Managing IT Investments in the High-performance ... - Accenture
Managing IT Investments in the High-performance ... - Accenture
Managing IT Investments in the High-performance ... - Accenture
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<strong>Manag<strong>in</strong>g</strong> <strong>IT</strong> <strong>Investments</strong> <strong>in</strong> <strong>the</strong> <strong>High</strong>-<strong>performance</strong> Bus<strong>in</strong>ess<br />
Strategic Information Technology Effectiveness (S<strong>IT</strong>E)
The role of <strong>IT</strong> <strong>in</strong> <strong>the</strong><br />
high-<strong>performance</strong> bus<strong>in</strong>ess<br />
Most companies spend too much time debat<strong>in</strong>g<br />
how much money to spend on <strong>IT</strong> and not enough<br />
time determ<strong>in</strong><strong>in</strong>g how to manage and allocate<br />
<strong>the</strong>ir <strong>IT</strong> spend<strong>in</strong>g (capital and expense). For chief<br />
executive officers and chief <strong>in</strong>formation officers<br />
seek<strong>in</strong>g high-<strong>performance</strong> results from <strong>the</strong> use of<br />
<strong>IT</strong>, <strong>the</strong> real challenge is discover<strong>in</strong>g how to<br />
separate high-bus<strong>in</strong>ess-value <strong>IT</strong> <strong>in</strong>vestments from<br />
those that are lower value.<br />
1
<strong>Accenture</strong>’s research <strong>in</strong>to <strong>the</strong> characteristics of high<strong>performance</strong><br />
bus<strong>in</strong>esses suggests that a real differentiator<br />
<strong>in</strong> a company’s f<strong>in</strong>ancial <strong>performance</strong> is not overall <strong>IT</strong><br />
spend<strong>in</strong>g but excellence <strong>in</strong> focus<strong>in</strong>g this spend<strong>in</strong>g by<br />
bus<strong>in</strong>ess value. Companies with superior earn<strong>in</strong>gs growth:<br />
• Spend less than <strong>the</strong>ir <strong>in</strong>dustry peers on <strong>IT</strong> but are<br />
able to free up more <strong>IT</strong> <strong>in</strong>vestment on new bus<strong>in</strong>ess<br />
<strong>in</strong>itiatives<br />
• Justify <strong>the</strong>ir <strong>IT</strong> <strong>in</strong>vestments with a rigorous, analytical<br />
process that enables <strong>the</strong>m to discover exactly where<br />
bus<strong>in</strong>ess <strong>performance</strong> improvement opportunities lie<br />
• Cont<strong>in</strong>ually monitor <strong>the</strong>ir efforts to ensure that <strong>the</strong>ir<br />
<strong>in</strong>vestments generate <strong>the</strong> expected value<br />
• Foster a culture <strong>in</strong> which <strong>the</strong> <strong>IT</strong> function and <strong>the</strong><br />
rest of <strong>the</strong> bus<strong>in</strong>ess are aligned on bus<strong>in</strong>ess objectives<br />
and priorities, and work toward <strong>the</strong> optimization of<br />
<strong>IT</strong> resources globally for higher <strong>performance</strong> of <strong>the</strong><br />
organization overall.<br />
To help senior executives <strong>in</strong> this effort, <strong>Accenture</strong>’s<br />
Strategic <strong>IT</strong> Effectiveness (S<strong>IT</strong>E) practice has developed<br />
an approach to <strong>IT</strong> that addresses <strong>the</strong> three pr<strong>in</strong>cipal<br />
factors that determ<strong>in</strong>e how a company uses <strong>IT</strong> successfully<br />
to create shareholder value (see figure opposite):<br />
<strong>Accenture</strong> research shows that while high-<strong>performance</strong><br />
bus<strong>in</strong>esses consistently spend less than <strong>the</strong>ir <strong>in</strong>dustry<br />
peers on <strong>IT</strong> as a percentage of revenues, <strong>the</strong>y generate<br />
greater value from <strong>the</strong>ir technology <strong>in</strong>vestments.<br />
<strong>Accenture</strong>'s experience with manag<strong>in</strong>g <strong>IT</strong> <strong>in</strong>vestments<br />
<strong>in</strong>dicates that implementation of a structured process to<br />
