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© 2005 Corporate Executive Board
CIO Executive Board
The CIO’s First 100 DaysAccelerating the Onboarding of Transitioning IT Principals
� Understanding Performance Expectations
� Gaining Visibility into Current Performance and Resources
� Executing on Transition Initiatives
Catalog No.: CIO1387OQD
IT Practice Quantitative and Financial Analysis Group
DirectorKevin Acker
AnalystsRich Nyman • Hosung Shin
Project Support DeskDepartment Head
Matthew Grimes
Research ManagersJacob Carney • Kristin Sherwood
Research AssociatesAalap Shah • Sujatha Sivakumaran
Creative Solutions GroupLead Graphic Design Specialist
Rami Bizri
Contributing DesignersChristie Parrish • Ladaska Robinson • Todd Threats
ProofreaderTracy Banghart
Publications EditorLacey White
CIO Executive Board StaffManaging Director
Shvetank Shah
Practice ManagerKris van Riper
Project ManagersAndrew Horne • Matt McWha
ConsultantsJohn Fiske • Deb Goldberg
Senior AnalystsChristopher Axarlis • Mark Davenport
Rich Flanagan • Kiran Mishra
Analyst Marie Elliott
Managing DirectorJaime M. Capellá
Senior DirectorBrian Foster
DirectorsSheldon Himelfarb • Matt Kelly • Stuart Roberts • Audrey Taylor
Associate DirectorsLoraine Brown • David Dunleavy
Executive DirectorGlenn Tobin
CIO Executive Board
Corporate Executive Board2000 Pennsylvania Avenue NWWashington, DC 20006Telephone: +1-202-777-5000Fax: +1-202-777-5100
The Corporate Executive Board Company (UK) Ltd.Victoria HouseFourth Floor37–63 Southampton RowBloomsbury SquareLondon WC1B 4DRUnited KingdomTelephone: +44-(0)20-7632-6000Fax: +44-(0)20-7632-6001
www.cio.executiveboard.com
© 2005 Corporate Executive Board. All Rights Reserved.
Note to MembersThis project was researched and written to fulfi ll the research requests of several members of the Corporate Executive Board and as a result may not satisfy the information needs of all member companies. The Corporate Executive Board encourages members who have additional questions about this topic to contact the Board staff for further discussion. Descriptions or viewpoints contained herein regarding organizations profi led in this report do not necessarily refl ect the policies or viewpoints of those organizations.
Confi dentiality of Findings This document has been prepared by the Corporate Executive Board for the exclusive use of its members. It contains valuable proprietary information belonging to the Corporate Execu-tive Board, and each member should make it available only to those employees who require such access in order to learn from the material provided herein and who undertake not to disclose it to third parties. In the event that you are unwilling to assume this confi dentiality obligation, please return this document and all copies in your possession promptly to the Corporate Executive Board.
Legal Caveat The CIO Executive Board has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and the CIO Executive Board cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the CIO Executive Board is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the CIO Executive Board or its sources, or b) reliance upon any recommendation made by the CIO Executive Board.
iii© 2005 Corporate Executive Board
Letter from the CIO Executive Board • iv
Introduction: Confronting the Challenging IT Landscape • 1
Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition • 13
Ford: Executive Partnering Program • 16
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design • 23
DuPont: Defi ning Competencies and Career Paths • 29
Iverson Financial*: Core Competency Rankings by Role • 30
DuPont: Personalized Development Plans • 35
IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs • 37
Seagate Technology: Aligning IT Strategy with Corporate Goals • 39
KeyCorp: Guiding IT Architecture Principles • 42
Schlumberger: Visualizing Project Portfolio Value • 43
Texas Instruments: Ensuring Benefi ts Capture Across All Projects • 45
IT Strategy Execution: Realizing Operational Objectives • 47
IBM: Legacy System Sunset Project Cards • 49
Merrill Lynch: Revalidating Business Case Assumptions Midcycle • 50
Bowne: Scorecard Rollout • 56
Cemex: Data Collection and Quality Assurance • 57
Corning: Scorecard Review and Revision • 58
Corning: Facilitating Scorecard Adoption • 59
Appendix I: IT Budget Benchmarks • 61
Appendix II: Vendor Management and Outsourcing • 67
Appendix III: Diagnostic Questionnaires • 73
Order Form • 90
In-Person Research Presentations • 93
CIO Executive Board Project Support Desk • 95
Table of Contents
* Pseudonym.
iv© 2005 Corporate Executive Board
Letter from the CIO Executive Board
First and foremost, welcome to the CIO Executive Board! As a newly appointed CIO, this may be your fi rst encounter with our services, designed to provide best practices research and executive education to senior corporate IT leaders across every industry and around the world. Guided continuously by member feedback, our task is to chronicle the successes and failures of those who pioneer the most innovative and potentially most pivotal practices in IT strategy and management. We strive to capture that which is of consequence and report back to our members without bias or commercial intent.
As we look around the corporate suite through the lens and data of our sister programs that serve CFOs, CMOs, CPOs, CTOs, and heads of Sales, Strategy, HR, and Supply Chain, we are struck by the disproportionately high annual turnover rates among the CIO ranks. Furthermore, the complexity of the challenges facing today’s CIOs and the criticality of IT as an enabler of business strategy have increased the scrutiny of newly appointed CIOs, necessitating effective and rapid onboarding. To help member CIOs address this mandate to move quickly up the “learning curve,” the CIO Executive Board conducted interviews with new and tenured CIOs, spoke with several CIO executive recruiting fi rms, and scoured trade press and consulting literature.
The resulting research study, The CIO’s First 100 Days, provides a road map for the growing ranks of recently appointed CIOs to enable effective onboarding within a new organizational setting. Specifi cally, as you embark on your fi rst 100 days in seat, we hope this study will provide a toolkit for achieving the following three objectives: 1) understanding performance expectations, 2) gaining visibility into current performance and resources, and 3) executing on transition initiatives.
A Note on Peer Networking Opportunities
As always, we welcome your feedback and guidance on this research study. Our staff would be happy to provide additional assistance around any of the topics or case studies included here through customized research, networking introductions, and presentations of any portion of the materials to any audience of your choosing.
Thank you for your continued support of the CIO Executive Board.
With our warmest regards,
Shvetank Shah Matthew Grimes Kristin Sherwood Jacob Carney Sujatha Sivakumaran Aalap Shah
1© 2005 Corporate Executive Board
IntroductionConfronting the Challenging IT Landscape
The CIO’s First 100 Days 2© 2005 Corporate Executive Board
Introduction: Confronting the Challenging IT Landscape 3© 2005 Corporate Executive Board
Amid a climate of economic recovery, many industry market leaders are emphasizing key initiatives aimed at top-line growth, relying on their CIOs to provide the supporting technologies to enable such objectives. These companies remain cautiously optimistic that the CIO will be able to leverage existing and future investments in information technology to support the underpinning business processes essential for growth. New CIOs, however, report considerable obstacles during their first 100 days in seat, as they look to maximize IT’s potential.
Growth Strategies of Bellwethers Require Information TechnologyCurrent growth strategies of leading companies…
The Boardroom Perspective
…cluster around a handful of key initiatives…
Key Growth Initiatives at Major CorporationsCorporate Executive Board Analysis
…that can be frustrated by a lack of continuity in IT leadership
Overcoming the Malaise“CIO turnover is one of the telling symptoms of the malaise that makes our IT less effective than its potential….The only way to compensate for the absence of consistency in policy and precedent is to put in place leadership in the person of the CIO, who will steer a steady course and be able to provide the necessary guidance for the IT organization. A leader can accomplish that only by taking a long-term view.”
Former CIOConsumer Packaged Goods
Company
Source: CIO Executive Board research.
• Alter business mix by exiting or reducing presence in application software, hard-disk drive, networking hardware, low-end printer, and retail PC segments and increase presence in distributed middleware, nonhardware maintenance services, Intel-based servers, and mobile PCs
• Increase revenue in business and technology consulting services
• Grow aggressively in emerging markets such as China, India, Russia, and Brazil
• Increase rate of new account growth
• Reshape portfolio by divesting energy, chemicals and pigments, pharmaceuticals, specialty polymers, and fi bers and polyester businesses and acquiring or partnering in growth areas such as agriculture and nutrition and performance materials
• Increase share of growth from innovation and new products
• Integrate marketing and research functions more closely
• Globalize R&D and Sourcing
• Technical leadership
• Services acceleration
• Customer focus
• Acquisition of growth platforms
• Globalization
• Focus product portfolio on 400 leading brands down from 1,600
• Synchronize data with customer via Transora online marketplace
• Consolidate manufacturing at 150 strategic sites
• Consolidate around strategic partners to increase enterprise purchasing
• Deliver a high-quality, consistent customer experience by getting the basics right every time
• Build valued relationships by developing a superior understanding of customers’ needs and their relationship preferences
• Deliver integrated banking and wealth management advice and solutions
Source: DuPont CEO Presentation, Sanford Bernstein Strategic Decisions Conference, 3 June 2004; www.GE.com; IBM Annual Report, 2003; Unilever Annual Report, 2003; National Australia Bank Group Annual Report, 2003.
