1. 1st order Creativity – an objective or vision (or product or outcome) is imagined

2. Clarity – out of which comes a definite objective

3. Method – to be achieved by a coordinated series of related tasks

4. Motivation – carried out for appropriate rewards, material or otherwise, or to avoid sanctions

5. Discipline – by people who understand and are able to do the work

6. 2nd order Creativity – and improve the method and their own effectiveness as they work

7. Leadership –  under the guidance of those who continually communicate the vision and create the conditions for its achievement.

These are the principles of organised effort. Think about how they apply to putting a man on the moon, building the pyramids, launching the next Apple product, building a car – or your current project, company and objectives.

Verax Consulting - Reduce IT Costs

The general reaction to my take on this (which was meant as positive feedback and an opportunity to improve IT Governance) has been that COBIT is already perfectly formed, and more than capable of handling ANY new circumstances, including the need for sustainable IT, with exactly the same tools, attitudes and approaches it uses today.

Good luck with that.

The argument goes that a Green IT project is just like any other IT project. That risks need to be assessed, just like they are with any other project, with no additional risk assessment necessary that might encompass the rest of society and the global environment.

But there is a bigger risk that lies outside of IT projects or even whole Enterprises. Enterprises are not enclosed systems, and we all face challenges that current tools cannot fix. To paraphrase Einstein, we can’t solve problems by using the same kind of thinking we used when we created them. Or to put it slightly differently:

When you have a hammer in your hand, everything starts to look like a nail.

Verax Consulting - Reduce IT Costs

What drives IT cost reduction?

Organisations want to grow and  to lower the costs of IT and other business functions. But in the current global economy, it’s tempting to equate ‘IT cost reduction’ with ‘cuts’, and to make the mistake – usually under enormous financial and time pressures – of taking a chainsaw to the problem when a skilful hand with a scalpel is what’s really needed.

No organisation can cut its way to growth, and this is the tension at the heart of IT cost reduction. This post is about wielding the scalpel, removing the rotten wood while leaving the healthy shoots to flourish. Every case of inflated IT costs is different in its details, but the broad features of the problem remain the same. IT cost reduction is about management capability, process transformation and effective leadership.

What follows are some examples of where these three activities can help to drive down costs while preparing the organisation for growth.

Resource and Asset Management Capability and IT Cost Reduction

By management capability, I mean the ability to manage the IT assets, people and processes which together deliver services to your customers. The cycle of developing this management capability is well known and quite straightforward: measure where the organisation is today; identify and execute improvements; rinse and repeat.

To do this you will need the ability to measure the assets, processes and people that comprise the resources of the Enterprise. But this is much more than a paper exercise – it is at the core of tactical and strategic IT cost reduction. As an example…

• How many servers and other IT devices across the Enterprise are under-used or unused?

• How will you reclaim and recycle unused or under-used assets? (For example, will virtualisation play a part?)

• How many devices are drawing energy from the grid but not being used?

• What’s the process for recycling or rationalising these under-utilised assets?

• How many software and maintenance licenses are you paying for?

• How many are being used?

• Could the control of these assets at a fine level of detail deliver significant financial benefits? How can you know how  significant, if you don’t have the data, the tools to collect it, or the process to action it? Without an accurate picture, are you at the mercy of your software provider?

The fact is, tools are available that make it possible for an Enterprise to make very significant IT Cost reductions by controlling its asset costs at the micro level with very little human intervention. You just need to complement the tools with a solid process that makes sure the organisation reaps the benefits.

Culture Change and IT Cost Reduction

CIOs and IT managers often don’t like to talk about ‘culture change’ because the term is used in so many different ways.  I mean something very specific by culture change, and I believe there are two straightforward ways to make it a reality.

By ‘culture change’ I simply mean the replacement of one set of attitudes and behaviours with another, more useful set. So, for instance, you might want the organisation to live and breathe a ‘no waste’ culture by adopting attitudes and behaviours to conserve scarce resources (e.g. electrical energy, consumables, time). The first way to do this is by paying attention to the detail of IT processes and if necessary transforming them, and the second is the more general area of effective leadership.

