IT Operational Excellence

When IT departments are tuned to run their best, they achieve more, spend less and drive success back into the organisations they support.

IT operational excellence is an approach that helps to ensure IT departments run efficiently and deliver great service. Without an operational excellence philosophy, IT departments lack vision and strategy, are slow to adapt and are more likely to be bogged down by trivial issues.

Achieving IT operational excellence isn't about implementing one particular framework. It is a mindset geared towards continuous improvement and performance that incorporates multiple principles designed to align team goals around delivering value to the customer.

IBRS can help organisations achieve IT operational excellence by revealing the most effective ways to leverage resources and identify the most valuable activities and differentiators in a given IT team.

Conclusion: This month, a number of high-profile systems outages were reported, again flagging risks associated with operating complex IT environments and business functions which rely on these systems. Seemingly minor incidents, or a combination of disparate problems, can result in serious and costly system failures. These problems are exacerbated when issues impact on a company’s service delivery mechanisms and their own customers. This month, a power surge which triggered a global systems outage at British Airways left 75,000 customers stranded, at an estimated cost of $135M. A failure at Westpac left online users unable to access funds for 24 hours, following a similar week-long online and mobile banking failure in November 2016. The Australian Taxation Office has experienced serious service disruptions as a result of three outages in recent months, related to two separate service providers. A review of two failures by service provider Hewlett Packard Enterprise found a number of issues contributed to ATO system collapses and an inability to respond to them, including monitoring systems used to detect operating errors that were not activated, and access to recovery tools required to resolve problems being stored on the network which failed. These types of incidents highlight the impact of unexpected failures and inadequate response measures as well as the need for both vendors and customers to prepare for such events.

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Conclusion: Vendors use sales incentives, such as bonuses or rewards, as levers to focus the behaviour or outcomes of their sellers or channel partners. Many vendors work on quarterly results for their sellers, and set sales incentives for these periods. Vendors view sales bonuses and incentives as levers that they can put in place to try to drive a specific focus, or specific sales results.

Being aware of the existence of these incentives can help an organisation understand that incentives may be driving the negotiations approach that a vendor may be prepared to take, and on what solutions are being offered.

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Conclusion: There are four broad approaches to consider when procuring Software Asset Management. The approach should be based upon an organisation’s SAM maturity1, and its appetite to grow this maturity2.

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Related Articles:

"Software Asset Management Maturity Part 1: A pragmatic model" IBRS, 2014-05-30 00:00:00

"Software Asset Management Maturity Part 2: A Process for bootstrapping maturity" IBRS, 2014-06-29 00:00:00

"Software Asset Management Maturity Part 3: Aligning Architecture" IBRS, 2014-07-29 11:24:24

Conclusion: Astute CIOs and business managers must consider not only which COTS (Commercial off the Shelf) vendor best meets their needs, but also how to best deploy the solution. This is because many vendors not only offer a mix of on-premises or private Cloud or SaaS (Software as a Service) solution but due to a limited local presence may lack the capability to implement it.

A further complication in the debate is that many COTS solutions are functionally mature which often means the selection decision hinges on their meeting qualitative and non-functional requirements.

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Conclusion: This month, discussions regarding skills gaps and talent shortages in ICT services have been prominent. Difficulties obtaining staff with specialist skills are expected to be apparent throughout 2017, and managed service providers are adopting a more strategic approach to obtaining and retaining qualified staff in key industry areas. The past year has seen a noticeable increase in acquisitions and collaboration between firms to provide services in high demand and maintain market relevance. However, vendors have recognised the need for long-term and strategic solutions to avert, rather than respond to, expected skills gaps. This has resulted in new positions being created dedicated to sourcing and further developing workforce capabilities that are sufficiently flexible to cater to a highly volatile and fluid industry, while providing environments that attract staff. A shift in perceptions of talent acquisition from an expense to a long-term asset investment is also required to ensure vendors can maintain a quality skills base.

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Conclusion: Organisations that by law must issue open tenders for systems solutions know they will be inundated with multiple responses and spend scarce work days assessing them. Staff involved in the process also know that many solutions proposed are not practical and, even if they are, often doubt the vendor has the capacity and capability locally to implement them.

