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Michael Watkins wrote an interesting post "Demystifying Strategy: The What, Who, How, and Why", he defines business strategy as:

"a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making….. A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take (and not take) and the things they should prioritize (and not prioritize) to achieve desired goals."

In a nutshell, as illustrated below:

• Mission is about what will be achieved.
• The value network is about with whom value will be created and captured.
• Strategy is about how resources should be allocated to accomplish the mission in the context of the value network.
• Vision and incentives is about why people in the organization should feel motivated to perform at a high level.

Together, the mission, network, strategy, and vision define the strategic direction for a business. They provide the what, who, how, and why necessary to powerfully align action in complex organizations.

 

 

Technorati Tags: Strategy, Vision, Mission, Value, Business, Goals, Management, Leadership, Planning

 

Mike Walker wrote and interesting post on a discussion he had on “Making Sense of Architecture Standards" which resulted in the following image:

 

 

• Taxonomy and Ontology: Such as IEEE 1471, “. . .an architecture is a conception of a system. There may be many conceptions of a system… What this provides to the enterprise architect, solutions architect or domain architect is a way to have a constant set of terms for describing what it is they are building. This should be at the core to your architecture activities.”
• Information Model and Decision Support: Decision support help us to "..focus more on … What are the right questions  … How do I organize those questions … What do those answers mean … Meaning what is the process in which I get the information, consume it, process it and ultimately make it actionable."
• Process Framework: "… when talking about decision support, there is a need for a process to wrap how we make our decisions…. Having this higher level process framework is essential to architects. There are a series of benefits for the organization … Constancy in how solutions are created … The right people are selected for the right job … Proper metrics can be obtained to gauge health of the EA process … Predictability of results which lends to being able to apply some level of risk management to decisions"
• Actors: These are people with the appropriate skills and competencies.
• Manage: The ability to effectively execute strategy and tactics "…This aspect covers PMO based processes, service management and IT Governance aspects. In the service management area specifically we are seeing closer alignment with EA. The latest version of ITIL has alignment with EA practices."

This is a great overview of the enterprise architecture standards and how they relate and interact.

 

Technorati Tags: EA, Enterprise Architecture, Framework, Standards, ITIL, TOGAF, IAF, Zachman, IEEE 1457, PMO, Process

Michael Hugos has a great post on agility where he makes the following point:

“Experience shows me (again and again) that agility is not about working fast but about finding elegantly simple solutions to business problems. You’ll know you’ve found an elegantly simple solution when the business people agree it solves their most important and immediate problems and when the developers know the solution can be built and tested in 30 days or less.

Unless you find a solution that meets these two criteria, it’s not possible to be agile. And often, because people can’t find these simple solutions, they mistakenly claim that agility itself doesn’t work. They come to this conclusion because they attempt to be agile by cramming complex solutions into short development cycles through working harder, longer, and faster.

That attempt has as much chance of success as trying to cram ten pounds of you-know-what into a five pound bag. Inevitably, the bag breaks, and then there is a mess to clean up.

An elegantly simple solution (a robust 80% solution) doesn’t do everything (there isn’t time for that), just the most important things. Finding this solution is not easy; it’s the creative part. It requires business people to figure out what tasks out of all the tasks they perform are the most important ones and what system features they need to handle those tasks. Then developers have to figure out how to build and test a system to deliver those features in the short amount of time available.”

We spend too much time complicating our lives by trying to do too much, too fast! There seems to never be enough time to do something correctly, but always enough time to do it over again! Given to complexity of managing technology, we’re prone to think that complex solutions, are better solutions. Instead we need to focus on implementing good enough solutions, solution that bring about small wins. Small wins, if continually applied, in a thoughtful and strategic manner, quickly add up to significant results. Small wins are more manageable and have less of an impact if they fail. Seeking big wins are extremely difficult, prone to failure and require significant political will! Focus on the small wins…. simple things done well!

 

Technorati Tags: Agile, Agility, Simple, Small Wins, GTD, IT, Project, Management, Business, Technology, Architecture, Good Enough, Execution

As discussed in Serge’s post there is a standard being ratified for IT Governance, ISO 38500 which will cover Corporate Governance of information technology. This standard was originally defined as an Australian standard AS8015.