guide <strong>IT</strong> <strong>in</strong>vestment delivers dramatic bus<strong>in</strong>ess benefits.<br />
Direct sav<strong>in</strong>gs of 10 to 15 percent <strong>in</strong> <strong>the</strong> <strong>IT</strong> budget are<br />
achievable with<strong>in</strong> six to 12 months, while improved <strong>IT</strong><br />
decision-mak<strong>in</strong>g can <strong>in</strong>crease <strong>IT</strong> productivity by a fur<strong>the</strong>r<br />
20 percent. Indirectly, <strong>the</strong> benefits result<strong>in</strong>g from a new<br />
set of prioritized projects and reconstructed <strong>IT</strong>-enabled<br />
bus<strong>in</strong>ess processes can deliver returns rang<strong>in</strong>g from<br />
10 to 500 times <strong>the</strong> <strong>in</strong>vested capital.<br />
This document demonstrates how <strong>Accenture</strong> has used this<br />
transformational approach to help organizations generate<br />
greater strategic, operational and f<strong>in</strong>ancial value from<br />
<strong>the</strong>ir <strong>IT</strong> <strong>in</strong>vestments.<br />
Sett<strong>in</strong>g <strong>the</strong><br />
<strong>IT</strong> agenda<br />
Execut<strong>in</strong>g <strong>the</strong> <strong>IT</strong> agenda<br />
<strong>Manag<strong>in</strong>g</strong> <strong>IT</strong><br />
<strong>in</strong>vestments<br />
• Sett<strong>in</strong>g an optimized <strong>IT</strong> agenda that allocates <strong>the</strong><br />
right levels of <strong>in</strong>vestment to <strong>the</strong> right areas<br />
• <strong>Manag<strong>in</strong>g</strong> an <strong>IT</strong> Governance process for manag<strong>in</strong>g<br />
<strong>the</strong>se <strong>in</strong>vestments through to value realization<br />
• Execut<strong>in</strong>g <strong>the</strong> <strong>IT</strong> agenda <strong>in</strong>clud<strong>in</strong>g tools that<br />
make <strong>the</strong>se processes susta<strong>in</strong>able, flexible, fast and<br />
transparent.<br />
2
Sett<strong>in</strong>g <strong>the</strong><br />
<strong>IT</strong> agenda<br />
<strong>Manag<strong>in</strong>g</strong> <strong>IT</strong><br />
<strong>in</strong>vestments<br />
Figure 1: Value creation <strong>in</strong> company / <strong>in</strong>dustry context<br />
Execut<strong>in</strong>g <strong>the</strong> <strong>IT</strong> agenda<br />
Susta<strong>in</strong>ed,<br />
higher value<br />
<strong>IT</strong> as <strong>in</strong>tegral part of bus<strong>in</strong>ess<br />
Re-th<strong>in</strong>k<strong>in</strong>g<br />
<strong>the</strong> bus<strong>in</strong>ess<br />
value model<br />
Bus<strong>in</strong>ess<br />
value<br />
creation<br />
<strong>IT</strong> as service provider<br />
Lead<strong>in</strong>g <strong>IT</strong><br />
practices<br />
Company strategy / <strong>in</strong>dustry context<br />
Sporadic,<br />
lower value<br />
‘<strong>IT</strong> Shop’<br />
activities<br />
Functional<br />
level<br />
Influence on bus<strong>in</strong>ess agenda<br />
Executive<br />
level<br />
3<br />
Sett<strong>in</strong>g <strong>the</strong> <strong>IT</strong> agenda<br />
As bus<strong>in</strong>ess conditions change with <strong>in</strong>creas<strong>in</strong>g velocity,<br />
senior management teams expect <strong>the</strong>ir <strong>IT</strong> functions to do<br />
more than master <strong>the</strong> fundamentals. <strong>High</strong>ly successful<br />
enterprises who have established mastery <strong>in</strong> <strong>IT</strong> <strong>in</strong>vest <strong>in</strong><br />
and use technology <strong>in</strong> ways that few o<strong>the</strong>rs do. How<br />
Wal-Mart, Dell Computer Corporation and FedEx have<br />
achieved superior market success <strong>in</strong> part because <strong>the</strong>y<br />
have succeeded <strong>in</strong> mov<strong>in</strong>g technology from a support role<br />
to a creator of value, and an <strong>in</strong>tegral part of <strong>the</strong>ir<br />
bus<strong>in</strong>ess models. All three companies built <strong>the</strong>ir bus<strong>in</strong>ess<br />
models around capabilities that new technology solutions<br />