The alternative, if not required to issue an open tender, is to conduct a market scan and qualify vendors with a viable solution and the ability to implement it. Having qualified them, they can send them a tender knowing they can probably meet its requirements. If this approach is adopted, there is the risk a potential vendor might have been overlooked.

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As outlined in “Human Capital Management Solutions: Why your ICT Group needs to get involved with HR right now” (IBRS, 2017) vendors are increasingly offering capabilities right along the spectrum of human capital management (HCM), starting with recruitment, through learning and performance management, to succession planning. This infographic provides a snapshot of vendors key strengths within the HCM. This Infographic is a useful starting point for conversations with HR professionals as to the HCM areas that may be worth considering in the short, mid and longer term, and links this discussion to product selection.

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Conclusion: ICT vendors compete to gain the loyalty of channel partners to take their products to market. Vendors often run channel programs that reward partners for specific behaviours and results, which can give specific partners an upper hand in competitive situations.

When organisations go to market to purchase specific technologies, they often seek out several quotes or proposals in an endeavour to ensure costs are competitive and reasonable.

Whilst pricing should not be the only factor in choosing a supplier, organisations should be aware of the way partner relationships work with vendors and how this may influence pricing and other outcomes.

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Is a return to the high period of IT investment likely? The same conditions of the long IT investment boom are not present today. This infographic reveals the trends over the next 3 years.

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Conclusion: This month has seen a sharp increase in outsourcing agreements and a broader range of services adopted by customers. Due to globalisation and thus access to new markets and overseas resources through collaboration, vendor offerings are becoming more diverse and tailored to individual customers. This allows for the adoption of stronger digital models from diverse markets, not focused on particular technologies but on business processes and changing customer experiences (CX). This pattern is emerging globally, spanning both large and small businesses. Worldwide, there has been an increased emphasis on CX and recognition that a focus on customer needs as well as a capacity to adapt is necessary to maintain customer engagement and remain competitive in the industry.

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Organisations can select a model for a particular need however, it is fundamental that the assumptions and the factors that construct the model are realistic and clearly understood. Furthermore, the models should be comprehended by other departments within an organisation, such as finance. A model that is only applied within, and solely has merit for IT, is generally not an altogether useful tool. The outputs and the inferences drawn from them may not convince other parties if the tool is not compatible with cross-department interpretation.

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IBRS iQ is a database of Client inquiries and is designed to get you talking to our Advisors about these topics in the context of your organisation in order to provide tailored advice for your needs.

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Conclusion: This month, strategic focuses and plans for managed service providers have been prominent. As the current market remains highly flexible and prone to change, vendors must plan ahead while providing customers with tangible business responses to evolving markets. In particular, areas such as security, analytics and digital transformation are set for increased growth this year, as well as associated, offshoot industries that support areas in high demand.

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Conclusion: This month, financial results reporting for the first half of the 2017 financial year have shown steady growth for many IT managed service providers. Vendors that have acquired other companies to enhance or expand service offerings often report positive outcomes, provided those businesses can be successfully integrated with existing operations. Without carefully assessing potential acquisitions and developing a solid transition plan, difficulties can arise because of unsuccessful integration and restructuring efforts. A stringent consolidation plan is required for vendors to incorporate acquisitions and fully exploit specialist products and skills obtained from these investments. It is critical for vendors to assess their own service capacities, capabilities of potential business acquisitions and determine how they can be consolidated to improve service offerings.
In addition, careful planning is required for acquisitions that require business transformation, as well as other potential shifts, such as different target markets or strategic objectives. These efforts can be complex and expensive, but highly beneficial for vendors. There is a need to provide unique, innovative and efficient solutions to customers in a fast-paced and competitive industry, and acquisitions can facilitate this type of market differentiation.

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Conclusion: Successful ICT life cycle service delivery from strategy development to system decommissioning relies on the person assigned the role picking up the work in progress and successfully completing the task before handing it to the next agreed role. It is analogous to the relay runner at an athletics carnival taking the baton from the previous runner and, on completion of the leg, handing it onto the next runner.

Unless the ICT service delivery model is designed well, critical activities might be missed or partially performed by different roles, resulting in duplication of effort, output overlap and, at worst, process failure. To overcome this problem the service delivery model must be thorough, and activities and the level of accountabilities clear so staff know what is required of them by activity.

