optimizing and accessing information technology

Optimizing and Assessing InformationTechnology Improving Business Project Execution K.. Optimizing and Asas-sessing Informa-tion Technology: Improving Business Project ExecuInforma-tion

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Optimizing and Assessing Information

Technology

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Technology

Improving Business Project Execution

K SCOTT PROCTOR, CFA

John Wiley & Sons, Inc.

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Optimizing and assessing information technology : improving business project

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CHAPTER 2

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This book is a guide—its purpose is to aid you in optimizing and

as-sessing information technology (IT) Optimizing and Asas-sessing

Informa-tion Technology: Improving Business Project ExecuInforma-tion is designed to be

both easy to use and immediately useful Put simply, this book is focused

on improving business project execution through effective IT optimizationand assessment

I wrote this book based on, among other things, my experience workingacross the field of IT at companies both small and large, ranging from start-

up enterprises on one extreme, to General Electric (GE) and AstraZenecaPharmaceuticals, at the other extreme

IT is a field and a discipline with a variety of meanings and tions The working definition of IT that I will use for this book comes fromthe Information Technology Associations of America and is, “the study,design, development, application, implementation, support or management

interpreta-of computer-based information systems, particularly sinterpreta-oftware applicationsand computer hardware.”1

This book is focused on both assessing and optimizing IT According tothe Merriam-Webster dictionary, to optimize something is to make it as “ef-fective or functional as possible,” and to assess something is to “determineits importance or value.”

As a guide, this book offers a framework for optimizing and assessing

IT It does not focus in on specific technologies per se—given the rapid andincreasing pace of technical change across the world today, any such focus islikely to be out of date as soon as it is published My focus is on a frameworkwhose principles are designed to stand the test of time and rapid technicaldevelopment

After reading this book, you will be able to (1) generate an accurateand reliable assessment of a company’s IT operations and (2) identify areas

on which to focus to optimize IT Topics such as “against what to assessoperations” and “optimized as compared to what” are addressed over thecourse of this book

In the interest of clarity and simplicity, please note that my coverage of

IT in this book extends beyond “technology” itself I cover various aspects

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technolo-For the purposes of this book, my focus is on optimizing and assessinghow various components of IT, including people, processes, and technology,support and work with broader business strategies and operations Someacademic definitions of IT and IS may differ from the ones that I employhere; my aim in clearly articulating a definition and scope for IT is to focus

on meaningful and impactful topics as opposed to labels and definitions

IT products spending At the time of publication of the Gartner report, ITservices and telecommunication services accounted for 70 percent of total

IT market spending

This book is focused on helping anyone optimize and assess IT ITprojects typically are not executed to plan and often represent a large set ofcosts Doing a better job of optimizing and assessing IT offers the potential

to improve business project execution

For the sake of context, some recent examples of failed IT projectsinclude Ford’s abandonment of a purchasing system after deployment in

2004 (costing around $400 million) and Sainsbury’s abandonment of asupply-chain management system after deployment in 2004 (costing around

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sto-In addition to these underlying drivers, Gartner predicted that “by 2015,most external assessments of enterprise value and viability will include ex-plicit analysis of IT assets and capabilities.”6 Thus, there is a compellingneed for this book and its underlying IPM framework to meet the comingdemand from, among other areas, external assessments of enterprise valueand viability.

T A R G E T A U D I E N C E F O R T H I S B O O K

Individuals and teams working across all phases of IT project managementrepresent the primary market for this book Included in this market are bothtypical project management functions, such as project managers, businessanalysts, and the like, as well as functions related to more specific IT assess-ment areas, such as investment due diligence, mergers and acquisitions duediligence, and other functions

Secondary markets for this book include business and finance sionals with an interest in IT, consultants working in the IT space, andstudents interested in IT

profes-Typical reader profiles for this book might include: a project managerworking on projects with some element of IT; a business analyst responsi-ble for mapping and/or understanding how certain IT elements relate to anoverall process; a business development professional assessing the IT opera-tions of a partner or potential partner company; and an investment managerassessing a company’s IT operations

S U M M A R Y O F C O N T E N T S

Optimizing and assessing IT involves a step-by-step process whereby variousaspects of IT are evaluated This book is organized into four discrete sec-tions In addition to the book itself, a companion web site offers templates,checklists, and related materials for your reference and use

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Part One provides a solid foundation for the reader in terms of whereand how the IPM fits into the overall operations of a business Conceptsranging from strategic direction to enterprise architecture are contextualizedand covered.