made possible – creat<strong>in</strong>g long-term, shared <strong>in</strong>vestment<br />
agendas that allow <strong>IT</strong> to deliver on its promises and<br />
cont<strong>in</strong>ually drive one <strong>IT</strong>-enabled <strong>in</strong>novation after ano<strong>the</strong>r<br />
(Figure 1).<br />
Importantly, such <strong>in</strong>novative use of <strong>IT</strong> does not depend on<br />
outsized technology budgets. For example, Wal-Mart’s<br />
total <strong>IT</strong> spend<strong>in</strong>g as a percentage of revenue is well below<br />
<strong>the</strong> average of its competitors. Study after study shows<br />
that lead<strong>in</strong>g companies almost always spend less than<br />
<strong>the</strong>ir <strong>in</strong>dustry peers on <strong>IT</strong>. Clearly <strong>the</strong>se companies<br />
understand how to make value-based decisions about<br />
<strong>the</strong>ir <strong>IT</strong> resources more effectively so that <strong>the</strong>y only <strong>in</strong>vest<br />
<strong>in</strong> projects that generate maximum bus<strong>in</strong>ess value –<br />
a concept that is at <strong>the</strong> heart of <strong>Accenture</strong>’s <strong>IT</strong> Value<br />
Discovery approach to formulat<strong>in</strong>g <strong>IT</strong> strategy (Figure 2).<br />
This approach <strong>in</strong>corporates two key pr<strong>in</strong>ciples:<br />
• Create powerful and <strong>in</strong>novative <strong>IT</strong> po<strong>in</strong>ts of view to<br />
engage <strong>the</strong> bus<strong>in</strong>ess around new bus<strong>in</strong>ess valuecreation<br />
opportunities<br />
• Partner around a selective, value-creat<strong>in</strong>g bundle of<br />
capabilities that toge<strong>the</strong>r make a greater contribution<br />
to shareholder value.
Figure 2: <strong>IT</strong> Value Discovery approach<br />
Step 1<br />
Determ<strong>in</strong>e<br />
Bus<strong>in</strong>ess / <strong>IT</strong><br />
Basel<strong>in</strong>e<br />
Step 2<br />
Identify<br />
Value Creation<br />
Opportunities<br />
Step 3<br />
Def<strong>in</strong>e Future<br />
Capabilities<br />
Step 4<br />
Develop<br />
Investment Plan<br />
Step 5<br />
Develop<br />
Implementation<br />
Roadmap<br />
What are <strong>the</strong> most important opportunities<br />
• Which lead<strong>in</strong>g bus<strong>in</strong>ess and <strong>IT</strong> trends will impact<br />
bus<strong>in</strong>ess value<br />
• What are <strong>the</strong> key opportunities to create bus<strong>in</strong>ess<br />
value<br />
• What is <strong>the</strong> long term vision for <strong>IT</strong> to enable and<br />
support <strong>the</strong> bus<strong>in</strong>ess<br />
How should it move forward<br />
• What is <strong>the</strong> overall bus<strong>in</strong>ess case and value for<br />
mov<strong>in</strong>g forward<br />
• What bundle of capabilities will be needed to realize<br />
<strong>the</strong> opportunities<br />
• What is <strong>the</strong> multi-year <strong>IT</strong> <strong>in</strong>vestment plan and roadmap<br />
The <strong>Accenture</strong> <strong>IT</strong> Value Discovery methodology goes well<br />
beyond traditional approaches to <strong>IT</strong> strategy. <strong>IT</strong> Value<br />
Discovery actively uncovers company-specific opportunities<br />
to create value. The approach also challenges <strong>the</strong><br />
bus<strong>in</strong>ess to collaborate with <strong>IT</strong> to craft a bold new<br />
agenda to capitalize on those opportunities. The result<br />
can be a dramatic, positive impact on shareholder value<br />
(Figure 3).<br />
<strong>IT</strong> Value Discovery <strong>in</strong>volves a systematic evaluation of <strong>the</strong><br />
three <strong>IT</strong> value creation levers. A company’s options for<br />
leverag<strong>in</strong>g <strong>IT</strong> to create value depend on <strong>the</strong> primary<br />
assets utilized and <strong>the</strong> <strong>in</strong>dustry or organization’s rate of<br />
change. <strong>Accenture</strong>’s approach <strong>in</strong>vestigates and assesses<br />
opportunities determ<strong>in</strong>ed by identify<strong>in</strong>g those levers that<br />
