Developing IT Strategy that Connects

Developing IT Strategy that Connects in a “Consumer IT” Environment

James P. MacLennan

AITP Chicago – Chapter Meeting

Rolling Meadows, IL

11 February 2013

Developing IT Strategy that Connects

Requirements

• Define an IT Strategy

• Align with Corporate Objectives

Assumptions

• Cut my Costs

• Deliver Innovation

• Something I Can Understand

3

B I N G O Paradigm

Shift Virtualization HTML5 Big Data Hacktivism

Consumer IT Blog Something-

As-a-Service Innovation

Speed of

Business

BYOD Green IT FREE

SPACE Business

Intelligence Gamification

Globalization SEO NFC Outside the

Box Synergy

Social Media Alignment Web 3.0 Wisdom of

the Crowds

Internet of

Things


Requirements



Assumptions

• Cut my Costs



5

?

How does IT drive 15/15?

People

ETB Enhance the Business

New capabilities with incremental benefits

Reallocate

RTB Run the Business

Keeping the Trains Running

$$

Variable:

– Data / Telecommunications

– Hardware / Software

Optimize

Fixed:

– Depreciation

IT Budget Mix

Direct Expense Management

• Optimize real $$ costs on variable spend

• Reallocate $$ and people time from RTB

Indirect Services: Projects and Skills / Training

• Enable growth with new capabilities / market access

• Drive savings through visibility and automation

6

What's Driving this Brevity?

• Speed of business?

7

8

9

l l

l

10

What's Driving this Brevity?

• Speed of business?

• Today's current fire?

• Expecting BoD-style?

11

13

A Simple Question

Said



Unsaid

• Cut my Costs



14

A Simple Question

Requirements



Assumptions

• Cut my Costs



15

Sustainable IT Strategy for the Fast Twitch Set

16

Where to Begin?

– Top Down: Corporate Strategic Objectives

– Bottom Up: IT Operations

– Common Ground: IT Finance

Bridging the Gap

– Making the connection

– Common language

– What the cat said to the dog

Hidden Messages

– Transparency

– IT as a Service

Communicating the Message

– One Time

– Multi-Media


17

Where to Begin?




Bridging the Gap


– Common language


Hidden Messages

– Transparency

– IT as a Service


– One Time

– Multi-Media

What are your Corporate Strategic Objectives?

1. More Revenue

2. Less Cost

18

What are your Corporate Strategic Objectives?

1. More Revenue

a. Grow Earnings

2. Less Cost

a. Grow Returns

b. Increase Cash Flow

19

Been There, Done That

20

• $35M Subsidiary of Schindler Elevator (€4B)

• Privately Held

• Light Manufacturing

• Strategic Objectives (ca. 1997) – Mature markets in the US generate cash

to fund international growth at parent

– Revenue growth in the US focused on new product segments and custom manufacturing


21

• $4B subsidiary of Monsanto ($9B)

• Publicly Held

• Pharmaceuticals

• Strategic Objectives (ca. 1999) – Drive revenue growth on new product (Celebrex)

– Focus R&D on long-term pipeline in smaller set of markets, funded by reallocation of resources


22

• $700M subsidiary of Vivendi ($29B)

• Publicly Held (International)

• Consumer Durables Manufacturing

• Strategic Objectives (ca. 2002) – Balance revenue flow by growing recurring streams

– Streamline back office for company-owned stores by establishing shared services


23

• $3.5B subsidiary of Rank Group

• Private Equity

• Foodservice Disposables Manufacturing & Distribution

• High Volume, Low Mix

• Strategic Objectives (ca. 2011) – Mature markets in the US generate cash

to fund acquisitions at parent

– Grow revenue by acquiring new products that will leverage broader distribution network


24

• $2B, Diversified Engineered Products

• Publicly Held

• Industrial Manufacturing

• Low Volume, High Mix

• Strategic Objectives “15/15”

– 15% Annual Earnings Growth

– 15% ROIC (Return on Invested Capital)

Top Line is Better

15% Annual Earnings Growth

• Aggressively Acquisitive, ~$100-200M per year

• Organic is a Focus in 2013

• We prefer revenue growth over cost-cutting – IDEX businesses typically enjoy strong margins

– Contribution Margin has faster / stronger impact than cost-cutting

15% Return on Invested Capital (ROIC)

• ROIC measures how well a company generates cash flow relative to the capital it has invested

• Working Capital, Lean, & Productivity fall under this topic

25

IT Operation: How I Spend My Days

Admin Meetings, Training/Development, Vacations/Holidays

Operations Recurring maintenance, Patches – Keeping things running

Break/Fix Bug fixes, Remedy tickets – “… it used to work but now it doesn’t …”

Improvement Process documentation, user assistance, small development efforts

Opportunity Opportunity Phase of New Projects – prepping for Concept Tollgate

Projects Grouped by business, and moving through the PM stage gates

26

… define subcomponents / categories …

For the two major components of People Time … RTB

ETB

Admin

Operations

Break/Fix

Improvement

Opportunity

Projects

Project Management is Easy, Right?