The topic of how a business’s strategic direction relates to its IT tions is covered in Part One as well The relationship between a company’sstrategic direction and how it manages and utilizes IT is a critical area forconsideration and analysis

opera-Finally, Part One covers the process involved in quantifying the IPM.Each area of the IPM is assessed and the manner in which these assessmentscan be quantified and summarized is described in detail

Parts Two and Three of the book examine each aspect of the IPM in thecontext of case studies Using fictitious (but realistic) company information,each of the components of the framework (People, Process, and Technol-ogy) is evaluated across each of the framework’s pillars (Strategy, ProjectManagement, and Operational Excellence)

Part Two covers the IPM as it relates to a large and mature organization.Part Three covers the IPM as it relates to a midsize and growing organization

In essence, Parts Two and Three of the book offer a detailed, hands-onuser’s guide to the principles and practice of the IPM Part One offers upsome important ideas and principles for strategy and IT, while Parts Twoand Three present step-by-step guidance for how a company’s IT operationsshould be assessed and optimized

The final section of the book, Part Four, covers tools and reporting.Analytical tools such as ROI (return on investment), benchmarking, andmetrics are covered in this section In addition, Part Four discusses a series

of useful reports for IT optimization and assessment

Finally, a companion web site is available for this book atwww.wiley.com/go/proctorit This web site complements the book and of-fers a variety of materials, including templates, checklists, and figures, thatare referenced throughout the book itself

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unneces-IT is more than a function within a business and more than a technicaldiscipline As noted in the Preface, IT may be characterized as “the study,design, development, application, implementation, support or management

of computer-based information systems, particularly software applicationsand computer hardware.”1

Parsing even further into the formal definition of IT, the Webster dictionary defines “information” as “knowledge obtained frominvestigation, study, or instruction,” and “technology” as “the practical ap-plication of knowledge, especially in a particular field.” Information mayalso be characterized as data, or “raw symbols,” that have been given mean-ing by relational connections.2

Merriam-Reading into the formal definitions of IT, one interpretation is “thepractical application of information in commerce and industry.” This is thedefinition that I will use throughout this book for IT

This is but one way of contextualizing IT—while the term can take avariety of meanings, it is important to ground any IT-related conversations

in a common definition and understanding of IT itself

Beyond any formal definition, however, IT may be characterized ashaving three “components”: People, Process, and Technology Put anotherway, the practical application of information in commerce involves threecomponents: (1) People, or the individuals and teams involved in work;(2) Process, or the manner in which certain tasks and activities are ac-complished; and (3) Technology, or the systems and tools utilized toaccomplish work

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While the purpose or role of IT may vary across industries, companies,and geographies, a lowest common denominator may be that of IT serving

as an “enabler,” or a vehicle for facilitating action There may well be tions to this characterization, but IT regularly serves as an aid or a tool thatfacilitates an activity, such as, for example, processing order transactionsquickly or processing large volumes of data efficiently and accurately

excep-As noted in the Preface, confusion can arise related to the differencesbetween the labels of information technology (IT) and information systems(IS) My focus in this book is on IT—specifically on optimizing and assessinghow various components of IT support and function with broader businessstrategies and operations

IT represents a large market—global spending reached $3.9 trillion in

2009.3 Despite the size of the global market, a large number of projectexamples indicate that few IT projects actually succeed or turn out well.4

These dynamics—a large market with poor delivery results—underscore theneed for this book and the IT Pillars Model (IPM)

O P T I M I Z I N G A N D A S S E S S I N G I T

As noted in the Preface, the Merriam-Webster dictionary defines “optimize”

as making something as “effective or functional as possible,” and “assess” as

to “determine its importance or value.” This book is focused on optimizingand assessing IT

In order to generate an IT assessment and an idea of what “optimized”might look like, a goal, or desired end state, for how IT should work across

an organization is needed In other words, we need to define our target inorder to properly assess and optimize IT

While the goal of IT may vary across companies, one common themeheard from chief information officers across a large number of surveyssponsored by the Center for Information Systems Research (CISR) of theMassachusetts Institute of Technology (MIT) is that their most importantconcern is “alignment with business strategy.”5Part of the IPM entails eval-uating how well the goals of an IT organization align with the rest of abusiness’s operations

An overarching goal of the IPM, and of this book, is to seek simplicity ITcan be a complex field and topic—a focus of mine is to distill the important,

or “vital,” aspects of IT out of the otherwise often complex IT landscape

To paraphrase Oliver Wendell Holmes, there is power in “simplicity on theother side of complexity.”