have <strong>the</strong> greatest impact on bus<strong>in</strong>ess value and overall<br />
bus<strong>in</strong>ess <strong>performance</strong>.<br />
Figure 3: <strong>IT</strong> <strong>in</strong>vestments contribute to shareholder value <strong>in</strong> three ways (illustrative)<br />
Bus<strong>in</strong>ess value<br />
Value<br />
today<br />
<strong>IT</strong> -Value Creation Levers<br />
3. Create new <strong>IT</strong>-enabled bus<strong>in</strong>ess model(s)<br />
2.<br />
2. Optimize current bus<strong>in</strong>ess model through <strong>IT</strong><br />
1.<br />
1. Optimize exist<strong>in</strong>g <strong>IT</strong> function<br />
Potential<br />
value<br />
Impact on EPS<br />
(earn<strong>in</strong>gs per share)<br />
Level of contribution of<br />
different levers to<br />
company value depends<br />
on company situation<br />
2-50 cents<br />
1-5 cents<br />
0.5 -1 cent<br />
4
Sett<strong>in</strong>g <strong>the</strong><br />
<strong>IT</strong> agenda<br />
<strong>Manag<strong>in</strong>g</strong> <strong>IT</strong><br />
<strong>in</strong>vestments<br />
Figure 4: <strong>Accenture</strong> <strong>IT</strong> Demand Management Framework<br />
<strong>IT</strong> Governance<br />
Execut<strong>in</strong>g <strong>the</strong> <strong>IT</strong> agenda<br />
Bus<strong>in</strong>ess / <strong>IT</strong><br />
Alignment<br />
<strong>IT</strong> Demand Plann<strong>in</strong>g<br />
<strong>IT</strong> Supply Control<br />
<strong>IT</strong> Value Review<br />
• Assess bus<strong>in</strong>ess and <strong>IT</strong><br />
capabilities<br />
• Align <strong>IT</strong> vision to<br />
bus<strong>in</strong>ess vision,<br />
objectives and strategy<br />
• Formulate <strong>IT</strong> strategy<br />
• Set <strong>IT</strong> <strong>in</strong>vestment<br />
guidel<strong>in</strong>es<br />
• Identify and shape<br />
<strong>IT</strong> <strong>in</strong>vestment<br />
opportunities<br />
• Assess bus<strong>in</strong>ess<br />
value and prioritize<br />
<strong>in</strong>vestments<br />
• Determ<strong>in</strong>e timel<strong>in</strong>e<br />
and fund projects<br />
• Manage portfolio of<br />
<strong>IT</strong> <strong>in</strong>vestment<br />
• Monitor project<br />
progress and budget<br />
consumption<br />
• Manage risks and<br />
issues<br />
• Review "after"-state<br />
returns aga<strong>in</strong>st<br />
"before"-state<br />
objectives<br />
• Incorporate lessons<br />
learned <strong>in</strong>to company's<br />
<strong>IT</strong> management model<br />
Feedback<br />
<strong>IT</strong> Resources<br />
Tools & Systems<br />
5<br />
<strong>Manag<strong>in</strong>g</strong> <strong>IT</strong> <strong>in</strong>vestments<br />
<strong>Accenture</strong>’s <strong>IT</strong> Value Discovery addresses several critical<br />
questions about <strong>IT</strong> strategy:<br />
• Are our <strong>in</strong>formation technology <strong>in</strong>vestments help<strong>in</strong>g us<br />
drive <strong>the</strong> highest <strong>performance</strong> from our bus<strong>in</strong>ess<br />
• How much should we be spend<strong>in</strong>g on <strong>IT</strong><br />
• Is our <strong>IT</strong> spend<strong>in</strong>g effective relative to our peers<br />
• Where are we deriv<strong>in</strong>g value from <strong>IT</strong><br />
• How can we make it easy for everyone <strong>in</strong> <strong>the</strong><br />
organization to understand how best to generate value<br />
from <strong>IT</strong><br />
• How can we use <strong>in</strong>formation technology to reduce<br />
operat<strong>in</strong>g costs and fuel growth<br />
Traditionally, <strong>the</strong> answers to <strong>the</strong>se questions have proven<br />
elusive, because: 1) <strong>the</strong>re is poor alignment between <strong>the</strong><br />
objectives of <strong>the</strong> bus<strong>in</strong>ess users of technology and those<br />
of <strong>the</strong> <strong>IT</strong> organization; and 2) <strong>the</strong>re are limited measures<br />
<strong>in</strong> place to evaluate whe<strong>the</strong>r or not technology solutions<br />