• Communicate

• Plan the Work

• Manage Resources

• Create Deliverables

• Checkpoint / Tollgate

27

Build Install Design Review Concept Run Idea

IT + Finance Language: Common Ground

28

The IT Budget “Mix”

• Fixed / Committed

• ($$$) Depreciation

• (Time) RTB

• Variable / Opportunity

• ($$$) Telecom, Software,

Hardware, Services

• (Time) ETB

People





$$$

Variable:



Fixed:

– Depreciation


29

Where to Begin?




Bridging the Gap


– Common language


Hidden Messages

– Transparency

– IT as a Service


– One Time

– Multi-Media


30




• (Time) RTB



Hardware, Services

• (Time) ETB

People





$$$

Variable:



Fixed:

– Depreciation

How does IT drive 15/15 (ROIC) ?

31

Optimize RTB

• Complexity Reduction

• Standardization

• Automation

Optimize Expense


• Standardization

• Leveraged Spend

Direct: Expense Management

(Cost Savings)

People





$$$

Variable:



Fixed:

– Depreciation

How does IT drive 15/15 (Growth)?

People





$$$

Variable:



Fixed:

– Depreciation

“Innovation Margin”

Reallocate Resources

• ($$$) from IT to (other)

• ($$$) from RTB to ETB

• (Time) from RTB to ETB

Indirect: Services

• Projects and Skills / Training

• Enabling BU Growth / Savings


33

People





$$$

Variable:



Fixed:

– Depreciation






Indirect: Services



l l l

l

l


People





$$$

Variable:



Fixed:

– Depreciation






Indirect: Services




People



Reallocate



$$

Variable:



Optimize

Fixed:

– Depreciation

IT Budget Mix







35


People



Reallocate



$$

Variable:



Optimize

Fixed:

– Depreciation

IT Budget Mix







36

This is reactive, not proactive

When can IT become a strategic differentiator?

“Earn our voice” with Execution Excellence

Update Strat Plan process to proactively include IT

Exit 2013 as an active participant

in growth planning and initiatives


37

Where to Begin?




Bridging the Gap


– Common language


Hidden Messages

– Transparency

– IT as a Service


– One Time

– Multi-Media

Consumption-based Bill-backs

Telecomm / Data / Network 5.0$ 10%

Software (Buy + Maintenance)

People / Talent

Staff - ETB (New capabilities) 15.0 30%

Staff - RTB (Keep the trains running)

Staff - Travel / Training

Professional Services

Technology / Assets

Hardware (Lease/Buy + Maintenance) 23.0 46%


Telecomm / Data / Network

Other

Depreciation 7.0 14%

50.0$

2013 Corporate IT Budget: Components

$M All $ shown are estimates;

please – no wagering

90% - Allocated (PB)

10% - Consumption

Consumption-based Bill-backs

Telecomm / Data / Network 10.0$ 20%


Consumption-based Allocations

Hardware (Lease/Buy + Maintenance)



People / Talent

Staff - ETB (New capabilities) 14.0 28%

Staff - RTB (Keep the trains running)

Staff - Travel / Training


Technology / Assets

Hardware (Lease/Buy + Maintenance) 19.0 38%


Telecomm / Data / Network

Other

Depreciation 7.0 14%

50.0$

2013 Corporate IT Budget: Components

$M All $ shown are estimates;

please – no wagering

80% - Allocated (PB)

20% - Consumption

IT-as-a-Service

1. Bill-backs – Consumption-based costs as they are incurred

2. Direct allocations – Committed costs, pre-allocated based on consumption

3. General allocations – Committed, shared costs, pre-allocated based on % of revenue

– Exception for New Acquisitions: No general allocation during first full year at IDEX

IT-as-a-Service

1. Bill-backs – Consumption-based costs as they are incurred

2. Direct allocations – Committed costs, pre-allocated based on consumption

3. General allocations – Committed, shared costs, pre-allocated based on % of revenue

– Exception for New Acquisitions: No general allocation during first full year at IDEX

l l l l

l

l


43

Where to Begin?




