Wednesday, 30 November 2011

IT Maturity: The law of accelerating returns

Last week I had my gall bladder removed, for which I must first say thanks to the surgeons and staff at Murrayfield Hospital.  Being away from the operational distractions of the office for a whole week I have been able to think more clearly about some strategic issues.  It’s a luxury that few people have time for, particularly right now.  The economic climate is constricting resources which means keeping the lights on takes precedence over improvement initiatives.  Consequently, organizations tend to shrink back into the comfort of a low cost, low risk operations-only mentality – sitting out the economic downturn safe in the knowledge that battening down the cost hatches will see them through the storm.  However, the fact is that companies that invest during lean times almost always emerge in a stronger position – by leapfrogging their shell-shocked competitors who are shying away from risk.

It is a commonly accepted 'fact' that an average of 70-80% of IT resources are used to provide support and therefore do not contribute anything new to the business.  With only 20-30% of IT budget going to new developments - some of which is fruitlessly wasted on projects that deliver no business value - it is no wonder that IT never reaches the ‘star player’ status.

Most IT organizations are stuck in the operations rut 
Many IT organizations are stuck in a rut - where the new development portion of their budget goes towards perennially catching up with business requirements.  In essence, there is no budget or resource dedicated to innovation that can close the gap and develop IT as a business leading organization. Few companies can afford to dedicate time to innovation, but organizations such as Google very cleverly built this into their company culture at a very early stage to guarantee long-term success in the market through ongoing commitment to innovation.  Organisation's need to shrug off their industrial-age thinking and start thinking in the context of a modern, fast moving global enterprise market where innovation gets you noticed.  The trick is to find the 'wormhole' to the next level - and often, it's a very small wormhole.

The IT Ops Managers Reunion 2012

Step on the gas
In essence, a nudge is required to release resources for innovation and push IT out of the operational rut.  A single, prioritised improvement project can start the ball rolling and create some forward acceleration.  However, the selection of the right project is critical.  A set of initiatives should be analysed and evaluated in terms of the capital expenditure, required resources and benefits that will be delivered.  If the selected project is predicted to release sufficient resources and deliver sufficient cost savings to meet the cost and resource requirements of the next project, inertia will be maintained and IT can continue to make progress with the roadmap.  Of course, no budget means instant failure, so it is vital that IT communicates the value of this ‘wormhole project’ in both standalone terms and as the critical first step in a holistic IT maturity roadmap.

"I'm an IT department and I have a problem"
Realising the problem is the first step towards a solution.  Admitting the problem is the next step (difficult as this might be) but it is also an opportunity to build credibility.  Politics enters the equation and to a certain extent the status quo can be considered a legacy situation that has built up over many IT ‘administrations’ allowing IT to pass the buck to the ghosts of IT past.  IT organizations should aim to gear up morale internally and create organizational enthusiasm by planning and communicating a way out of the rut that is crystal clear.

Who are you calling a 'legacy situation'?

Critical Success Factors
  • Risk assessment must be stringent to foresee and negate project pitfalls to minimise risk of failure.  It must be kept in mind at all times that failure in step one will destroy organizational confidence in the whole roadmap, making it very difficult to re-start.
  • The cost savings and resource benefits of one project should meet or exceed the input requirements of the subsequent project or a shortfall will be revealed and IT will have to go back to the CFO with cap in hand.
  • The CEO must recognise the strategic potential of IT and provide the resources (in other words the breathing space) they need to embark on an improvement roadmap.  Clamping budget helps nobody but your competitors  - who see the strategic potential and recognise that there is a price tag associated with achieving Innovation Technology maturity.

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