IT Cost Reduction Through Process Transformation

Cultures change when behaviours change. The quickest way to change behaviours is to embed the new, desired practice deep in the appropriate process. Continuing with the example of waste, let’s look at the biggest single area of over-spend and waste in the IT lifecycle – the development stage.

What projects and programmes should your organisation undertake, and who makes that decision? What are the criteria for such a decision? How many projects over-run, fail, go outside of their scope, lack focus and accountability, or need to be rescued with emergency cash injections?  If the answer is ‘some’ or ‘quite a few’, then the governance processes in this area aren’t working.

It may be that the process is too bureaucratic, or doesn’t have enough checks and balances. It may be that business benefits are not considered at all, or that business conservatism slows down the adoption of transformative technologies that could give your enterprise the competitive edge. In any of these cases, the fact is that the process  can be transformed: the enthusiasm and ingenuity of staff can be recruited to drive new behaviours that avoid waste and increase agility, even in such a complex area as programme governance.

How? Define the process. Agree the process. Measure it and improve it and celebrate success. Make sure that reducing costs is seen as the norm, whether in the project delivery arena or elsewhere.

A final thought on process change. We are coming to the end of the era when process change was driven by external objectives, such as compliance with ‘best practice frameworks’. The fact is that these frameworks cannot evolve quickly enough to keep up with new ways of business enabled by technological change. These days, process change has to be driven by internal objectives such as

• Increased availability of  IT systems (not just availability in terms of time, but also in terms of space - systems need to be device independent for the end user and accessible from any geography. In the near future the norm will be: if the Enterprise app isn’t available on my Android device or iPad, then it just isn’t available)
• Reduced development cycle times
• Waste reduction
• Reduced carbon footprint
• Efficient lifecycle management from procurement to disposal of IT assets

All of the above examples, when managed appropriately, will drive IT cost reduction.

Effective Leadership must drive IT Cost Reduction

Cultures also change when attitudes change.  Attitudes change when those with influence set an example.

Effective leadership in reducing IT costs is about doing the right things and being seen to do them. Make it clear that you are setting the agenda – in this example – we will reduce waste. Question people on how they reduce waste, how they build the desired behaviours into their everyday jobs.

There’s another aspect to effective leadership when it comes to reducing IT costs.  It stems from the fact that we are on the cusp of a massive transformation that will be brought about by the need to reinvent business models to leverage cloud technologies and applications, and the convergence of consumer and enterprise IT.

But that is the subject of another post.

Verax Consulting - Reduce IT Costs

• Framework
• Enabling processes
• Implementation
• Toolkit

Only the first of these – the framework – is available free to non-members. The processes and the implementation guide are free to members. And you will have to register your email at  http://www.isaca.org/cobit5 in order to get the download. I hope that isn’t a backward step for COBIT: in the previous versions the process details were available to non-members, and I’m sure this helped to spread the popularity of the framework and helped to raise the profile and importance of IT Governance generally.

Once I’ve digested the features in COBIT 5 I’ll publish a review of what makes the new version different. According to ISACA, COBIT 5 represents “the most significant evolution in the framework’s 16-year history”.

Verax Consulting - Reduce IT Costs

Look for the Pain?

Quite a few years ago, starting out on my career as an independent consultant, I was given the immortal advice: “look for the pain”.

What was meant by this was that a consultant who wants to help improve the performance of clients should look for companies who are ‘suffering’, shrinking, and/or desperate for help. This advice was bad then and still is now.

From a personal point of view, I know that working for a strong company is a more effective and rewarding experience than working for a ‘suffering’ organisation. Over time, I’ve also come to recognise the characteristics that distinguish strong companies from weak ones. Here’s how I think it works out in the real world…

“Look for the pain”. This advice was bad then and it still is now.

1. Change

Strong companies have an appetite for prudent risk. Change programmes are actively sanctioned and led by senior management, who nevertheless encourage staff to participate and lead. They approach change with a sense of urgency and relish – dare I say it, even fun. The view is that if the organisation isn’t moving, or leading, or changing… then it is a sitting duck as the world around changes without asking permission.