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IT Fundamentals 5

At a high level, the processes of optimizing and assessing IT involve asmall number of important steps These eight steps include:

1 Define the goal Define the desired end state of the IT function.

2 Assess the situation Assess the current IT function against the desired

end state

3 Quantify the situation Translate the assessment of the current IT

func-tion into quantitative terms

4 Identify the gaps Determine where gaps exist between the desired IT

end state and the current situation utilizing the quantified IT assessment

5 Determine a plan to bridge the gaps Build a plan to bridge the gaps

between the current situation and the desired end state of the IT function

6 Quantify the benefits of bridging the gaps Translate the plan to bridge

the gaps into quantitative terms

7 Execute the plan to bridge the gaps Move forward and implement the

plan to fill the gaps

8 Repeat these steps Reassess the IT function in the future and begin the

optimization process again

Figure 1.1 illustrates the steps involved in optimizing and assessing IT

I N T R O D U C I N G T H E I T P I L L A R S M O D E L

The IPM is a framework for easily assessing and optimizing IT The focus

is on simplicity and driving value As a variety of models and frameworkshave been used across the field of IT, I focus here on the specifics underlyingthe IPM I cover what is in scope and, in Chapter 2, how this model relates

to a number of other IT models and frameworks

Put simply, the IPM evaluates the components of people, process, andtechnology against three “pillars,” or areas of focus for IT By evaluating acompany’s IT operations using the IPM, it is possible to both assess the ITfunction and identify areas for possible optimization

The IPM gets its name from three IT pillars These pillars are (1) Strategy,(2) Project Management, and (3) Operational Excellence In this context, apillar refers to a fundamental principle or foundational idea These threepillars, taken together, cover the typical areas of interest and focus for IT.Figure 1.2 presents a summary view of the IPM

For easy reference, each of the cells in the matrix is numbered I cover themeaning and relevance of each of the cells and refer back to the numberedcells on a regular basis over the course of this book

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F I G U R E 1 1 Steps for Optimizing andAssessing IT

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IT Fundamentals 7

F I G U R E 1 2 IT Pillars Model

Strategy relates to how IT services are designed The focus here is on thelong term and includes areas such as enterprise architecture and enterprisesystems Project Management addresses how IT services are built and pro-duced This pillar focuses on the development, or “build,” environment for

IT service delivery The third pillar, Operational Excellence (also referred

to as Op Ex), relates to how IT services are delivered to clients This pillarfocuses on the production, or “run,” environment for IT service delivery.The three IT pillars are evaluated against the three components of Peo-ple, Process, and Technology in the IPM “Component” in this context refers

to a part of a larger entity—a pillar in this case

The People component of the IPM relates to the human element of IT.This component addresses the issue of “who” in the IT landscape Process,

as a component of the IPM, addresses the issue of how “things get done” inthe IT landscape Put another way, the Process component focuses on how

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specific tasks and units of work are accomplished The third component ofthe IPM, Technology, relates to the concept of tools in the IT landscape.The Technology component is focused on what (and how) specific tools areused and employed across IT

S t r a t e g y

The first of the three pillars of IT, Strategy, is focused on longer-term erations than are the other two pillars, Operational Excellence and ProjectManagement The Strategy Pillar addresses topics of long-term IT interest,such as enterprise architecture and enterprise technology strategy

consid-The components of the Strategy Pillar are highlighted in Figure 1.3

F I G U R E 1 3 Focus on ThreeComponents of Strategy

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IT Fundamentals 9

P e o p l e The issue of overall IT team alignment is addressed in Cell #1

in Figure 1.3 at the intersection of the People component with the StrategyPillar Items including IT functional and leader alignment and organizationalstructure are covered in Cell #1

P r o c e s s The broad topic of Process Management is addressed in Cell #2

in Figure 1.3 Cell #2, at the intersection of the Process component andthe Strategy Pillar, deals with the important considerations associated withlong-term process management across the enterprise

