Harsh times are coming for IT divisions. What to do ?

Financial Insights, a research subsidiary of IDC, forecasts that top 10 american financial institutions  will cut  their IT budgets by 30%. Money is becoming dearer worldwide and investments harder to make. Europe which need big restructuring, fears recession.

For IT managers, it is time to consolidation for being able to support unavoidable budget cuts.

What means consolidation ?

A change agent CIO, his real strategic stake.

CIO contribution is often assessed on the basis of IT value indicator which most of the time is improved when costs lower, quality of service rises, and risk level is acceptable. Furthermore, some firms expect from CIO to be one of their most important change agent. This is an opportunity for CIO’s which helps to bring them front and to give them a true strategic role. Then, the scope of CIO is not limited to IT Division but encompasses the whole company.

Often in the past, the widespread thought was that’s enough to find the right technology and company people will immediately get it and change its way of working.

IT vision and IT Strategy what is the difference ?

In my previous post, I addressed the point of view that IT Strategy is not only business alignment, but should rely on a strong vision of IT role in the company.

Then, in this post, I propose to address the points of IT vision utility and how to build it with respect to IT Strategy.

Unfortunately, in the business world, few situations support to undertake no move, because usually stakeholders are facing externalities which raise questions on the way the company business is done. Beside, business undergo internal pressure when, for example, company reach poor execution performance in some areas.
The same happen for IT, if you choose to not move when all your environment is changing, you are quickly out of the business, or if you perform poorly you out your buiness at risks.

IT Strategy and IT alignment

Holidays ending up shortly, it is time to rise up a little bit our views and to start discussing about Strategy.

When reviewing papers regarding IT Strategy, they often talk about IT Strategic alignement. Most of them seems to assert that the only acceptable strategy for IT is to be aligned with Business. Despite this general point of view, when rewinding the tape, some messages looked questionable.

For instance, when considering strategy you deal with long term goals and action plans. As it seems obvious, the spreading of strategic planning methods like Balanced Scorecard (BSC) has set the long term line to next year which is pretty short. Are we really still in strategy ?

Is organisation the raw material for enterprise architecture ?

I use to read Yves Caseau’s blog on which the author scans enterprise organisation issues, tries to identify appropriate optimisation levers, and tests models which helps to validate control efficiency. Involved in Enterprise Architecture which is expressed by organisation, Y Caseau has already identified 5 levers for organisation efficiency :

• meetings
• hierarchy
• matrix structure
• lean and mean
• competences

Should this list be closed or requiring new entries ? Although some people think that organisation is far less important than strategy, it deserves to be properly studied since without well shaped organisation it becomes harder to achieve a strategy. Basically it is Enterprise Architects message.

A dreamed CIO life ?

Here is, below, some thoughts I exchanged with a consultant in the Paris metro, regarding CIO life. Does it match your knowings ?

Once you have stepped in as CIO, you are facing quickly to a lot of operational concerns which usually are managed by crisis meetings. Your people expect from you to take the harsh decisions they have not been able to take and they think they need, to be backed in their day to day work. You are trying a say about strategy, everybody hears you politely, but they all seem to think : “hey, guy shed your illusions ! Here, you will deal with the hard. only if such a thought may support the budget, it is worth to have”. Your team is expecting a change but nobody believe it is still possible.

From Enterprise architecture to social architecture. The very architect challenge !

In the 80’s and the 90’s, information systems viewed the world as enterprise centric. All business facts and events the enterprise ought to manage, were entered into the system by employees or captured by technical equipements like sensors.
By these times, enterprises were compared to complex living systems made of people and machines. They need at the same times programs and psychology, that was in short the H A Simon point of view when he work out the decision process. Information systems should support all aspects of the enterprise brain, especially they should cater for a virtual machine which help to understanding events, to taking the right decision, to leading the required operations. This cannot be achieved without dealing with the question of reality representation. Beside technology, this is the main question addressed by researchers and developers.

What about Enterprise Architecture and IT auditors ?

As Enterprise Architecture buzz is gaining ground within IT Divisions, what auditors, may think about it ? Since version 4.0, one of Cobit focuses is strategic alignment which is attained by a 3 stages macro process : translating by the business into objectives related to IT-enabled initiatives, defining IT’s own objectives, defining the IT resources and capabilities required to successfully execute IT’s part of the enterprise’s strategy. Although the CIO is responsible for the whole process, the IT Chief architect contributes to stage 1 and stage 2, and is responsible for IT architecture design.

With ITIL, the situation is much more confusing. In its post “ITIL v3, Enterprise architecture…“, Steve Thorn who made a research on TOGAF 8.1.1 and ITIL v2 relationships for the Open Group, points out that service strategy process is not very clear about Enterprise Architect responsibility alongside project portfolio manager and IT service manager responsibilities. Enterprise Architect role may be shared by both of them.