1. Business Portfolio Reconfi guration—Acquisitions and Divestitures
2. Solutions Businesses—Move from Product to Services
3. Cross-Sales
4. Geographic Expansion—The Race to China
5. Customer-Driven Innovation
* Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
*
The CIO’s First 100 Days 4© 2005 Corporate Executive Board
IT has experienced dramatic shifts that impact the CIO, who is now viewed as a business technology leader responsible for innovation and inculcating business objectives into IT. As the CIO forms partnerships with the business, identification of key stakeholders in the “IT value chain” and their varied perceptions of IT’s strategic role is a crucial step to accomplishing IT objectives. Upon arrival a new CIO must quickly uncover nuanced perceptions of IT and the dynamic political environment in an effort to influence senior executive leadership.
CIO at a CrossroadsCharged with stewarding the company’s data, the newly appointed
CIO must quickly establish a vision for his or her role
Reshaping the Role“The continuing focus on transparency is reshaping the role to become Chief Information Offi cer versus Chief Computer Offi cer. In the days of data processing directors, their role was much more focused on running the data center environment….Today, the CIO has become a clear guardian of the information and is expected to stand for the integrity and validity of the data. Now more than ever, CIOs are being held accountable for driving the business value…to be involved not only in strategy development but also in business and product innovation.”
Gregor BailarCIOCapital One Financial Corporation
Technology Expert
• Ensures consistent availability and access to network resources
• Leads large-scale deployments of new technologies and systems
• Contributes to corporate energy through process automation
• Minimizes costs to running Infrastructureand Applications
Strategic Business Partner
• Corporate Offi cer central to strategic and operational decisions
• Proactively provides insights into opportunities for innovation
• Leverages cross-functional visibility to optimize business processes
• Identifi es opportunities to reduce costs through strategic sourcing and economies of scale
Challenge #1: Evolving Role Definition and Shifting Expectations
Source: Bansal, Parveen, “Why Does the CIO have So Many Hats?,” The Banker, 1 December 2003; CIO Executive Board research.
Introduction: Confronting the Challenging IT Landscape 5© 2005 Corporate Executive Board
Core business strategies continually shift in response to external market factors. As a result, CIOs looking to organize around core business strategies, such as attaining lowest-cost producer status, accelerating time-to-market, or becoming more customer centric, find there is no dogmatic “end state.” A further challenge is building a comprehensive picture of existing IT priorities and resources. Yet, to build a compelling business case for organizational adjustments, such as revising reporting structures and altering skill requirements, new CIOs must complete a highly objective organizational assessment, articulating a complete view of existing current strengths and weaknesses.
Organizing for Competitive Advantage
Challenge #2: Misaligned Organizational Design and Competencies
Percentage of IT Spend Controlled Centrally by the Group CIO
n = 45 CIOs.
50%
88% 95%
As control over IT spend progressively consolidates at the center…
…new CIOs must reconcile diminishing returns and trade-offs in organizational responsiveness…
Balancing Effi ciency and Responsiveness
Source: CIO Executive Board surveys, 2003, 2005.
…while proactively building and managing the required talent portfolio for improving business–IT partnerships
Importance of IT Staff Skills to Effectively Drive Business ValuePercentage of CIO Respondents
n = 45 CIOs.
IT’s Contribution to Business
Value
Degree of IT Centralization
Effi ciencyImproved Scale Contributes
to Bottom-Line Savings
ResponsivenessReduced Flexibility Undermines Areas of Competitive Advantage
Low
High
HighLow
“Finding the Right Balance”
63% 58% 52%43%
28%9% 7%
Understanding of Company Value Drivers
Communication Skills
Management/Executive
Skills
Collaboration Skills
Intellectual Courage
Risk Taking Understanding of Emerging Technologies
n = 76 CIOs.
2002 2004 2006(E)
The CIO’s First 100 Days 6© 2005 Corporate Executive Board
0%
50%
100%
16%
55%
29%
51%
49%
0%
50%
100%
11%
55%
34%
30%
68%
2%
Due to the IT executives’ historical focus on project execution, CIOs have struggled to gain a seat at the business strategy–setting table, getting tapped more frequently for tactical input. As new CIOs strive to make a strategic impact on the business and prove the value of IT investments, their challenge is compounded by a lack of exposure to existing strategy-setting processes and styles. Furthermore, the IT strategic agenda represents a new CIO’s first major attempt to expose the executive board to a comprehensive organizational vision, influencing initial perceptions of competence.
No Seat at the Strategy TableNew CIOs desire a more leveraged role in strategic planning to increase IT’s contribution to enterprise growth initiatives
Technology Solution Life Cycle
Challenge #3: Large Gaps in Business Strategy Participation
CIO Role in Business Strategy Formation CIO Role in Business Opportunity Identifi cation
Information Resource/None
Participant
Leader
Business Strategy Formation
Business Opportunity Identifi cation IT Project Execution User Absorption Value
Measurement
Source: CIO Executive Board survey, 2005.
Current Ideal Current Ideal
n = 81 CIOs.
Introduction: Confronting the Challenging IT Landscape 7© 2005 Corporate Executive Board
Concurrent with the process of aligning IT strategy with corporate objectives, the CIO must ensure successful realization of promises to reduce inefficient IT maintenance spending and increase value-added IT solutions delivered on time and on budget. Crafting a detailed execution plan is a daunting task for a new CIO with limited understanding of a firm’s existing IT architecture and ongoing projects’ business cases. A comprehensive execution agenda, however, helps ensure that the CIO’s first 100 days include successful project delivery, reduced inefficient IT spending, and increased customer satisfaction.
Risky Business
Challenge #4: IT Portfolio Risks
●
●
●
●0%
30%
60%
●
As development projects get larger and more complex…
Average Project SizeFunction Points
…on-time, on-budget performancebecomes harder to achieve
Rate of Successful Project Delivery
The Bigger They Are“Anything $5 million and less, we hit those out of the park all day long. We always meet deadlines and, in most cases, get that on or under budget. But the double-digit guys, we’re at 75%. That’s not bad if you’re playing baseball, but in a culture that’s not really compassionate about defects, it’s not a good batting average.”
VP and Divisional Information Offi cerInternational Automotive Company
Average Project
Size(FPs)
Project Success
Rate
Source: IFPUG. Source: The Standish Group CHAOS Survey, 2004.
46%
23%
32%
Size of Project ($)
< $750.00 K > $10.00 M$6.00–$10.00 M
$3.00–$6.00 M$0.75–$3.00 M
11%
2%
1970 1980 1990 2000 20050
10,000
20,000
The CIO’s First 100 Days 8© 2005 Corporate Executive Board
Previous failures of IT executives to clearly articulate and drive strategic responses to the pressing challenges impacting the corporate technology organization have contributed to substantially high turnover rates among the CIO ranks. CIO Executive Board survey results indicate a correlated finding that nearly half of the CIO bench maintains less than three years in role, narrowing the window of opportunity these executives have to positively impact their businesses.
Growing PainsGiven the scale of the role’s challenges,
the CIO position is plagued by high turnover…
Average Annual Turnover Rate by Position
…and relatively short tenures
Average CIO Tenure in Role
CEOs CFOs CIOs
12%
17%
34%
48%
34%
18%
More Than Five Years
Fewer Than Three Years
Three toFive Years
Outcome: Disproportionately High Turnover Rates
Whistling in the Dark“Given the complexity of the IT terrain, I am little surprised at the rapid turnover rates we have experienced [in the CIO role]….Many of these individuals bring with them an avid love for technology but fail to adapt to the business challenges of the position. Without this business perspective to guide the investments of technology, they seemed to be whistling in the dark.”
CEOUtilities Company
n = 51.
Source: CIO Executive Board survey, 2004; CIO Executive Board research.
n = 51.