On the other hand, weak companies dread change and implement it poorly. Senior managers wait for well-intentioned middle managers to succeed or fail before publicly getting involved.

2. Growth

Weak companies are focused on cutting costs, but cutting rarely leads to growth. Often this cost cutting is a way in which to make the old failing ideas look more financially viable – but the ideas remain the same.

Strong companies are focused on growth, not merely as a ‘strategy’ or concept, but with an emphasis on delivery. Growth is planned as part of a wider strategy and a keen understanding of markets, products and services. Sometimes it’s unplanned too, as strong managers react quickly to unforeseen opportunities. Cost cutting happens naturally as a by-product of greater efficiency.

3. Innovation

In weak companies, innovation is dangerous.

Corporate attitudes to innovation are dependent on the market or sphere in which an organisation operates. Sometimes being at the ‘bleeding edge’ isn’t the best tactic. But strong companies usually invest in and plan innovation, are fully energised on the subject, and have management teams who are tolerant towards occasional failures.

In weak companies, innovation is dangerous. The management philosophy is ‘command and control’, and bright workers soon learn to keep quiet or move on.

4. Staff

When staff are encouraged to use their initiative, and are valued and celebrated, they are working in a strong organisation. Good managers take heed of the old advice to ‘surround yourself with good people’.

In weak organisations, managers learn that it’s dangerous to surround yourself with good people because working relationships and management structures are ‘political’ in the worst possible sense.

When people tell me ‘things are very political here’, what they usually mean is that there is a poisonous atmosphere of non-cooperation, undermining behaviours and uncertainty about the direction in which the company is going. If this is a temporary situation - as some power struggle or other quickly plays itself out - then all well and good. But what strikes me is that in weak companies, there is always a power struggle, and an underlying disrespect for more junior staff.

5. Outside expertise

This non-productivity usually lasts at least a day and sometimes longer – much longer. It’s bad for everyone concerned.

I know I’m at a weak company within the first hour of an engagement. First, I won’t be able to get onto the premises. There will be no desk put aside where I can work, and no staff available to interview or interact with. It will seem as though the days or weeks planning the engagement had never happened and that my presence is suddenly a huge surprise to everyone. It will be impossible to get an internet connection, and promised meeting rooms will not have been booked. Interviewees are completely confused as to who I am or what I am doing there. Apart from that, everything is fine.

This non-productivity usually lasts at least a day and sometimes longer – much longer. It’s bad for everyone concerned.

6. Alliances

This is the area in which I see most waste in weak companies. Whether the alliance is with a supplier or as part of a joint venture, the counterparty is expected to quickly resolve issues that have bedevilled the weak company for years. This sets the alliance up for failure – but only after months and perhaps years of bitter feuding.

Strong companies approach alliances from a ‘win-win’ perspective. The relationship is open and mature, with each party recognising the valid right of the other to profit from the alliance.

7. Society / Community

Strong companies turn challenges like Carbon Reduction Commitments into opportunities, which indeed is what they are.

Strong companies guard their reputations and seek to improve them. Some are genuinely enthusiastic and active in the area of corporate social responsibility (CSR). At the very least, they ensure compliance with upcoming legislation in areas such as environmental impact and look to turn challenges like Carbon Reduction Commitments into opportunities, which indeed is what they are.

In weak organisations, CSR is seen as an irrelevance at best or an unwelcome burden at worst.

8. Vision and Strategy

The vision for the organisation is well-articulated and part of the culture of a strong company. Strategy guides the organisation and is instrumental in decision making.  

In a weak company, if there is a vision I’ve often found that it’s derided, even by those who created it! Strategy is nominal and disregarded completely when opportunities arise – often with unforeseen and detrimental consequences.

 Characteristics of strong and weak companies

But that’s only eight!

True, but that’s because the ninth element runs through all the others like a message in a stick of rock.

9. Leadership and action

All of the eight areas we’ve looked at have something in common. Without leadership and action they are just ideas and observations. Leaders are able to motivate themselves and others to take action in every area – from changing working practices, services and even markets; to developing vision and strategies that are credible and exciting enough for others to sign up to. 

