks being viewed as strategically irrelevant. Business executives believe in technology's value; unfortunately, they're not as enamored of their IT department's execution or ability to help them achieve their business strategies
Business leadership views IT innovation and early technology adoption as critical, but executives say IT isn't ready to deliver. Many companies are still struggling through tough economic times, focusing on cutting costs and streamlining operations-not on discovering the next big thing or transforming their organizations or industries. Still, executives view innovation as vital to their companies-and are more aggressively seeking innovation and early IT adoption than they were two years ago. as executives also disagree on when technology should be adopted. Surprisingly, more than half of the business leaders believe they should adopt technology early, or before it matures, compared with one-third of IT leadersAddressing these issues is critical to the future relevance of the IT organization. Technology leaders must quickly focus on closing the gap between business demand and the IT organization's ability to deliver IT adoption and innovation.
Innovative and agile companies will continue to outperform static businesses by effectively offering new products or services to customers. So how can companies reap those benefits and make sure IT is ready to deliver the innovative solutions the business needs? They can start by becoming skilled in evaluating and making sound investment decisions on disruptive technologies that support their corporate strategies-and determining how well they can implement these solutions. The ability to assess how nascent technologies will affect a company's value chain and competitive position will be crucial to matching demands on IT with its delivery capability.
GATE METHODOLOGY TO ENSURE THAT NEW PROJECTS REMAIN ON TIME AND BUDGET
One of the best ways to get early warning is through implementing a gate methodology which forces a structured review of the programme at pre-defined checkpoints along the way. In essence you build gates at the exit points of the major phases of the programme. Naturally these are also the entrance points to the next major phase.
Let's assume that you have five major phases as follows: Scope & Plan, Design, Build, Test, Go-Live. You would then have five major gates as well - each positioned at the exit point of the five phases: Gate 1 - Exit Scope & Plan, Gate 2 - Exit Design, Gate 3 - Exit Build, Gate 4 - Exit Test and Gate 5 - Go-Live. Potential criteria for each of these gates could be as follows:
Gate 1 - Exit Scope & Plan
· Is there a scope document, and does it cover all aspects of scope including functionality requirements, modules to be implemented, geography, gaps, interfaces, organisational aspects, technical aspects, data conversion etc
· Is there a plan, and does it include detailed tasks (nothing longer than two weeks), with resource names mapped to tasks, and is it resource balanced (no simple task)
· Is the design team mobilised
· Is there a design authority in place, and is the change control process agreed
· Is the sandbox SAP system ready, and is there a client strategy document agreed
Gate 2 - Exit Design
· Has the design been documented, including SAP transactions ...
Here is just a sample of what you'll find in this solution:
"If IT fails to make this shift, it risks being viewed as strategically irrelevant. Business executives believe in technology's value; unfortunately, they're not as enamored of their IT department's execution or ability to help them achieve their business strategies. Business leadership views IT innovation and early technology adoption as critical, but executives say IT isn't ready to deliver."