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: when approaching significant software licensing decisions, consider re-evaluating the organisation’s licensing service provider (LSP) to bring contestability to value-added services and costs not directly related to the software licences. Determining appropriate selection criteria for an LSP is based partly on an organisation’s software asset management maturity, and investments in software asset management capabilities, and a range of vendor management issues.

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Conclusion: the time is right to review whether ERP (Enterprise Resource Planning) solutions implemented over 10 years ago are still meeting their original objectives, and if not, assess the options. Failure to review and seriously consider the options when the business value of the ERP is marginal, is unsustainable.

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Conclusion: when considering Cloud based email (Microsoft or Google) organisations should critically re-evaluate the need for third party Email Archive add-ons. Since Cloud-based email has virtually unlimited mailbox capacity the archive/storage management features of third party Email Archive add-ons many not be needed.

For many organisations the native compliance and eDiscovery features in Cloud based email are satisfactory and will rapidly mature and improve over time. Organisations that are very large, highly regulated, or at risk of litigation should evaluate the benefit of the more comprehensive, and more polished, third party Email Archive add-ons, whether that be Cloud or On-premises.

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Conclusion: This month has seen an increase in executive appointments in ICT companies, as well as 2015 industry forecasts. Most interesting is an expected rise in outsourcing contract renegotiation to $100B, driven in part by a preference for multi-sourced contracts, as it becomes easier to respond to vendor management and governance issues, as well as obtain more stable contractual models. These improvements are expected to reduce difficulties and complexities associated with establishing and maintaining a number of agreements at once while retaining cost benefits multi-sourcing can provide.

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Discussions regarding emerging trends in 2014 and forecasts for 2015 were prominent this month.  The need for improved security solutions and cloud offerings have been identified as critical issues that emerged in 2014, with 2015 forecasts focused on increased third-party vendor engagements and expansion of product offerings, delivery models and contractual structures.  With large financial investments in outsourcing and the greater demand for business outcome-based contracts it is expected vendors will be altering current approaches to service provision.  

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Conclusion: The digitisation of service delivery in the finance, insurance, and government sectors means that all organisations in these sectors are now in the business of developing, maintaining, and operating software products for millions of users, with profound implications for organisational structures1, business architectures2, and the approach3 to service development and operation. Whilst internal business support functions can usually be addressed via off-the-shelf software, with very few exceptions, the functionality of customer facing services can’t be sourced off-the-shelf.

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Conclusion: Big Data and the promise of unlocking greater revenues and better productivity is perceived as the next technology wave. No barrier exists for any business of any size accessing Big Data solutions.

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Conclusion: Adobe’s ‘Cloud’ licensing model, coupled with aggressive auditing tactics, is causing discomfort for organisations in Australia. In the past, organisations used Adobe’s persistent licensing to deploy Adobe’s products in a largely ad hoc fashion. Now these organisations are being scrutinised by Adobe, and finding themselves out of compliance. Reducing the organisation’s Adobe exposure should be considered a priority.

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Conclusion: When architecting a payroll environment it is best to align to employment types not to departments. The payrolls are simpler to establish and run, cost less, and are in a form that can be outsourced to specialist payroll BPaaS providers.

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Organisations migrating to the Cloud and embracing flexible user-based computing have been tied up in knots with Microsoft’s archaic licensing models. On the end user computing side of things, a quick review of my notes on the nuances of Virtual Desktop Access (VDA) licensing and Remote Desktop Services (RDS) licensing are enough to give most people a brain aneurism.

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This month, the Lufthansa/IBM infrastructure outsourcing agreement, valued at $1.25B was particularly significant. These “big bang” outsourcing agreements have pared back the past few years because of difficulties associated with long-term contracts, such as vendor lock-in and expense, especially when project objectives are not met and client/vendor disagreements arise. 

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Conclusion: IT managers who discourage staff from using consumer oriented technologies could be doing themselves a disservice. Whilst there are risks of data leakage or cost blowouts from over-usage of external computing resources, the unexpected benefits such as identifying new patterns of buying behaviour or using data analysis to identify welfare fraud, far outweigh management’s concerns.

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Conclusion: Before embarking on a virtual desktop project examine the major factors in delivering a virtual desktop rather than immediately focusing on a technical evaluation of Citrix vs. VMware. This should include use cases, service model (i. e., Cloud, Managed Service Provider or Build, Own, Run) and infrastructure model (i. e., Desktop-as-a-service, Engineered System, Do It Yourself).

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October has been a great month for ICT outsourcing contracts, with a wide range of agreement types, vendors and buyers representing different industries.  Particularly interesting is the high number of smaller providers establishing a real presence in the market.

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Conclusion: Financial models provide insights and support better understanding. Using the right model depends on a thorough knowledge of its output and what it means. A powerful and valid model must have currency outside IT.