TOGAF 8.1.1 addresses strategic alignment as well, but focus on Architecture life cycle. It gives the responsibility of identifying business requirements and designing IT architecture to IT architects, up to them to identify stakeholders and to set up the detailed process.

According to Cobit Togaf 8.1 mapping document, Cobit and TOGAF cover more or less the same extent regarding entreprise architecture. They may be considered as complementary in respect of TOGAF is adressing detailed activities of Cobit Chief Architect.

With Cobit, auditors find support to assess architecture macro process regarding deliverables and performance through KPI assessment. But, as design decisions are critical, it is interesting to detect flaws earlier than system go in live time. Because TOGAF is compatible with setting up a Quality Insurance Activity dedicated to Enterprise Architecture, it is a very interesting reference for managers and auditors.

Nevertheless, in accordance with framework approach, process are loosely defined, each company has to decide of its own implementation. Then, auditing Enterprise Architecture requires for the auditor to be able to assess not only if the process implementation is appropriate to company goals, but the same about methods and if indicators enable to detect quality risks early.

When Cobit enables to manage and drive globally strategic alignment, TOGAF, although restricted to architecture function, may be used equally on the scope of a whole company, a business domain or a program. With TOGAF, IT Divisions are able to manage alignment locally and globally at design time. Often Business Divisions focus on time to market and time-scale, when companies mainly focus on compliance and costs. TOGAF allows to build a comprehensive framework which may drive all design activities of the IT Division in accordance with Business Goals.

Enterprise architects support CIO strategists

When strategists sharpen their analysis, they often build plans of specialization, diversification, internationalization, or vertical integration regarding a company. For products, decisions are wiath respect of development, retention or divestment.

All of these impacts Lines of Business and IT division .

Specialization means developing certain products and giving up others. Diversification is about investing in new products. Internationalization could occur along with specialization or diversification. And vertical integration impacts more supply chain than products.

In any case, plans execution must be prepared and carried out jointly by Business Directions and IT Division.

Consequently, projects are natural ways of working for companies.

Besides delivering the service with existing systems, companies ask IT divisions to extend or to reconfigure IT functions according to strategic plans. It makes investment in information technology never end.

CIO must demonstrate his capability of monitoring changes at no extra cost or, needing more resources, they should be linked with good indicators. Should it be turnover ? profit ? employees number ? Although each choice has its pros and cons, the market retains mainly budget / turnover.ratio

In this context, time is frequently used as adjustment variable, either on the Company Request which caps his annual effort, or imposed by the projects slippage. Improving project performance with the increase of project management skills or by selecting partners carefully, are actions well identified by large IT Divisions.

Another adjustment variables are project extent and roadmap for infrastructure acquisition. In this case, business is eager of system availability for being able to implement strategic decision as soon as possible, even if integration is at risk or if automation is partially postponed.

Regarding speed, outsourcing is an attractive option. Software as Service (SaaS), in addition to speed, brings ability to stagger investment, and more to link it with activity volume. Yet, insourcing remains good for understanding impacts of technology on a business and being in a position to make innovations.

Finally, sourcing method is an adjustment variable of budget with strategic developments.

More than ever, question of strategy is asked to CIO, and he has to grasp it. In fact, the Gartner recently published a warning on the IT Divisions lack of involvement in helping Business Division to choose SaaS, .

Indeed, CIO ability to address strategic issues, identifying clearly critical IT factors or having a clear vision of priorities, is essential to select sourcing options.

He must find next to him, the Enterprise Architect which should help to structure strategic IS contribution, in order to decide on the optimal sourcing, and to prepare internal resources and externally

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Processes or Leadership in Enterprise architecture field

When a company would like to join the information revolution, it needs to rely on new breed of professional able align Business and IT Transformation. This is the Enterprise Architect as Allen Brown wrote in the Align Journal.

Even if CIO is an important player, it needs to be seconded by an IT City Planner who plan and drives the moves to break silos.

For many years, big french companies have started implementing IT City Planning processes. But, so far, we don’t see any information revolution happening. US are always considered as leading the field. It will be interesting to realize a survey regarding Enterprise Architecture processes maturity and effects on companies IT and business.

One of the points maybe that french companies tends to trust more processes than leadership. But, I don’t see how to succeed undertaking organisational changes without leadership.

To see their actions recognised and approved, City Planners develop the strategy of supporting IT silo teams since they are visible by the Business. In the same time, some CIO’s balance the change in IT with respect to risks on silos which may impact Business.

In this landscape, I wonder how French Conception of City Planning may fuel information revolution toward Business Transformation !

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