T e c h n o l o g y Enterprise architecture and enterprise systems, among othertopics, are addressed at the intersection of the Technology component andthe Strategy Pillar, shown as Cell #3 in Figure 1.3 The long-term shape,scale, and scope of the enterprise’s IT function are covered in Cell #3

P r o j e c t M a n a g e m e n t

Project Management is focused on developing and building IT services This

is the second of the three pillars of IT as shown in Figure 1.4

The activities and considerations associated with producing and ing IT services fall in the Project Management Pillar While OperationalExcellence might be thought of as IT “run” activities, Project Managementmay be thought of as IT “build” activities

build-P e o p l e The “build team,” found in Cell #4 at the intersection of the Peoplecomponent and the Project Management Pillar in Figure 1.4, addresses thePeople component of the IT Project Management Pillar

Considerations such as organizational structure and team experienceare addressed in Cell #4

P r o c e s s The set of processes underlying the Project Management Pillar,referred to here as “build processes,” are focused on in Cell #5 of Figure 1.4

It is here, where the Process component overlaps with the Project ment Pillar, that the processes associated with IT design, build, test, anddeploy are addressed

Manage-T e c h n o l o g y The tools associated with IT Project Management, or “buildtools,” are covered in Cell #6 of Figure 1.4 The Technology component ofProject Management is concerned with the nature and type of build, projectmanagement, and data management tools that are employed

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F I G U R E 1 4 Focus onThree Components ofProject Management

O p e r a t i o n a l E x c e l l e n c e

Operational Excellence, the third of the three pillars of IT, is focused ondelivering services to clients IT activities related to production systems andrevenue generation fall within this category The three components of Op-erational Excellence are shown in Figure 1.5

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IT Fundamentals 11

F I G U R E 1 5 Focus onThree Components ofOperational Excellence

P e o p l e The People component of the Operational Excellence Pillar, labeledCell #7 in Figure 1.5, is concerned with the “run team.” The run team isthe team of people who are accountable and responsible for delivering ITservices in a production environment

Aspects covered in this cell of the IPM include the team structure, teamexperience breadth and depth, and outsourcing choices, among others

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P r o c e s s Cell #8 in the IPM, as shown in Figure 1.5 at the intersection

of the Process component and the Operational Excellence Pillar, is cused on IT service delivery and support The processes associated with

fo-IT run/production are addressed in Cell #8

T e c h n o l o g y Cell #9 from Figure 1.5 covers the tools associated with ITrun/production This cell deals with the Technology components of Opera-tional Excellence Service management tools and technology stack referencemodels are addressed in this cell

S U M M A R Y

The fundamental elements covered in this chapter serve as the basis forthe remainder of this book In addition to the core concepts covered inChapter 1, a number of additional aspects of assessing and optimizing ITare covered over the course of the book, including measures, metrics, andindicators as well as reporting

Assessing the performance of IT through the utilization of measures,metrics, and indicators is an extension of the IPM This topic is coveredseparately later in this book

Reporting, or the presentation of relevant and focused data and mation, beyond the scope of the IPM matrix is covered later in this book.The reporting focus of this book is the IPM matrix itself, which is populatedwith “scores” for each of the cells for an enterprise A series of reports inaddition to the IPM is presented later in this book

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infor-CHAPTER 2

The Role of IT in Business Operations

Awide variety of models and definitions for analyzing and assessing variousaspects of information technology (IT) exist in today’s market Given thiswide variety, combined with the highly focused/niche characteristics of some

of these models, I lay out explicitly a perspective on how IT fits within thelarger context of an operating business

This chapter focuses on defining and contextualizing how IT relates tothe rest of an operating business Chapters 3 to 5 focus on the relationshipbetween strategy and IT

M O D E L S A N D D E F I N I T I O N S

For the sake of this book, the logical progression and ordering of variousmodels flows in this order: A strategy drives a business model, which inturn informs an operating model, which is then resolved in an enterprisearchitecture Many other models and orderings may exist, but for the sake

of clarity and transparency, this is the context that I employ for this book.This chapter maps out the path from strategy to business model tooperating model to enterprise architecture Figure 2.1 illustrates the stepsinvolved in optimizing and assessing IT

Figure 2.1 also was presented in Chapter 1 (see Figure 1.1); I refer tothis recurring figure on a number of occasions throughout this book Myinterest here is in providing a map or guide to how all the various processesand steps in optimizing and assessing IT fit together

