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(Strategic Business Strategic IT Projects Budget
Plan)
Agenda
5 8
6
Strategic IT Project Plan
Action
Projects
Requirements (Annual)
11
2
4
Assessed Lights-On
Strategic IT Plan
Portfolios Budget
9 IT Plan
(Alignment, (Annual)
Service/Quality,
Technology) The IT Enterprise: Four “Lights-On” Asset Pools

Performance Measurement Metrics 12




Deliverables
Effective Planning
in the
Bottom-
Appropriate Resource Decisions
Business IT
Strategy-to-
Line
Strategies Actions
Results
Workable Budgets, Projects, and
Bottom-Line
Operational Plans
Value Chain
Performance Measurement Metrics




The connection from the information on one deliverable to the creation of
the next deliverable in the Value Chain.
The connection of information from business sources (strategic inten-
tions, business plans) to IT sources (portfolios and, within those portfolios,
information from enterprise architecture and related technical planning
processes).
The connection to the budgeting business processes (and related processes
of performance measurement).

For example, the information on business strategic intentions drives the cre-
ation of the strategic IT agenda, which drives strategic IT requirements, which are
then turned into projects, and so forth. It is the connections that are important.
The 12 deliverables are listed in Exhibit 6.4 and defined as follows.

1. Business Strategic Intentions. We defined these in Chapter 3. Examples are
found in the Prioritization and Alignment practice descriptions in Chap-
ter 8. As a deliverable, a chart formatted as shown in Chapter 3 defines
the company™s strategic intentions and, for each, goals, metrics, and weights.
These are used in all five NIE practices. The content is company mission
plus strategic intentions.
2. Assessed Portfolios. Chapter 4 introduced Portfolio Management. The
portfolios of applications, infrastructures, services, and management areas
96 ADOPT EFFECTIVE PROCESS TO PRODUCE ACTION


EXHIBIT 6.4 Descriptions of the 12 Deliverables
Strategy-to-Bottom-Line Value Chain
Deliverable Name Deliverable Description
1 Business Strategic Intentions Mission plus weighted Strategic Intentions
Strategic Planning




2 Assessed Portfolios As-is alignment, service, quality, technology, use
3 Strategic IT Agenda for Use of IT Strategic Intentions to Strategic Initiatives
4 Strategic IT Plan Strategic Intentions to Strategic Initiatives
5 IT Strategic Requirements Initiatives”3 to 5 years horizon”portfolio format

6 Projects Real, doable projects
Annual/Tactical Planning




7 Annual Project Plan One year annual horizon”with portfolio format
8 Annual Business Plan Documentation according to company practices
9 Annual IT Plan Documentation according to company practices
10 Annual and Capital Projects Budgets Documentation according to company practices
11 Annual Lights-On Budget Documentation according to company practices
12 Performance Measurement Metrics Documentation according to company practices



are assessed for alignment, service, quality, technical, and intensity of use.
These assessments are described in Chapter 8. The assessed portfolios are
used in planning and in the development of strategic IT requirements
through projects. The content is as-is alignment, service, quality, technol-
ogy, and intensity of use for each line item in the portfolios.
3. Strategic IT Agenda. The agenda is an outcome of strategic IT planning.
It defines what the business expects to do with IT to meet its strategic
intentions. A further description and example is found in Chapter 9. The
strategic IT agenda is used to drive strategic IT requirements and projects,
as well as establish the obligations business management has to produce
the expected bottom-line impact from IT spending. The content is busi-
ness management™s strategic intentions for the use of IT, strategic objec-
tives for the use of IT, and the strategic initiatives with IT to achieve the
company™s business strategic intentions.
4. Strategic IT Plan. This plan is the outcome of strategic IT planning; it
defines what the IT organization must do to meet the demands of the
strategic IT agenda. It is used as the strategic framework for the IT lights-
on budget and the technology-related projects needed to support the busi-
ness projects. The content is the IT organization™s strategic intentions to
deliver IT to meet the business requirements defined above.
5. Strategic IT Requirements. This is a prioritized statement of programs and
initiatives that, over the life of the strategic plan, will satisfy the require-
ments of the strategic IT agenda and the business strategic intentions. It is
the portfolio of potential strategic initiatives, on a 3 to 5 year horizon, to
meet the business requirements defined above, prioritized according to
business strategic intentions.
97
The Strategy-to-Bottom-Line Value Chain


