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(Alignment, (Annual)
Technology) The IT Enterprise: Four “Lights-On” Asset Pools

Performance Measurement Metrics 12

Effective Planning
in the
Appropriate Resource Decisions
Business IT
Strategies Actions
Workable Budgets, Projects, and
Operational Plans
Value Chain
Performance Measurement Metrics


Throughout the discussion of the Value Chain and the NIE practices, management
roles have been defined. Overall, we have defined a standard view of these roles (see
Chapters 4 and 11) for each of the leadership teams.
These roles are specified in terms of the deliverables in the Value Chain (shown
in Exhibit B.1). These deliverables are created in the company processes that deal with
the topic. For example, the strategic intentions and the strategic IT plan deliverables
are a result of the company processes that do business and IT planning. In Chapters 6
and 11, we discussed at length the cultural impediments involved and, in Chapter 14,
how to address them.
To review, the leadership teams are defined in Chapters 6 and 11 as:

Senior Leadership Team ” typically comprised of the CEO and direct reports.
These direct reports can include the chief executives of lines of business as well
as functional (“CxO”) reports.
Business Leadership Team ” typically made up of direct reports to the senior
management team.
Technology Leadership Team ” typically the CIO and direct reports.

In addition, there™s the team responsible for the Right Decisions/Real Results processes.
These teams are described as enterprise-wide. For example, the Business Leader-
ship Team represents all the business functional areas and the key lines of business (if
they are free-standing SBUs). Examining the roles we™ve identified for each of these
teams looks a great deal like the governance role these groups should play in the man-
agement of IT. See Exhibit B.2.

EXHIBIT B.2 Senior Leadership Team Roles
Deliverable Name Senior Leadership Team
1 Business Strategic Intentions Approve and weight strategic intentions
2 Assessed IT Portfolios Review
3 Strategic IT Agenda for Use of IT Approve
4 Strategic IT Plan Review
5 IT Strategic Requirements Review
6 Projects Review, approve large projects
7 Annual Project Plan Make decisions or approve funding
8 Annual Business Plan Approve
9 Annual IT Plan Approve
10 Annual and Capital Projects Approve
11 Annual Lights-On Budget Review
12 Performance Measurement Metrics Approve

The role of the Senior Leadership Team is to review and approve the basic re-
source allocation and budget decisions made through the Right Decisions/Right Results
processes. See Exhibit B.3.
Management Team Roles in Right Decisions/Right Results

EXHIBIT B.3 Role of the Business Leadership Team
Deliverable Name Business Leadership Team
1 Business Strategic Intentions Revise and review strategic intentions
2 Assessed Portfolios Assess portfolios/alignment, service, quality
3 Strategic IT Agenda for Use of IT Develop IT agenda
4 Strategic IT Plan Review IT plan
5 IT Strategic Requirements Develop requirements
Recommend decisions
6 Projects Create project requirements and business cases
7 Annual Project Plan Prioritization
Recommend funding
8 Annual Business Plan Review IT plans
Establish business unit plans
9 Annual IT Plan Review
10 Annual and Capital Projects Develop budgets
11 Annual Lights-On Budget Review
12 Performance Measurement Metrics Establish business performance metrics

The role of the Business Leadership Team is to operationalize the main activities,
ranging from assessing the current as-is portfolios in the lights-on budget through cre-
ating and prioritizing projects and establishing budgets. The core of these activities is the
business-driven establishment of requirements through projects, and then the determi-
nation of the financial resource allocations to realize them. See Exhibit B.4.

EXHIBIT B.4 Role of the Technology Leadership Team
Deliverable Name Technology Leadership Team
1 Business Strategic Intentions
2 Assessed Portfolios Contribute to portfolio development
Assess portfolio/technology
3 Strategic IT Agenda for Use of IT Participate in IT agenda process

4 Strategic IT Plan Develop IT plan
5 IT Strategic Requirements Participate in IT requirements process
6 Projects Form detailed projects and technical
7 Annual Project Plan Establish annual project plan and schedules
8 Annual Business Plan Advise
9 Annual IT Plan Develop IT plans, establish budgets
10 Annual and Capital Projects Budgets Participate in budget planning
11 Annual Lights-On Budget Develop budget
Initiate plans
12 Performance Measurement Metrics Establish IT performance metrics

The role of the Technology Leadership Team is to support the process and gener-
ate IT plans and projects consistent with the business requirements established by the
Business Leadership Team. See Exhibit B.5.

EXHIBIT B.5 Role of the Value Chain Process Owner
Deliverable Name Value Chain Process Owner (IT Impact
1 Business Strategic Intentions Create initial draft Strategic Intentions
2 Assessed Portfolios Manage portfolio development
Manage the assessment process
3 Strategic IT Agenda for Use of IT Create the initial drafts (strawman)
4 Strategic IT Plan Create the initial drafts (strawman)
5 IT Strategic Requirements Drive the process
6 Projects Assure that project formation works right
7 Annual Project Plan Drive the process
8 Annual Business Plan Assure this happens
9 Annual IT Plan Assure this happens
10 Annual and Capital Projects Budgets Create initial draft (strawman)
11 Annual Lights-On Budget Create initial draft (strawman)
12 Performance Measurement Metrics Assure this happens
Create initial drafts (strawman)

The role of the Right Decisions/Right Results team is to drive the process forward,
work out the organizational, cultural, and political deals, and “make it happen.” Chap-
ter 14, “IT Impact Management,” gives guidance on how to do this.