AS8015 provides six guiding principles for good corporate governance and the effective, efficient and acceptable use of ICT. The six principles are:

1. Establish clearly understood responsibilities for ICT (eg, ensure individuals understand and accept their responsibilities)
2. Plan ICT to best support the organisation (eg, ensure ICT plans fit current and future needs and the organisation’s corporate plans)
3. Acquire ICT validly (eg, ICT acquisitions should be made for approved reasons and in the approved way; on the basis of ongoing analysis)
4. Ensure ICT performs well, whenever required (eg, ensure ICT is fit for its purpose and is responsive to changing requirements)
5. Ensure ICT conforms with formal rules (eg, ensure compliance with external regulations and internal policies and practices)
6. Ensure ICT use respects human factors (eg, ensure ICT meets the evolving needs of the ‘people in the process’)

This is a great step forward towards effective governance of ICT within a corporate governance framework.

 

Technorati Tags: IT, Governance, IT Governance, Strategy, Alignment

An interesting article in the MIT Sloan Management Review discussing IT business alignment entitled "How to Tap IT’s Hidden Potential" By Amit Basu and Chip Jarnagin caught my attention. In the article the authors talk about the traps or obstacles that trip up companies as they struggle with understanding how to use technology strategically within their businesses.

The five primary reasons that IT and business don’t often see eye-to-eye as mentioned in the article include:

1. Mind-set differences between management staff and IT staff: "….Interaction between logic-driven IT personnel and managers who deal mostly in gray areas can be exasperating for both sides. Too often the result is a minimization of such interactions, leaving the IT team feeling misunderstood, unappreciated and isolated. … Unfortunately, the chief information officer often reinforces this separation. That’s because he or she usually is an IT professional chosen to be a director of technology, rather than an executive who is expected to fully integrate IT into the company."
2. Language differences: "…IT people use jargon and acronyms that are indecipherable to others. Executives speak the language of business, fully expecting to be understood by everyone in the company. Much is lost in translation, leading to suboptimal results that IT is blamed for, which causes resentment and cynicism toward management…"
3. Social influences: "…. the persistent perception of those who are oriented toward science and technology as ‘nerds.’ The recent boom in IT outsourcing has Sworsened this estrangement. Now, IT professionals are almost pitied as dinosaurs whose jobs will soon be sent offshore. "
4. Flaws in IT governance (defined as the specification and control of IT decision rights): "….IT decisions are often made by the wrong people with insufficient input, and the resulting failures drive a wedge between senior managers and their IT colleagues. There is some irony here in the fact that outsourcing often appears to improve IT management, in part because a governance committee is needed to manage the relationship with the outside providers. If a similar committee had previously been in place, outsourcing could probably have been avoided in many cases. "
5. Difficulty of managing rapidly changing technology: "…applying IT to business needs, especially when a company is innovating, is still an experimental process with few standards. Technology changes rapidly and is subject to fads, which can be confusing even to IT professionals."

 

Seven Steps to Building a Strong Bridge between It and the Business

The authors recommend that organisations seeking to create a compelling advantage through the smart and effective use of IT in their business follow the following seven steps.

1. Begin with IT literacy—and commitment—at the top. The impetus for effective IT management must come from the CEO and the board. There has to be a willingness on the part of the CEO and the other executives to know enough about IT to understand its functions and its value to the company, in the same way that they understand accounting, finance and marketing.
2. Hire an IT leader who sees the big picture. The next step is to hire a true chief information officer—not just a technical expert, but a leader who understands the strategic importance and use of IT. Choosing a CIO is much more difficult than choosing other top executives. There are very few people with the perspective and the skills to effectively deploy and leverage IT within a business. The best CIO can work within the management culture at the executive level, can present IT issues as business issues to the executive team, and is willing to learn the business as well as technology. Rarely is the CFO the greatest financial expert in a company, or the CMO the greatest marketing expert. Similarly, some of the most effective CIOs at large companies have not been top technologists….. Rotate management and executive candidates through IT. A stint in IT must be part of the training for people being groomed as general managers and senior executives.
3. Create demand for IT solutions. Managers at all levels across the organization need to be convinced that innovations in IT-related areas such as knowledge management, business intelligence, information security, change management and process integration are essential to the success of the enterprise. Knowledge of them should be as mandatory as functional knowledge in marketing, finance and manufacturing. Only then will the use of IT to address these concerns move from a "technology push" driven by the IT group to a "demand pull" from people across the organization, which will ensure that the company’s IT services are strategically aligned with its business and that capital won’t be allocated for expensive and unnecessary IT services.
4. Make sure nothing gets lost in translation. A company must have people at all levels who can translate IT language for those outside that department and translate the language of management for those in IT. Some of the greatest mistakes in the use of IT occurred in the late 1990s when CEOs bought into IT initiatives and IT-based business models blindly without bothering to truly understand what the technology could and couldn’t do. At the same time, IT staff should have a clear understanding of the business role and value of their work. This should include awareness of the costs and benefits of systems, applications and operations, and an understanding of the interdependencies of IT and other resources within the organization. Including IT personnel in business planning and control committees, task forces and cross-functional teams, as suggested above, and similarly, having non-IT managers on IT planning committees, can facilitate this.
5. Rationalize IT spending. The planning of IT expenses and investments should be subject to the same rigorous procedures and methods as any other expenditure. Too often, executives sign off on IT spending without a clear understanding of its business value. To ensure that all IT spending makes sense for the business, the executive management of the firm must institute proper IT governance—that is, ensure that every part of the organization that is affected by IT decisions is part of the decision-making process, and that decisions are made at the highest levels with a full understanding of all their implications.
6. Create an IT portfolio by evaluating risks and returns. Just as an investor balances risk and returns in constructing a portfolio of investments, management should analyze the costs, benefits and risks of all IT projects to determine how to get the most benefit from the dollars invested in technology. There is a myth that IT investments can’t be evaluated because many of the advantages are intangible or can’t be monetized. While such uncertainty often is part of the equation, thoughtful analysis of the costs and benefits of IT projects can still lead to greater confidence in the value of these projects.

