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.

This month there has been a lot of discussion regarding the importance of innovation, in the approach to both technology and business strategies. While this has been flagged previously it is even clearer when examining the IT industry activity this month, in particular company buy-outs, new product and service offerings, investments in development and company growth. Collaboration between companies in the provision of specialised service offerings and in discussions about new standards and protocols for evolving technologies and solutions were also noticeable. These activities are both driven by, and drive, the need to innovate in the current climate, the need to address user concerns in the uptake of new solutions and a desire to maximise the benefits of using new solutions.

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Conclusion: With IT infrastructure having gone through major changes in the last five years, due to virtualisation and cloud technologies, organisations should challenge their assumptions about storage, and evolve their strategy prior to the next major storage acquisition.

Rather than assume the current networked storage centric strategy is the right approach, and simply needs a minor update, organisations should look at how their IT infrastructure has changed in the five years, then evaluate alternative approaches such as Integrated Systems or networked storage free Unified Systems.

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Conclusion: Customer Relationship Management (CRM) is undergoing major changes. The addition of features, analytics, and high quality data measurement gives users more options than ever to explore how their various customers interact with their organisation.

The substantial enhancements in CRM technologies should encourage organisations to lift their own skills in order to use the power of these tools. To use the CRM tools effectively it may be necessary for people within each department to coordinate their work across different areas of the organisation.

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Conclusion: Today, nearly all organisations are delivering digital services to customers and suppliers. Quality of service expectations of external stakeholders create significant challenges for organisations that were used to treating IT and software needs as internal topics that are at least one level removed from customers and suppliers. Digital services have evolved into the key mechanism for embedding an organisation into the external value chain. Articulating a clear conceptual picture of the external value chain in precise terms without using any IT jargon is a prerequisite for innovation and successful business transformation, having an IT strategy is no longer good enough.

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September has seen a noticeable rise in the number and value of outsourcing deals, particularly in the provision of communications and network infrastructure. Other IT news was centred mainly around the change in government. Pre-election, there was much discussion on the Coalition’s proposed strategies and plans, and after the election, predictions regarding the impact of the change on the ICT industry. Commentary and opinion was largely positive and focused on increased confidence and business-centric policies which are expected to drive evolution and growth in the ICT industry.

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Synopsis: In the previous millennium some CIOs claimed they could reduce their IT costs by not producing printed reports for business managers and only recommencing them if the manager complained. If they said nothing the application software and documentation were put on the back burner in case they were needed and after a decent period given a ‘quiet burial’.

In this millennium the approach above will not work as business professionals and managers can access their data and prepare management reports online when needed. This begs the question, how can CIOs reduce their costs in 2013 while managing risks?

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Conclusion: Vendor performance evaluation is a critical component of successful contract execution and has been an area of difficulty for the ICT industry. Deciding what to evaluate, when and how often to evaluate, how to collect the data necessary to undertake the evaluation and fulfilling the responsibilities of a customer requires commitment, planning and active participation. However, CIOs will be rewarded with improved supplier relationships and more successful contract engagements.

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Conclusion: Microsoft’s licensing for its end user products (Windows, Office) attempts to straddle the old desktop-bound paradigm and the new user-centric paradigm brought to the fore by mobility, cloud services and consumerisation of end points. This has resulted in a fragmented and complex set of intertwined usage rights that can confound even the most astute procurement specialist. The only workable approach is to prepare long-term scenarios that deal with specific end-user situations and have Microsoft develop and confirm the licensing requirement in writing prior to deployment: plan for more dynamic application deployment, but externalise the effort, time, costs and risk of the licensing decision back to Microsoft.

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Conclusion: Withouthonest and informed feedback from clients on the effectiveness of the services delivered, IT management must rely on their intuition to devise ways to enhance services and measure the department’s performance.

The ideal way to obtain the insights needed to enhance IT services and measure performance is to conduct an IT Service Effectiveness, or Customer Satisfaction Survey, on a regular basis and act on the findings. Actions might include, for instance, justifying an increase in the IT Expense budget or acquiring extra computing resources to improve online systems performance.

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Conclusion: Application portfolio rationalisation offers the promise of reduced ICT maintenance costs while improving data quality, process support and usability for end users, and increasing organisation effectiveness and efficiency.

