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: 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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Conclusion: Organisations which reach outside to acquire application systems solutions need to manage their risks well and be commercially astute while selecting the right vendor. To select the right vendor the tender document needs to be complete, reviewed thoroughly to avoid mistakes and based on an awareness of what the market will offer. Premature release could lead to the wrong vendor being selected.

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This month’s IT news has been especially interesting with a lot of discussion around vendor transformation, in particular, vendor restructures, business unit purchases and sales and market expansion. Vendors have also been discussing changes to their strategic focuses, business priorities and service offerings. These developments clearly reflect recent trends and growth forecasts in business demands for IT outsourcing with vendors rebalancing their offerings in an effort to cater to these demands. While this is nothing new the number of vendors making significant internal changes across so many areas has never been so visible indicating shifts in IT priorities and strategic focuses for businesses in general. These are issues that will be fascinating to observe as they unfold.

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Conclusion: It is tempting for the Executive when the IT Department’s processes are failing or systems are not being implemented on time to direct the CIO to engage an external provider. Whilst the need to act might be urgent CIOs must avoid making hasty decisions which could lead to the types of mistakes, set out below, occurring.

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Conclusion: Along with many benefits, mobile devices bring new challenges in securing access to the organisation’s data and applications. The real issue is not with technology, but in striking a balance between security and the mobile user experience.

A common mistake is touse typical desktop management practices and tightly control the mobile device. This often results in a compromised user experience, leading to high levels of user dissatisfaction. As employees, and contractors, increasing expect to use their personal devices (BYOD) for work, Organisations will find this approach is unacceptable.

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Conclusion: While there’s surprising level of interest inside some IT departments to build their own data centre within an office complex, the arguments against this strategy are overwhelming. The few organisations that can financially justify building their own data centre are those organisations that prefer spending Capex to Opex, have the Capex to spend and, ideally, can distribute this cost to others. While the idea of an on-premises data centre can be driven by a misplaced belief in control, there are many risks that come with this strategy that most CIOs should not be interested in managing, and there are costs that most CIOs would not want to pay.

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This month, there has been a lot of discussion around mobile technologies and BYOD practices. What’s especially interesting is a shift in focus from actual technology adoption and reasons for growth in this area, to the need for systems and solutions that can support the adoption of these devices, including device management systems and applications, company protocols as well as user identification and control tools. This indicates a broader perspective of a growth area that goes down several levels to management solutions and company practices which does not typically happen in the industry. It also indicates this could be an emerging area for vendors supplying outsourced support systems, and device management services.

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Conclusion: Based on their exposure to consumer technology (iPhone/iPad) Business Executives and Managers are demanding mobile solutions for their knowledge workers and field service staff. Rather than rush to a solution for one group’s needs (which may create a siloed solution and a barrier to further projects) define an enterprise mobility strategy that enables current and future mobility project to be quickly and effectively built.

A mobility strategy can be built in less than three months and must start with use cases. This leads to device selection, which must focus on user experience rather than the IT organisation’s concerns.

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Conclusion: Increasingly, organisations are recognising that they can benefit from a so-called software product line approach. The transition from an IT organisation that operates entirely in project delivery mode to a product development organisation that introduces a product line governance process is a significant undertaking. The process involves the designers of business information services as well as Enterprise Architects and other domain experts. Achieving the benefits of a product line approach (systematic reuse of shared assets) requires the adoption of a dedicated product line engineering methodology to guide product management, design, development, and operations, and it also requires knowing where to draw the boundary between product development and the delivery of professional services.

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Conclusion: One of the functions of a board1 is to minimise business risks to the shareholders. As signing a major contract with a managed services provider involves significant risks such as the failure to deliver critical IT services, boards need to be convinced the risks2 are known and can be minimised by vigilant management.

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October has seen a significant rise in IT outsourcing deals many of which are more interesting than usual and with a more noticeable engagement of smaller, very specialised IT service providers. This move confirms last year’s forecasts regarding the need for more focused services in light of a rise in the types of divergent technologies being deployed by companies, as well as system consolidation and the need for customisation. This month has also seen a lot of significant industry forecasts and the publication of interesting research results as the end of the year becomes closer.

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Conclusion: The cost of Flash Memory, a high-speed alternative to disk storage, has declined to the point that it is now economical to use in a broad set of cases. This has spawned a large number of Flash based products, often from start-ups, that offer an adjunct, or alterative to, Disk. The different approaches, and the conflicting technology claims, make product selection complex. When coupled with a high capital price, technology risks, and the viability of start-ups, purchasing Flash products carries a high risk for the next few years.

IT organisations should only purchase Flash devices tactically when a sufficiently strong benefit justifies the risk. Over the next five years the cost of Flash will decline by a factor of 10, and the technology and vendors will mature, making it suitable for mainstream use.

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Conclusion: Based on conversations, interviews and meetings with Australian clients, IBRS has compiled a list of the top six mistakes that are probably impacting your architecture practice right now.

Astute CIOs and business executives will take steps to avoid these common mistakes which we see repeated in many organisations.

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While there were no new projects or tenders announced this month, outsourcing deals are finally becoming a little more significant, with the Royal Adelaide Hospital network deal being especially interesting. The forecasts for outsourcing are currently excellent and there are grounds for optimism in the future.

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Conclusion: For the last 20 years an organisation’s applications and data have been largely accessed from a Windows desktop. While the Windows desktop will remain an important access platform, IT organisations will be expected to also enable access via mobile device and to support Software as a Service (SaaS) applications.

The first step is to shift paradigms from “delivering a standardised desktop” to “enabling access from a range of devices and form factors using multiple delivery methods”. The second step is to choose between a best-of-breed or integrated platform strategy for the management platform.

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Conclusion: CIOs need to decide if they will invest in the practice of enterprise architecture and if so, how to approach it. Many CIOs choose to invest in enterprise architecture for the wrong reasons: because other organisations are doing it or because a consultant says it is “best practice”. Instead CIOs should consider which enterprise architecture functions would provide specific benefits, given the functions that are already provided in the organisation.

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Conclusion: Australian enterprises seem to be slow in adopting social media and related enterprise collaboration tools. Survey evidence indicates that corporate Australia is not as interested in the social and collaborative technologies as counterparts in other regions.

Taking a steady and progressive strategy implementation of social and collaboration is probably an advantage. Being an early adopter with such technology may be an opportunity for some enterprises but not for a mid-sized or larger organisation. However, waiting too long, or crafting an even better strategy may mean wasting opportunities.

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There were only a few deals this month with one very interesting contract between Perpetual and Fujitsu which came through towards the end of the month. This contract is a complete, infrastructure agreement, which used to be quite common but now really stands out in the current environment where customers prefer to outsource to multiple, smaller vendors. This agreement may indicate that the consolidated, single supplier arrangement could be coming back into popularity.

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