Skip navigation
All Places > TBM Council Home > TBM Council Blog > Blog > 2017 > October
2017

This blog was originally written by Ludvig Millfors, Partner, Strategisk IT Centigo. It was published on October 7, 2017 via the Centigo blog. You can read the original blog post here.

 

Three ingredients of the recipe for success
Most businesses and organizations we collaborate with or read about face an enormous pressure to upgrade and invest heavily in new technology. Going digital is shaping the narrative in all areas and industries including all external service providers such as consultants.
 
Although this ambition creates an at times unhealthy level of stress upon teams across the globe to deliver Digital, it also attracts a lot of new types of talent to the technology scene. By diving straight into the blue ocean and proposing fascinating ideas, the world of change leadership is flourishing. It offers fresh winds and excitement into organizations. Members or successful technology departments have gone from a support identity to a business critical and competitive advantage identity. 
 
We, at Centigo, embrace this like every other service provider. We would like to, however, take a moment of your time to highlight a few cautions and some advice that needs attention in order for your organization’s continued success in your digital endeavors. 
Management teams around the globe still have a long way to go in catching up with what really is happening in the technology space. There are still organizations out there with stated digital ambitions lacking proper technology representation in leadership meetings or at board level. This will likely change soon but one important action to lift technology on the agenda beyond ambition is to build a solid foundation for governing your technology. 
 
The technology governance scene is changing as rapidly as the evolution of the technology itself. This means you have to make sure you can find new paths to show and manage value. You have to seek and find a direction that allows you and your technology team to month over month connect multiple technology delivery chains to real value for the organization.
 
You have to converge your current services into understandable entities that alters the content of the dialogue with the rest of the leadership. You also have to provide flexibility and dynamics not just on the services themselves but, just as importantly, in the parts of your organization that are responsible for delivering technology. We like to refer to this as building a capability to governing the digital value chain.
Here are a three ingredients of the recipe for success:
 
1. Explore the power of Transparency
The most interesting way to move towards a modern digital governance model is to explore the power of transparency. Establishing a transparent value chain for technology is not as easy as you might think. In our experience, a move towards transparency will cause quite a bit of unease within a traditional IT department. We believe that it is an effect of historic difficulties in finding accurate data in a consistent way. This has led to a tradition of good enough and a continued decrease of expectation of insight into details of an IT department. 
 
Given that most organizations are looking to drive their digital transformation agenda, there will without doubt come a point where a transparent digital governance model will be inevitable. The capital expenditure levels will create anxiety. The move towards transparency will have to expose todays vulnerabilities. This can seem frightening. It will, however, also be an important step towards building the trust that a successful digitalization journey requires. 
 
2. Building leverage based on Trust
One foundational part of both building and maintaining funding for digital transformation is the capability to constantly optimize your technology value chains. Setting up an organization that constantly drive bad cost out of running your services to ensure that more funding is placed in evolving or growing the use of modern technology. It is not a one-time effort. To continually be able to show internall effectiveness in this area will build trust. Establishing this foundation and governing capability requires an investment. In times where most organizations want to just invest directly into game changing technology on the front end our advice is NOT to forget the less exiting grunt work of setting the stage. Building the solid base to enable continued growth etc.
 
3. Get the parties together in a common language
Complexity in governing technology is often directly related to the size of organizations. The more structural entrenchments one see, the more difficult it is to drive progress. When we implement modern governance capabilities to deliver on the first points above, we often find that the people we summon and  connect in workshops never have met before. If they have they hide behind the technical language and complexities that mandate their normal workday. Sometimes we find that within the same organization they will have very different definitions of practically the same objects. They account for similar things in complex variations that does not allow relativity. Even though we introduce very powerful tools to help the major progress is actually we manage to get parties to agree to definitions and paths forward. Sometimes this complicates the discussion but most of the time it creates a common, and often simpler, way to move forward to reach a unified agenda. 

These three important ingredients will make your Digital Value Chains a pleasure to govern. Without it will be equal to making a spaghetti carbonara and missing the parmigiana, black pepper and egg yolk.
 
When writing this I realize, with some dread, that this message sounds a lot like me lecturing my kids on moments before they embarked the ferry for summer camp this year. I hear the words in my head when I explain the importance of not spending all the allowance on candy. I ask them to make sure that there are some left to buy a toothpaste.
 
If you are interested in more information on how Technology Business Management (TBM) enables an organization to bend the cost curve for technology services, we want to invite you to our seminar, Oct 26. See more about it below:
 

 

We hope to see you there. Visit our webpage for more information about TBM.


If you want more of this kind of content we recommend you to subscribe to our blog too.

Yours sincerely 

 

Ludvig Millfors | Email: ludvig.millfors@centigo.se 
Partner, Strategic IT

This blog was originally written by Jonathan Jones, Principal Consultant at DXC Technology on September 12, 2017. You can read the original blog post here.

 

Implemented effectively, with insight and deep understanding, Technology Business Management (TBM) is a powerful means for the CIO to change the perception of IT from serving the business to growing the business.

Although TBM is becoming widely accepted as a more effective way to run IT – and the tools make inefficiencies patently clear to both the CIO and other business leaders – it’s how the data is interpreted and subsequent actions taken that deliver the real value.