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Conclusion: Determining the optimum licensing mix involves not only an understanding of Software Assurance, but also consultation with the organisation’s business strategy groups, as well as a firm understanding of potential structural changes, such as mergers, de-mergers, acquisitions, and growth strategies. Getting the wrong mix can result in overspend, or worse, an inability to adopt business strategies such as mobility, activity based working, or bring-your-own-device.

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Related Articles:

"Understanding and Optimising Microsoft Software Assurance: Part 1 – The Basics" IBRS, 2014-10-01 20:28:23

Conclusion: While the concept of bundling and outsourcing of IT services is simple, its pricing regime based on dedicated devices available and not client applications processed, frustrates efforts to make IT costs transparent to business managers.

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Conclusion: HP’s split into two companies is more important as a sign of the dramatic changes in the IT infrastructure market than the impact it will have on HP customers. When combined with IBM’s exit from the PC and x86 markets and Dell going private, poor financial results from leaders such as IBM and SAP, it is clear we are in the midst of a major industry transition that is being driven by the forces of Social, Mobile, Analytics, Cloud and Consumerisation (SMACC).

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Software Asset Management tools vendors have been spreading the FUD (fear, uncertainty, doubt) as thick and as fast as they can. It’s not that they’re wrong in their claims of the risks. It’s just that mitigating these risks is not a matter of technology. SAM is a matter of process. It’s a matter of maturity. And here lies a problem with how software asset management is currently being positioned in Australia.

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New service contract agreements have been prominent the past month, particularly with the Department of Defence. The Department of Defence has traditionally engaged in high volume, high value, complex projects and does invest a lot in IT to support its critical functions.

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Conclusion: There are several established models which have been used to evaluate technology investments. Some models are applied to assess the value of technology in use within an organisation.

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 these outputs may not convince other parties if the tool is not compatible to cross-department interpretation.

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Conclusion: VMware’s EVO hyper-converged infrastructure is the tipping point for the move away from SAN based architectures. Over the next 3-5 years VMware EVO will commoditise and simplify compute/storage infrastructures in the same fashion VMware commoditised and simplified servers.

This will disrupt traditional systems vendors (e.g., HP, IBM) and new systems vendors (e.g., Cisco, VCE) and challenge the growth and long term viability of upstart hyper-converged vendors (e.g., Nutanix and SimpliVity). However, the real challenge to EVO will be IaaS, especially VMware Air.

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Conclusion: In most vendor-client relationships power shifts from the client to the vendor as soon as the deal is signed. As the SMACC (Social, Mobile, Analytics, Cloud and Consumerisation) ecosystem evolves, strategies are emerging that enable power to remain with the client for the duration of the vendor-client relationship. However, this shift in power will only happen if the client actively works to eliminate vendor lock-in strategies.

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Conclusion: Microsoft’s Software Assurance should not be viewed as a monolithic software maintenance and ‘upgrade path’ for existing solutions. Instead, it should be viewed as a collection of additional licences that extend product usage rights, and grant features for enterprise scale deployments. Knowing which Software Assurance licences to procure, and which to reject, can result in significant savings.

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Related Articles:

"Understanding and Optimising Software Assurance: Part 2" IBRS, 2014-10-31 17:57:54

Once upon a time there was a programmer who developed software, working for a software vendor, and there was a CEO, a CIO, and a sales executive who all worked for a manufacturing business. It was a happy time, where everyone knew who developed software, who bought software, who implemented software, and who used software. In this long-gone era businesses delivered physical goods and professional services, and software was a helpful tool to standardise business processes and automate tedious repetitive tasks. Those were the days where hardware was solid, software was easy to deal with (certainly not harder than dealing with a teenager) and humans were the masters of the universe.

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This month there has been a significant increase in senior appointments, restructures, collaboration and purchases in the ICT industry. In particular, service providers are acquiring or partnering with technology vendors to integrate specialised and high quality products with their services. This highlights the demand in the market for access to new and developing technologies and associated services to take advantage of them. In order to stay competitive, service providers have been forced to move beyond basic service provision and include technologies as part of their service offerings.

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Conclusion: The IBRS technology investment model only assesses costs. It shows costs in net present value terms and can also compare those costs with a typical total cost of ownership calculation. It does not measure so-called benefits or other intangible features of a product. Its principal aim is to reveal what an investment will cost over its duration and to do that as thoroughly as all the data available will allow. In addition the model can be customised and work with different data sets.

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Conclusion: Unless the IT and HR management work together to implement information systems to enable them to hire, develop and record the skills of IT professionals, the organisation will probably not have the right people to meet the looming challenges of the digital age.

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Conclusion: In government organisations the potential for standardisation and process automation via the use of enterprise resource planning software is largely limited to internal administration. In terms of digital service development government organisations can optimise their IT budgets by understanding themselves as knowledge-transformation organisations rather than as consumers of off-the-shelf technology.