An effective approach to application portfolio rationalisation involves five steps: 1. understand your business architecture; 2. understand your applications portfolio; 3. develop principles for rationalisation; 4. assess opportunities for rationalisation; and 5. rationalise.

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The majority of IT outsourcing contracts this month include the provision of cloud-based services, and issues relating to cloud adoption. A large number of service providers and consultancies have announced the acquisition of specialist divisions, partnerships and collaborative agreements for the sharing of information and expertise for companies outsourcing IT. A number of training initiatives, workshops, and information sharing arrangements between vendors, industry service providers, and governments have taken place.This benefits both vendors and customers when outsourcing in an environment where a large degree of flexibility and constant development is required to accommodate new technologies and solutions. By expanding existing capacities or strengthening service offerings companies are providing a greater range and higher quality specialist services for a changing market.

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There’s a long history of fad terms and acronyms in the information technology field – EDP, VM, CRM, EDI, iPad, iPod, tablet, BPO, ad infinitum, and of course the latest – Cloud.

The advent of all things Cloud introduced new terms such IaaS, PaaS, SaaS to classify layers of technology such as infrastructure, platforms and software that could take advantage of the Cloud – ‘Everything as a Service’.

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Conclusion: Reports on the findings from CIO surveysconsistently highlight management’s imperative to transform stored business data into wisdom. What the survey reports do not make clear though is how wisdom, or the Eureka moment, can be recognised. Also missing from the reports is an explanation of how skilled IT and business professionals can achieve the transformation, so management can act on the wisdom.

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July has seen a noticeable rise in the number and range of outsourcing deals. An interesting development is the move to smaller service providers who are being engaged to provide targeted and specialised services. This flags a trend in the outsourcing industry which has been evolving for some time, as the desire to realise the benefits of new technologies across diverse commercial environments is necessitating specialist support skills and increased company flexibility from prospective vendors.

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Conclusion: Enterprise architecture tools and processes have traditionally missed the mark in providing timely and relevant support for executive decision making. A fresh approach is required that focusses on just enough information to support defensible, evidence-based planning. Enterprise architecture functions must provide value in short, focussed iterations.

Enterprise architecture provides an evidence-based approach that demonstrates clear traceability for investment planning decisions. Astute executives will understand how enterprise architecture can be used as a powerful approach for developing an ICT investment plan that is robust and defensible.

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While discussions around company and service offering expansions have been common in the past few months the real consideration of the implications of these developments was prominent this month, In particular the demand for new and highly specialised service offerings in response to increased business complexities, new technologies and solutions and problems emerging because of these issues. For instance, the demand for consultants to copy company data, manage data retention and review and reduce stored data has risen dramatically as the accumulation of large amounts of data is becoming problematic for organisations. Enhanced technologies and solutions or different problems necessitate services to support them which in turn results in new tools and outsourcing services providing stability to growth markets, and the development of new ones.

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Conclusion: CIOs and technology leaders will often have relationships with many suppliers and vendors. This can be transactional in nature and limited to an exchange of goods or services for payment. A strategic partnership is a longer and deeper relationship and has many of the same characteristics of a good marriage and many benefits. However, organisations often focus on having a good process and underestimate the real imperative of good relationships which is harder to achieve but is the clear differentiation between a transactional relationship and a strategic partnership.

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Conclusion: Most organisations that use enterprise resource planning (ERP) software have a need to integrate the ERP system with other enterprise software. It is common for ERP systems to be integrated with customer relationship management software (CRM) and with all the bespoke applications that operate at the core of the business. Some organisations strive to simplify the system integration challenge with a single silver-bullet system integration technology, but this approach only works in the simplest scenarios, when the number of system interfaces is small. Instead, aiming for maintainable integration code leads to better results.

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Conclusion: Enterprise architecture should be viewed by CIOs as a fundamental toolset to provide sound, defensible, evidence-based decision making. CIOs who ignore or misunderstand enterprise architecture forego a powerful management device.

CIOs should understand and make use of the enterprise architecture techniques at their disposal; they must also recognise approaches to enterprise architecture that will not work. CIOs should set expectations with their enterprise architects for quick delivery of highly relevant outputs: days not years.

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Conclusion: Much discussion on NBN attempts to demonstrate its value in the future. Instead of trying to prove what NBN can deliver in thirty years it is wiser to assess what organisations can do with the network.

This may seem obvious. All that’s required is to plug into NBN and let the network make it happen. If NBN is really such a significant change in technology, organisations will find they have to discover how they operate and how to fix themselves in order to use the NBN to their advantage.