In a previous post, The CIO becomes CEO of your technology business, I covered some of the symptoms that indicate the need for a TBM approach – as well as the drivers for implementing it.

Here are some practical tips for the CIO to optimise beyond TBM tools, and enable transformative change.

Identify and prioritise your initiatives

Cost transparency reveals a plethora of opportunities for optimisation – but they all can’t happen at once. Identification of initiatives must be followed by prioritisation based on a number of factors.

Initiatives that would result in huge dollar savings may seem an obvious choice to be at the top of this list. However, there are other considerations when prioritising such as alignment with business strategy and reliance on organisational change. Business needs and your priorities for optimising IT will change over time – so you will need to remain flexible by regularly reassessing the order of your ‘to do’ list.

Align with your key strategic objectives

The most valuable optimisation initiatives will be those that are directly aligned with your organisation’s strategy. It is often more than just a dollar saving. For example, the saving of $1M in IT costs may seem boring to the business as a whole – but ‘freeing’ $1M by retiring a rarely used legacy system to create a new online presence, opening up new markets and boosting revenue will demonstrate solid business outcomes. This in turn creates new opportunities and secures a more favourable future for the organisation.

Communicating your plans in terms of contributions to the stated strategic directions of the organisation will go a long way to getting your employees on board, and to successful implementation. The ‘whys’ and ‘whats’ you propose must relate to specific business goals.

The more aligned your initiatives, the more recognition your subsequent success will get – easing the process of approval for others. Don’t talk about the underlying plumbing, talk about the house. Attention and visibility are key to gaining support and acceptance for current and future IT optimisation projects.

Make it possible to action change

While some initiatives may seem ‘no-brainers,’ they often can’t get off the ground due to valid reasons from functional managers – such as already committed budgets and responsibilities for other projects from which they can’t afford to divert their time or resources.

HPE Enterprise Services (which joined with CSC to become DXC in 2017)  implemented TBM very successfully across the organisation, by finding, identifying and eliminating redundant/underutilised systems. This activity amounted to cost savings of around US$330M over three years. This may seem like a big number, but it was comprised of many different, smaller projects such as a network rationalisation which cost US$1M, but led to a saving of US$6M.

One of the key reasons for success was empowerment of the TBM Office. The TBM Office had its own dedicated funding and the authority to proactively drive optimisation activities. While the optimisation programs would ultimately be delivered by IT, the TBM Office was unconstrained by the typical budget and resource limitations of the IT department. The end result was a reliable stream of optimisation savings.

For TBM to be successful in achieving concrete savings and better align IT with the rest of the business, consider how you can best remove all the little roadblocks to making a desirable change.

Cultural change is essential – on both sides

Changing IT from a cost centre to a true business partner is an exercise in cultural change. For members of the ITO, it’s about no longer seeing themselves as a separate silo. One of my clients recently said to me that, “You need to educate them to think about the business, not just IT.”

For the business, it can be the realisation that they actually control IT costs more than they know. HPE Enterprise Services issued personalised ‘bills of IT’ along with tips on how to reduce costs. This was based on the idea that a ‘free good’ is often over-consumed because the opportunity costs are not well understood. Seeing the consequences of their choices allows individuals to take responsibility for changing their behaviours.

In one example, a manager who was tethering his smartphone to his laptop when travelling was costing the organisation thousands of dollars a month. Once alerted to the actual costs, he started using hotel wifi services instead. While this seems obvious, understanding the dollar impact ultimately changed that manager’s behaviour.

Alter the mindsets

Organisational change must embed a mindset within the ITO that recognises the value of optimising IT. An excellent way to visualise IT savings, and increase their perceived value, is to measure them in terms of revenue. If your organisation’s margin is usually around 10%, then every dollar you save via IT optimisation is equivalent to $10 of earned revenue. The business can relate to this sort of tangible illustration, and applying such a multiplier will help the ITO team feel they’re positively contributing to the overall success of the business.

Once you are in the execution phase, you will find yourself having a feast of initiatives. Each initiative may see some quick wins but information and the situation will change over time – so your priorities must too. You will be responsible for a range of ‘moving parts,’ so a static spreadsheet is not sufficient. Ongoing stakeholder analysis and engagement will be necessary to keep on top of everything.

As you progress, collect robust evidence of your achievements and align them to the common goals of the organisation. This will maintain clarity and help avoid skepticism within the ITO and the organisation as a whole. Know exactly where you are throughout the journey: keep it real, in real time, to maintain the momentum.

TBM is more than just a tool

If there is one thing we have learned about TBM, it’s that getting value depends on what you put around the tool itself: strategy, effective cultural change and responsive agility.

The steps I have discussed above can get you moving in the right direction. Freeing up capital buried in ‘serving the business’ can make it available for investment in the new technologies for digital transformation that will improve your position against competitors.

Of course, the basis of your digital strategy is knowing where that investment should go and planning your journey. Here too, TBM becomes an enabler. By applying the economics of digital transformation to understanding its cost impact, you are going to be able to drive this transformation to deliver the expected return and benefits.

Jonathan Jones

Jonathan Jones is a principal consultant at DXC Technology and product manager for the Technology Business Management (TBM) offering. His 15 years of industry experience include consulting and developing new offerings in IT cost management. He has extensive experience in helping clients optimise and transform their businesses through the power of TBM and Telecommunications Expense Management.