implemented are deliver<strong>in</strong>g appropriate bus<strong>in</strong>ess value to<br />
<strong>the</strong> organization.<br />
In some organizations <strong>the</strong> <strong>IT</strong> department has become<br />
essentially a supplier of commodity services and <strong>the</strong>re is<br />
strong separation between “<strong>IT</strong> demand” – <strong>the</strong> l<strong>in</strong>e<br />
bus<strong>in</strong>esses – and “<strong>IT</strong> supply” – <strong>the</strong> <strong>IT</strong> organization. In<br />
<strong>Accenture</strong>’s experience such a separation <strong>in</strong>variably fails<br />
to optimize <strong>IT</strong> <strong>in</strong>vestments. In most high-<strong>performance</strong><br />
companies <strong>the</strong> l<strong>in</strong>e bus<strong>in</strong>esses and <strong>the</strong> <strong>IT</strong> organization<br />
have a collaborative relationship that enables users and<br />
<strong>IT</strong> management to determ<strong>in</strong>e jo<strong>in</strong>tly which <strong>IT</strong> projects are<br />
funded and when; to set objectives for those projects;<br />
develop service level agreements that are consistently<br />
enforced; attract and hold senior management attention;<br />
ensure accountability; def<strong>in</strong>e go / no-go checkpo<strong>in</strong>ts<br />
based on value delivered; and def<strong>in</strong>e <strong>the</strong> metrics by which<br />
<strong>the</strong> bus<strong>in</strong>ess results of every <strong>IT</strong> project will be measured.<br />
Many companies make occasional one-time efforts to<br />
build <strong>the</strong>se processes, but this approach almost always<br />
falls short of deliver<strong>in</strong>g durable benefits. Only by<br />
<strong>in</strong>stitutionaliz<strong>in</strong>g this process can a company ensure that<br />
all of <strong>the</strong> <strong>in</strong>dividual components of its <strong>IT</strong> value cha<strong>in</strong> are<br />
addressed completely and cont<strong>in</strong>uously.<br />
To that end, <strong>Accenture</strong>’s approach <strong>in</strong>corporates a<br />
structured <strong>IT</strong> Governance process, supported by robust<br />
tools and resources, that guides companies through <strong>the</strong><br />
challenges of align<strong>in</strong>g <strong>IT</strong> and bus<strong>in</strong>ess, <strong>IT</strong> demand<br />
plann<strong>in</strong>g, <strong>IT</strong> supply control and <strong>IT</strong> value review (Figure 4).<br />
• Bus<strong>in</strong>ess / <strong>IT</strong> Alignment: Based on an assessment of<br />
exist<strong>in</strong>g and planned bus<strong>in</strong>ess and <strong>IT</strong> capabilities, a<br />
company first must align its <strong>IT</strong> vision to its bus<strong>in</strong>ess<br />
vision, objectives and strategy. This <strong>in</strong>cludes formulat<strong>in</strong>g<br />
an <strong>IT</strong> strategy and sett<strong>in</strong>g top-down guidel<strong>in</strong>es for <strong>IT</strong><br />
budget<strong>in</strong>g and <strong>in</strong>vestment. At m<strong>in</strong>imum, this exercise<br />
should be performed semi-annually.
Figure 5: Typical spend<strong>in</strong>g impact of <strong>IT</strong> Investment<br />
Management (illustrative)*<br />
Figure 6: Typical distribution of bus<strong>in</strong>ess and <strong>IT</strong> skills across <strong>the</strong><br />
bus<strong>in</strong>ess units and <strong>the</strong> <strong>IT</strong> provider of a corporation (illustrative)<br />
As-is <strong>IT</strong> Budget<br />
To-be <strong>IT</strong> Budget<br />
<strong>IT</strong> spend<strong>in</strong>g<br />
Strategic<br />
<strong>in</strong>vestment<br />
Tactical<br />
spend<strong>in</strong>g<br />
Ma<strong>in</strong>tenance<br />
New<br />
<strong>IT</strong> spend<strong>in</strong>g***<br />
Redirected<br />
<strong>IT</strong> spend<strong>in</strong>g**<br />
New <strong>IT</strong> <strong>in</strong>vestments<br />
+5% to +50%<br />
-20% to -40%<br />
Bus<strong>in</strong>ess skills<br />
Bus<strong>in</strong>ess units<br />
<strong>IT</strong> provider<br />
‘Miss<strong>in</strong>g L<strong>in</strong>k’ – Skill and<br />