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Mergers, acquisitions and divestitures are a fact of life that make vendor management an ongoing challenge for today’s tech leaders…

There have been several seismic shifts with IT vendors over the last couple of decades. The merger of HP and Compaq, Lenovo’s acquisition of IBM’s PC and server businesses and, more recently, the Dell EMC deal that has seen the two companies come together – while several businesses, such as Quest Software and Dell SonicWall, have been divested. And, more recently, we’ve seen HP split into HPE and HP Inc. Add the constant acquisitions of small companies and start-ups by the big boys and vendor management becomes a major headache for technology managers.

Peter Hall, an advisor with analyst firm IBRS recently published a research note on vendor management through mergers, acquisitions and divestitures.

Full Story

Conclusion: Prominent this month were agreements and discussions that highlight shifts in the ICT outsourcing market, with increasing demand for targeted solutions to support business functions and long-term goals. These types of offerings have become more common, and are no longer niche services. Set solutions, which are sufficiently flexible to be tailored to individual customers, have become the norm. These solutions bundle a wide range of technologies, associated services and specialist staff, while utilising new business models for the provision of end-to-end services. In order to remain competitive, and facilitate the adoption of new solutions such as the Internet of Things (IoT) vendors are bundling offerings which go beyond the performance of business functions or expanding existing functionality.
Catering to specific goals such as increased customer engagement or the need for monitoring and analysis systems to help with business evolution or protocol development are becoming increasingly popular. Vendors have recognised the importance of portfolios which include extensive suites of strategic managed services that are efficient, diverse and easily customised to individual needs.

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Conclusion: Organisations deal with an array of ICT vendors, resellers, integrators or service providers. Prudent organisations will establish formal Supplier Relationship Management procedures to systematically manage the organisations’ interactions with suppliers, with goals of streamlining procedures and maximising effectiveness and value in these dealings.

Not all suppliers are equal in value, and SRM approaches for each should be measured in the effort applied.

A really effective SRM approach should enable an organisation to foster and grow strategic relationships with key suppliers capable of helping the organisation, for example, in driving competitive advantage. This would mean viewing the relationship with key suppliers as an asset and managing it as such. Organisations should also be aware of the risks in having too few strategic relationships which may stifle innovation or value over time.

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Conclusion: Contact centres in Australia have been undergoing many strategic changes embracing digital transformation for well over a decade. So what awaits in 2017? As new technologies mature, it is time to seriously ramp up and explore the emerging trends and then embrace the next generation of technology enablers to better serve business aspirations.

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Conclusion: The options for processing ERP (Enterprise Resource Planning) range from on premises to managed services to public Cloud to SaaS (Software as a Service). The attributes of all the solutions, including the risks, costs and benefits, can appear overwhelming and may persuade risk averse senior management to make an expedient decision and keep the status quo.

IT managers must engage their risk averse peers and force them to think through the issues and make a strategic, rather than an expedient, decision as whatever they decide will have long-term ramifications.

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Conclusion: This month saw a focus on the development of improved controls over vendor activities due to the high number of recent outsourced solutions failures and serious impacts on customers. In particular, establishing internal early threat detection teams for initial development phases and more stringent, ongoing reviews. These types of activities flag a change in the outsourcing environment, with increased customer involvement in contract execution throughout all phases of an agreement and set processes to assist with technical issues that may arise before implementation as well as basic contract management. This type of involvement can help minimise risks associated with the adoption and consumption of new technologies and business models, with a greater emphasis on frameworks to circumvent threats as well as respond to them.

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Conclusion: Mergers, acquisitions and divestitures are regular occurrences amongst ICT vendors. A lot of analysis of these announcements focuses on the potential impact on the future value of the organisations involved, particularly for investors. But each announcement means there will be changes for employees, customers and business partners.

Prudent organisations must be proactive and engaged in considering and debating how announced changes to suppliers could impact them, and assess for themselves the business implications of the potential scenarios that are likely to occur, and the risks or opportunities these present.

As each customer and business partner will have a unique relationship with the parties involved, they should do their own assessment, including seeking independent advice, of the potential ramifications of the announced changes.