Most reasonably sized companies have multiple lines of business. How do the manage-
ment roles play in this situation?
The problem is most severe when each line of business has bottom-line, profit/loss
responsibility. Typically, this means that centralized, or single-focus, planning and pri-
oritization processes don™t work well if they attempt to ration or allocate financial
resources across the lines of business. The reason, of course, is that the chief executive
of each line of business is essentially free to make his or her own decisions on resource
Companies that deal with this problem, particularly global companies where the
problem is complicated by multiple-country operating locations and the likelihood of
profit/loss responsibility devolved to the county level, have evolved a balance between
central governance and the business units that has decentralized financial responsibility.
The corporate center™s role is to establish standards and processes. These can

Definition of standard strategic intentions ”A corporate-wide set of strategic
intentions, at least in terms of basic themes, can provide important guidance to
the individual lines of business
Expectations of standard processes ”The corporate center can encourage and
support each line of business to conduct the planning through bottom-line processes
discussed in this book.
The Challenge of Multiple Lines of Business and Global Businesses

Preparation of standard budgets ”A standard budgeting format, focusing espe-
cially on costs within the lights-on portfolios, helps in company-wide communi-
cations and management.
Use of enterprise architectures and CTO roles ”This can help drive the planning
processes in each line of business.
Definition of standard roles for management teams ” Perhaps the most impor-
tant, this encourages each business unit to follow through on business-driven
processes such as those stated above.

Viewed from the individual business unit perspective, they carry forward with Right
Decisions/Right Results by doing some or all of the following:

Adjustment of the strategic intentions to the local business unit requirements ”
Although the corporate framework might be appropriate, the specific details in
terms of goals and weights are more likely to be different for each line of business.
Establishment of prioritization and alignment processes ”This is the basis for
understanding the as-is IT spend and making the appropriate decisions for the to-
be projects and ongoing lights-on budgets.
Establishment of planning process in the Value Chain ”Understanding the con-
nection between strategic intention and bottom-line results, and taking action con-
sistent with this understanding. This is how the business unit can control IT spend
and improve IT™s bottom-line impact.
Establishment of portfolios ” Understanding the total IT spend, particularly in
the lights-on, is important to effective business-driven management. It is the basis
for applying the basic NIE practices.
Implementation of management roles ”This is critical.

The Strategy-to-Bottom-Line Value Chain and the management roles provide for
a way for both the corporate center and each business unit to think about and under-
stand IT governance, as well as the connections to controlling IT spend and maximiz-
ing IT™s bottom-line impact. The Value Chain provides the foundation for: (1) establishing
the standards, (2) providing for cross-line of business issues (e.g., corporate-wide ini-
tiatives), and (3) enabling effective governance processes that connect from planning
to the bottom line.

The Development of Strategic
Intentions, with Examples

A ppendix C™s purpose is to discuss how “strategic intentions” can be documented for
a company. A colleague wrote to us as he reviewed Chapter 3, saying: “Most IT
professionals do not understand how to derive the strategic intentions of an organi-
zation through what management thinks is important. Management™s actions and deci-
sions outline their strategic intentions; we have to be smart enough to determine what
that is and how we communicate IT™s support of it.”1
The problem in many companies is that there is little awareness of exactly what the
company™s strategic intentions are. (Note that strategic intentions do not equal strat-
egy. Strategic intentions are what management intends to do, over time. Strategies are
one of the means they have available to do them.) Most companies do have formal mis-
sion statements, often with a high-level strategy statement. For example, we worked
with a financial services company that proudly pronounced its mission and strategy.
Its stated mission: to provide a complete set of personal and corporate financial serv-
ices in its region. Its stated strategy: to offer the highest quality services at the lowest
costs possible, to the most customers in the region. However, what we really need to
know is what management intends to do ” that is, what its strategic intentions are.
How will the company offer the highest quality services? How will those services be
offered at the lowest costs possible? And so forth.
In another consumer products company, the overall enterprise goal was to improve
relationships with customers. To achieve this, senior management developed strategic
intentions for each area, such as customer service (e.g., establish call centers and man-
age them for improved customer relations), finance (e.g., improve all aspects of customer
contacts for billing and collections), and marketing (e.g., develop comprehensive cus-
tomer information). These strategic intentions were the basis for developing implemen-
tation strategies. Unfortunately, in this particular case the strategic intentions were not
consistent with each other or with the overall goal. This is why clear strategic intentions
are so important, and why it is critical that they become the organizing principles around
which business units and IT focus their activities. This is why we use strategic intentions
in each of the NIE practices, throughout the Strategy-to-Bottom-Line Value Chain.
Often, companies do have well-thought-out statements of management™s strategic
intentions. Where this is the case, we can adopt these statements directly and apply
them throughout the NIE practices. If a company does not have a clear statement of


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