organizational gap<br />
between bus<strong>in</strong>ess and <strong>IT</strong><br />
-15% to -30%<br />
Skill ranges<br />
Skills profiles<br />
Operations<br />
-10% to -20%<br />
Discretionary <strong>IT</strong> spend<strong>in</strong>g<br />
Non-discretionary <strong>IT</strong> spend<strong>in</strong>g<br />
Time<br />
<strong>IT</strong> skills<br />
* Based on <strong>Accenture</strong> experience for average perform<strong>in</strong>g corporations<br />
** Redirected from orig<strong>in</strong>al <strong>IT</strong> budget to address <strong>IT</strong>-enabled value agenda<br />
*** Based on conv<strong>in</strong>c<strong>in</strong>g value creation potential<br />
• <strong>IT</strong> Demand Plann<strong>in</strong>g: Next, <strong>the</strong> company must identify,<br />
shape, scope and specify its <strong>IT</strong> demands. The priority<br />
and value of future <strong>IT</strong> <strong>in</strong>vestments should <strong>the</strong>n be<br />
assessed <strong>in</strong> <strong>the</strong> context of <strong>the</strong> organization’s strategy<br />
and bus<strong>in</strong>ess. Fund<strong>in</strong>g and decision-mak<strong>in</strong>g for <strong>IT</strong><br />
projects should be closely l<strong>in</strong>ked to <strong>the</strong> company’s<br />
overall budget<strong>in</strong>g and capital request processes,<br />
and monitored closely aga<strong>in</strong>st clear bus<strong>in</strong>ess<br />
<strong>performance</strong> metrics.<br />
• <strong>IT</strong> Supply Control: Dur<strong>in</strong>g <strong>the</strong> provision of <strong>IT</strong> services,<br />
it is critical for <strong>the</strong> company to rout<strong>in</strong>ely monitor<br />
all aspects of execution, <strong>in</strong>clud<strong>in</strong>g project progress,<br />
resource consumption, and risk and issue management.<br />
In do<strong>in</strong>g so, <strong>the</strong> company can ensure that <strong>IT</strong> is<br />
deliver<strong>in</strong>g what is expected of it – and that <strong>the</strong> product<br />
ultimately delivered meets <strong>the</strong> time, budget and<br />
quality requirements determ<strong>in</strong>ed at <strong>the</strong> beg<strong>in</strong>n<strong>in</strong>g of<br />
<strong>the</strong> <strong>in</strong>itiative.<br />
• <strong>IT</strong> Value Review: Once <strong>the</strong> new solution has been<br />
implemented, <strong>the</strong> company must conduct a post-project<br />
review to determ<strong>in</strong>e whe<strong>the</strong>r <strong>the</strong> value anticipated was<br />
actually realized. Such a review can help p<strong>in</strong>po<strong>in</strong>t specific<br />
areas where value may not have been fully achieved<br />
and suggest ways to address <strong>the</strong>se shortcom<strong>in</strong>gs.<br />
Importantly, while <strong>Accenture</strong>’s process is structured, it<br />
also accommodates company-specific practices, situations<br />
and data. For <strong>in</strong>stance, <strong>the</strong> process can be applied as<br />
easily <strong>in</strong> a company that is focused on <strong>in</strong>itiat<strong>in</strong>g new <strong>IT</strong><br />
projects as one that is retir<strong>in</strong>g non-perform<strong>in</strong>g projects.<br />
Similarly, it is as effective <strong>in</strong> help<strong>in</strong>g an executive manage<br />
<strong>the</strong> <strong>IT</strong> development portfolio aga<strong>in</strong>st compet<strong>in</strong>g<br />
stakeholder <strong>in</strong>terests as it is <strong>in</strong> protect<strong>in</strong>g <strong>the</strong> overall <strong>IT</strong><br />
budget from reactive corporate cost-cutt<strong>in</strong>g.<br />
Our approach not only helps companies systematically<br />
manage <strong>the</strong>ir technology <strong>in</strong>vestments to drive<br />
<strong>performance</strong>, but it also shifts <strong>the</strong> <strong>IT</strong> organization from<br />
<strong>the</strong> role of tactical-delivery group to strategic advisor.<br />
Such a shift depends on a change <strong>in</strong> organizational<br />
