Optimising Sourcing during a Slowdown

Ashley MudfordCIO

New Zealand Food Safety Authority

CIO ForumJune 2009

Purpose?

…thinking options…

…to help you to be more effective…

Sourcing

• Increasing revenue

• Decreasing cost

• Releasing effort

Presentation Structure

• Your Organisation’s Context

• Options to think about

Principle 1

Business expectations will influence how you make change and/or optimise

sourcing

Gartner Segmentation Model... Plus the Ability to Collaborate and Influence

Expected IT Role:

Tactical/Utility

ExpectedIT Role: Strategic/ Transformational

Business: Market Follower/Risk-Averse/Mature

Business: Market Leader/Risk Taker/High-

Growth

• Works well with others• IT value over time, not just cost• Business process focus, but

solution-driven• High business alignment

The Team Player

• Anticipate business needs• Minimized governance• Service over cost• Don't hinder the business

The Butler• Full business/IT integration• Managed risk• No distinction between IT and

business governance• What, not how

The Entrepreneur

• IT cost containment• Predictability/reliability• Governance as self-

protection• Continual unit cost

improvement• Benchmarking for

justification

The Grinder

Gartner Predictions

At least 60% of large IT organizations will divide into at least two organizations by 2012, one working on

sourcing and delivery of infrastructure, another on architecture and change.”

Source: Gartner, John Mahoney, Dec 2007

“Their (architects) role within leading enterprises is moving from a technology focus to a focus on

business processes and relationships”

Depending upon which quadrant your team fits will determine how you

approach sourcing and make change

Principle 2

The business’ perception of your providing value will influence the extent

of change

Service Level Maturity Model

Integrated

Aligned

Functional

Initial

• Few performance metrics

• Little emphasis on measurement and improvement

• Clear IT service tower definitions

• Functional metrics (IT tower-based, vertically focused)

• Metrics used to track performance over time

• Business oriented (horizontally aligned)

• Analysis of root causes drives improvements

• Metrics to understand the business impact of IT performance

• IT metrics completely integrated with business-unitobjectives and represented in terms of business results

• Ability to segregate IT resources by business process

• Leading indicators of bus. processes clearly understood

• Problems prevented through proactive analysis

CharacteristicsSLA Maturity Levels

5

4

3

2

1

Preventive

Gartner research has found that there are five levels of service level maturity. Possible to undertake a rapid evolution, but not feasible to skip evolutionary steps entirely.

Principle 3

The business’ perception of your degree of alignment and integration will help

determine your value

Governance

Chief Executive & Board

Strategic BusinessProcess 1

CorporateGovernance

Strategic Project 1

IMProgramme

HRProgramme

Policies & Procedures Programme

etc Programme

Shared Services

Business Interaction

CIO Files & Records Management

Group

Business Consultation

Group

Application Management Committees

Business Programme

of Work

Business Service Delivery Meetings

Web Programme Management

Business Team Meetings

OrganisationStaff Updates

IMNewsletters

So…

Where does your programme fit on these models?

Depending upon your model… what is your focus?

Key tool

• By Function/Service– What it delivers– What does it comprise– Total cost– Cost per ‘event’ per ‘person’ per ‘year’– Options for change– Options for cost/service changes– What is delivered for each option– What is not delivered for each option– The risks for each option

• Business decision on what they can live with

Projects

• Review project benefits – Stop– Slow down– Delay– Continue

Grinder… then…

• Review core business & stop doing non-core stuff• Confirm SLAs• Improve internal IT (& business) processes

– efficiency– effectiveness– transparency– cost

• Cost Benefit Analysis for outsourcing• Cost Benefit Analysis for different delivery options

– shared services– cloud computing– Software as a Service

Grinder… then also…

• Consolidate/standardise/rationalise– systems– organisation– equipment

• Review licensing (conditions & alternatives)• Review contracts against cost & service levels• Review contracting regime against overlaps• Review technology for value• Benchmark• Find alternative sources of revenue

– Shared services– consultancy

Entrepreneur… then…

• Drive Grinders to make efficiencies & savings – IT&T– Applications

• Review what resources are required to support business innovation– Architects– Analysts

• Work with the business to initiate innovation: – Model business processes (end-to-end)– Identify business process improvements– Make measurable stretch improvement targets (reduce xxx process by

xx% from ‘$a’ to ‘$b’ and ‘x’ time to ‘y’ time)– Support organisational change– Support benefit realisation

SLA maturity is low… then…

• Work out how you can get to the next level of maturity with existing resources

• Implement simple (to business) reporting matrix – It costs $100 per person per year to provide ‘this’– Deliver x,000 per year

• Market service improvements to the business

• Mind you… if you’re starting now, you’re probably too late for immediate benefits…

Governance is low… then…

• Research benefits for effective Governance

• Identify key organisation influencers

• Promote need for Governance

• Actively support establishment of organisation governance model

Business Interaction is low… then…

• Research benefits for increased business interaction

• Develop interaction plan• Identify key business influencers • Promote need for increased business interaction• Make it happen • Use it to market programme achievements

What you are after is…

The Business… – Having a high level of transparency and

understanding of what you do– Advocating your case for what you can and

can’t accomplish and at what price

But also remember…

Really good people are hard to get irrespective of the state of the economy

ashley.mudford@nzfsa.govt.nz+64 4 894 2605

…and best wishes with your thinking and action…

Thank you…