The materials in this chapter relate directly to the first step shown

in Figure 2.1, “Define the Goal,” or defining the desired end state of the

IT function

Figure 2.2 demonstrates the relationship among strategy, businessmodel, operating model, and enterprise architecture

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F I G U R E 2 1 Steps for Optimizing andAssessing IT

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The Role of IT in Business Operations 15

F I G U R E 2 2 GeneralBusiness Figure

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S T R A T E G Y

Strategy is a field and discipline unto itself Many books have been written

on the topic of strategy, and entire businesses exist to do nothing but providestrategic consulting and advice My intent here is not to cover the field ofstrategy but rather to highlight certain aspects and describe how strategyrelates to the assessment and optimization of IT

One definition of strategy states that strategy “entails specifying theorganization’s mission, vision and objectives, developing policies and plans,often in terms of projects and programs, which are designed to achieve theseobjectives, and then allocating resources to implement the policies and plans,projects and programs.”1

Figure 2.3 highlights the position and role of strategy

It is an organization’s strategy that provides the overall mission andvision to a business There are a variety of levels or types of strategy Theseinclude corporate strategy, business strategy, and functional strategy

F I G U R E 2 3

Strategy Positionand Role

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Corporate strategy is the overall strategy for an entire firm This is thebroadest type of the strategies noted earlier—it is corporate strategy thatguides the overall direction of a company

Business strategy is related to the strategies of particular lines of business

or strategic business units While each division or business unit within a pany shares the same corporate strategy, they may have business strategiesthat differ from one another

com-Functional strategies relate to the strategies for specific business tions, such as IT My focus in this book is on how strategy—whether cor-porate, business, functional, or another type of strategy—influences andimpacts IT in a business

func-B U S I N E S S M O D E L

A business model represents “the rationale of how an organization creates,delivers, and captures value The process of business model design is part ofbusiness strategy.”2Put another way, a business model demonstrates how abusiness goes about generating value

Figure 2.4 highlights the position and role of a business model

The “business model” terminology is used in a wide variety of contextsand has a range of meanings For the purposes of this book, a business modelmay be defined as “the manner in which a business generates value.”

O P E R A T I N G M O D E L

The concept of an operating model is more abstract than a strategy or

a business model An operating model of a business describes the level

of process integration and data standardization among trading partnersand guides the underlying business and technical architecture in realizing abusiness model effectively and efficiently Designing an operating model isalso part of business strategy

Figure 2.5 highlights the position and role of an operating model.Framed in a different context, an operating model describes how thevarious pieces of a business fit together An operating model cuts across thedomains of People, Process, and Technology

E N T E R P R I S E A R C H I T E C T U R E

The bottom “layer” of this hierarchy is that of enterprise architecture (EA)

EA represents “a rigorous description of the structure of an enterprise, which

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F I G U R E 2 4

Business ModelPosition and Role

comprises enterprise components (business entities), the externally visibleproperties of those components, and the relationships (e.g., the behavior)between them This description is comprehensive, including enterprise goals,business process, roles, organizational structures, organizational behaviors,business information, software applications and computer systems.”3

Put another way, EA represents a description of the structure of theenterprise and the relationship of various business components Figure 2.6indicates the position and role of an EA

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F I G U R E 2 5

Operating ModelPosition and Role

For some additional perspective, a popular architecture frameworkknown as TOGAF (The Open Group Architecture Framework) defines ar-chitecture in one of two ways, depending on the context.4

A formal description of a system, or a detailed plan of the system

at component level to guide its implementation.

The structure of components, their inter-relationships, and the ciples and guidelines governing their design and evolution over time.

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F I G U R E 2 6

EnterpriseArchitecture Positionand Role

Furthermore, the Center for Information Systems Research (CISR) at theMassachusetts Institute of Technology (MIT) defines EA as “the organizinglogic for business process and IT capabilities reflecting the integration andstandardization requirements of the firm’s operating model.”5

This TOGAF and MIT CISR information is meant only to score the fundamental concepts underlying EA—those of structure andrelationships

Tiêu đề	Optimizing and Assessing Information Technology
Tác giả	K. Scott Proctor, CFA
Trường học	John Wiley & Sons, Inc.
Chuyên ngành	Information Technology
Thể loại	Book
Năm xuất bản	2011

Định dạng
Số trang	253
Dung lượng	16,91 MB