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Discussions regarding unknowns that arise from multi-layered, hybrid and increasingly complex ICT environments have been prevalent this month. There is a recognition that, because of these variables, traditional tools and delivery models are often insufficient to ensure ICT environments function efficiently. Reviews indicate that difficulties can arise because of failures in the implementation of management and operational protocols as well as the critical tools needed to bind the many facets of an ICT environment together, to ensure operational effectiveness which all users can access and understand. For instance, user authentication systems that now require careful consideration and planning are often not feasible as they can require very specific expertise for just one small aspect of a large environment. IBRS Analyst James Turner will be discussing this particular issue in relation to authentication solutions, as well as potential response measures in a webinar to be held on July 31st.

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Conclusion: There is no single perfect financial analytical method. There are some models which are in common use but their longevity is due to their lack of rigour, or that they can be used for any occasion.

The best way to avoid the obvious gaps is to combine techniques, not in one model, but for comparison purposes. By bringing together parts of the stronger methodologies users can obtain better insights. How this type of optimised composite model will work is shown in the next paper.

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Conclusion: The architecture for a Software Asset Management solution must take into account an organisation’s structure, ability to digest and utilise the information that such solutions provide, using existing tools and processes. Furthermore, the architecture should not be considered a final end-state, but rather an evolving set of technologies and processes which will incrementally deliver benefits over time.

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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 4: Approaches for selecting a solution" IBRS, 2017-07-03 23:42:13

Conclusion: The operational model and associated processes of larger organisations in many sectors of the economy are encoded in software. Enterprise software from SAP plays a dominant role in many industries and significantly influences the terminologies and workflows used within organisations, in particular in those domains where SAP offers out-of-the-box solutions. The resulting level of standardisation has tangible advantages, but also represents an upper limit to the level of operational efficiency that is achievable. Organisations that rely on SAP are well advised to get independent advice to determine the optimal level of lock-in to SAP.

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Conclusion: IT Infrastructure has undergone a major transformation in the last five years yet many organisations cling to their old practices and are unsure how to proceed. As Jeff Smith, former CIO of Suncorp recently said, most organisations are not limited by skills, people or money, but by what they think is possible!

To harvest the benefits of these changes IT executives must be willing to stand up and challenge the assumptions that underpin the status quo and as necessary push staff out of their comfort zones.

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Conclusion: Organisations looking to adopt Software Asset Management (SAM) tools for the first time often discover that they lack the structure and maturity to realise the full benefits of these tools. Addressing the deep cultural issues that are at the heart SAM maturity may not be rushed, leapfrogged or outsourced. Instead, a steady process of organisational development is needed. 

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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 3: Aligning Architecture" IBRS, 2014-07-29 11:24:24

"Software Asset Management maturity Part 4: Approaches for selecting a solution" IBRS, 2017-07-03 23:42:13

Conclusion: Unlike other parts of business, IT has wrestled with a few financial analysis methodologies. Although those commonly employed work reasonably well, and have currency, it is clear to IT professionals that they are not as good as they might be. That is to say, that despite the application of a financial analysis to technology investments there is still vagueness and uncertainty about the quality of the analysis.

Eliminating all doubts over the merits of financial analysis is not entirely possible, of course, but it is feasible to apply better techniques as to how financial analysis is conducted.  

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Conclusion: Remediating major systems is not a job for the faint-hearted or over-confident IT managers. Poor governance decisions and excessive optimism can easily lead to project failures (and ruin careers). Conversely smart decisions combined with sound project leadership can increase the probability of success and enhance careers.

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This month’s outsourcing deals were especially interesting, showing that the range of services available to outsource and the ways customers are using them has broadened and borders for providers are being eliminated. Vendors are becoming more specialised, as the trend to target outsourced services at particular business functions or objectives, to satisfy customer needs, has emerged. This has resulted in vendors adopting more flexible products, services and delivery models to accommodate a wider range of customers and their varied requirements. This is becoming clearer with potential customers, such as the Department of Health specifically stating it wishes to explore different service models, technologies, IT practices and market capabilities when searching for a new service provider.

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Conclusion: Most Software Asset Management (SAM) Maturity models are theoretical and do not provide an organisation with a pragmatic way to consider SAM in the context of their organisational objectives. IBRS proposes an alternative that provides organisations with a basis to plan gradual, incremental improvements in both technology and, more importantly, organisational culture.

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Related Articles:

"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

"Software Asset Management maturity Part 4: Approaches for selecting a solution" IBRS, 2017-07-03 23:42:13

Conclusion: While many IT organisations believe that using public IaaS (e.g. AWS, Microsoft Azure, Google) to host business applications is a cost-effective strategy, they still require to manage the hosted environment themselves or select an external service provider to manage it for them. Towards this, it is critical to understand the current service management maturity level prior to choosing an in-house or outsourced solution. This note provides a self-assessment service management maturity model to create a solid foundation for selecting sourcing options. IBRS recommend that IT organisations with maturity level 3 or higher retain the service management function in-house, whereas, IT organisations below maturity level 3 should outsource the service management function.

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