processes and structures, and usually a transformation<br />
of <strong>the</strong> <strong>IT</strong> workforce. Such a transformation addresses:<br />
skills gaps that may exist <strong>in</strong> <strong>the</strong> <strong>IT</strong> organization and <strong>the</strong><br />
l<strong>in</strong>e bus<strong>in</strong>esses, core values and behaviors, key processes,<br />
management and governance structure.<br />
Us<strong>in</strong>g <strong>Accenture</strong>’s “bus<strong>in</strong>ess-driven” <strong>IT</strong> Governance<br />
process, companies can:<br />
• More effectively prioritize value-creation opportunities<br />
• Generate a higher return on <strong>in</strong>vested capital (ROIC)<br />
• Deliver measurable value<br />
• Develop more favorable ratios of strategic versus<br />
tactical spend<strong>in</strong>g<br />
• Ga<strong>in</strong> real-time visibility and control of <strong>the</strong> <strong>IT</strong> project<br />
portfolio<br />
• Improve executive <strong>IT</strong> customer satisfaction.<br />
6
Sett<strong>in</strong>g <strong>the</strong><br />
<strong>IT</strong> agenda<br />
<strong>Manag<strong>in</strong>g</strong> <strong>IT</strong><br />
<strong>in</strong>vestments<br />
Execut<strong>in</strong>g <strong>the</strong> <strong>IT</strong> agenda<br />
7<br />
Execut<strong>in</strong>g <strong>the</strong> <strong>IT</strong> agenda<br />
A company’s commitment to a strategic <strong>IT</strong> agenda can<br />
fall apart without discipl<strong>in</strong>ed execution. To deliver on a<br />
demand<strong>in</strong>g <strong>IT</strong> agenda an organization needs streaml<strong>in</strong>ed<br />
<strong>IT</strong> processes, clear roles and responsibilities, skilled people<br />
with <strong>the</strong> right <strong>in</strong>centives, a value-focused culture and<br />
more. Build<strong>in</strong>g an <strong>IT</strong> capability that delivers quality and<br />
high throughput is demand<strong>in</strong>g and requires attention to<br />
all <strong>the</strong>se facets. Fortunately, recent market developments<br />
have made this easier by provid<strong>in</strong>g more advanced tools<br />
to support management <strong>in</strong> execut<strong>in</strong>g <strong>the</strong> <strong>IT</strong> agenda.<br />
In large and complex organizations <strong>Accenture</strong> sees<br />
greatest value derived where management decisions are<br />
supported by effective tools for streaml<strong>in</strong><strong>in</strong>g key<br />
processes and reduc<strong>in</strong>g adm<strong>in</strong>istrative activities.<br />
Modern commercial tools can add value <strong>in</strong> several ways by:<br />
• Accelerat<strong>in</strong>g both <strong>the</strong> design and <strong>the</strong> deployment of<br />
new <strong>IT</strong> management processes, help<strong>in</strong>g <strong>the</strong> company<br />
more quickly generate bottom-l<strong>in</strong>e improvements.<br />
For example, dashboards, such as <strong>the</strong> one illustrated<br />
on <strong>the</strong> follow<strong>in</strong>g page, can rapidly help put <strong>IT</strong><br />
managers <strong>in</strong> control<br />
• Help<strong>in</strong>g communicate <strong>the</strong> vision of streng<strong>the</strong>ned<br />
<strong>IT</strong> management to o<strong>the</strong>r executives, <strong>the</strong>reby build<strong>in</strong>g<br />
buy-<strong>in</strong> and momentum for change<br />
• Help<strong>in</strong>g susta<strong>in</strong> agreed-upon management processes<br />
over time, reduc<strong>in</strong>g <strong>the</strong> risk of slid<strong>in</strong>g back <strong>in</strong>to more<br />
ad hoc approaches after improv<strong>in</strong>g <strong>IT</strong> governance<br />
• Streaml<strong>in</strong><strong>in</strong>g day-to-day management operations and<br />
accelerat<strong>in</strong>g decision-mak<strong>in</strong>g by automat<strong>in</strong>g key <strong>IT</strong><br />
activities. Improv<strong>in</strong>g decision-mak<strong>in</strong>g by focus<strong>in</strong>g<br />
management attention on <strong>the</strong> issues that are most<br />
critical to bus<strong>in</strong>ess value.