Introduction: Confronting the Challenging IT Landscape 9© 2005 Corporate Executive Board
These pressing initiatives complicate the already difficult task of senior executive onboarding by multiplying the chances of onboarding failure and shrinking the traditional onboarding grace period. To successfully adapt to the position, CIOs must compress the learning curve, moving quickly to master their portfolio of responsibilities and cement working relationships with key individuals.
Quick and Painless? Pressures exacerbate traditional drivers of onboarding failure…
Drivers of Failure for Newly Appointed Executives
…while also reducing time to onboard
Current Versus Historical Grace Period for New CIO Onboarding
82%
58%
50%
47%
28%
25%
Failed to Build Partnership with Peers
and Sub or di nates
Unclear or Confused About Role
Expectations
Lacked Requisite Political Savvy
Failed to Achieve Two or Three Critical Expected Objectives
Took Too Long toLearn Job/Role
Lacked Balance BetweenWork and Personal Life
Pedal to the Medal“At the end of 100 days, either I have to execute or be executed. The fi rst 100 days should be spent observing, analyzing, and brainstorming, but after that, actionable steps and deliverable results should be the key focus for any CIO.”
CIOAutomotive Manufacturer
Source: CIO Executive Board research.
Stages in the Path to Full Productivity
Onboarding Completed
Length of Tenure
Operating at Full
Productivity
Starting to Make
Decisions
1 Day 2 Months 4 Months 6 Months
New CIO Onboarding Trajectory
Historical CIO Onboarding Trajectory
…whereas in the past, CIOs often had a six-month “honeymoon” period to master the challenges of onboarding.
Implication: Shorter Time to Move up the Learning Curve
New CIOs now have a very short window of time to move up the learning curve…
Source: Association of Executive Search Consultants; Centre for Creative Leadership; Kennedy Publications; Manchester Partners International.
Source: Gabarro, John J., “When a New Manager Takes Charge,” Harvard Business Review (May/June 1985); Hoffman, Von, “The Survivalists,” CMO Magazine (September 2004).
The CIO’s First 100 Days 10© 2005 Corporate Executive Board
Understanding the Role and Associated
Expectations
Evaluating Current IT Organizational
Structure and Performance
Assessing Staff Capabilities and
Readiness for Change
Defi ning a Business-Aligned
IT Strategy
Establishing an Execution Agenda
for Operational Objectives
Examining Fiscal Requirements
and Vendor Relationships
External Hire with Previous CIO
Experience
Internal Promotion from the Technology Organization
Internal Transfer from a Business
Role
PersonalBackground
Mandate
Variations in background and prior professional experience largely define the ease with which executives acclimatize themselves to the CIO role. The CIO Executive Board has created the following road map to serve as a quick reference guide, outlining the degree of onboarding difficulty relative to several challenges faced by a new CIO. Each of these challenges is mapped to corresponding chapters and company case profiles that are designed to assist the CIO through his or her first 100 days.
Bridging the GapCIOs face a relative degree of diffi culty based on personal background
Degree of Diffi culty with Onboarding Challenge
● High Diffi culty ●●◗ Medium Diffi culty Low Diffi culty
Implication: Shorter Time to Move up the Learning Curve (Continued)
Source: CIO Executive Board research.
Introduction: Confronting the Challenging IT Landscape 11© 2005 Corporate Executive Board
Accelerating the TransitionA road map for successful onboarding
Understanding Performance Expectations
Gaining Visibility into CurrentPerformance and Resources
Executing on Transition Initiatives
I.
Identifying Decision Makers’ Perceptions of the IT Value
Proposition
Executive Partnering Program (p. 16)
Expectations Profi ling Exercise (p. 17)
Best-in-Class Learning (p. 19)
II.
Evaluating IT Effectiveness and Optimizing
Organizational Design
IT Competency Diagnostic Tool (p. 26)
Organizational Design Diagnostic (p. 28)
Defi ning Competencies and Career Paths (p. 29)
2
Core Competency Rankings by Role (p. 30)
Personalized Development Plans (p. 35)
III.
Aligning with Business Goals and Prioritizing Needs
Aligning IT Strategy with Corporate Goals (p. 39)
Business Unit Alignment Diagnostic Tool (p. 40)
Guiding IT Architecture Principles (p. 42)
Visualizing Project Portfolio Value (p. 43)
Ensuring Benefi ts Capture Across All Projects (p. 45)
IV.
Realizing Operational Objectives
Legacy System Sunset Project Cards (p. 49)
Revalidating Business Case Assumptions Midcycle (p. 50)
Project Cycle Time and Cost Reduction (p. 51)
Scorecard Development andLife-Cycle Management Compendium
(pp. 54–55)
Scorecard Rollout (p. 56)
Data Collection and Quality Assurance (p. 57)
Scorecard Review and Revision (p. 58)Facilitating Scorecard Adoption (p. 59)
Additional Transitioning SupportDiagnostic Questionnaires(pp. 73–89)
Vendor Management and Outsourcing (pp. 67–72)
IT Budget Benchmarks(pp. 61–66)
1 Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.2 Pseudonym.
Visit Resource Center @ www.cio.executiveboard.com
Relevant Published Research (pp. 90–91)
1
The CIO’s First 100 Days 12© 2005 Corporate Executive Board
Accelerating the TransitionA road map for successful onboarding
Understanding Performance Expectations
Gaining Visibility into CurrentPerformance and Resources
Executing on Transition Initiatives
I.
Identifying Decision Makers’ Perceptions of the IT Value
Proposition
Executive Partnering Program (p. 16)
Expectations Profi ling Exercise (p. 17)
Best-in-Class Learning (p. 19)
II.
Evaluating IT Effectiveness and Optimizing
Organizational Design
IT Competency Diagnostic Tool (p. 26)
Organizational Design Diagnostic (p. 28)
Defi ning Competencies and Career Paths (p. 29)
2
Core Competency Rankings by Role (p. 30)
Personalized Development Plans (p. 35)
III.
Aligning with Business Goals and Prioritizing Needs
Aligning IT Strategy with Corporate Goals (p. 39)
Business Unit Alignment Diagnostic Tool (p. 40)
Guiding IT Architecture Principles (p. 42)
Visualizing Project Portfolio Value (p. 43)
Ensuring Benefi ts Capture Across All Projects (p. 45)
IV.
Realizing Operational Objectives
Legacy System Sunset Project Cards (p. 49)
Revalidating Business Case Assumptions Midcycle (p. 50)
Project Cycle Time and Cost Reduction (p. 51)
Scorecard Development andLife-Cycle Management Compendium
(pp. 54–55)
Scorecard Rollout (p. 56)
Data Collection and Quality Assurance (p. 57)
Scorecard Review and Revision (p. 58)Facilitating Scorecard Adoption (p. 59)
Additional Transitioning SupportDiagnostic Questionnaires(pp. 73–89)
Vendor Management and Outsourcing (pp. 67–72)
IT Budget Benchmarks(pp. 61–66)
Visit Resource Center @ www.cio.executiveboard.com
Relevant Published Research (pp. 90–91)
1 Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.2 Pseudonym.
1
13© 2005 Corporate Executive Board
Roles and ExpectationsIdentifying Decision Makers’ Perceptions of the IT Value Proposition
Action Steps
Build Relationships: Understand business challenges and IT’s priorities by networking with business units and internal customers.
Executive Partnering Program (p. 16)
Identify Expectations: Gauge the expected mandates from the senior executive team to develop an appropriate outlook for IT.
Defi ne Discretionary Powers: Address questions that calibrate an employer’s resolve to support IT.
Ascend the Learning Curve: Increase familiarity with the industry, business, and technology to ease transition and achieve rapid results.
Solicit Feedback: Establish formal and informal feedback to shape a CIO’s career trajectory.
The CIO’s First 100 Days 14© 2005 Corporate Executive Board
Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition 15© 2005 Corporate Executive Board
New CIOs responsible for understanding how the organization functions and supplying technology to optimize the business can derive valuable information by building strong relationships with key constituencies. In an effort to learn crucial information about business strategies and technology expectations, CIOs cannot overemphasize the importance of networking and relationship building upon entering the role. These relationships help influence IT’s strategic vision and immediate priorities, while clarifying role expectations for the CIO.
Building PartnershipsNew CIOs gain signifi cant insight into company challenges and corporate
strategic objectives by meeting with all business units and internal customers
Initial Conversations“During my fi rst month, I spent the largest percentage of my time with people within the organization, identifying personalities and relationships. With some of the discussions, I felt like I was driving people crazy with all of my questions, but I also talked to people who seemed like they had never been listened to; these people were hungry to share their issues.”
