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Adopt Effective Process to Produce Action: Management Agenda


ADOPT EFFECTIVE PROCESS TO PRODUCE ACTION:
MANAGEMENT AGENDA
The following is a self-examination for the critical success factors for Right
Decisions/Right Results.

If No, What Is
Yes or Our Plan for
Management Question No? Correcting This?

Demand/Supply Planning ” Does the company improve
strategic and operational impact from its IT investments?

Innovation ” Does the company excel in innovating through
IT, in products, processes, and performance?

Prioritization ” Does the company choose the most
valuable IT investments?

Alignment ” Does the company improve returns from its
IT activities?

Performance Measurement ” Does the use of performance
measures lead to improved IT and business performance?

Culture Management ” Is management able to optimize
IT™s contribution to business performance?

Por tfolio Management ” Do all IT investments and
resources contribute to business performance?

IT Impact Management ” Does the effective application
of NIE practices in all areas of the business improve
IT™s return?



Chapters 8 through 10 explain the practices needed to answer the “What Is
Our Plan for Correcting This?” question.


ADDITIONAL READING
The book™s website contains additional information related to Chapter 6:
Website Note 4: Tests for Connected Business and IT

The appendices at the back of the book also contain information related to
Chapter 6:
Appendix A: The Role of Enterprise Architecture in Right Decisions/Right
Results
110 ADOPT EFFECTIVE PROCESS TO PRODUCE ACTION


Appendix B: Management Team Roles in Right Decisions/Right Results
Appendix E: The CFO Role in Right Decisions/Right Results


NOTES

1. Michael J. Earl and David Feeny, “How to Be a CEO for the Information Age,”
Sloan Management Review, Winter 2000, pp. 11“ 23.
2. While the terminology here and throughout the book is in “business” terms, the
concepts and practices apply with equal force to government and nonprofit orga-
nizations. While business is concerned with competitive strategy and financial
outcomes, government is just as concerned with strategy and performance to
organizational mission.
3. We use the term “annual” in the description of Value Chain deliverables. How-
ever, some organizations do tactical planning in different time frames, such as
quarterly or bi-annually. We are not specifying that “annual” is the only appro-
priate timeframe.
4. We address management role and the related problems of culture directly in
Chapter 7, “Tackle the Practical Problems”; in Chapter 11, “Deal with Culture”;
and in Chapter 14, “Answer the ˜So What?™ Question.” In Chapter 13, we estab-
lish a supporting IT Impact Management practice that provides tools and direc-
tions for moving forward. In particular, we outline an incremental process for
going forward.
7
CHAPTER

Tackle the Practical Problems



I n Chapter 6, we made three basic points: (1) a company should adopt a
connected set of management processes to produce the deliverables represented
by the Strategy-to-Bottom-Line Value Chain; (2) a company should employ
one or more of the NIE practices (e.g.,
Prioritization, Alignment) as part of Control Spending and Maximize
those processes, and (3) a manage- Impact on the Bottom Line
ment team should focus on getting 1 Define the Goals
the right action to produce bottom- 2 Ask the Right Questions
line impact. The three points make up
3 Connect to the Bottom Line
what is required to control IT spend-
4 Understand Costs and Resources
ing and improve IT™s bottom-line
5 Focus on the Right Things
impact.
The question now is: What does 6 Adopt Effective Process to Produce Action
it take for a company to follow these ¤ 7 Tackle the Practical Problems
three recommendations? What are the 8 Make the Right Decisions
practical problems involved?
9 Plan for the Right Results

10 Keep Score
A PRACTICAL PERSPECTIVE 11 Deal with Culture

12 Char t the Path to Implementation
We need to put these issues of discon-
13 Define What™s Next
nects, management roles, and the Value
14 Answer the “So What?” Question
Chain in some practical perspective.
There is a risk that it sounds like a
very large undertaking to accomplish anything practical and worthwhile. For
many company situations we may overemphasize the issues of process connec-
tion and the Strategy-to-Bottom-Line Value Chain, and the “global” view of
management roles. However, much of the value is contained in the individual
NIE practices ” in particular, prioritization and alignment. These are things that
can be done well by themselves and, in fact, are appropriate places for a com-
pany to begin. In the right circumstances, a company can adopt an NIE prac-
tice, or parts of a practice, to good effect. That, by itself, can begin to address
culture and role questions.

111
112 TACKLE THE PRACTICAL PROBLEMS


The reason we say so much about connection, consistency, roles, and so
forth, is that they so greatly influence the long-term value of adopting a busi-
ness-strategy-based focus on IT spending and IT™s bottom-line impact. This is
because it is, fundamentally, a systemic set of problems and solutions. As we
have repeatedly said, unless the outcomes of things such as decision making in
prioritization get directly reflected in budgets, nothing will happen. In order
to effectively and continuously control IT spending and improve IT™s bottom-
line impact, the issue of connection, and related issues, really do have to be
addressed.
In the meantime, if a company is interested in getting started, then we can
apply one or more NIE practices and make progress. This is a good start, but it
won™t produce lasting changes.