I think that the author make an excellent point. Much of the IT failures I’ve seen and been a part of have results, not from bad technology, but rather from the poor management of technology. As much as IT is responsible for the effective management of technology for the business, the business function also need to take responsibility for holding IT accountable for the value they deliver, just as any other business function.

 

Technorati Tags: Alignment, Governance, IT, Technology, Strategy, Management, Leadership

Simplicity is critical to the effective execution of IT strategy. Raj Sheelvant’s discusses on importance of simplicity in his post "Simplicity Minded Management".  He refers to Ron Ashkenas’s HBR article “Simplicity Minded Management”, where the author provides the following checklist as a guide to help to reduce complexity:

Make simplification a goal, not a virtue

• Include simplicity as a theme of the organization’s strategy
• Set specific targets for reducing complexity
• Create performance incentives that reward simplicity

Simplify the organizational structure

• Reduce levels and layers
• Increase spans of controls
• Consolidate similar functions

Prune and simplify products and services

• Employ product portfolio strategy
• Eliminate, phase out, or sell low-value products
• Counter feature creep

Discipline business and governance processes

• Create well-defined decision structures (councils, committees)
• Streamline operating processes (planning, budgeting, and so on)
• Involve employees at the grassroots level

Simplify personal patterns

• Counter communication overload
• Manage meeting time
• Facilitate collaboration across organizational boundaries

I thought this a great checklist to help reduce the complexity. Given the nature of enterprise simplicity should be critical part of an enterprise architect’s goals. Simple strategies and architectures are easier to communicate, easier to execute and easier to manage. What component of your strategy or enterprise architecture can you focus on simplifying this week?

 

Technorati Tags: Simple, Simplicity, EA, Enterprise Architecture, Strategy, Architecture, Goal, Objective

An article from Cio.com title "The Productivity Gap Between Mid-Market and Large IT Shops" really struck a cord with me. The IT service management consulting at Enterprise Management Associates (EMA) performed an analysis of recent data trends and found that:

"IT departments in Fortune 1000 enterprises actually are more productive and effective service providers than mid-market counterparts—and it has nothing to do with the amount of staffers or money spent."

Having worked in both large and mid-market IT shops, my experience supports their findings, consider the following results from their research:

• Ninety percent of mid-market IT organizations use manual processes.
• Seven out of 10 calls for IT support are a direct result of incorrect operating procedures, meaning self-inflicted by the IT staff.
• Eight out of 10 IT system outages are caused by a failed change—meaning, an IT staffer "didn’t take the time to consider the ramifications of making a change to the infrastructure,"
• As much as 80 percent of the actual IT department is replicated by "shadow IT" workers in the business because IT is too busy to service their customers effectively.
• Research from EMA and The Standish Group show that approximately 70 percent of mid-market IT projects fail.
• Larger companies of the Fortune 1000 support almost three times—2.9 times, to be precise—as many users per IT staff member than mid-market companies….. The Fortune 1000 user-to-IT-worker ratio is 512 users for every one IT worker; in the mid-market, the ratio is 175-to-1…..this makes "mid-market IT organizations only about one-third as effective as their larger Fortune 1000 cousins.

The reason for the different in large and mid-market organisations is not about the money spent of IT and it’s not about the number of staff. The primary difference is in the productivity of the IT organisation. The reason for the low levels of productivity in mid-market organisations are due to:

1. Lack of specialisation: The research found that mid-market organisations have "more generalist approach with a shared team and few if any specialists…. These teams work harder and have less time to dedicate to any particular technology or specialization".
2. Poor IT processes: "IT is too busy to adopt huge [process-oriented] frameworks like ITIL, Six Sigma, CobiT or formal IT project management," Marquis writes. "But the reason they are so busy is precisely because they have no formal processes…. average IT organization is its own worst customer and responsible for most of the outages to which it finds itself reacting," he writes. "In fact, most of the work going on in the average IT organization is not productive work at all, but rather is re-work."