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This month, there has been a lot of discussion regarding security and ICT systems. These discussions have ranged between risks, new product offerings, need for greater awareness, specialist security company expansions and security responses. This has been interesting in relation to outsourcing as the discussions have adopted a more holistic approach, with security not being seen as an individual component of IT operations, but rather one which should be integrated with other areas. For instance, aging technologies or system protocols which can potentially cause major security problems, are not seen as distinct with both the problem and response measures intertwined. The types of specialist skills necessary to address security issues caused by existing technologies and practices as well as evolving markets and technologies will inevitably result in a growth in products and service provision in this area.

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Conclusion: Many organisations in Australia rely on SAP software for enterprise resource planning (ERP) software. To get the best results out of their data, a significant number of organisations have implemented a data warehouse alongside operational systems, and are combining SAP software with best-of-breed technologies for customer relationship management and system integration. Whilst SAP software continues to provide important functionality, it pays to understand to what extent standardisation of ERP functionality makes economic sense, and from what point onwards standardisation reduces the organisation’s ability to deliver unique and valuable services. Standardisation is desirable only if it leads to a system landscape that is simpler and sufficiently resilient.

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Conclusion: Most organisations run a large percentage of their workloads on VMware’s hypervisor, yet they are reluctant to virtualise their production Oracle Databases. The three common reasons given are: lack of support, poor performance and increased licence costs. The first is Oracle FUD, the second is a lack of understanding and testing, and the third needs to be examined on a case-by-case basis, but can result in a reduction in cost.

For many organisations moving some, or all, of production Oracle databases to an existing Intel/VMware platform is a low risk, high value strategy that should be examined.

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Conclusion: IT managers and purchasing officers need to be aware of recent changes in Microsoft’s licensing and evolving interpretations of licensing terms, or face surprises during true up and licensing negotiations that Microsoft will use to its advantage.

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Conclusion: Clients will see fewer IT services providers responding to requests for work in 2013 as many have been forced to reduce staff to stay profitable. To attract respondents and get competitive pricing, clients must convince both struggling and viable providers they have a greater than 30% chance of success and no-one has the ‘inside running’ to win the business.

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Conclusion: As outlined in a previous research note1, CIOs need to ensure that external-facing websites support an appropriate range of browsers. This is to ensure websites can be accessed by the largest possible percentage of users per dollar spent on development and testing.

The very public nature of the issue means that it is wide open to criticism. Many CIOs have been called on to explain their position. Astute CIOs will have a clearly defensible support policy that can stand the test of public scrutiny.

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This month, there has been a lot of discussion regarding cloud computing services, in particular new offerings launched by a number of companies globally. More interesting for outsourcing however is talk around technical, legal and administrative vulnerabilities when contracting out IT services. The continuation of the Queensland Health Payroll review, which has flagged problems that can arise when procurement processes are not properly scrutinised, is just one example of these problems.It is clear that many of these vulnerabilities are still not properly considered by companies when outsourcing or off-shoring and are often caused by a failure to properly monitor vendors.

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EMC and VMware are spinning out their non-core technologies to a new company called Pivotal, which is run by the former VMware CEO, Paul Maritz. VMware is divesting the application middleware components (Spring, GemFire, Cloud Foundry, Cetas and Pivotal Labs) acquired after Paul Maritz took over the company in 2008. EMC is letting go of the data warehousing product (Greenplum) acquired in 2009.

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Conclusion: Selecting a corporate mobile device standard can be risky. Mobile devices are far more personal than PCs, and users’ preferences are heavily influenced by their existing consumer experience and personal choices.

Imposing an IT driven device standard increases the risk of the CIO being forced into defending the decision against disgruntled end-users, some of whom may have considerable influence. To avoid this follow the four golden rules of mobility and ensure mobile device selection has business buy-in.

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Conclusion: NBN and other similar high speed broadband networks are presented as opportunities to expand visions and create new industries. However, given the weak position of government finances in some Australians states, NBN is now a critical cost-cutting services delivery medium.

Any state government examining NBN to reduce expenditure should also be certain that what appears convincing as a business case is deliverable. For example, health is a major focus area because health budgets keep expanding. But achieving service delivery and a reduced operating budget may be challenging and long-term, not a quick remedy.