CIO Business Services Company
“What they tell you what they need is often not what they really need; it’s a CIO’s job to decipher what is important to them from a business perspective and use IT to solve it.”
CIO Pharmaceutical Company
Critical Questions
• What are your key issues and strategic objectives for the coming year? Two years? Five years?
• What are the critical pain points of your job?
• What is your department’s relationship with IT? What would be an ideal relationship?
• Do you feel comfortable and/or confi dent approaching IT for support with your strategic initiatives?
• What are your expectations for IT? Where is IT currently not meeting your expectations?
• What are your current IT priorities? How do you anticipate these priorities changing across the next year?
• Do you think IT is allocating resources appropriately to both technical and strategic business issues?
• Are you aware of IT’s strategic plan?
Source: CIO Executive Board research.
The CIO’s First 100 Days 16© 2005 Corporate Executive Board
Executive Partnering ProgramIn order to rapidly build a solid understanding of the company’s and industry’s strategic issues and challenges (as well as build an internal network), Ford runs an effective executive partnering program for new senior executives. This two-month program allows the CIO to “shadow” the top executives of different business units and/or functions one week at a time and, in the process, gain visibility into firm and industry issues as well as the organization’s informal power structure.
Shadowing Key Strategic PartnersCarefully selected senior team members from across the company…
New Executive Partnerships
Source: Ford Motor Company; Corporate Strategy Board research; CIO Executive Board research.
…provide an intensive orientation to a company’s strategic and operational issues
Illustrative Calendar, New Executive
Week One “Partner”: VP, Business and Product StrategyWeek Two “Partner”: Group VP, Product Development and Quality
Week Three “Partner”: CEO, Ford Motor Company
Week Four “Partner”: Group VP, Manufacturing
Week Five “Partner”: VP, Truck Vehicle Center
Week Six “Partner”: Group VP, Premier Auto Group
Week Seven “Partner”: Group VP, Purchasing and Ford of Mexico
Week Eight “Partner”: Process Leadership Executive
September 2004 October 2004
President and Chief Executive Offi cer
Vice Chairman Vice Chairman and Chief of Staff
Vice President and Chief Financial Offi cer
Chairman and CEO, Ford
Credit
Group Vice President,
Asia–Pacifi c Operations
and Associations
President, Ford of
Europe, Inc.
President, Ford South
America Operations
VP, Vehicle Operations
Group Vice President,
Manufacturing
Group Vice President, Purchasing and Ford of
Mexico
Vice President, Business
and Product Strategy
Process Leadership
Group Vice President, Product
Development and Quality
VP, Truck Vehicle Center
VP, Volvo
Group Vice President, Premier
Auto Group
The new executive’s set of partners is selected to provide broad-based learning about Ford’s key strategic issues across product lines and operations.
A new executive dedicates up to 10 hours per day shadowing every item on the “partner’s” agenda, including all staff and client meetings and is frequently called upon to contribute to meetings and post-session debriefi ngs.
Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition 17© 2005 Corporate Executive Board
Role of the CIO Description Share of the CIO's Time That Should Be Devoted to Each Role
Own View CFO View CEO View
The Head of IT Coordination
IT Cost ReductionIT centralization, simplifi cation, and governance and standards
The Business Strategist
Value CreationDriving business effi ciency via
process optimization and digitization
Practical CIOExecution Focus
Practical implementation: “Getting things done”
Chief Technology Offi cer
Technology FuturingFinding new technology to transform industry
Key Priorities for the
Coming Year
1.
2.
3.
Striving to affect business performance, new CIOs solicit the understanding of the CFO’s and CEO’s mandate for IT. The tool presented helps identify each of these expectations. Each executive is encouraged to fill out this form separately and then use the document for further discussion.
Your New Job DescriptionGain visibility into expected mandates by networking with the senior executive team
Source: CIO Executive Board research.
Expectations Profiling Exercise
% %
%
%
%
%
%
%
%
%
%
%
The CIO’s First 100 Days 18© 2005 Corporate Executive Board
CIOs occasionally fail due to an overestimation of the discretionary powers ascribed to the position. While the initial impression is that information technology is the key to success for the corporation, they only realize after assuming the position that they cannot get projects funded or that line absorption of technology is poor. To this end, the CIO Executive Board asked IT executive recruiters to construct a list of questions for incoming CIOs seeking to measure a potential employer’s resolve to support IT.
Defi ning the CIO’s Discretionary PowersCultural factors offer subtle cues to defi ne IT’s discretionary power
Industry Dynamics Q: What drives industry competition: price or functionality?Companies that compete on price are less likely to invest in strategic information systems.
Q: Is this company an industry leader or follower in terms of business innovation?Companies that lead their industries are more likely to take risks with new advanced information systems.
Q: How quickly does change occur in this industry?Companies that are in rapidly changing industries are more likely to adopt new technologies and embrace new ways of doing business.
Financial Resources Q: How is the corporation performing fi nancially?Many companies are simply unable to fully fund information technology.
Q: What is the size of the IT budget as a percentage of sales? Has it changed over the past fi ve years?The company’s proportional spending on IT is a good indicator of the value of technology to the company.
Q: How are capital-intensive IT projects approved?Bottom-up funding implies a more network-intense fi rst 100 days than top-down funding.
Customer Priorities Q: Who are the most important “internal customers” of IT in the company?Manufacturing and logistics indicate cost-saving role for CIO; sales, marketing, and R&D suggest a more strategic customer-facing agenda.
Q: Do customers view IT as merely a back-offi ce function or as an enabler to the business?CIOs that operate as “business technology leaders” collaborate with the business to create value, extend scope of the franchise, improve operational effi ciencies, and reduce costs.
Q: Does the CIO have genuine leadership responsibility for the company’s enterprise security and risk strategy?As a strategic partner, information technology can set and infl uence budgetary decisions, policies for end users, and risk management for the company.
Senior-Level Commitment Q: Do senior executives believe that information technology can (and should) materially affect the company?It is unlikely that IT can prove to be a strategic partner to the corporation without the support of the company’s senior management team.
Q: What is the turnover rate among the senior management team? A high turnover rate might indicate a larger corporate concern. However, if the CIO position is the only source of executive turnover, it may be diffi cult for the CIO to promote his or her agenda or break into the management “club.”
Q: Is IT mentioned in corporate communications as being critical to the success of the company?Public pronouncements set shareholders’ expectations for the corporation and are generally excellent indicators of management’s commitment to information technology.
Source: Korn/Ferry; Russell Reynolds; Spencer Stuart.
Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition 19© 2005 Corporate Executive Board
Best-in-Class LearningAlthough all new CIOs need to learn the intricacies of the business, build relationships with peers, and understand relevant technology, CIOs entering uncharted industries or businesses face a steeper learning curve and thus need to increase their familiarity with essential technology concepts and terms.
Scaling the Learning CurveNew CIOs use various strategies to clearly understand technology
concepts, industry trends, and business intricacies
Onboarding 101“I try to get up to speed in a new industry by doing a lot of reading. I work like a dog my fi rst 6 to 12 months, meeting face to face with as many people as possible for 10 or 12 hours a day, both top down and bottom up. Then I expect to take home fi ve or six hours of reading a night.”
CIO Financial Services Company
The CIO Executive Board offers assistance to new CIOs during this critical orientation period. Members can commission short-turnaround custom research projects from the Project Support Desk (PSD) at no additional cost. Project Support Desk offerings include the following:
• Industry Watch—Annually published research brief detailing business and IT trends in select industries
• Budget Watch—Quarterly summary of spending trends and predictions
• Key Findings—Research brief to address a specifi c member need
• Vendor Profi les—Listing of vendors within a specifi c market space, with an objective description of product or services and client listing
• Networking—Targeted discussion with a peer within the membership to discuss common challenges and lessons learned
To commission a PSD project please visit www.cio.executiveboard.com.
Reverse MentoringA new CIO can leverage internal experience by tasking high-performing individuals with creating a targeted learning program. A single direct report may serve as a mentor, or several key employees can work together to create a comprehensive training plan.