THE PRACTICAL PROBLEMS REVOLVE AROUND PEOPLE
Good management processes alone are not sufficient.
The best planning and prioritization practices will fail when senior man-
agement does not accept the results, or act on them. The best alignment and
performance measurement practices will fail when line management does not
understand the results or does not consider them important enough to affect
their areas of responsibilities. The best innovation practices will fail to generate
new ideas and business opportunities when the management culture does not
accept them. In proposing the kind of management processes necessary to
improve IT™s bottom-line impact, we treat management culture and disconnects
as a critical element, and propose methods for addressing these issues.
A company cannot successfully adopt the Value Chain and NIE practices
without the proper culture and without management taking necessary actions.
Therefore, we explicitly describe the relationship between having good “mechan-
ical” processes and the related cultural and management behavior requirements.
The distinction is between simply executing step-by-step processes and the com-
mitment necessary to transform the management processes to produce results
consistent with the values and necessary outcomes. These are the cultures and
behaviors necessary to transform mechanical process into an effective set of
management values applied in decision making, producing decisions in which
management believes and is willing to invest time and resources.
We have all experienced the real impediments, such as politics and culture:
“doing things the way we™ve always done them.” Encouraging individual man-
agers to do what is necessary can be difficult, particularly when the actions
involve many organizations across many silos. IT, often, is exactly in this situa-
tion. Getting the right results comes down to getting individual managers to do
the right things. (For that matter, the same impediments occur when trying to
get the right decisions from management teams.)
This chapter is as much about the questions leading to decisions as it is
about the actions that may result. We want to lay the groundwork for making
113
Practical Problems Getting from Strategy-to-Bottom-Line Impact


the right decisions, and then guide and motivate all concerned to take the right
actions. None of this matters unless things actually happen.


ADDRESSING PRACTICAL PROBLEMS:
IT IMPACT MANAGEMENT
In this chapter,1 we explore several practical problems and our strategy for solv-
ing them. We adopt a program management approach, called IT Impact Man-
agement, to the planning and implementation of the Right Decisions/Right
Results frameworks and processes. This approach is based on addressing each
of the practical problems. The focus is on affecting the way the company and
its managers make decisions and allocate resources.


PRACTICAL PROBLEMS GETTING FROM
STRATEGY TO BOTTOM-LINE IMPACT
The fundamental challenge is to translate the company™s business strategies and
goals into the right IT actions to produce the right bottom-line impact. This is
done by effective planning, appropriate resource decisions, and workable budg-
ets and operational plans. The objective is to control IT spending and improve
IT™s bottom-line impact. But serious practical problems face the management
team committed to doing this. See Exhibit 7.1.

1. Process Disconnects. Management is unable to consistently carry through
from business planning to IT action to bottom-line results.
2. Legacy and Entitlement Mentality. The company™s existing IT applications,
infrastructures, and project backlogs are the legacy of the existing strategy-
to-results management practices, and prevent starting with a clean slate.
Managers feel entitled to “their” systems and support.
3. Management Roles. The company™s management culture prevents business
and IT management from playing the roles needed to effectively direct and
apply IT resources to achieve improved bottom-line impact.


EXHIBIT 7.1 Strategy to Bottom-Line Impact: Business Results


Effective Planning

Appropriate Resource Decisions
Business IT Business
Strategies Action Results
Workable Budgets and
Operational Plans
114 TACKLE THE PRACTICAL PROBLEMS


4. Company Processes. The new or changed management practices that connect
business and IT will have to coexist and work with many other existing
company management practices (e.g., capital budgets, HR, management
performance/compensation, corporate budgets, purchasing, and so forth).
5. Management Expectations. Senior company managers only expect financial
return from IT and simple measurement of its alignment and affordability.
6. It Ain™t Broke. . . . Individual managers get what they need with the processes
they currently use.
7. Multiple Perspectives. The company does not speak with one voice.

Our solution is IT Impact Management, a program of management initia-
tives that address the practical issues result in effectively controlling IT spend
and improving IT™s bottom-line impact.


Practical Problem 1: Process Disconnects
Existing management processes are unable to consistently carry through from
business planning to IT action to bottom-line results.
Most companies already carry on planning activities; they have some means
of making resource decisions, and they do have operating budgets and operat-
ing plans. Most often, however, these basic management activities are discon-
nected and fail to consistently carry through from business strategy to IT action.
Business planning does not effectively connect to IT planning, which does not
directly influence the annual budget process and which is not reflected in the
performance measurement practice that governs management behavior. Man-
agement™s goal should be to produce IT actions that, together with the business
organization™s initiatives, directly carry out the business strategies to get the
right bottom-line impact.
Every organization has its own distinct planning culture that is reflected in
its specific strategic and tactical planning processes (both for business and IT).
Our experience has been that in most organizations, the various planning activ-
ities are loosely coordinated and not well integrated. Moving from business
strategy to IT action in these cases mimics the old parlor game of passing a state-
ment serially around a group of people: By the time business strategies eventu-
ally become IT actions, much of the original meaning of the strategy has been lost.
There can be a considerable gap between management™s planning process
and how something actually happens in IT (see Exhibit 7.2). In some cases, the
planning process itself gets in the way (poor timing, ineffective communication,
or ineffective goal setting and goal articulation), or there is no follow-up to
planning to be sure that the actions taken reflect the company™s intentions. The
existing processes typically are not coordinated or integrated, so annual budg-
ets and project plans are not driven by the business strategies but reflect a dif-
ferent set of priorities, often tactical and tied to individual managers™ wants.
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Practical Problems Getting from Strategy-to-Bottom-Line Impact

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