Eileen Feretic, writing in the June 2009 edition of Baseline magazine, reported a recent study by the Hackett Group which forecasts an 8.6% growth in IT demand between now and 2011 with only a 1.3% increase in budget.
Surprised? No, I thought not. But do you have a plan? Are you comfortable that your plan, if it exists, can deliver the implied 7.3 cost reduction?
If you answered “No” to either of these questions, where should you start?
The answer is simple, you have to start withe the business. If you don’t have one already, you need to develop an IT Governance methodology (DCG has one and it can help you with this if desired) that identifies all the important decisions at the business-IT interface, who makes them and how they are made. This is essential for getting the inevitable prioritization exercise right. Too often cost saving is arbitrary and causes disproportionate harm to wither the business or IT.
Feretic’s article quotes Steve Bozz, CIO of 1-800-Flowers, “What we’ve done is take all the tech stuff and translate it into business language so that its meaningful to our brands and business units. Now they can make decisions in a way they never could before.”
“Putting Metrics to Work” in the April 2009 edition of CIO Insights contains several articles on the theme. I can’t emphasize enough the importance of the subtitle to Samuel Greengards lead article - “It’s essential for CIOs to find the right ways to measure IT’s performance.” The key message from this interesting group of short articles was that “Right ways to measure” is much more important than “Right metrics.” While I preach (yes, sorry) that some metrics are basic and should be available to all IT departments, these authors confirmed my view that the most important strategic metrics are different in every organization. Why? Because metrics must be used for decision making or you should stop collecting them. The strategic decisions in every organization are different based on industry structure, internal structure, market status and many other factors. Hence, the right strategic metrics are different from organization to organization and from time to time. Scary, huh!
Examples?These few articles identified metrics as diverse as IT Cost per Employee, Cash-to-Cash Cycle time and Capital Expenditure as per cent of ROI.
How do you benchmark yourself against other organizations on metrics that are so specific to you? You don’t. You can’t. So what you do is use these metrics to decide what you should do by comparing internal teams, locations, projects, etc. to each other. You can use this information to drive a continuous improvement strategy (taking lessons from the best to the worst) or a survival of the fittest strategy (kill the stragglers).
Two great articles in one edition (April 2009) of SoftwareTech (www.softwaretechnews.com). As you may have gathered, I really like the Agile methodology in the right circumstances but even I feel sometimes that fitting agile into the constraints of a government IT group is just one too many boulders to push uphill. This article by John Rusk lightens the weight o the boulder considerably by presenting a way to combine EVM with an agile approach. The genius (like all great genius) is so simple I could kick myself. John looks at the burn chart as a simple version of EVM. Of course it is! He offers a 7 step implementation approach and a bunch of other good advice which I wont repeat here because you should read the article! Thanks John.
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I just read a great article by Bob Hunt, Dan Galorath and Paul Solomon in the April edition of SoftwareTech (www.softwaretechnews.com). The title is “Applying Earned Value Management to Software Intensive Programs,” but the key message is in the sub-title - Inaccurate estimates can threaten project success causing poor project implementations, the shortcutting of critical processes and emergency staffing to recover schedule. Recommended reading for government IT employees!
Eight out of ten business leaders say they “make major decisions with missing or untrusted information,” according to an IBM survey reported by Eileen Feretic in the print versions of Baseline (May 2009). The best measurement systems and metrics are those that enable business leaders (including CIOs) to make important decisions. You would think that delivering this measurement information would be a key value contribution of the IT Department and sometimes that is true. Unfortunately, all too often the IT Department is part of the problem. The CIO cannot even provide metrics on the value of IT never mind the rest of the business. Ms Feretic quotes from her interview with Dr David Friend, CEO of Palladium Group, “IT needs to be the keeper of the truth, the enabler of good decision making. It can’t just spew out data. It has to provide insight along with the information in order to help managers make good decisions.” If you are a CIO or a senior IT manager reading this, can you put your hand on your heart and say out loud that you are doing a good job of this? What about for the IT department?
I was in Europe last week meeting with current and prospective clients. It is interesting to see that the level of commitment to the use of function points for managing outsourcing contracts is growing. Nobody believes that functions points are the whole answer or that they should be implemented thoughtlessly but there is growing support for the idea that managing a software development or maintenance outsourcing contract is very hard indeed without some notion of software size. The sizing methodology that can be most easily accepted by both parties to the outsourcing contract is function points. During the week, I was party to several conversations that illustrated how sophisticated the measurement conversation has become in SOME companies. I was reminded that those companies who have not implemented strong software measurement plans are getting further and further behind. Of course, they are probably not reading this blog either :-).
Doug Beizer wrote an interesting article in a recent FCW (link below). I love the quote from Tony Mullen of PA Consulting Group, “The key, of course, to real success with dashboards for acquisition and other business intelligence is to choose good measures and to be rigorous in tracking them.” In a side bar, Beizer highlights that the keys to doing software dashboards right are:
- The Right Metrics
- The Right Tool
- The Right Processes
I agree wholeheartedly.
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A recent report by the National Association of State CIOs highlights 10 areas in which IT has delivered value to state governments:
- Business continuity and disaster recovery
- Cross-boundary collaboration and partnerships
- Data, information and knowledge management
- Digital government: government to business (g to b)
- Digital government: government to citizen (g to c)
- Digital government: government to government (g to g)
- Enterprise it management initiatives
- Information communications technology (ict) innovations
- Information security and privacy
- IT project and portfolio management
I really like this report because it is attractively presented, features real people working in state governments (with their photos) and describes simple ways to deliver value. You can read it or download it at:
http://www.nascio.org/publications/documents/NASCIO-2008Awards.pdf
Writing in the September 15, 2008 edition of Government Executive, Carolyn Duffy Marsan proposed seven best bets in IT for the new administration (of whatever party). The seven were:
- Cybersecurity
- Performance Measurement
- E-Government
- Lines of Business
- Federal Enterprise Architecture
- IPv6
- Green Data Centers
All good stuff! But, naturally, the one that I am going to focus on is #2 Performance Management. Not just because the David Consulting Group can help but because, frankly, it is easy to do and we do not see enough evidence of it yet in government IT projects.
To get some insight into why these seven were chosen, you can read the original article at http://www.govexec.com/story_page.cfm?filepath=/features/0908-15/0908-15s3.htm
The September 22, 2008 issue of Federal Computer Week contained a couple of articles about a fairly new concept in the US Government - the Chief Management Officer or CMO. The idea is to create a position in agencies to elevate the level of attention paid to management issues, integrate various transformational efforts and institutionalize accountability. Is it just me or is this the ultimate symptom of total management failure?
Fot the editorial see, http://www.fcw.com/print/22_31/comment/153791-1.html
For more information on the CMO concept, see Jonathan Breul’s article, http://www.fcw.com/print/22_31/comment/153814-1.html