As part of this reverse mentoring relationship, the mentor is responsible for providing the new executive with an adequate level of generic knowledge immediately and a more in-depth knowledge of specifi c topics particularly crucial to the business and the goals of the function. The mentoring relationship should be confi dential and objective, and it should provide the new executive with honest and candid feedback. As part of the relationship, the mentor should provide the following:
Compilation of key readings to supplement specifi c gaps in executive knowledge
Listing of possible executive education courses to address CIO learning requirements
Schedule of networking contacts to build relationships with key individuals in the business and IT
Source: CIO Executive Board research.
Project Support Desk
The CIO’s First 100 Days 20© 2005 Corporate Executive Board
Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition 21© 2005 Corporate Executive Board
Considering the short time frame in which new CIOs are expected to deliver results, formal and informal feedback from a variety of sources provides valuable performance insight. Immediate and regular solicitation of feedback can help to propel and direct one’s career trajectory.
Soliciting Relevant FeedbackCIOs seek varied performance feedback…
From Whom Do You Receive Feedback Regarding Your Performance?
Source: CIO Executive Board survey, 2004; CIO Executive Board research.
…to shape and focus their career trajectories
How Am I Doing?“It was essential for me to get feedback early on in my tenure. And a lot of it. Most of the time you spend is on relationship building and feedback; whether it is formal or informal, it is imperative to assess the circumstances of your customers, your team, and your boss. In a sentence: ‘Your job depends on it.’”
CIOAutomotive Industry
41%
8%
65%
39%
49%
37%43% 41%
80%
20%
67%
22%
31%
6%
55%
41%
Board of Directors
Direct Reports
External Stakeholders
Functional Heads
BU HeadsCOOCFOCEO
Informal
Formal
n = 51.
The CIO’s First 100 Days 22© 2005 Corporate Executive Board
Accelerating the TransitionA road map for successful onboarding
Understanding Performance Expectations
Gaining Visibility into CurrentPerformance and Resources
Executing on Transition Initiatives
I.
Identifying Decision Makers’ Perceptions of the IT Value
Proposition
Executive Partnering Program (p. 16)
Expectations Profi ling Exercise (p. 17)
Best-in-Class Learning (p. 19)
II.
Evaluating IT Effectiveness and Optimizing
Organizational Design
IT Competency Diagnostic Tool (p. 26)
Organizational Design Diagnostic (p. 28)
Defi ning Competencies and Career Paths (p. 29)
2
Core Competency Rankings by Role (p. 30)
Personalized Development Plans (p. 35)
III.
Aligning with Business Goals and Prioritizing Needs
Aligning IT Strategy with Corporate Goals (p. 39)
Business Unit Alignment Diagnostic Tool (p. 40)
Guiding IT Architecture Principles (p. 42)
Visualizing Project Portfolio Value (p. 43)
Ensuring Benefi ts Capture Across All Projects (p. 45)
IV.
Realizing Operational Objectives
Legacy System Sunset Project Cards (p. 49)
Revalidating Business Case Assumptions Midcycle (p. 50)
Project Cycle Time and Cost Reduction (p. 51)
Scorecard Development andLife-Cycle Management Compendium
(pp. 54–55)
Scorecard Rollout (p. 56)
Data Collection and Quality Assurance (p. 57)
Scorecard Review and Revision (p. 58)Facilitating Scorecard Adoption (p. 59)
Additional Transitioning SupportDiagnostic Questionnaires(pp. 73–89)
Vendor Management and Outsourcing (pp. 67–72)
IT Budget Benchmarks(pp. 61–66)
Visit Resource Center @ www.cio.executiveboard.com
Relevant Published Research (pp. 90–91)
1 Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.2 Pseudonym.
1
23© 2005 Corporate Executive Board
Organizational AssessmentEvaluating IT Effectiveness and Optimizing Organizational Design
Action Steps
Assess the IT Organization’s Effectiveness: Measure the competencies of the IT organization to identify opportunities for organizational improvement.
Optimize IT Organizational Design: Assess the effectiveness of the current organizational structure to mitigate competing demands for cost savings and responsiveness.
Defi ne IT Skill Competencies to Align with Corporate Objectives: Determine core technical and business competencies to enable IT strategy execution.
Defi ning Competencies and Career Paths (p. 29)
Map Skill Requirements to IT Roles: Develop a comprehensive, uniform list of IT roles and performance expectations to inventory enterprise resource capabilities and skill gaps among existing IT staff.
Core Competency Rankings by Role (p. 30)
Evaluate and Benchmark IT Leadership: Assess the competencies and leadership profi ciencies of the IT management team.
Drive Employee Performance and Engagement Through Development: Form individual development plans for staff to target areas of improvement for underperformers and identify growth opportunities for high-potential employees.
Personalized Development Plans (p. 35)
2
1 Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.2 Pseudonym.
1
The CIO’s First 100 Days 24© 2005 Corporate Executive Board
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 25© 2005 Corporate Executive Board
Order Relevant Published Research: Key Attributes of the World-Class IT Organization (pp. 90–91)
Incoming CIOs should measure the competencies of their IT organizations in order to identify and prioritize IT initiatives. The CIO Executive Board has compiled a tool—Key Attributes of the World-Class IT Organization—which identifies 25 attributes common to the most highly effective IT organizations, grouped into eight major areas of IT management. In addition to establishing a comprehensive, high-level view of an IT organization’s competencies, the Key Attributes diagnostic also serves as a gateway to the CIO Executive Board’s research library by mapping relevant literature to each IT attribute.
Assessing the IT Organization’s EffectivenessCIOs need a comprehensive framework to support strategic decision making
Source: CIO Executive Board research.
Strategic Priority Identifi cationExamine performance gaps relative to attribute importance to set IT strategy agenda and assign responsibilities for short- and long-term opportunities
Agenda Pressure-TestingAssess differences in scores between senior leadership and key staff (e.g., high-potential IT managers) to “pressure-test” IT priorities
Senior-Level CommunicationSecure executive support for IT initiatives by presenting internally assessed performance gaps alongside benchmark comparisons from the CIO Executive Board membership
Attribute CIO Staff
CEOBU Heads
CIO
Recently transitioned CIOs can use the Key Attributes diagnostic tool as a framework to examine IT challenges. CIO Executive Board members can use the tool in two ways:
Individual Assessment (Online)• Members complete an interactive, online diagnostic
survey.
• Participants receive immediate survey results online and by e-mail, with custom links to relevant research.
Collaborative Group Exercise• Executives can print the survey and administer it to
the IT leadership team or the entire organization.
• Participants can request a customized report to benchmark results.
If your organization is interested in learning more about the diagnostic, please visit the CIO Executive Board Web site at www.cio.executiveboard.com or contact your Account Director.
Key Attributes of the World-Class IT Organization
The CIO’s First 100 Days 26© 2005 Corporate Executive Board
Key Attributes of the World-Class IT Organization: A Competency Diagnostic
CIO Executive Board
Source: CIO Executive Board research.
Strategy and PlanningWe chart IT’s strategic direc-tion based on the business’s articulated strategies.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
1
Capabilities Alignment Diagnostic
How to Use This Diagnostic Please select the value (1 to 5) that best describes your IT organization using the two grading scales provided. The top scale measures performance in each competency and the bottom scale measures the importance of each competency.