This research provides some interesting insight into mid-market IT organisations. If you’re working in a mid-market IT organisation investing in robust IT processes and specialisation can significantly increase the productivity of your IT shop.

 

Technorati Tags: Specialisation, Strategy, Research, Process, ITIL, COBIT

A research report from IT Governance Limited found that:

"…only 12 percent of businesses take technology seriously enough to operate full board-level oversight of their IT resources…..boards still appear to be lagging badly in implementing appropriate IT governance measures. IT governance frameworks, such as ITIL, CoBIT and ISO27001, also appear to be used in less than 50 percent of organisations."

Other findings from the study includes:

• Less than 7 percent said that board members understood the risks posed to business operations by information and IT systems.
• Over 57 percent said that directors and officers failed to understand the age and health of the current IT portfolio and the business implications of deferring maintenance.
• Less than 37 percent said that IT governance frameworks were integrated with their company’s enterprise risk management regime.
• Asked if their companies used standard IT governance frameworks, such as ITIL, CoBIT, ISO17799 or PMBOK, 9 percent said yes, and 19 percent said that good progress was being made towards this.

These finding really surprised me… I expected to see an higher percentage of organisations adopting these best practice frameworks, especially considering the emphasis on corporate governance and risk management…!

 

Technorati Tags: IT Governance, Governance, Strategy, Business, Management, Research, IT,ITIL, COBIT, PMBOK, ISO17799

The Harvard Working Knowledge has an article "Ten Principles of IT Governance" by Peter Weill and Jeanne W. Ross, taken from their HBS Press book "IT Governance". The ten principles listed below provide a good foundation for your IT governance programme.

