On Wednesday, October 30th at 12:00 p.m. (ET), we hosted a live ReThink IT webinar, analyzing the greatest issues facing IT and providing actionable strategies to drive business value from IT.
During the webinar, WGroup CEO Harry Wallaesa, introduced forward-thinking points of view around IT strategy, capturing the unprecedented transformations facing the industry, and answering the questions on how IT leaders need to think about IT to create value for the business. Whether or not these changes are embraced, they are happening, and as such, the role of the IT leader is transforming from manager of data centers and programmers to advisors to the business. As more companies embark on transformative IT projects, ranging from sourcing initiatives and shared service models to vendor management organizations, governance processes and ITSM implementations, high performing IT leaders must adapt or risk marginalization.
The most disruptive trends that were discussed included:
Responsibility for IT is moving to the business
Convergence of ITO and BPO
Social, Big Data, mobility, and analytics
Commoditization of IT and business services
Consumerization of IT
While these are not new, the difference between today’s leading edge IT leader and those who risk marginalization is how they choose to manage, react, and leverage these trends to their advantage. Integral to this is the role of the next generation IT leader who needs to manage IT as a business as internal resources compete with global service providers.
Essential new viewpoints to ReThink IT which were also discussed included:
New IT Management Disciplines: Successful implementation of the ITSM framework enables IT leaders to manage the full cycle of IT by promoting efficiency and defining best practice processes to manage IT. Most importantly, this includes Demand Management, Service Management, Vendor Management, Governance, and Service Integration.
New Roles, Responsibilities and Skills: As businesses become more global, IT leaders and CIOs have new roles that include creating strategic partnerships, exploiting global trends, delivering cost-effective results, and optimizing service capability.
New IT Supply Chain and Outsourcing: The next generation outsourcing has resulted in an influx of new and proven service providers that have opened a number of opportunities for multi-sourcing. Emphasis is now placed on measuring performance and delivering business value. It is the role of IT leaders to manage and nurture new relationships that are a result of the new IT supply chain and outsourcing.
Beyond Traditional ITO Approaches: Traditional approaches to outsourcing no longer work. Instead, IT leaders must identify what outcomes the business requires and which provider can best resolve the outcomes. IT service strategy needs to be built on business solutions that result in both cost savings and value creation.
New Definition of Business Value: Business value is driven by business outcome, and in the new world of IT, this applies to both internal and external services. IT leaders need to answer questions, such as how IT exploratory investments results in new products or competitive advantage, and how quickly IT can enable a company’s reaction to new market conditions and changing strategic direction.
To download a complimentary copy of the ReThink IT paper or if you were unable to attend the live event, watch the replay when it becomes available here: http://thinkwgroup.com/rethinkit/
From implementing personalized marketing campaigns to Big Data analytics and cloud computing, multiple functional areas within a company are increasingly relying upon outsourced technology to drive growth and business value. In fact, according to Gartner, only one-third of the 2013 marketing technology budget for 383 vendors of hardware, software, IT professional services, and electronic components will go to capitalized software and infrastructure. Two-thirds will go to services provided by external marketing technology vendors.
It is not just about outsourcing, but about a service delivery model that leverages all forms of sourcing based on what will provide the best value to the business (insourcing, outsourcing, shared services). IT leaders must master the capability to manage and govern multiple IT service providers, cloud-based and other delivery models into a coherent operating model supporting a company’s business functions.
As discussed in ReThink IT, for today’s CIO, this means their role has changed from technology expert to orchestrator for decision-making. As CIOs prepare for the new era of IT, they must learn the new technology requirements that will run on a more simplified IT architecture. They need to ensure their governance strategy and vendor management organization is aligned to their business goals and will oversee all efforts of the supply chain so that they receive the most value from their IT. These two separate yet important disciplines require that:
Companies need to develop the people, process, and controls to manage the new method of IT service delivery. Those who do not may encounter misalignment or operational failure if one or more IT providers fail to execute.