Security Policies and Standards
We have defi ned and communicated a set of enterprise information security policies and standards.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
8
PerformanceImportance
Competency
Scoring ScalePerformance5 = We Are Excellent at This4 = We Are Good at This3 = We Are Average at This2 = We Are Poor at This1 = We Are Terrible at This
Importance5 = Critical 4 = High Priority3 = Moderate Priority2 = Low Priority1 = Not a Priority
II. IT Performance Measurement and Value Demonstration
Enterprise ArchitectureWe maintain an architecture blueprint that clearly links technology choices to business capabilities.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Business Case DisciplineWe employ a standard business case template for all IT investments that captures project life-cycle costs, benefi ts, and risks.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Portfolio ManagementWe help the business prioritize projects using a defi ned set of objective, weighted criteria.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Value DemonstrationWe track metrics that demonstrate IT’s contribution to the achievement of desired business outcomes.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Performance ReportingWe provide regular reports tailored by channel and content for specifi c business and IT audiences.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Risk ManagementWe have created a principled framework for assessing relative risk and sequence risk mitigation investments accordingly.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Security Policies and Standards
We have defi ned andcommunicated a set of enterprise information security policies and standards.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Disaster Recovery and Business Continuity PlanningWe develop and regularly test enterprise plans to ensure continuous support of core business processes.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Availability ManagementWe ensure the availability of systems based on SLAs that consider business criticality.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
10
User-Centric Operational Indicators
9
Employee Awareness Campaign
8
Enterprise Risk Assessment
7
Balanced Scorecard Life-Cycle Management
6
Executive Satisfaction Survey
5
Enterprise-Level Portfolio Prioritization
43
Project ROI Contracts
2
Embedded Architectural Discipline
Life-Cycle Cost EfficiencyWe effectively manage assets across their life cycle to maximize effi ciencies.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
11
End-to-End Asset Management
Cost TransparencyWe use unit-level visibility into infrastructure cost drivers to provide internal customers with the ability to effectively manage their demands.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
12
“User-Friendly” Infrastructure Product Catalog
Requirements DefinitionWe create alternative scenarios of cost versus functionality for proposed IT projects to help business sponsors make informed scoping choices.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
13
Alternative Cost and Functionality Scenarios
Application DesignWe reuse application components and services to build new functionality and integrate existing systems.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
14
Best-in-Breed Component Architecture
IT-Enabled CollaborationWe have created a toolkit and a set of communities that allow distributed staff to effectively share information and collaborate.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
23
Community Seeding
Data and Knowledge Management
We provide the business with accurate, timely, and required information.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Performance ManagementWe closely link compensation of senior IT staff to desired outcomes such as systems simplifi cation or cost reduction.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Leadership DevelopmentWe provide high-potential IT staff with customized training and development plans, includ-ing formal training, rotations, and project-based work.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
IT Staff DevelopmentWe provide IT staff with transparency into role-specifi c competency requirements and opportunities for technical and business skills development.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Vendor SegmentationWe segment vendors based on contract value and strategic contribution and allocate management resources accordingly.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Vendor Performance Oversight
We utilize a metrics-based scorecard to select and evalu-ate vendors based on standard performance criteria.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Maintenance Cost Containment
We segment our applications portfolio based on business value to facilitate legacy system retirement and prioritize maintenance work.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Project Management and Execution
We manage projects using a standard methodology to meet budget, scope, and schedule goals.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
15
Stage-Gated Project Execution
1617
Vendor Performance Scorecard
18
Value-Based Vendor Segmentation
19
Development Opportunity Brokering
20
Personalized Leadership Development Planning
21
Architecture Gain-Sharing Incentive Plan
22
One View of the Company
Process DigitizationWe employ a standard methodology to identify opportunities for business process automation and enhancement.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
25
Top-Down Business Process Optimization
Technology InnovationWe proactively scan for and exploit opportunities to deploy new technologies in support of the business.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
24
Prototype Labs
I. IT GovernanceIII. Security and Business
Continuity Planning
V. Applications Delivery and ManagementVI. Vendor ManagementVII. Talent Management
VIII. Business Enablement
Attributes of Interest to the CEO/CFO
Value-Based Maintenance
Enterprise-Level Business Continuity Planning
IV. Infrastructure Delivery and Management
IT Competency Diagnostic Tool
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 27© 2005 Corporate Executive Board
Order Relevant Published Research: Achieving Responsive Scale (pp. 90–91)
In order to increase organizational transparency, simplify enterprise architecture, and leverage consolidated skills expertise, CIO Executive Board research indicates that a growing number of companies are moving toward a centralized IT environment. Organizations have identified targeted IT responsibilities that are suitable for centralization, including various governance activities and business-facing roles. Though centralization can enable several efficiencies, CIOs should not overlook the potential corresponding decrease in responsiveness to the business.
Roles of the IT CenterCIOs are migrating management and coordination roles to the center across the IT value chain
Source: CIO Executive Board research.
Traditional Roles of the Center
Roles Migrating from Local to Center
Emerging Central Roles
Implementation and Operations
“Building Things Right”
Needs Analysis“Building the Right Things”
User Absorption“Capturing Benefi ts”
Demand Management• Proactive identifi cation of business needs• Focused business unit relationship management
through SLAs
Project Management Oversight • Creation of methodologies, business cases,
templates
IT Portfolio Management • Defi nition of portfolio prioritization criteria
and process
Business Process Design • Provision of methodologies and tools for business
process design
Infrastructure Shared ServiceEnterprise ArchitectureSourcing and Vendor ManagementIT Strategic PlanningLeadership DevelopmentSecurity and Risk Management
Resource Management • Standardization of job descriptions,
career paths • Matching staff with project assignments• Skills forecasting
User Readiness • Development of education and training
to ensure business users understand how to use new technology
• Proactive identifi cation of needed investments in process change
Reusable Application Services and Middleware• Development, support, and consulting on reusable
application services and middleware
Data Architecture • Standard defi nitions and formats for shared
information• Data integrity stewardship
Diagnostic Questionnaire on p. 75
The CIO’s First 100 Days 28© 2005 Corporate Executive Board
Order Relevant Published Research: Charting the Course for Principled IT Centralization (pp. 90–91)
Organizational Design DiagnosticTransitioning CIOs must also assess the effectiveness of their organizational structure to ensure the appropriate balance of centralized cost efficiencies and distributed alignment with dynamic business objectives. Recognizing the importance of harmonizing business strategy with organizational structure, the CIO Executive Board offers the following diagnostic, drawn from analysis of organizational designs at member companies.
Aligning IT Organizational Design with Business ModelCompanies weigh a number of business factors in determining the structure of IT
Total Score Representative Organizational Models
0–1 Structured Collaboration
2–7 Tiered, Mirrored Central and Regional IT
8–10 IT Shared Service and Competency Centers
11–12 Global IT Linked by Business Liaison
Company is…Business Model Attribute Closer to Both Closer to
Business Diversity Diverse business unit scale, market environment, or product lines 0 1 2 Similar business unit scale, market
environment, or product lines
Business Strategy Product differentiation and innovation 0 1 2 Lowest-cost provider
Business Portfolio Stability Pursuing divestiture or joint ventures 0 1 2 Stable or pursuing M&A or alliances
Role of Technology Customer facing (e-commerce and channel enablement) 0 1 2 Primarily back offi ce (fi nance, HR, and
core transactions)
Regulatory Focus Local tax and labor arbitrage 0 1 2 Global compliance
Corporate Culture Local autonomy and entrepreneurship 0 1 2 Top-down management
Subtotal Subtotal Total Score=
Source: CIO Executive Board research.
Diagnostic Questionnaire on p. 76
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 29© 2005 Corporate Executive Board
Defining Competencies and Career PathsTo enable IT strategy execution, CIOs should examine their long-term human resources plan. IT organizations place increased value on general business competencies including finance, procurement, communication, and leadership skills, reflecting a closer alignment with the business. DuPont adopts a comprehensive strategic competency model to outline the Nine Critical IT Capabilities for the internal organization, detailing specific skills within the areas of business, technology, and vendor management to support an aggressive outsourcing strategy.
Aligning Competencies with Corporate ObjectivesAn IT competency model defi nes nine key skills…
Nine Critical IT Competencies
…associated with three distinct career paths
DuPont’s IT Job Families
Source: DuPont; CIO Executive Board research.* Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
Making Technology Work
Informed Buying
Leadership
RelationshipBuilding
Contract Facilitation
Vendor Development
Contract Monitoring
Architecture Planning
Design of IT Architecture
Delivery of IT Services
Business and IT Vision
Business Systems Thinking
1
3
2
General Competencies
Note: Reprinted from “Core IS Capabilities for Exploiting Information Technology” by David F. Feeny and Leslie P. Wilcocks, MIT Sloan Management Review, Spring 1998, pp. 9-21, by permission of publisher. Copyright © 1998 by Massachusetts Institute of Technology. All rights reserved.
Leadership and Informed Buying are cited as the most important competencies in an outsourced environment.
LeadershipIntegrating IS/IT effort with business purpose and activity.
Business Systems ThinkingEnvisioning the business process that technology makes possible.
Relationship BuildingGetting the business constructively engaged in IS/IT issues.
Architecture PlanningCreating a coherent blueprint for a technical platform that responds to current and future business needs.
Making Technology WorkRapidly achieving technical progress—by one means or another.
Informed BuyingManaging the IS/IT sourcing strategy that meets the interests of the business.
Contract FacilitationEnsuring the success of existing contracts for IS/IT services.
Contract MonitoringProtecting the business’s contractual position, current and future.
Vendor DevelopmentIdentifying the potential added value of IS/IT service suppliers.
1
2
3
4
5
6
7
8
9
Informed BuyingManaging the IS/IT sourcing strategy that meets the interests of the business.
Contract FacilitationEnsuring the success of existing contracts for IS/IT services.