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Conclusion: Strange things happen in the labour market when there is economic uncertainty. IT staff turnover drops and IT contractors quickly accept offers made by recruitment agencies. The prolonged downturn, which started with the Global Financial Crisis in 2008, will continue to make permanent employment attractive to contractors. As the tide has turned employers need to seize the moment and make offers to contractors whose knowledge and wherewithal they want to keep.

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Especially interesting this month was the start of the Queensland Health Payroll System Commission of Inquiry, which is investigating outsourcing arrangements with IBM and the system’s failure that caused significant havoc and extreme cost overruns. Initial findings indicate there were some serious problems with several areas of the procurement process, including insufficient time to review IBM’s proposal, no verification of the technologies that IBM founded the payroll system on, and a failure to effectively monitor the procurement process. This highlights the dangers, and extreme roll-on effects a lack of planning and management in the procurement process can have on an outsourcing arrangement, and re-emphasises that exercising tight management control, including thorough reviews, is just as critical at the beginning of the contract process as after the agreement has commenced.

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Conclusion: Software as a Service (SaaS) is gaining mainstream acceptance as a viable sourcing strategy for enterprise applications in both the public and private sector. IDC predicts that by 2015 24% of all new business software purchases will be of service-enabled software with SaaS delivery being 13.1% of worldwide software spending1. SaaS is being considered by many organisations as a means of achieving faster delivery times, cost reductions and access to innovative capability. In addition, organisations can exploit the SaaS model during the acquisition phase to reduce risk, improve business change management and test activities if they are prepared to move away from more traditional approaches and deal with organisation cultural issues. This paper focuses on the early stages of the acquisition process prior to contract finalisation.

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Conclusion: For most organisations, especially SME, it’s time to let go of your IT infrastructure. Owning and operating your own hardware was once a necessary part of using IT for a competitive advantage, however it is now an unnecessary burden that reduces agility, creates significant risks and impacts long term sustainability.

CIOs should not be asking “if”, but rather “when, how and to whom” we let go of the IT infrastructure.

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Conclusion: Today organisations need to adapt swiftly to changes in their external environment. Brittleness and inflexibility are characteristic of complex systems that lack modularity and redundancy. Resilient systems offer an appropriate level of redundancy at all levels of abstraction: from replicated skill sets within organisational structures to physical redundancy of hardware. In other words, a simplistic focus on efficiency may introduce more risks than benefits.

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Conclusion: IT Managers and CIOs who are responsible for external-facing websites are faced by the difficult proposition of determining the optimal set of browsers and browser versions to support. Supporting too many browser platforms wastes money; supporting too few risks alienating users.

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Prominent in the news this month were announcements of plans to cut contractor and employee numbers in a range of ICT services companies, such as ASG and Sensis. Along with cutbacks, companies also plan to restructure business processes, change strategic focuses and find ways to increase efficiency. While this is not new, increased reports of budget cuts and changes brought on by new technologies and improved business structures really does give rise to a sharper focus which should result in more targeted, careful and more successful programs, as opposed to simple staff cuts to save on IT spend. This is definitely a positive for the industry because as businesses evolve they will implement better ICT service provision frameworks

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Conclusion: The concept of service virtualisation is fundamental to the development of scalable service oriented architectures (SOA) and to the implementation of a DevOps approach to software change and operations. On the one hand service virtualisation enables the development of resilient high-availability systems, by enabling dynamic switching between different service instances that may be running on completely independent infrastructures. On the other hand, service virtualisation enables realistic integration tests of non-trivial Web service supply chains.

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Conclusion: Whilst SaaS (Software as a Service) using Cloud computing has helped commoditise IT, it is not always the ideal replacement for in-house application development. Instead the axiom ‘look before you leap’ applies, and SaaS assessed on a case-by-case basis (including not only potential benefits but also the hidden costs, such as contract breakage should the SaaS solution be unable to meet changing business requirements).

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January saw a noticeable increase in tender offers and project announcements, and forecasts for the coming year. There has been a particular focus on growth in big data solutions, cloud computing and mobile devices. More interesting though were the high number of reports on criminal prosecutions, regulatory actions and internal and external protests in the IT industry, as well as commentary on potential problems. This indicates that people and companies are paying closer attention to their contracts and technologies, which is definitely a good thing where there are outsourcing agreements and a need to keep up to date on external forces that could possibly impact on arrangements.

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