Setting the example of taking positive action is the role of leadership and it applies to all of us on a greater or lesser scale… as CEOs or workers, as private individuals, social activists and citizens.

Verax Consulting - Reduce IT Costs

Benefits or KPI Targets?

In recent years, however, the usefulness of KPIs has come into question. Valid objections have included…

KPIs drive inappropriate and inefficient behaviour

This is the source of the strongest argument against KPIs. Despite the best of intentions, people become more focused on delivering the desired KPI measurement than on ensuring that the customer of the process being measured is receiving the desired product or service.

“… ambulances waiting outside A&E departments with patients to avoid missing the target for seeing a patient once they are in A&E…”

This issue came to the fore when the UK government began to impose KPI measures in the public services and found that while many measures were being met the perception of the quality of the services plummeted. The unintended consequence of the new measures was that public services employees, at the request of their managers, had changed their behaviours so that the required targets could be hit. Particularly scandalous examples that have been cited include

- ambulances waiting outside A&E departments with patients to avoid missing the target for seeing a patient once they are in A&E
- cancellation of follow-up appointments that do not contribute to targets

Before the private sector gets too smug about its own performance in this area, I have personally witnessed very similar and almost equally scandalous (though less life threatening) examples in outsourcing agreements. For example, over the years I have seen agreements – driven by poorly designed financial key performance indicators – which have had the following unintended consequences:

- call centre / service desk staff record as few incidents and problems as possible
- call centre / service desk staff record as many incidents and problems as possible
- reclassification of incidents and problems after the event in order to meet KPI targets
- resources directed away from resolution of current problems so that resolved issues can be administratively closed within a target time-frame

KPIs disempower and demoralise staff

Very often staff feel that their experience and knowledge is sidelined in the pursuit of KPI targets. Many experience the situation where a course of action is followed that intuitively feels wrong, but has to be carried out in order to meet KPIs. This is a recipe for encouraging people NOT to think about improving the work they do.

A focus on KPIs can miss the big picture

One of the biggest problems caused by too much focus on KPIs is their failure to deal with the fact that business objectives very often have an ambiguous character that escapes simple KPIs. The ambiguity comes about when indicators are quantatative but results need to have some measure of quality.

For example, a company I worked with used a target which stipulated the number of sales calls and customer contacts which needed to be made within a single month. Many of these contacts were not well prepared for and served to irritate current customers because they were inappropriate, while sales calls were often wasted because they were directed at organisations in the wrong market segments.

A Different Approach

In an interesting article profiling Darrell Stein, the Marks and Spencer CIO, Stein explains a benefits driven approach to strategy:

“Rather than base the IT project objectives on a set of dates, I have given them a business benefit target… You have a certain amount of money to spend and you have benefits to achieve. If you are not getting the benefits then you have to find another benefit.” This represents a ‘big mindset shift’ for both Stein and his management team. Now, Stein says, “I don’t get requirements to spend on things that we don’t get benefits from.”

The strategy is working well so far, with M&S bouncing back on the high street and Stein’s approach making huge savings in IT. The question is, can other companies adopt such methods and do they work in the long run?

“I don’t get requirements to spend on things that we don’t get benefits from.”

Benefits Driven Strategies – Not a Panacea

Like all strategies, benefits driven management has to be applied intelligently. The biggest drawback with this approach is the danger of getting into a downward spiral of expenditure cutting which doesn’t drive growth and is not sustainable in the long term.

For instance, managers might be tempted to drive projects which have a positive effect on the bottom line (there is an immediate financial benefit), but are to the detriment of the business over the longer term. It is always reasonably easy to find things to cut today, but what will be the effects on capability and competitiveness tomorrow, next week and next year? Stein seems to be applying the strategy intelligently and successfully.

“it is essential that benefits driven management is considered in the light of potential unintended consequences”

Benefits or Targets?

Any system of management control will drive behaviours – just as KPI target setting drives behaviours – so it is essential that benefits driven management is considered in the light of potential unintended consequences. Businesses are complex systems, and not all results of changes to their mode of operation are predictable.