IT organizations must embrace outsourcing where appropriate and leverage their internal team for strategic roles that are essential to the business. Delayed response to this need can prevent a company from gaining value from IT as costs to maintain IT infrastructure escalates. This means fewer resources to invest in innovation, such as Big Data, analytics, and mobile computing.
Companies need to take a holistic view of IT governance and vendor management in order to maintain alignment within the IT function. Governance needs to fit into the broader IT program while vendor management is the core competency of the IT function. With both in mind, it is the role of CIOs and IT departments to create, monitor, and nurture vendor relationships so that the company has the right mix of IT outsourcing and insourcing opportunities.
By clearly defining the IT process with an effective governance framework and vendor management office, CIOs and IT executives can ensure that there is IT alignment, enabling the business to realize value in IT.
The ReThink IT paper is available with no registration and includes insights on these issues and more. To download ReThink IT or register for our upcoming webinar discussing the paper’s findings and strategies, please visit: http://thinkwgroup.com/rethinkit/
With the five disruptive trends announced in ReThink IT, the focus is on the implications for the CIO and IT, but IT is not the only internal group impacted by these trends. Many parts of the business, especially finance and accounting, are affected as well. The CFO and leaders of Finance & Accounting should consider each of these questions related to the five disruptive trends and leverage them as an opportunity to evolve the way finance & accounting services are delivered to the business.
Trend 1 – Shift in Responsibility for IT to largely that of the business
How do we track and account for the way in which IT is procured across the enterprise? Does our internal financial reporting need to change to reflect the new reality of true IT expenditures?
How do we ensure that IT costs are auditable in this new environment?
Trend 2 – Convergence of ITO and BPO,
Does this mean contracts and fiscal reporting needs to be restructured to reflect integrated contracts?
What fiscal control implications, if any, does this have?
Who negotiates, manages, and governs these contracts; what is finance’s role in this process?
Trend 3 – Rise of social, big data, mobility and analytics,
How do I make sure everyone is using the same data with the same definitions (e.g., sales means the same thing to all business units and comes from the same data source)?
How do I ensure use by the businesses of comparable analytics?
How do I maintain control over fiscal reporting and compliance?
Trend 4 – Commoditization of IT
How does the company take advantage of lower cost of services while still driving quality service and ensuring audit controls are maintained?
How do I track and report IT spend?
Trend 5 – Consumerization of IT
How do we track IT spend? Is it really IT spend or business unit spend?
How do I ensure applications, devices, etc. are used for proper and consistent analysis company-wide?
How do I ensure I can support customers in this new world by providing the data and services they need?
There are three important steps a company can take to address the biggest issues in finance and accounting that occur as a result of these trends.
Maintain the proper controls – Rationalize the data warehousing facilities to ensure that data is used properly, consistently and accurately from “one” data source. Comparability of reports (e.g., sales must have a standard definition and sales data must come from “one” approved source) is essential, but it is often a challenge to many organizations if data governance and data management are not in place.
Manage Risk – Design and implement systematic and, if possible, automated event management within the business processes. This will ensure results can be audited and risks mitigated through preventive and detective mechanisms. This is part and parcel of “Maintaining Proper Controls”.
Contain/Reduce Cost – With the consumerization/commoditization of IT and the shift of IT to the business, strong governance will safeguard costs and protect the investments.
The best first step to address these issues is to evaluate the finance and accounting organization, the services provided and determine how these services compare to peer groups and best practices.
Large and mid-size organizations are seeing a dramatic shift in IT responsibility. Gone are the days of the monolithic IT organization. Now, internal IT departments are being integrated with the business side. For example, a 2011 IBM survey of 1,734 CMO’s found that nearly one-fourth of respondents outsourced IT services, and 61% said they would rely on such IT providers over the next five years.