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Conclusion: This month saw a focus on customer priorities and greater demand for niche or highly specialised IT services. In particular, there was a shift in IT investment centred on cost savings to ongoing strategic initiatives which facilitate innovation and expansion to maintain competitive advantage. These types of priorities can be advantageous for enterprises hoping to increase operational efficiencies or avoid irrelevancy in changing markets. However, without adequate preparation and thorough assessments of existing and potential environments, large-scale alterations to business operations can be hazardous, negating potential benefits. Risks associated with unforeseen skills deficits, complexities associated with consolidating or replacing environments and business process changes must be considered carefully. An increased uptake of business consultancy services to manage high-level alterations and avert or respond to difficulties indicates an awareness of the necessity to establish solid plans in conjunction with vendors that can be flexible and sensitive to customer needs.

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Conclusion: On 1st October, Microsoft introduced a number of changes to its licensing regime, changed the names of several products, added two new packages under the new Secure Productive Enterprise (SPE) portfolio and introduced new licensing rights1.

The new licensing packages are aimed at taking organisations on a journey off Cap-Ex (persistent) licensing for devices, toward Op-Ex (subscription) licensing for users.

Understanding the new Secure Productive Enterprise licensing packages is essential for organisations embarking on a move to digital workspaces, and those renegotiating Enterprise Agreements (EAs) within the next nine months.

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IBRS iQ is a database of Client inquiries and is designed to get you talking to our Advisors about these topics in the context of your organisation in order to provide tailored advice for your needs. 

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IBRS iQ is a database of Client inquiries and is designed to get you talking to our Advisors about these topics in the context of your organisation in order to provide tailored advice for your needs.

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Conclusion:

Prominent this month were reports of outages and system failures which impacted on critical operations for several businesses and government agencies. These types of failures can become costly with the increased reliance on technology and more complex environments that underpin many basic business processes. Outsourcing agreements and protocols can provide frameworks for averting or responding to service interruptions, but cannot cater to all variables that cause unexpected problems which are difficult to resolve. Triggers for serious disruptions this month have included human error, software misconfiguration, failed fire alarms, contravention of standard consultant protocols and ISP failures which had flow-on effects for large companies which rely on networks. It is not always possible to prepare effective responses for the types of disruptions that are not predicted, making it essential for both vendors and customers to conduct more thorough and regular reviews of environments, as well as establish strict protocols for public responses to avoid further damage to vendors or clients depending on outsourced services.

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IBRS iQ is a database of Client inquiries and is designed to get you talking to our Advisors about these topics in the context of your organisation in order to provide tailored advice for your needs.

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Conclusion: The Australian Bureau of Statistics’ annual innovation survey gives financial evidence to the rhetoric on innovation. The data presents strategic directions which could produce wider changes too, such as full casualisation in employment, coupled with technology investment by large businesses and structural underutilisation and deskilling, although more trend data is required to qualify such a view in future.

Senior technology executives ought to take note of this economy-wide picture of investment strategies in order to understand their own initiatives in a wider context. It may help with policy setting, with business cases, and provide a better view of planning evolution over the next two years.

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Conclusion: ICT vendors invest in training their Account Managers or Sellers to be “Trusted Advisors”. The training is to improve the seller’s skill to be able to help their clients achieve success both in business and at a professional level. A client organisation’s expectations are that the vendors should at best be “Competent Advisors” in terms of the solutions or products they represent. Few, if any, employees in client organisations are relying on or expecting their success to be based on the strength of a “Trusted Advisor” from a vendor.

Few sellers can ever achieve the highly valued position of being a true “Trusted Advisor”. The way vendors manage and reward their “sellers” generally has nothing to do with the client recognising them as a “Trusted Advisor”.

Sellers from vendors know their primary measures are on their sales results. This is what their management really expects them to be focusing on and achieving.

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Conclusion: This month, the integration of businesses and expanded service offerings has been especially prominent. In particular, the combination of technologies and managed services to provide more variety and highly specialised IT service offerings targeted to customer strategic initiatives. Vendors are reaching beyond service implementation to deliver full, high-value solutions in innovative ways, including partnering with competitors to expand capabilities and improve service quality. This type of flexibility is critical and indicative of an environment where delivery models, innovations and offerings change at a fast pace and underpin high customer demand for new solutions.

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IBRS iQ is a database of Client inquiries and is designed to get you talking to our Advisors about these topics in the context of your organisation in order to provide tailored advice for your needs.