Contract MonitoringProtecting the business’s contractual position, current and future.
Vendor DevelopmentIdentifying the potential added value of IS/IT service suppliers.
Vendor Management
Skills
Technology Skills
Business Skills
Core IS Capabilities for Exploiting Information Technology
Diagnostic Questionnaire on p. 77
Order Relevant Published Research: Strengthening the IT Leadership Bench (pp. 90–91)
*
The CIO’s First 100 Days 30© 2005 Corporate Executive Board
Core Competency Rankings by RoleA comprehensive, uniform list of IT roles and performance expectations provides visibility into enterprise resource capabilities as well as potential skill gaps among existing IT staff. After creating 35 standardized roles across the company, Iverson Financial* scored the competencies of each position according to four key skills dimensions to express each role’s strategic business impact. For each skills dimension, the roles receive a score on a scale of 1 to 5, to provide an objective ranking of role expectations for both individual and enterprise-wide talent assessments.
Defi ning Required Skills and CapabilitiesIverson Financial* analyzes enterprise roles for alignment with key skills dimensions
Role Competency Rankings List
* Pseudonym. Source: Iverson Financial; Applications Executive Council research.
*
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 31© 2005 Corporate Executive Board
Recent CIO Executive Board data suggest that CIOs should invest in the development and retention of a strong leadership to most effectively drive employee discretionary effort. Compensation, by contrast, has only one-fifth the effect on employee effort as that of manager quality.
Investment in Management Leadership to Build the High-Performance Workforce
Manager quality is fi ve times more impactful than compensation
Average Impact of Management Strategies on Discretionary Effort
20%19%
15%
9%
4%
Direct Manager Characteristics
Organizational Culture Traits
Day-to-Day Work Characteristics
Learning and Development Opportunity
Compensation Strategies
Source: Corporate Leadership Council research; CIO Executive Board research.
Change in Discretionary
Effort
n = 3,564.
The CIO’s First 100 Days 32© 2005 Corporate Executive Board
Because strong leadership is imperative to a successful IT organization, new CIOs must evaluate the competencies and leadership styles of the function’s current management team. To assist new CIOs in understanding the most valuable leadership characteristics, the graph below presents the most important attributes for effective IT leadership as ranked by IT staff in managerial positions.
What Leadership Characteristics Do IT Leaders Consider Most Important?Focus investment on the most important leadership characteristics
Leadership Characteristic Importance Scores
n = 800.
* Percentage of leaders selecting each item as one of the eight most important characteristics of effective leadership at their company and level.
Source: Corporate Leadership Council Leadership Survey; CIO Executive Board research.
Order Relevant Published Research: Strengthening the IT Leadership Bench (pp. 90–91)
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 33© 2005 Corporate Executive Board
Creati
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Inter
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Meetin
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s0.0
5.0
10.0
8.0
6.9 6.6 6.4 6.2
8.6
5.9 5.6 5.5 5.4 5.2 5.1 4.8
5.9
4.9 4.84.4
Feedback and Relationship Activities Mean = 6.8
Experience-Based Activities Mean = 5.7
Education-Based Activities Mean = 5.0
5.9 = Mean Importance
for All Activities
Acknowledging the importance of strong leadership, new CIOs are tasked with maintaining or developing a robust IT leadership pipeline to ensure continued organizational improvement and success. To help new CIOs provide staff with the most effective development opportunities, the graph below plots 17 common development activities according to importance.
What Development Activities Do IT Leaders Consider Most Important?
“Feedback and Relationship” is the most important category of development activity
Distribution of Importance Scores for Development Activities Among IT Leaders*
* Importance scores derived from conjoint analysis, measuring the relative importance leaders place on each activity for its development of leadership skills.
Source: Corporate Leadership Council Leadership survey; CIO Executive Board research.
n = 800.
Average Importance or Higher
Below Average Importance
The CIO’s First 100 Days 34© 2005 Corporate Executive Board
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 35© 2005 Corporate Executive Board
Competency Self-Assessment
Relationship Building Profi cient Need development; add to development plan
Development Preferences Development assignment or project Mentoring Course or seminar Related courses for this capability (clicking this link
will open course description in a new window) Executive Program in Corporate Strategy
Related Development Opportunities
Next Performance Review Date
Personalized Development PlansNewly appointed CIOs facilitate the formation of individual development plans for staff to target areas of improvement for underperformers and identify growth opportunities for high-potential employees. In the uncertain environment following a change in leadership, development plans also shift employee focus toward future opportunities within the organization. DuPont’s customized development planning tools enable employees to gauge their proficiency in required competencies for a current or desired role and generate development plans that include development priorities, a recommended learning regimen, and suggested completion dates.
Fostering Motivation Through DevelopmentOnline self-assessment of competency
gaps and training activity preferences…
Online Competency Self-AssessmentIllustrative
…generates individualized development plans that form a “baseline” for career-path guidance
IT Staff Personalized Development PlanIllustrative
Source: DuPont; CIO Executive Board research.* Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
Attend executive seminar on corporate strategy
11 30 03
Save Clear Changes
Relationship Building
Competency Assessment Education Opportunity
Project Opportunity
Target Completion Date
Leadership Need development
DuPont 101 Corporate Strategy
Course11/30/03
Making Technology Work ✓ 12/31/04
Informed Buying Need development
Specialty Chemicals
E-Procurement10/31/03
Architecture Planning ✓
Business Systems Thinking
Need development
Supply Chain E-Learning Module
Relationship Building
Need development
Attend executive seminar on corporate
8/30/03
Staff: Scott CarneyTitle: Global IT Alliance Director
Direct Manager: Robin PriceNext Review Date: November 2003
My Development Plan
“Best-mix” recommendations of classroom and experiential development
Employee development priorities
Opportunity completion date
*
The CIO’s First 100 Days 36© 2005 Corporate Executive Board
III.
Aligning with Business Goals and Prioritizing Needs
Aligning IT Strategy with Corporate Goals (p. 39)
Business Unit Alignment Diagnostic Tool (p. 40)
Guiding IT Architecture Principles (p. 42)
Visualizing Project Portfolio Value (p. 43)
Ensuring Benefi ts Capture Across All Projects (p. 45)
Accelerating the TransitionA road map for successful onboarding
Understanding Performance Expectations
Gaining Visibility into CurrentPerformance and Resources
Executing on Transition Initiatives
I.
Identifying Decision Makers’ Perceptions of the IT Value
Proposition
Executive Partnering Program (p. 16)
Expectations Profi ling Exercise (p. 17)
Best-in-Class Learning (p. 19)
II.
Evaluating IT Effectiveness and Optimizing
Organizational Design
IT Competency Diagnostic Tool (p. 26)
Organizational Design Diagnostic (p. 28)
Defi ning Competencies and Career Paths (p. 29)
2
Core Competency Rankings by Role (p. 30)
Personalized Development Plans (p. 35)
IV.
Realizing Operational Objectives
Legacy System Sunset Project Cards (p. 49)
Revalidating Business Case Assumptions Midcycle (p. 50)
Project Cycle Time and Cost Reduction (p. 51)
Scorecard Development andLife-Cycle Management Compendium
(pp. 54–55)
Scorecard Rollout (p. 56)
Data Collection and Quality Assurance (p. 57)
Scorecard Review and Revision (p. 58)Facilitating Scorecard Adoption (p. 59)
Additional Transitioning SupportDiagnostic Questionnaires(pp. 73–89)
Vendor Management and Outsourcing (pp. 67–72)
IT Budget Benchmarks(pp. 61–66)
Visit Resource Center @ www.cio.executiveboard.com
Relevant Published Research (pp. 90–91)
1 Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.2 Pseudonym.
1
37© 2005 Corporate Executive Board
IT Strategy SettingAligning with Business Goals and Prioritizing Needs
Action Steps
Align IT Strategy with Corporate Goals: Create an IT strategic plan to support overall business objectives and drive value through IT.
Aligning IT Strategy with Corporate Goals (p. 39)
Align IT Strategy with Business Unit Goals: Understand business unit needs and perceptions to enable responsive IT service.
Evaluate IT Architecture and Architectural Management Strategies: Ensure architecture can support future IT investments.
Guiding IT Architecture Principles (p. 42)
Establish Governance Structure Around Future IT Investments: Establish an objective prioritization framework to ensure transparency around IT resource allocation.
Visualizing Project Portfolio Value (p. 43)
Ensure Maximum User Absorption: Incorporate change-management strategies during project implementation to ensure maximum end-user adoption of IT projects.