This doesn’t mean we shouldn’t move quickly when necessary, or fall prey to ‘analysis paralysis’. But we especially need to be wary of easily quantifiable benefits which may impact operational effectiveness.

Verax Consulting - Reduce IT Costs

Big Data

Big Data refers to the availability of huge amounts of data about customer behaviours, markets, sales, etc. These huge datasets are both a problem and an opportunity.

Let’s look at the opportunity first. Mckinsey has called Big Data “The next frontier for innovation, competition, and productivity” and identifies five areas where the management of big data sets will become increasingly important:

1 – unlock value by making information transparent and usable at much higher frequency (i.e. exploit opportunity more quickly)

2 – expose variability and boost performance through more accurate and detailed information on everything from product inventories to sick days (i.e. improve management and performance of our businesses)

3 – tailor products or services precisely through ever-narrower segmentation of customers (i.e. sell more)

4 – improve decision-making with more sophisticated analytics (i.e. do the right things at the right time to benefit business)

5 – improve the development of the next generation of products and services (i.e. produce services and products that pre-empt demand and delight customers)

The first problem is that we do not currently have the technologies to effectively manage and exploit the very largest datasets. My sense is that this merely technological challenge will be solved over the next few years à la Moore’s Law.

Big Process

The much more significant problem is, how can we handle vast amounts of information in a way which improves our businesses and the customer experience, while keeping data secure and customer privacy intact? This is where ‘Big Process’ comes in.

Big Process is said to be the way in which we design and transform overall business processes – such as the sales process – in such a way that big data drives decision making and ‘best next steps’ across the whole enterprise. It is the opposite of the silo approach to modular process improvement.

For example, a customer’s online behaviour or past transactions can be matched with new products and services. Or, to take an example that might interest IT Service Providers, the numbers of outstanding service incidents and queued requests can be addressed and managed in real time across the whole enterprise in a way which maximises scarce resources and serves customers more quickly.

But isn’t this what process has always been about – organising resources, activities and people to achieve a desired outcome? Big Process is a new name, but the truth is that all well designed processes should be scalable and resistant or adaptable to increases in the amount of data handled. Successful processes are based upon finer qualitative decisions, not quantitative ones.

It is also true that we have repeatedly seen miracle applications, systems and technologies fail to deliver expected benefits because organisations did not redesign their processes and re-train their people – this is nothing new. In the world of Big Data, process design (small, medium or Big) will define whether we drown in a sea of data or use it to understand how to be more successful.

The Bottom Line

Big Data is a fact of life and needs to be addressed. Big Process is old wine in new bottles. Tightly couple processes and data to stay competitive.

Verax Consulting - Reduce IT Costs

• The sourcing strategy is reviewed too infrequently

Deciding on an outsource partner and establishing contractual agreements and performance measurements can be a long, arduous and often expensive process. It’s little wonder that CIOs and senior managers want to simply ‘move on’ once agreements are in place. But getting the right sourcing mix in a medium to large enterprise is something that needs regular attention. Business needs change; technologies evolve; service providers’ capabilities develop; new players come into the market; in-house skills disappear or grow; regulatory changes may subtly change the context of the original strategy; loop-holes may have appeared in contracts that could not be foreseen when they were originally agreed.

Are they doing things we asked them to do three years ago but which are no longer relevant? Are both sides measuring the right thing?

The key to adddressing these issues is to get frequent review procedures in place at the start of a sourcing strategy. These reviews will be internal – Where are we now? Have our needs changed? – and conducted with partners – how is the supplier performing? Are they doing things we asked them to do three years ago but which are no longer relevant? Are both sides measuring the right thing? Typically, the scope of such reviews is too narrow. They ask: are the key performance indicators that were put in place showing that the supplier is delivering? They should be asking – are the KPIs the right ones? If it isn’t possible to change the scope of KPIs then the original contract was probably too inflexible. Flexibility – responding to market pressures, threats and opportunities – is key to an organisation’s ability to reduce IT costs.

