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.

With a number of significant IT projects either completed or well under way we are now turning our attention to improving the quality of the service we deliver to the company. With our IT infrastructure becoming increasingly mission critical it is essential that we constantly review and ensure the provision of the appropriate level of IT resource to contribute to the organisation’s success and growth. The challenge is how to achieve this in the tight budgetary and technically complex and logistically distributed environment in which we operate.

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Part 1 of this article, published in IBRS July 2003, discussed different approaches taken by Public Sector agencies when sourcing IT. Part 2 outlines the management challenges faced by Public Sector Agencies when sourcing IT, focusing on the initial planning and assessment phases of an outsourcing initiative. The sourcing model selected (See Part 1: “Public Sector Sourcing Models” IBRS, July 2003) and internal processes established to manage this model should focus on achieving the business benefits sought and specific requirements of the agency as identified when defining the current IT status.

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Conclusion: Without experience and knowledge of the local outsourcing market, public sector agencies risk inefficiencies when developing outsourcing practices that are sufficiently flexible to change as the agency’s circumstances change.

When outsourcing public sector agencies require solid governance, accountability processes and regular reviews to ensure the approach taken will suit their internal structures, policies and IT needs.

Ongoing information support is also critical so the agency has a thorough understanding of the changing environment, local outsourcing market and lessons learned from other public sector agencies that have adopted different outsourcing strategies.

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Since the IT industry continues to consolidate, with acquisitions of both large and small companies a weekly event, users must keep several questions and action items in mind to respond effectively if and when one of their main suppliers is suddenly acquired. It is important to remember that all acquisitions are takeovers – there is no such thing as a friendly merger – and if you are a customer of the acquiree you have to be extra diligent.

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Conclusion: Carried out judiciously a benchmarking exercise can yield unexpected and significant benefits. Conversely, when few performance measures are captured and unit costs are unclear, the exercise is a waste of time.

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Conclusion: No solution comes shrink-wrapped and perfectly adequate so that it can be considered complete and that is true of e-learning. If the implementation of e-learning in the workplace has stumbled the two guidelines below will assist in getting better results:

  1. Ensure that the e-learning process is continuous – not constant – but persistent for all employees over time;

  2. Test, test, test, not just the e-learning software package but also what the users thought of it as much as the content of the program.

If e-learning is viewed as a process, not just a one-off event, it will become part of the working schedule and also integral to the productivity of the organisation.

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Much can happen during the course of an IT services agreement, causing parties to re-evaluate an arrangement, and seek change or termination. A prudent approach to IT outsourcing arrangements recognises the long-term likelihood of changed circumstances and provides both parties the option of re-assessing and if necessary changing the services agreement. The agreement should have a shared vision, coupled with a precise legal framework and processes to allow for parties to affect the most desirable solution: review of the current arrangement, followed by renegotiation or termination.

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Conclusion: Consultants can be a potent weapon provided you are using the right consultant for the right reason; you manage the assignment appropriately; and you insist on a deliverable that is implementable in your organisation.

CIOs should review their selection and management processes for consultants. Consultants should win assignments based on value for money outcomes - not on daily rates - and assignments should be managed end to end from the pre-proposal stage to implementation.

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The scarcity of skilled in-house IT staff and strong project managers in Medium Enterprises is increasingly leading to the use of multiple outsourcers for major projects. However, poor selection and inadequate management of the relationships with the outsourcers that occurs through the lack of project management and outsourcing management skills are critical factors contributing to IT project failure. A disciplined approach is required to enhance the success rate of IT projects. The most important thing that a CIO can do is to ensure that the business managers understand the goals of the outsourcing and the impact on business operations.

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A monthly review of all of the sourcing activity, upcoming tenders and news items

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A monthly review of all of the sourcing activity, upcoming tenders and news items

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Conclusion: “Offshore outsourcing” or the practice of outsourcing IT or business functions to other geographic regions is growing, with similar trends forecast for the future. While offshore outsourcing offers cost-cutting opportunities, it does possess risks unique to offshore projects, which have resulted in mixed success when adopting this strategy. Detailed risk assessment, strategic planning and ongoing management must be conducted by any organisation considering an offshore project, or commercial benefits will be lost, ultimately negating proposed cost savings.

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The ANAO has recently highlighted the ineffectiveness of the contract performance monitoring and management activities in the last five years of government agencies which have engaged external suppliers of IT services. The Federal Government’s experience in this area is salutary and provides a timely warning to organisations considering outsourcing IT functions.

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Conclusion: If you know your organisation’s records and document management processes are out of control and do not propose a viable solution, you are putting your job, and the CEO’s, at risk.

Why Records and Document Management?

One of the hidden and unavoidable costs of running an organisation is that of manually filing, retrieving and disposing of records and documents. This cost often runs concurrent with the hidden risk from not being able to find key documents when required for evidentiary purposes or completing an asset sale. How can the costs be avoided and the business risks minimised?

To answer the question, let’s look at what has been happening in many firms of all sizes in the last couple of years.

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 Conclusion: While certain types of IT sourcing deals (such as large “mega deals”) have been criticised by commentators, it may not be beneficial for all organisations to alter their current IT sourcing strategy. All potential cost and management problems must be carefully considered prior to altering any sourcing strategy.

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A monthly review of all of the sourcing activity, upcoming tenders and news items

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Procurement of PCs, software, servers or services can seem overwhelming due to the complexity inherent in the process, market and business volatility, and uncertainty in the vendor community. Buyers should use a formal process - including the establishment of documented best practices and standard document templates - tailored to that organisation’s culture and structure to bring discipline to the process. Ultimately such an approach will reduce TCO. A successful negotiation requires a complete understanding of the product or service, how it will be used, user profiles, and identification of vendor negotiating levers.

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IT Disaster Recovery and Business Continuity have always been issues that have figured prominently on our list of priorities but continually get pushed to the back of the queue, replaced by other operational issues that assume greater importance and that can be seen to return some immediate benefit. It is not that the company does not recognise its importance, its more of a “laissez faire” attitude that “nothing has gone wrong so far so we will continue to take a short to medium term risk on anything happening in the future”. It is typical of the approach to risk in the company where construction risk is everything and other risk is considered insignificant.

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Conclusion: Server consolidation has become widespread as budget pressure is maintained and corporate mergers and reorganisations continue. Although the overwhelming majority of consolidation projects are viewed as successful (at least in terms of the reduction in number of servers) when failures occur it is usually because of poor planning. Vendor endorsed programs often appear very attractive, but unless the full implications of your particular environment are taken into account the only goal that will be met is the vendor’s revenue target.

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We first investigated the benefits of video conferencing in late 1996. The main driver for the initiative came from Leighton Holdings’ major shareholder Hochtief, based in Essen in Germany. Their objective was to have access to a more efficient form of communication between themselves and Sydney and thus reduce the amount of travel that board members and other executives had to undertake.

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Conclusion: In today’s business climate in which discretionary capital is scarce, CIOs, or equivalent, need to be confident and able to convince the Executive they can deliver the benefits expected in proposals to invest in IT Infrastructure1. To meet the needs of stakeholders when real time services are at stake, the arguments must be compelling and presented in a way that leaves the Executive no alternative but to approve the proposal.

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Conclusion: Short-term targets have affected planning but many companies will want to ensure that a qualified planning procedure will remove any shocks. This process can be isolated into various scenarios depending on market conditions. Scenarios minimise risk while maintaining the firm’s potential for reward relative to competitors.

The status of a market is affected by the number of competitors. This a major variable which could change rapidly, so it is significant to create a scenario for such a possibility and plot the effects and outcomes on the firm.

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