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Monday, June 4, 2012

Sourcing IT Value - A Management Perspective

Sourcing Value

In a previous Blog entry I made the case that the value of an I.T. organization is directly related to the level and maturity of “organization”. The “organization” is the way we structure our people around processes to deliver a business outcome or “service” for a client or clients. 
A business’ purpose is to add value to raw materials for the benefit of its clients. If it is a service business, then this value is created through structure, processes and organization. The amount of value added, directly influences the business’ value to its clients. 
The raw material in our I.T. business is the people and technology we use and package, through processes and structures, into services that solve client business problems. Therefore, the way we organization our people around processes is the key contributor to the amount of value delivered to our I.T. clients.
If the level and maturity of “organization” is where the value is delivered, then where and how is it created? 
In this Blog, I make the case that I.T. Managers are the creators of the organization, and therefore directly defines and influences the value potential of such an organization. 
Through the manner in which they organize their I.T. Professional resources, I.T. Managers have the largest potential to directly influence how much value is created and therefore delivered into services for clients. 
I.T. Professionals individually have value to offer. It is the effective and efficient structuring of these I.T Professionals into processes for services that defines the value of an Organization or I.T Function. Without this structuring and processes, the I.T. organization becomes a mere labour broker, and it will continuously fight for its existence. 
Without this value, it is no surprise that more and more businesses question the cost of their I.T. Organization relative to the benefits they derive for their business. Some has even gone as far as labeling I.T. as a risk instead of an enabler or asset. What they know: Another late project. Another failed business benefit expectation. Another system down. More cost. 
As I.T. Professionals in I.T. Organizations, we have a challenge on hand to lift our organization’s game, or be faced with disgruntled clients that grudgingly complains every time they think of the I.T. we deliver or fail to deliver. This very fact has caused many top I.T. Professionals to seek alternative career paths. 
The value of our I.T. functions rests on the shoulders of our I.T. Managers. We need good I.T. Managers, not merely good technical people that are made managers because it is perceived to be the next rung on the career ladder.
What are the key characteristics of this highly specialized and fundamental value creating role called: “I.T. Management”? 
If one want’s to create the maximum value in an I.T. organization, what should be expected from an I.T. Manager for this business? 
Key Competencies of I.T. Management

To define the ultimate I.T. Manager is quite a challenge. 
Firstly, there is no material difference between an effective Manager and an effective I.T. Manager except for one small factor. This factor is: “The understanding of the IT Organization.” The structure of this unique business called I.T. is the only thing that differs the I.T. Manager from the Business General Manager.
We have defined the role of I.T. Manager as: “...being responsible for managing and overseeing the operational processes, people and service outcomes of the I.S./I.T. organization.”  
This role is quite different from some of the other management support roles of the I.T Organization like that of the Project Manager; Deployment Manager, Release Manager, Service Level Manager, etc.. The most fundamental is that the I.T. Manager has the ultimately responsibility for the service outcomes of the organization, which includes all operational, change and supporting processes.
A lot can and has been said for the personal talents or strengths of a manager. What makes a manager successful. The author I admire the most for his contribution to this topic is Marcus Buckingham. In my opinion, he managed to successfully capture the essence of the talents of a good manager. The one thing that differentiates great managers from good managers. I highly recommend you read his book on the topic: “The One Thing You Need to Know”, Buckingham, 2005 (Free Press)
For the purpose of this discussion, I am only going to elaborate on the next layer of capability required for successful Management. You can have all the talent in the world, but if you don’t know the rules of the game, then you cannot be a successful player. I.T. role competence defines the rules of the I.T. Manager game - the person’s knowledge and skills relative to the job on hand.
We concluded that the following ten key I.T. Management characteristics should be considered:
  • Team Sourcing, Composition and Motivation: The I.T. Manager should be highly competent at identifying and assigning the right person to the right job, and motivating him for outstanding performance. In I.T. this more important than ever, considering that people is the primary ingredient in our business. The challenge ahead is to define “right” person and “right” job for your particular business model. The first part of motivating any team member is ensuring that they are in a job that they can do well, and that they love doing.
  • Systems Perspective: The I.T. Manager should be highly capable of identifying, owning and being responsible for key processes and tasks under his management, knowing clearly what his team requires to succeed, and what his team must provide for others in the organization to meet their objectives. In short, the I.T. Manager needs to know his team’s place in the I.T. machine, and the key outcomes required from him and his team.
  • Persuasion and Motivation: The I.T. Manager should be highly capable of persuading and motivating staff under his management to continuously increase and innovate their performance and output, and can similarly persuade and motivate his colleagues and customers towards a common and beneficial set of improvement goals and objectives.
  • Structured Innovation and Continuous Learning: The I.T. Manager should be adept in SixSigmaTM, TurboSigmaTM or equivalent approaches to organizational and personal learning that include both continuous improvement of existing approaches and significant change leading to new goals and approaches that are to manifest in his daily work at personal, work unit and organizational levels and that addresses problems at their root causes. The emphasis is on a structured process to allow his colleagues and team to co-learn from each other.
  • Service and Product Delivery Outcome Focus: Every member of the I.T. Manager’s team and he himself, should be highly knowledgeable of the key elements contained within the service or product of his team, and the elements' required performance as to influence customer's and user's views and decisions relative to future purchases, use and continued relationships, and is highly capable in aligning these elements with customer expectations. In short, know what you are supposed to delivery and make sure you and your team do it.
  • Financial Control: The I.T. Manager should be highly capable of setting, controlling and optimizing the application of financial resources entrusted to him and his team, in relation to his operational responsibilities and key target service or product outcomes. The challenge is always to do less with more. The I.T. Manager has this accountability and is responsible for its control.
  • People Management: The I.T. Manager should be highly capable to facilitate the clear definition of responsibilities and outcomes of his staff, and should be able to encourage the personal development, and give recognition to each individually for using their personal strengths in meeting and / or exceeding their objectives.
  • Agility: The I.T. Manager should be highly adept in producing major improvements in response times and driving innovation cycle time. Even though the I.T. manager may be required to incrementally improve what is done, he is also required to be agile in responding to any fundamental change in requirement, improvement or time to effect these material actions.
  • Management by Fact: The I.T. Manager should be highly capable of identifying measurements from business needs and strategy that will provide the critical data and information about key process, outputs and results to effectively manage performance excellence. One cannot manage what one cannot measure. The effective manager knows what to measure, and does so regularly to direct his management effort and focus.
  • I.T. Operational Knowledge: The I.T. Manager should be highly knowledgeable of industry accepted, and commonly used solutions delivery life-cycle (SDLC) and service management frameworks like ITIL, and the required underlying processes, principles and supporting organizational structures and roles. In principle, the I.T. Manager should not only understand the I.T. machine, but be able to bend and mold it around his client’s unique requirements.
How Value is Created

The above provides a base for selecting a capable I.T. Manager - something this industry desperately needs. 
It still doesn’t ensure that value is created by this individual. To create the value I recommend you take a look at some of the tools and suggestions included previously in this Blog. In particular I recommend you look at the LUC Management Model I discussed on 11 April, ’06. 
The I.T. Manager needs to manage for a purpose, and while doing so maximize and create value in the process. The next challenge on hand will be the definition of the desired outcome for the I.T. Organization. What is the I.T. Manager managing for? 
This will be the topic of our next discussion - a brief look at the definition of an “I.T. Service” - the thing our customer are buying from the I.T. Organization.

Hendrik van Wyk 

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