Bridging the Gap


– Common language


Hidden Messages

– Transparency

– IT as a Service


– One Time

– Multi-Media

Mode

• In Person / One-in-One

• Written

• Presentation

Media

• Paper

• eMail

• Blog

• PowerPoint

• Browser

Milieu

• Team meetings

• Global meetings

• SuccessFactors

See IT, Read IT, Hear IT

44

Mode

• In Person / One-on-One

• Written

• Presentation

Media

• Paper

• eMail

• Blog

• PowerPoint

• Browser

Milieu

• Team meetings

• Global meetings

• SuccessFactors


45

Mode

• In Person / One-on-One

• Written

• Presentation

Media

• Paper

• eMail

• Blog

• PowerPoint

• Browser

Milieu

• Team meetings

• Global meetings

• SuccessFactors


46

Mode


• Written

• Presentation

Media

• Paper

• eMail

• Blog

• PowerPoint

• Browser

Milieu

• Team meetings

• Global meetings

• SuccessFactors


47

Mode


• Written

• Presentation

Media

• Paper

• eMail

• Blog

• PowerPoint

• Browser

Milieu

• Team meetings

• Global meetings

• SuccessFactors


48

One page method


People



Reallocate



$$

Variable:



Optimize

Fixed:

– Depreciation

IT Budget Mix







50

Multi-page method


52




• (Time) RTB



Hardware, Services

• (Time) ETB

People





$$$

Variable:



Fixed:

– Depreciation

How does IT drive 15/15 (ROIC) ?

53

Optimize RTB


• Standardization

• Automation

Optimize Expense


• Standardization

• Leveraged Spend

Direct: Expense Management

(Cost Savings)

People





$$$

Variable:



Fixed:

– Depreciation


People





$$$

Variable:



Fixed:

– Depreciation






Indirect: Services




People



Reallocate



$$

Variable:



Optimize

Fixed:

– Depreciation

IT Budget Mix







55

Intranet method

57

58

59


People



Reallocate



$$

Variable:



Optimize

Fixed:

– Depreciation

IT Budget Mix







60

This is reactive, not proactive

When can IT become a strategic differentiator?

“Earn our voice” with Execution Excellence

Update Strat Plan process to proactively include IT

Exit 2013 as an active participant

in growth planning and initiatives

61

Everything will be all right in the end...

if it's not all right, then it's not yet the end

62


Requirements



Assumptions

• Cut my Costs



63


Requirements



Assumptions

• Cut my Costs



64

l l l l l

l

l

l

Developing IT Strategy that Connects in a “Consumer IT” Environment

This presentation is licensed under the Attribution-NonCommercial-NoDerivs 3.0 United States license, available at http://creativecommons.org/licenses/by-nc-sa/3.0/

James P. MacLennan Chief Information Officer

IEX Corporation

1925 West Field Court

Lake Forest, IL 60045

(847) 664 4775

[email protected]

An electronic version of these slides is available online

www.cazh1.com

AITP Chicago – Chapter Meeting

Rolling Meadows, IL

11 February 2013

20130211 AITP CIO Dinner.pptx Image Credits: Next Page

IMAGES

Internet Explorer Icon

by Tatice [CC-BY-NC-ND 3.0]

(www.creativecommons.org/licenses/by-nc-

nd/3.0)], via IconArchive

Outlook Icon

by Benjigarner [CC-BY-NC-ND 3.0]



PowerPoint Icon




MS Word 2 Icon




Devices printer Icon

by Oxygen Team [GNU LGPL],

via IconArchive

Standard Blog Icon

by Brendan Mitchell [CC-BY-SA 3.0]

(www.creativecommons.org/licenses/by-

sa/3.0)], via blog.brendanmitchell.com

Ski Racer

by Rickdrew [CC-BY-SA 3.0]


sa/3.0)], via Wikimedia Commons

Marigolds

by rugs (originally posted to Blogger 13 Aug

2011) [CC-BY-SA 3.0]



Devices video projector Icon

by Oxygen Team [GNU LGPL],

via IconArchive

Passing Jugglers (various) by Juggler

[CC-BY-SA 3.0]



This presentation is licensed under the Attribution-NonCommercial-NoDerivs 3.0 United States license, available at http://creativecommons.org/licenses/by-nc-sa/3.0/

The products or characters depicted in these slides are © by Respective Copyright Owners

No Animals Were Harmed in the Making of This Presentation