• It is difficult to reduce IT costs because suppliers are compensated for the wrong behaviours

At the heart of this problem, again, are KPIs. A common scenario is that suppliers are paid for the formal delivery of a service or product to an originally agreed specification, but do not take ownership of providing the quality needed. Suppliers will argue that the quality of the service is only as good as the requirements that were stated, and they are often correct in that. However, there have been many examples where suppliers clearly work to the formal sense of a contract, rather than to its spirit. The reason they will do this in 99% of cases is that they are working to deliver against KPIs which are not appropriate.

As a straightforward example, Service Desk and Incident Management support providers who also provide Problem Management services might be incentivised on the number of calls or incidents that are dealt with by the Service Desk and other support teams. This is a disincentive for efficient Problem Management which aims to reduce the number of incidents.

Such disparities in vision – what do we really want our suppliers to do and how can we measure it? – have a huge negative impact on the ability to reduce IT costs. They also lead to the extremely common phenomenon whereby end users and the business community are complaining bitterly about IT service quality while IT service providers are comfortably meeting their contractual obligations.

• The structure of the relationship with the supplier is dysfunctional

Let’s not forget that the IT Service Supplier might be internal to the organisation – and is often the dominant player in the right-sourcing strategy. In this case, the status of the CIO or IT Director is often indicative of the health of IT’s realtionship with the business. Most enlightened organisations now see the central importance of IT as not only an enabler, but often as a business driver, and this is reflected at board level. It is important that in the drive to reduce IT costs, IT Service Management is not seen simply as a cost centre.

Such disparities in vision – what do we really want our suppliers to do and how can we measure it? – have a huge negative impact on the ability to reduce IT costs.

However, when very large parts of IT Service Management are outsourced, the structure of the relationship with and between suppliers is vital. Common problems are: excessive ‘man marking’ where the supplier is not trusted to deliver what they are paid for, and internal employees spend huge amounts of time ‘assuring’ the quality of deliverables; the relationship is over complex, with the business unclear as to who to talk to when they need IT services to get things done; communications between internal and external suppliers are poor, and the supplier ‘eco-system’ lacks leadership and a clear sense of what is needed for the good of the organisation.

Verax Consulting - Reduce IT Costs

In the current economic environment, CIOs and senior IT managers are frequently asked to deliver cost savings, and to deliver them quickly. Because cost-cutting results are always needed yesterday, the answer is often to make staff redundancies or to cut back on staff training, which is seen as a cost rather than an investment. In the long run, this can be both ineffective and inefficient and lead to higher costs – the reverse of what was required. This article summarises a smarter way of lowering IT costs. Future articles will look at each of these suggestions in more detail.

• Re-visit the sourcing strategy

That outsource your organization carried out four years ago may have made sense at the time, but is it delivering value to your business now? Examine the ‘rightsource mix’ in detail.

• Examine supplier contracts and procurement policy

We rarely – if ever – visit clients who would not benefit from a drains-up on their supplier contracts and procurement policies, which, like the general sourcing strategy, are often seen as a task that needs to be done once, and then can be safely left alone. Contracts need to be monitored, renegotiated and improved on a cyclical basis.

• Rationalise software licensing agreements

Similar to the last point, but we are talking here specifically about software licenses (products) rather than contracts for services. If understanding your current position is difficult – i.e. no one has an answer at the ready when you ask for a breakdown of licensing costs – then it’s a solid bet that you are wasting money in this area.

• Understand demand on IT services and your response to it (Service Strategy)

Although ITIL v3 has helped some organizations improve some aspects of demand management (the demand for operational services and their underlying technologies and functions), we also need an accurate picture of demand on the development side of the house, which is more difficult, sometimes less predictable, but can yield great savings. Benchmark process performance and staff ratios

If we do not know how well our processes perform, it will be difficult to manage them in a more efficient way. Benchmarking can be a useful approach, and this also goes for staff ratios. If we need to lose people from the organization, a benchmarking exercise can at least give some clues on where to look for efficiencies.

