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Strategic Benefits Realization – How to Maximize IT Portfolio Yields

Richard Hunter@rc_hunter

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Who Wants to Be a Strategic Partner?

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Why Would You Want to Be a Strategic Partner? Well, It Pays Better, and It's More Fun …

Average

Effectiveness

Score

Percent

Reporting

to the CEO

Average

IT Budget

Weighted

Average

IT Budget

Unweighted

IT Portfolio

Percentage

Run

Portfolio

Percentage

Grow

IT Portfolio

Percentage

Transform

Leaders 86% 50% +0.07% +6.93% 58% 22% 20%

Challengers 74% 41% +0.88% +6.56% 61% 20% 19%

Close

Followers61% 33% -0.15% +4.69% 65% 18% 17%

Late

Followers43% 35% +2.19% +3.93% 70% 14% 16%

Global

Average67% 38% +0.16% +5.45% 64% 19% 17%

Source: 2009 Gartner CIO Survey

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

• Digital business will require significant increases in spending on IT infrastructure and applications

• Many enterprises are unprepared to increase IT spending effectively

• A few enterprise practices need to change to avoid significant waste

Being Strategic Matters Right Now

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

You Can't Be a Strategic Partner in the Absence of a Strategy

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

So: What's a Strategy?

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

• OGSI (Objectives, Goals, Strategy, Initiatives):

- Objectives: A general description of a desired state

- Goals: A quantified, time-bound description of one or more aspects of the desired state

- Strategy: The path to the goal, described in simple terms

- Initiatives: Projects or programs the enterprise undertakes in order to execute the strategy and achieve the goal(s)

So: What's a Strategy? (Continued)

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Initiatives Are Numerous and Potentially Complex, Strategy Is Clear and Concise

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

• SBR turns the IT project portfolio into an explicit mechanism for coherent execution of enterprise strategy.

• SBR enables CIOs and enterprises to produce a meaningful response to questions like "Am I spending enough on IT, and am I spending on the right IT?"

• SBR makes the CIO a "strategic partner."

Strategic Benefits Realization Assures That IT and Business Strategy Are One

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Clear Priorities, Not Brilliant Execution, Most Influence "Success" in IT Delivery

Execution

Project Proposal and Investment

Strategy

Measurement

How Will the Enterprise Win?

Which Initiatives Will Be Supported?

How Will We Deliver on Our Initiatives?

What's the Score?

Valu

e P

erc

eption

Source: Gartner 2012 to 2015

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

SBR Focuses on Key Leverage Points in Each Segment of the Virtuous Cycle of IT Value, With Heavy Emphasis on Initial Decision-Making Phases

Oversight

Needs Identification

TransparentInvestment

BPR/Organizatio

nChange

ApplicationDevelopment

Measurement

• Managed channels for demand

• Benefits in quantified terms

• Assessment of potential impact on strategic goals

• Stack ranked list of enterprise priorities (aka strategy)

• No execution until all required resources are available and allocated

• Assessment of approved portfolio impact on strategic goals

• Focus on organizational change management

• Empowered PMO and PPM

• Use lightweight processes to compare estimates to actuals

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

• Goal: "Increase market share in region X to 30% by January 2019":

- Strategy: Increase distributor mind share and share of wallet; target midmarket buyers

- Funding for goal: $XX million

- Initiatives: Distributor apps/portal/data services; simplified products and services for midmarket

- Metrics: Brand recognition among distributors; share of distributor business; cycle time for creation of midmarket products; market share in midmarket

- Costs: 40% of allocated funding for goal

- Timeline/Extent of effect: 2 years to 50% of goal; remainder TBD

Portfolios Based on Strategic Goals Add Gravity to Investment Decisions and Make IT's Contribution to Strategy Clear

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

• Issue: Enterprise IT spend fixed (arbitrarily) at a low percentage of enterprise revenue

• Over time, growth in the business pushed more and more IT spend into run the business support

• IT team concerned about their ability to support enterprise change as run-the-business spend increased against a fixed IT budget

• Gartner was asked by IT team to develop an argument for more investment in grow/transform the business IT

Case Study: Heavy Equipment Manufacturer (North America)

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Case Study: The Real Problem

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

• Project proposals changed to address business outcomes and explicitly relate those outcomes to strategic goals

• First effort in this regard produced a winning proposal for an additional 27% in portfolio spend to address a known strategic issue

• IT included in strategic discussions for the first time

Case Study: Making It Better

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Case Study: Investment Portfolios Post SBR Represent Key Enterprise Interests

"We Asked, 'What Matters Most?'"

Run

Critical

(Enterprise)

Initiatives

Domain

(Business Unit)

Initiatives

Continuous

Improvement

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

http://surveys.gartner.com/s/OIB2013

We encourage all CIOs to participate in this research by completing this 15 minute survey. The information provided will be kept confidential and your individual responses will be analyzed in aggregate. If you would like us to follow up with you directly regarding your survey responses and how they should be interpreted, please contact your Gartner account representative. Thank you in advance for participating in this groundbreaking research.

Take the SBR Online Survey (10 to 15 Minutes), and Let Us Know If You'd Like to Discuss Your Results

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Strategic Benefits Realization:What Are the Next Steps?

CONSCIOUS COMPETENCEUNCONSCIOUS COMPETENCE

Create Awareness and Appetite

Embed in Culture

• Clearly defined strategies and prioritized goals, updated regularly

• Investment process focused on strategic goals

• Funding based on value of strategic goals

• Significant reduction in initiative failures

• Significant reduction in percentage of portfolio invested in nonstrategic initiatives

• Educate self, staff, and enterprise on what strategy is and why it matters

• Clarify enterprise strategy and strategic goals

• Demonstrate quantitative links between initiatives and goals

• Assess waste in IT portfolios in terms of nonstrategic initiatives and failures from preventable causes

• Develop managed channels for demand

• Ensure that project proposals describe business outcomes in quantified, time-bound terms

• Create investment portfolios based on enterprise goals

• Initiate practices designed to eliminate preventable failures

• Ready IT for timely execution

UNCONSCIOUS INCOMPETENCE CONSCIOUS INCOMPETENCE

Build Capabilities

© 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Strategic Benefits Realization: IT as an Engine for Coherent

Execution of Strategy

Richard Hunter and Others (G00270814)

How the CIO Can Influence Enterprise Strategy

Richard Hunter (G00255692)

The Keep-It-Simple Approach to Reporting on IT Value

Richard Hunter (G00210318)

The Real Business of IT:

How CIOs Create and Communicate Value

Richard Hunter and George Westerman

Harvard Business School Press,

October 2009

Recommended Gartner Research

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