6. Projects. Specific projects are defined in response to the programs and ini-
tiatives defined in strategic IT requirements. These are candidates for pri-
oritization and inclusion in an annual project plan or budget. The content
is real, do-able projects. (Not an NIE deliverable.)
7. Annual Project Plan. This is the annual set of projects expected to be
undertaken during the current fiscal year. Of course, an “annual” per-
spective of projects is not timely or responsive enough for most businesses,
so this deliverable is usually revisited quarterly or even more frequently
for particularly dynamic businesses. The content is a portfolio of sched-
uled projects, with resources assigned, prioritized according to business
strategic intentions.
Annual Business Plan. This is the set of annual3 tactical and operational
8.
plans for the business units. It is the basis for establishing the annual proj-
ect plan (see point 8 below) and defines what the business units will
require tactically from IT. (Not an NIE deliverable.)
9. IT Plan. This is the set of annual tactical and operational plans for the IT
organization. It is the basis for establishing the Lights-On budget for sup-
port of the business units. The content is documented according to com-
pany practices. (Not an NIE deliverable.)
10. Projects Budget. The budget is the aggregate investment budget for proj-
ects for the year. It is based on the “affordability” for the business units.
Of course, this budget may be affected by business events during the year,
and so is normally revisited quarterly or even more often depending on
business dynamics. The content is documented according to company
practices.
11. Lights-On Budget. This is the base budget for ongoing activities of the IT
organization. It provides for all services and support not specifically pro-
vided in the Projects Budget. Taken together with the Projects Budget, 100
percent of the IT spend is defined. The content is documented according
to company practices.
12. Performance Measurement Metrics. This is the set of metrics for IT and for
the use of IT in the business. The content is documented according to
company practices.

We recognize that the deliverable descriptions above may not apply cleanly
to each company situation, due to such variables as company size, company
complexity, and the ways in which IT services are delivered (e.g., outsourcing,
shared service organizations). Nevertheless, they represent a framework to define
the needed information in the Strategy-to-Bottom-Line Value Chain.
Moreover they represent the connected set of information to drive from
strategy to bottom-line impact. However the company may manage its activities
and processes, the information defined here is required. To the extent the infor-
mation is not available, or is developed in a disconnected way, the company will
98 ADOPT EFFECTIVE PROCESS TO PRODUCE ACTION


have great difficulty in controlling IT spending and maximizing IT™s impact on
the bottom line.


ESTABLISHING THE PROCESS CONNECTIONS
The Strategy-to-Bottom-Line Value Chain, in addition to being a connected set of
information represented by the deliverables, is also a connected set of processes.
Exhibit 6.5 shows a generic set of processes that deliver the 12 Value Chain
deliverables. The corporate/business processes of corporate strategic planning,
business unit planning, budget, procurement, capital budget, and measurement
interact with the Value Chain processes by providing the basic business infor-
mation and, critically, operationalizing the results through budgets and per-
formance measurements. The IT management processes of enterprise architecture,
project management, systems development, IT planning, and the administrative
processes interact by providing technical direction and, ultimately, the lights-on
and project budgets.


EXHIBIT 6.5 Management Processes in and around the Value Chain

Budget
Corporate
Procurement
Strategic Business Unit Planning
Capital Budget
Planning
Measurement




Strategic Business Projects
IT Agenda Unit Budget
Annual Plan

Strategic
Project
Projects
IT
Plan
Requirements

IT
Strategic Annual Lights-On
IT Plan Plan Budget




Enterprise Architecture Systems Development IT Finance
IT Procurement
Project Management (PMO) IT Planning IT Measurement




MANAGEMENT ROLES
Achieving the goals of connected information and processes, in an unbroken
chain that carries on from business strategy to budgets and actions, requires that
management understand the roles to be played, and then actually play them.
99
New Information Economics Practices


Management, in this case, includes the senior leadership team, one or more busi-
ness leadership teams, the technology leadership team, and the manager who is
responsible for conducting and coordinating the processes that produce the
deliverables in the value chain.
This is so easy to say, and potentially so difficult to do. The risk is that what
we describe in this chapter and the book sounds so overwhelming and intimi-
dating that a manager interested in pursuing the ideas abandons them because
the task of interacting with senior and business leadership is so daunting and
may feel impossible. The potential impediments include management culture,
management disinterest in the process, misunderstanding the goals and the
importance of achieving them, politics, awkward organizational structures, and
personalities. This is a tough list.4
Here, we introduce the big picture of the management roles needed, accord-
ing to the Strategy-to-Bottom-Line Value Chain. Again, we understand that com-
panies have existing processes that do produce most if not all of the deliverables.
Our primary interest is in their connection and consistency, and the tool set used
(e.g., prioritization with strategic intentions, etc.). See Exhibit 6.6.
The senior leadership team is corporate leadership, typically consisting of
the CxOs. The business leadership team can be business unit CEOs and, in the
case of multi-SBU companies, their direct reports. More typically, this team
comes from the set of direct reports to the senior leadership team. The IT lead-
ership team is from the IT providers; note that this can include representation
from outsourcing organizations if they are in the picture. The Value Chain
Process Owner is an awkward way of stating which individual is accountable for
accomplishing parts or all of the Value Chain activities.
This description is necessarily very generic, as every company has differing
management patterns. In some situations, for example, the same set of individ-
uals fulfill more than one role. This description also flows from a “central” per-
spective, with the notion of one company leadership team and one IT team. This
may not be the case, and possibly several sets of individual teams, and manage-
ment processes, are required. It should be apparent that the specifics of the indi-

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