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.

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.

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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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Conclusion: This month there has been a focus on supplier governance models based on the service integration and management (SIAM) approach which can improve the effectiveness and efficiency of IT environments. By establishing converged and hybrid technical foundations and utilising multiple suppliers significant benefits can be achieved. However such an approach may be problematic if disparate arrangements and processes for contract execution are employed. The SIAM approach provides a single and end-to-end user experience, despite multiple suppliers’ underlying IT functions. This type of model allows for greater efficiency and cost benefits, as well as faster IT overhauls for companies needing to increase capacity, upgrade, or wishing to access new technologies and solutions. However, the model also requires strong implementation partners for analysis and a strict system definition combined with strong management capabilities, to support a very tightly integrated environment where many components can operate as one entity.

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Conclusion: CIOs continually wrestle with how to replace or modify failing core systems and having to convince management to invest in modernising them. They also know that ignoring a bad situation will probably cost the organisation more to fix the longer they postpone the replacement decision.

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Conclusion: Cloud architectures offer a vast array of possibilities that are not an option for organisations limited to conventional IT solutions. Do not let infrastructure people convince the organisation they can match Cloud capabilities solely using legacy in-house resources

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Conclusion: This month, discussions regarding a number of failed public sector outsourcing projects, which resulted in significant cost overruns have been prominent. Weaknesses were identified in a range of areas, from inappropriate vendor engagement processes to insufficient monitoring and response measures to problems that were identified during the course of a contract. It is critical for clients to establish protocols for contract management as well as frameworks to ensure these protocols can be followed.

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Conclusion: The role and responsibilities of procurement and corporate services organisations is increasing relative to those of ICT groups as ICT becomes increasingly bought ‘as-a-service’ rather than installed as capital-intensive internal infrastructure.1

This demand is driving the trend to focus on governance, probity and sourcing management issues in buying decision frameworks.

Neither corporate procurement nor ICT sourcing teams can succeed in isolation: both will sink or swim together. The near-term challenge for most enterprise buying activities will continue to be the ability for both procurement and ICT to keep each other adequately informed and sufficiently knowledgeable in the other’s domain2.

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Conclusion: This month, there has been a particular focus on service-based Cloud offerings. As this market matures, there are increased concerns regarding vulnerabilities that arise when using evolving environments without adopting new enabling tools and processes to support a shift. Approaches, such as retaining legacy applications in a new technological space can cause difficulties in areas such as security, which require more high-level data collection and analysis for success, rather than basic functions offered in legacy systems. With a dramatic increase in vendors offering service-based solutions, it is important for customers to ensure solutions have underlying systems that can support businesses and strategic objectives prior to establishing agreements. It is critical for customers to alter their perspective of service-based Cloud offerings from an alternative hosting platform to an IT toolset that can alter business processes and efficiency, with adequate foundations to achieve business objectives.

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Conclusion: This month, the Queensland government’s action against IBM for the failed Health payroll system was dismissed, with the liability waiver upheld despite assertions the government was misled by IBM regarding its capabilities during the tender. The Australian Federal Police also announced it has cancelled two five-year outsourcing contracts with Eldbit Systems because of project failure. This underscores the need for clarity during the negotiation phases and establishing clear contract terms such as liability waivers and exit clauses to cater to project failures and disagreements, as well as fostering an environment for positive client/supplier relationships even when projects fail.

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Conclusion: While the need to design current and future state technology platforms has not diminished, the role of the solutions architect in designing tactical business systems and advising management which systems implementation approach to pursue is taking centre stage.

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Conclusion: This month, discussions regarding analytics and data-driven innovation have been prominent. As the role of IT changes from providing technology solutions to driving business outcomes and strategy through the use of technology agile services to support business processes and targets are required. Companies have recognised that data handling and having the capacity to absorb, use and deliver data are becoming core competencies. This has prompted the growth of service providers that manage and analyse data, as well as providing associated services such as security and storage.

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Conclusion: This month, Fujitsu and Link Group announced a five year extension to their current ten year managed services agreement, which is founded on a combined on-site, on-shore and offshore delivery model for the provision of a variety of services. This is indicative of an increase in further alignment between IT spending and business strategic priorities utilising complex and evolving delivery models. The agreement highlights the need to provide a wide range of resources which cater to business needs, whilst managing them as one. In order to do this, a cohesive management strategy and the capacity to accommodate increased IT proliferation, new technologies, and associated security risks, must be carefully integrated into outsourcing plans during vendor engagement and contract performance. 

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Conclusion: It has been well established in recent reports that future workplaces will be significantly different from today and the workers of tomorrow will demand to work differently. Technology has enabled organisations to provide greater freedom to their workers with a new, greater understanding of the strength and weaknesses of flexible working. In addition, organisations will gradually casualise their workforce for greater flexibility. Organisations that fully harness the potential of providing highly flexible or flexible and creative workplaces early will be able to attract and retain the best talent for their workforce. Other organisations will be forced to adapt as work roles and practices disappear or change radically.

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Conclusion: To ensure desktop investments are aligned to the organisation’s strategy, and the business benefits are clearly understood, IT organisations should create a Benefit Dependency Network. This is a benefits management tool that explicitly shows the linkages between technology investments and the business benefits, uncovers the business changes necessary to deliver these benefits, and clarifies the role of the business in harvesting those benefits.

Through the processes of building a Benefit Dependency Network, the IT organisation can engage the business in a meaningful discussion about business benefits and about the business changes needed to harvest them. Without a benefits analysis a major desktop investment is less likely to be approved and there are risks generating no value for the business, perpetuating the view that IT is a cost that must be reduced.

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Conclusion: This month there has been an especially visible increase in managed service provider offerings and expansion globally. With the wide range and increased release speed of new technologies in the market, greater emphasis has been placed on adopting new technologies in business to support evolution and cost reduction. Approximately 70% of business leaders involved in company digital business transformation ranked new technology adoption as the top priority in a survey this month, resulting in an increased demand for tailored solutions with effective implementations in complex ICT environments.

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Conclusion: Especially interesting this month was a Trial Services Agreements (TSA) between SkyFii and Wests Ashfield Leagues Club. The agreement spans four weeks, with very specific deliverables and KPIs. In IT outsourcing, where agreements and relationships can become difficult to manage or collapse due to a wide range of unforeseen complexities, TSAs are emerging as a solid review process to measure vendor skills and capacity to service specific customers. These TSAs are also an attractive avenue for vendors to display competencies sought by customers and a precursor to possible long-term relationships. Such arrangements can also provide a greater clarity when setting terms and establishing final agreements as well as clearer and sturdier ongoing vendor/customer relations.

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Conclusion: Sustained investment in IT Infrastructure is critical for the delivery of services to clients and delivering business efficiencies. Without continued investment service quality will deteriorate, operational incidents occur more frequently and the organisation’s network put at risk from unwanted intrusions.

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