Example of management dashboard:<br />
Mercury Interactive’s Mercury <strong>IT</strong> Governance<br />
As an example, Mercury <strong>IT</strong> Governance provides<br />
<strong>in</strong>tegrated support to accelerate such results. Based on<br />
field tests and compell<strong>in</strong>g results at clients, <strong>Accenture</strong><br />
has established an alliance with Mercury to facilitate and<br />
accelerate <strong>the</strong> implementation of Mercury <strong>IT</strong> Governance.<br />
We have also augmented <strong>the</strong> tool support to deliver<br />
greater value: tested configurations, standard templates<br />
and low-cost tool support services all contribute to<br />
de-risk and speed up implementation – with a particular<br />
focus on <strong>in</strong>dustrializ<strong>in</strong>g strong processes <strong>in</strong> <strong>the</strong><br />
<strong>IT</strong> organization.<br />
We have created specialist capability <strong>in</strong> <strong>Accenture</strong>'s<br />
Delivery Centre <strong>in</strong> Bangalore, India, to enable rapid,<br />
offshore development of Mercury <strong>IT</strong> Governance<br />
implementations, a facility dedicated to help<strong>in</strong>g clients<br />
execute <strong>IT</strong> strategy with <strong>the</strong> latest tools available. A<br />
global <strong>in</strong>surance company fac<strong>in</strong>g a major challenge <strong>in</strong><br />
deliver<strong>in</strong>g on its ambitious <strong>IT</strong> agenda, recently worked<br />
with <strong>Accenture</strong> to implement <strong>the</strong> tool to achieve greater<br />
transparency and improve management control. In <strong>the</strong><br />
first year spend<strong>in</strong>g and focus were redirected aggressively<br />
to prioritized areas and <strong>in</strong> <strong>the</strong> process <strong>the</strong> company<br />
realized a 10 percent reduction <strong>in</strong> <strong>IT</strong> spend<strong>in</strong>g.<br />
By <strong>in</strong>vest<strong>in</strong>g <strong>in</strong> lead<strong>in</strong>g <strong>IT</strong> management tools <strong>in</strong> <strong>the</strong> right<br />
context, companies can:<br />
• Rapidly improve <strong>IT</strong> management processes<br />
• Enhance communication that focuses on <strong>IT</strong><br />
management<br />
• Ensure that agreed-upon processes are followed, both<br />
<strong>in</strong> <strong>the</strong> short term and over time<br />
• Streaml<strong>in</strong>e and accelerate <strong>IT</strong>-related decision mak<strong>in</strong>g<br />
• Improve <strong>the</strong> quality of <strong>IT</strong> decision mak<strong>in</strong>g.<br />
Build<strong>in</strong>g on our outstand<strong>in</strong>g track record of delivery<br />
excellence, and extensive experience enabl<strong>in</strong>g<br />
organizations to build strong <strong>IT</strong> capabilities, <strong>Accenture</strong><br />
can help you deliver <strong>the</strong>se benefits more quickly and<br />
with less risk – and, importantly, susta<strong>in</strong> those benefits<br />
for <strong>the</strong> long run.<br />
8
Go to www.accenture.com/site
About S<strong>IT</strong>E<br />
<strong>Accenture</strong>’s Strategic <strong>IT</strong> Effectiveness (S<strong>IT</strong>E) practice helps organizations achieve greater bus<strong>in</strong>ess value from <strong>IT</strong>.<br />
Our professionals br<strong>in</strong>g a boardroom perspective to <strong>IT</strong>, help optimize <strong>IT</strong> <strong>in</strong>vestments and transform <strong>IT</strong> capabilities through<br />
<strong>in</strong>tegrated services <strong>in</strong> four areas:<br />
• Focus<strong>in</strong>g <strong>the</strong> <strong>IT</strong> debate on creat<strong>in</strong>g bus<strong>in</strong>ess value<br />
• Creat<strong>in</strong>g powerful propositions for <strong>IT</strong>-enabled change<br />
• Optimiz<strong>in</strong>g <strong>the</strong> <strong>IT</strong> <strong>in</strong>vestment agenda<br />
• Transform<strong>in</strong>g <strong>the</strong> <strong>IT</strong> function to improve capability and bus<strong>in</strong>ess results.<br />
For more <strong>in</strong>formation go to www.accenture.com/site<br />
About <strong>Accenture</strong><br />
<strong>Accenture</strong> is a global management consult<strong>in</strong>g, technology services and outsourc<strong>in</strong>g company. Committed to deliver<strong>in</strong>g<br />
<strong>in</strong>novation, <strong>Accenture</strong> collaborates with its clients to help <strong>the</strong>m become high-<strong>performance</strong> bus<strong>in</strong>esses and governments.<br />
With deep <strong>in</strong>dustry and bus<strong>in</strong>ess process expertise, broad global resources and a proven track record, <strong>Accenture</strong> can<br />
mobilize <strong>the</strong> right people, skills and technologies to help clients improve <strong>the</strong>ir <strong>performance</strong>. With approximately 90,000<br />
people <strong>in</strong> 48 countries, <strong>the</strong> company generated net revenues of US$11.8 billion for <strong>the</strong> fiscal year ended August 31, 2003.<br />
Its home page is www.accenture.com.<br />
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