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Conclusion: This month, online Census solutions failures prompted the government to launch a review into outsourcer IBM’s performance. Debate regarding causes for the outages commenced, and uncertainties again highlight the need for a solid and structured framework to be established in contractual arrangements, as well as protocols for implementing services and responding to difficulties encountered. Frameworks are more critical now as rapidly changing technologies and solutions are in high demand, combined with the new, often complex customer environments vendors must cater to. Problems can be compounded by an under-appreciation of costs, different vendors working together and time overruns. It seems as though a higher number of contract failures are being reported, but it is a natural output of outsourcers delivering hybrid solutions in large, complex and foreign environments with evolving technologies and solutions. These types of factors that can result in problems for both customer and vendor necessitate a solid legal and operational framework for conducting the contract.

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Conclusion: Communications vendors’ product shipping reports show that a disappointingly large number of Australian enterprises continue to re-invest in obsolete telephony solutions. In most organisations, this approach is a major waste of business opportunity and a misdirection of communications responsibilities given that popular and effective alternative unified communications and collaboration (UCC) solutions are so readily available.

UCC has become known as simply ‘collaboration’ and telephony needs to be seen as a supported part of the collaboration environment rather than as a first choice communications technology.

Do not re-invest in obsolete telephony solutions. Strong collaboration solutions abound.

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Conclusion: Discussions regarding new executive appointments, acquisitions and partnerships have been prominent this month with managed service providers adopting a more calculated approach to reformation. In order to meet emerging challenges and demands, vendors must match both operations and offerings to provide solutions which can cater to new customer priorities. These priorities have increasingly dictated vendor investment decisions to build capabilities and portfolios through acquisitions and partnerships with specialist service providers. Heightened demand for industry-specific digital business models has driven much of the investment and transformation; in particular, end-to-end business solutions, digitally unified systems or the provision of new solutions that cannot be obtained using existing customer systems.

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Conclusion: This month, IT Outsourcing (ITO) industry analyses for the Asia Pacific region were released. Whilst figures show a decline in ITO spend in the region, the trend towards Cloud adoption and new service models that result in cost savings has driven this decline, not the demand for external services. As vendors shift to cater to this new market and provide more specialist services, ITO sector growth is expected. These types of changes in the ITO industry have been seen in the past, as service providers adapt to accommodate customer demands and new services and technologies. These market shifts are typically beneficial for customers, vendors and business operations providing a greater range of services, higher quality service delivery and cost savings.

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Conclusion: This month has seen a high level of activity in tender issues, funding allocations and new ICT projects by government agencies seeking to reap the benefits offered by emerging technologies, ongoing innovation and digital transformation. This follows general trends in outsourcing because of the advent of new technologies, contract structures and solutions that can be tied directly to fulfilling business objectives. Whilst the technologies exist, a report issued this month regarding CIO concerns has flagged difficulties still prevalent when attempting to take advantage of innovations, attributed to outdated existing technologies, policy and budgetary constraints. As the ICT outsourcing industry continues to evolve at a fast pace, organisations must adapt their inner workings to suit new technologies and business structures before they can take advantage of benefits, and avoid project failures because contracts and businesses are misaligned.

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Conclusion: This note seeks to analyse two questions: Is a return to the high period of IT investment likely? And what were the conditions surrounding the last one?

The answer to the first question is, currently at least, of a very low probability. The conditions or background that produced the long IT investment boom are not seen today and are not likely to provide the same business environment in the near-term either.

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Conclusion: This month there have been a high number of new senior appointments and workforce expansions in the IT service industry, flagging the need to monitor and change resources which support businesses if required. Whilst strategic planning and initiatives are central to business development, the need for an effective skills base to successfully implement plans in increasingly complex and unique environments, which change quickly, is clear. Both the skills base and the framework to maximise benefits are required. Regular assessments of a company’s human resources, and structures in place to utilise them to achieve business objectives, have also become crucial. Structures need to be sufficiently flexible to accommodate new and targeted skills required to support both business and fluid IT environments.

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Conclusion: Most IT professionals see Cloud as simply a replacement (sometimes even competition) for the tasks they do now – provide CPU cycles, storage and internal communications. Looking at Cloud through such a narrow lens is a big mistake. Cloud is not just a replacement for IT processes – it is a replacement for all business processes that are based on legacy in-house IT capabilities.

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Related Articles:

"Why In-House IT is not like Cloud" IBRS, 2016-03-01 05:05:35