1. Actively design governance: "Many enterprises have created disparate IT governance mechanisms. These uncoordinated mechanism "silos" result from governance by default—introducing mechanisms one at a time to address a particular need (for example, architecture problems or overspending or duplication). Patching up problems as they arise is a defensive tactic that limits opportunities for strategic impact from IT. Instead, management should actively design IT governance around the enterprise’s objectives and performance goals….. Not only does overall governance require active design, but each mechanism also needs regular review. Focus on having the fewest number of effective mechanisms possible…..  Many enterprises with effective IT governance have between six and ten integrated and well-functioning mechanisms. One goal of any governance redesign should be to assess, improve, and then consolidate the number of mechanisms."
2. Know when to redesign: "Rethinking the whole governance structure requires that individuals learn new roles and relationships. Learning takes time. Thus, governance redesign should be infrequent. Our recommendation is that a change in governance is required with a change in desirable behavior….. governance processes communicate and enforce new desirable behaviors to facilitate organizational transformations."
3. Involve senior managers: "In our study, firms with more effective IT governance had more senior management involvement. CIOs must be effectively involved in IT governance for success. Other senior managers must participate in the committees, the approval processes, and performance reviews. For many enterprises, this involvement is a natural extension of senior management’s normal activities….. CIOs must be effectively involved in IT governance for success…. Many senior managers are willing to be involved but are not sure where to best contribute. It’s very helpful for the CIO and his or her staff to communicate IT governance on one page with a picture like the Governance Arrangements Matrix. The matrix provides a vehicle for discussing each senior manager’s role and any concerns they have."
4. Make choices: "Good governance, like good strategy, requires choices. It’s not possible for IT governance to meet every goal, but governance can and should highlight conflicting goals for debate. As the number of tradeoffs increases, governance becomes more complex. Top-performing enterprises handle goal conflicts with a few clear business principles. The resulting IT principles reflect these business principles…. Some of the most ineffective governance we have observed was the result of conflicting goals."
5. Clarify the exception-handling process: "Exceptions are how enterprises learn. In IT terms, exceptions challenge the status quo, particularly the IT architecture and infrastructure. Some requests for exceptions are frivolous, but most come from a true desire to meet business needs. Formally approved exceptions offer a second benefit in addition to formalizing organizational learning about technology and architecture. Exceptions serve as a release valve, relieving the enterprise of built-up pressure. Managers become frustrated if they are told they can’t do something they are sure is good for business…….If the exception proposed by a business unit has value, a change to the IT architecture could benefit the entire enterprise. We have described the exceptions process of UPS, State Street Corporation, and other enterprises. All these exemplars have three common elements to their exceptions procedures:
   • The process is clearly defined and understood by all. Clear criteria and fast escalation encourage only business units with a strong case to pursue an exception.
   • The process has a few stages that quickly move the issue up to senior management. Thus, the process minimizes the chance that architecture standards will delay project implementation.
   • Successful exceptions are adopted into the enterprise architecture, completing the organizational learning process."
6. Provide the right incentives: "… a common problem we encountered in studying IT governance was a misalignment of incentive and reward systems with the behaviors the IT governance arrangements were designed to encourage. The typical concern: ‘How can we expect the governance to work when the incentive and reward systems are driving different behavior?’ "
7. Assign ownership and accountability for IT governance: "Like any major organizational initiatives, IT governance must have an owner and accountabilities. Ultimately, the board is responsible for all governance, but the board will expect or delegate an individual (probably the CEO or CIO) or group to be accountable for IT governance design, implementation, and performance—similar to the finance committee or CFO being accountable for financial asset governance. In choosing the right person or group, the board, or the CEO as their designate, should consider three issues…. First, IT governance cannot be designed in isolation from the other key assets of the firm (financial, human, and so on). Thus the person or group owning IT governance must have an enterprise-wide view that goes beyond IT, as well as credibility with all business leaders…. Second, the person or group cannot implement IT governance alone. The board or CEO must make it clear that all managers are expected to contribute to IT governance as they would contribute to governance of financial or any other key asset…. Third, IT assets are more and more important to the performance of most enterprises. A reliable, cost-effective, regulation-compliant, secure, and strategic IT portfolio is more critical today than ever before. The person or group owning IT governance must understand what the technology is and is not capable of. It is not the technical details that are critical but a feel for the two-way symbiotic connection between strategy and IT…. Our recommendation is that the board or CEO hold the CIO accountable for IT governance performance with some clear measures of success."
8. Design governance at multiple organizational levels: "In large multi-business unit enterprises it is necessary to consider IT governance at several levels. The starting point is enterprise-wide IT governance driven by a small number of enterprise-wide strategies and goals. Enterprises with separate IT functions in divisions, business units, or geographies require a separate but connected layer of IT governance…. The lower levels of governance are influenced by mechanisms designed for higher levels. Thus, we advocate starting with the enterprise-wide IT governance, as it will have implications for the other levels of governance."
9. Provide transparency and education: "It’s virtually impossible to have too much transparency or education about IT governance. Transparency and education often go together—the more education, the more transparency, and vice versa. The more transparency of the governance processes, the more confidence in the governance.  Many firms like State Street Corporation use portals or intranets to communicate IT governance. State Street’s portal includes under the section ‘IT Boards, Committees, and Councils’ a description of the Architecture Committee and all the other governance bodies. The portal includes tools and resources, such as a glossary of IT terms and acronyms and the ‘Computer Contract Checklist.’ Often portals include lists of approved or recommended products. Templates for proposing IT investments complete with spreadsheets to calculate the IT business value are often available….. The less transparent the governance processes are, the less people follow them. The more special deals are made, the less confidence there is in the process and the more workarounds are used…. Communicating and supporting IT governance is the single most important IT role of senior leaders…… Firms in our study with more effective governance also had more effective governance communication. The more formal vehicles for communication were the most important."
10. Implement common mechanisms across the six key assets:  "We began the book by describing how IT governance fits into corporate governance. We contend that enterprises using the same mechanisms to govern more than one of the six key assets have better governance…… relationship assets….IP assets……human assets…..information and IT assets……physical assets….financial assets….. Many enterprises successfully coordinate their six assets within a project but not across the enterprise via governance."

This is a great check list that can be used to start or review our existing IT governance structure and process. Given this list how effective is your existing governance mechanisms? Which one action can you take this week to strengthen IT governance with your organisation?

 

Technorati Tags: Enterprise Architecture, Governance, Principles, IT Governance, IT Strategy, EA, Architecture, Business, Leadership, Management

A Cutter Associates study of enterprise architectures in buy-side asset-management firms cites six reasons why these firms should adopt a framework and structure for enterprise architecture. The report cites six reasons why these firms should adopt a framework and structure for enterprise architecture:

1. Achieve greater flexibility and capacity for acquisitions, new products and new investment instruments.
2. Reduce IT’s time to market.
3. Adapt better to changes in the vendor landscape, industry trends and regulatory environment.
4. Align IT and business to the same set of priorities.
5. Reduce cost to business and IT.
6. Improve communication within IT and between IT and business people.

Source: Wall Street & Technology

Technorati Tags: Enterprise Architecture, Architecture, Cutter, Research, EA

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