• Consider operational self-service tools (and the processes which they support)

Consider it in two senses – if your request management system isn’t primarily self-service, see if there is a business case for introducing it. If you already have self-service, get an expert to review the function, process and tools to make sure value is being delivered. Often, the business is not aware of self-service tools and the issue is one of communication.

• Get a handle on the cost of failure to IT services

In many organizations IT is still considered as a cost centre. Businesses can be slow to recognise the value of IT services when those services are performing well, but quick to put a cost on failure of services. In any conversations around lowering IT costs, it’s vital to be armed with an understanding of the real value of the IT services provided.

• Make processes more efficient

Many IT departments are still not expert at designing processes, measuring their performance, and managing their improvement. There is always a temptation to see the latest tool / technology as a cure-all, but as many process experts have shown, the implementation of tools without understanding the processes they are meant to support will lead to vastly greater inefficiency.

• Who’s doing stuff they shouldn’t?

This is not just a question of skunkworks (unauthorised and unmanaged development work). The question is a much deeper one. Is there a service management strategy. How well is that strategy communicated? How well is it turned into actionable plans that are taken up as part of the culture of the organisation, and not just imposed from above. The costs of having a non-cohesive culture can be vast in terms of productivity, staff turnover and customer dissatisfaction.

• Consider the organization’s functional model

How are your teams organized? Is there a silo approach to delivery? Are skills and capabilities leveraged to the maximum? Are functions integrated and moving towards the same goals?

All of these things are basic and respond to well-known management disciplines. In future we’ll go into some more detail about how to lower IT costs and demonstrate value.

Verax Consulting - Reduce IT Costs

• The Big Question Approach
• The Seven S Model
• The ITIL V3 model

The Big Question Approach

In this approach Corporate Strategy is essentially about finding answers to some big and basic questions such as:

• What business are we in?
• What business should we be in?
• What business are we in that we need to get out of?
• What makes us unique, and why would anyone use our products or services rather than our competitors’?
• What would success look like for us?
• What do we want to do?
• What is it possible for us to do?

As the answers to these questions emerge, both the overall goals and the strategy needed to achieve them will also become clearer. The next step would be to define the actions that must be taken to deliver on the strategy.

The Seven S Model

The Seven S Model was created by McKinsey consultants and approaches strategy by looking at an organisation in the round. The basic idea is that the seven strategic factors provide a framework for thinking about the effectiveness of an organisation, and can then be aligned with each other to ensure that every person and activity is shooting for the same goals. 

• Superordinate Goal / Shared values: these are usually put at the bottom of the list, but I believe they are the foundation of all strategy. If plans do not spring directly from values and goals, then we will simply end up doing things we do not wish to do – “We spent a lifetime climbing the slippery ladder of success, only to find it was leaning against the wrong wall”.
• Strategy itself is the way in which plans to achieve goals are communicated and implemented.
• Structure is the organizational hierarchy
• Systems are the procedures used to operate and gather information
• Staff – and all the human resource systems that support them
• Skills – particularly the unique or distinctive skills possessed by an organisation’s staff, but that competitors do not possess
• Style indicates the culture of an organization – the way it does business, its behaviours, its language and its mode of operation. Style can also be defined by an organisations approach to innovation and change – slow-to-innovate; leading edge; bleeding edge

The ITIL v3 Model

The ITIL Model draws on systems thinking and brings together several well-known approaches and applies them to the specific ways in which IT service providers can formulate strategy. Although it is partly concerned with making sure that IT integrates with business strategy, most of the ITIL strategy model is also applicable to non-IT service and product providers. The main features are:

Strategy Generation

• Defining the Market
• Developing the service offerings
• Developing strategic assets to provide value to customers (and capture value or profit for the provider)
• Preparing for execution

• Perspective – this is the overall vision and mission of the organization
• Position – defined by the policies and distinctiveness of the organization
• Plans – the methods and means of execution used
• Patterns – the ongoing actions carried out from day to day and from which new strategies may emerge

All three ways of looking at strategy are distinctive but also share important features. Each of them uses different language to emphasise the importance of understanding underlying values of the organisation that should drive its strategy – and not the other way around.

Verax Consulting - Reduce IT Costs