In spite of these tendencies, companies still need IT departments in-house. As discussed in ReThink IT, internal IT departments roles have changed; they must now act as the broker, orchestrator and manager of purchased IT services, as companies begin to shift the way they measure value from IT. Understanding these two points from the new world of IT will help you to do that:
New IT Supply Chain – As IT outsourcing continues to grow as a business strategy, companies still need to vet, secure, and nurture these strategic outsourcing partnerships in order to maximize their investment, capture global trends, and support business innovation. Unlike the IT departments of years past, today’s internal IT department must focus on driving relationships, and addressing changes in platforms, architecture, services, and performance requirements.
New Definition of IT Business Value – Internal IT organizations don’t operate their own costly data centers, they go to the cloud. They don’t build their own applications, they buy them. ip information The IT role and supply chain have shifted so measuring IT purely by cost and efficiency does not work. Instead, today’s most effective, internal IT drives business value for the company. This means that companies must now evaluate their internal IT based on business outcomes that take into account both operational and financial metrics.
With the new IT supply chain, companies need IT that can enable:
Exploratory investment in IT that results in new products or competitive business advantages
The company to improve business processes to react to continuous changes to the market and execute strategy
The company to transform its business model
The company to capitalize on Big Data to better market the brand, products, and services
So if you find yourself asking how internal IT can remain relevant in today’s new IT supply chain, and why companies need internal IT departments that embrace the new role of IT to drive business growth and strategy, you’ve come to the right place. The ReThink IT paper is available with no registration and includes insights on these issues and more.
With more organizations looking for IT alignment with the business, yesterday’s role of a CIO as just a strong technologist no longer applies. More business leaders are outsourcing technology solutions as software-as-a-service and cloud based delivery models become increasingly available. Research firm Gartner further highlights this trend, predicting that spending on IT from outside of the IT organization will grow from 20% of total IT spending in 2009 to 90% by 2020. This will drastically change the way that CIOs have to drive value in order to maintain their seat at the table.
In ReThink IT we discuss how CIOs must evolve if they want to remain viable. The cutting edge CIO should have many roles; as a services integrator, an advisor to the business, and an innovator. They must clearly communicate and collaborate the IT roadmap for an effective business strategy. Most importantly, CIOs need to embrace the new IT organization that runs faster and operates on less technology and decide what activities will drive innovation and value.
To avoid marginalization in the changing landscape of IT, the following new roles and responsibilities should be embraced:
Transforming IT and Business Strategy – Today’s CIO works with smaller, strategic departments, and must help identify those opportunities that hold the greatest, long-term value for the business. CIOs need to convey to business leaders the transformative nature of big data and analytics tools, and develop a streamlined, cost-effective strategy that is business-IT aligned. The new CIO must master the emerging art of business model invention and process re-engineering.
IT Architecture for Seamless IT and Business Integration – IT architecture is an important skill set for the new CIO. With many outsourced business and IT services, today’s CIO must ensure that the business and IT processes are well-codified, data definition standards are well-defined, and the processes to bring together all elements for successful deployment are well-documented. Without these assurances in place, businesses will experience costly downtime, and multiple outsourcing vendors will not have a seamless implementation.
Leadership Role Crossing IT and Business Departments – Today’s most relevant CIO serves as strategic advisor and “facilitator of fulfillment” for the business. The effective CIO must develop and nurture relationships with multiple outsourcing vendors, and become the business’ orchestrator for external suppliers. Ultimately, IT must provide business value, and CIOs who maintain their seat at the table can provide the CEO and CFO calculations and analysis for return-on-investment, facilitate best value for the business, and lead the organization to key market opportunities and strategic partnerships. Effectively, CIOs must increase their strategic and operational value.
For more information, the ReThink IT strategy paper is available for download and includes insights on these issues and more. To download ReThink IT and register for our upcoming webinar discussing the paper’s findings and strategies, please visit:http://thinkwgroup.com/rethinkit/