Ensuring Benefi ts Capture Across All Projects (p. 45)
The CIO’s First 100 Days 38© 2005 Corporate Executive Board
IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs 39© 2005 Corporate Executive Board
Source: Seagate Technology; CIO Executive Board research.
Aligned CIO GoalIllustrative
1. Growth/Profi tability
Design and implement best-in-class processes that drive revenue growth and reduce costs
2. Technology and Time-to-Market
Lead our industry in developing and executing critical technologies to be fi rst to market
3. Customer Quality
Develop best-in-class products to meet customer’s quality expectations
4. On Time Delivery
Achieve on time delivery to customer request
5. People
Cultivate a diverse, high-performing team that attracts, develops, recognizes, and retains the best people
Aligning IT Strategy with Corporate GoalsSeagate Technology establishes a goal alignment workshop and a formal cascade process to more effectively translate corporate objectives into functional and operational goals. The company creates cascaded functional goals to directly reflect strategic corporate objectives and establishes more granular project metrics to track progress against those objectives.
Cascading Goals from CEO to StaffHighest-level corporate objectives align directly with IT executives’ annual goals
Seagate Corporate ObjectivesIllustrative
Diagnostic Questionnaire on p. 79
Visit IT Strategic Planning Resource Center at www.cio.executiveboard.com
Address:
StopForwardBack Refresh ! !
Functional Goal Goal Description Measures
Launch a product and process data warehouse for Seagate
• Develop and execute product-centric data warehouse• Transition from multiple independent decision-support databases and tools to a single system• Begin moving decision-support features from execution systems into the new system
Q2: Design in place and approval to proceed confi rmed Q2: Begin streaming data to the new data warehouseQ4: Strategy in place for execution systems
Address:
StopForwardBack Refresh ! !
Current Goals Browse by Employee: CIO My Goals and Tasks: Launch a product and process data warehouse for Seagate Title Aligned To Due Date Status UpdatedDevelop infrastructure strategy for EDW VP, Infrastructure 30 Jun 04 On Track 30 Apr 04Assess application strategy for future expansion of EDW VP, Applications 30 Jun 04 On Track 14 Mar 04Create legacy systems integration strategy for EDW VP, Enterprise Systems 30 Jun 04 Issues 10 Mar 04Improve data quality Senior Data Manager 30 Jun 04 Issues 20 Apr 04
Formulate new EDW business processes Director, Business Process Management 30 Jun 04 On Track 09 Jan 04
CIO priorities link clearly to those of IT direct reports.
Arrows indicate the presence of downward- and upward-aligned goals.
CIO Goal Alignment DashboardCIO Goal Alignment Dashboard
The CIO’s First 100 Days 40© 2005 Corporate Executive Board
Business Unit Alignment Diagnostic ToolTo align IT strategy with corporate goals, IT must clearly understand business needs and perceptions. The IT–Business Alignment Diagnostic is a survey-based exercise that enables CIO Executive Board members to identify which attributes of IT process and service delivery are of top priority to business partners and IT staff. An aggregate analysis of more than 1,850 survey responses from 28 companies identified common IT attributes where recurring gaps exist between importance and effectiveness ratings.
Properly Aligning IT with Business UnitsThe CIO Executive Board tool reveals six
general areas of top priority to the business…
Business Partner Importance Versus Business Partner Effectiveness Gap
…and provides an opportunity for members to obtain custom results
●
●
●
●
●
● ●
●
●●
●
●
●
●
●
●
●
●
●
●
●●
●
●
●
●
●
●
●
4.25
5.25
6.25
0.2 0.4 0.6 0.8 1 .2 1.4 1.61.0
Effectiveness Gap (Business Partner Importance–Business Partner Effectiveness)
Business Partner Importance
Opportunistic Improvement
High PriorityKey Strength
Low ROI
Security
Business Liaison
Requirements Defi nitionVendor Alignment
Prioritization Discipline
Value Demonstration
System AdoptionCost Transparency
CommunicationUser Training
Leadership SkillsBusiness Case Discipline
Technology Innovation
Financial ImpactBusiness Skills
Risk ManagementProject Skills
Technology Provisioning
End-User SupportTechnical Skills
Business Continuity PlanningAvailability Management
Responsiveness
Business Case Achievement
Strategy and Planning
Data and Knowledge Management
Business Functionality
Project Delivery
Skills Adaptation
Average Gap
Average Importance
n = 1,850 business partner respondents from 28 companies. Source: CIO Executive Board IT–Business Alignment Diagnostic Database.
To help recently transitioned CIOs understand business expectations, the CIO Executive Board is pleased to offer the IT–Business Alignment Diagnostic to CIOs as part of your membership.
What You Will Do• Identify appropriate business partner and IT staff to
complete Web-based survey
What You Will Receive• Detailed customized report identifying high-priority
areas to increase business alignment
Members Leverage the Diagnostic To• Focus strategic planning efforts for IT• Create a more informed dialogue between IT and
business partners• Tailor IT service delivery to better refl ect the needs
of the business
If your organization is interested in learning more about the diagnostic or in reserving a spot for the current quarter, please contact your Account Director.
IT–Business Alignment Diagnostic
IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs 41© 2005 Corporate Executive Board
Order Relevant Published Research: Calibrating the Partnership (pp. 90–91)
For each attribute, IT’s self-assessment of performance is higher than the corresponding business partner rating. In the chart below, the columns represent the average attribute effectiveness ratings of business partners, while the dots represent the average attribute effectiveness ratings of IT staff. Among attributes, the largest gaps exist in the Business Enablement and Project Design and Execution categories.
IT Overestimates Its EffectivenessDisconnect in perceptions highlights poor communication between IT and the business
Average Effectiveness by AttributeBusiness Partners Versus IT Staff
n = 3,063.
Source: CIO Executive Board IT–Business Alignment Diagnostic Database.
Talent Management and Development
Project Design and Execution
Service Delivery and Management
Business Enablement Governance Security/Reliability
●
●
●●
●●
● ●●
●● ●
●
●
●● ● ●
●
●
●
●●
●● ●
● ●
●
1.00
7.00
4.074.40
4.124.32 4.41
4.59
3.984.28 4.14 4.24 4.26
4.044.24
3.954.24
4.84 4.82 4.824.60
4.19
4.824.63
4.40 4.28 4.42 4.48
5.195.07 5.04
4.71
5.31
4.875.15
4.875.16
4.83 4.924.67
4.854.70 4.77
5.09
4.27
4.965.21 5.16 5.25
5.52
4.61
5.47
4.794.96
4.814.99 4.97
5.20 5.13
5.85
Finan
cial Im
pact
Projec
t Deli
very
Requir
emen
ts Defi
nition
Value D
emons
tratio
n
Strate
gy an
d Plan
ning
Communica
tion
Priorit
izatio
n Disc
ipline
End-
User Su
pport
Tech
nology
Provis
ioning
Lead
ership
Skills
Busine
ss Sk
ills
Projec
t Skill
s
Risk M
anage
ment
Busine
ss Lia
ison
Secu
rity
Tech
nology
Innov
ation
Skills
Ada
ptatio
n
User Tr
aining
Responsi
vene
ss
Busine
ss Conti
nuity
Plan
ning
Effectiveness Score
Syste
m Ado
ption
Busine
ss Case
Disc
ipline
Availab
ility M
anage
ment
Busine
ss Case
Ach
ievem
ent
Tech
nical
Skills
Highly Effective
Highly Ineffective
Busine
ss Fu
nctio
nality
Data an
d Kno
wledge
Man
agemen
t
Cost Tra
nspare
ncy
Vendo
r Align
ment
IT Average: 4.98BP* Average: 4.26
Gap: 0.72
IT Average: 4.89BP Average: 4.25
Gap: 0.63
IT Average: 4.83BP Average: 4.26
Gap: 0.57
IT Average: 5.14BP Average: 4.61
Gap: 0.53
IT Average: 5.00BP Average: 4.51
Gap: 0.49
IT Average: 5.28BP Average: 4.95
Gap: 0.33
IT Effectiveness Rating
Business Partners’ Effectiveness Rating* BP = Business Partner.
The CIO’s First 100 Days 42© 2005 Corporate Executive Board
Order Relevant Published Research: Case Studies in Enterprise Architecture Mitigation (pp. 90–91)
Guiding IT Architecture PrinciplesBefore addressing enterprise goals through IT investments, new CIOs must first evaluate the organization’s IT architecture and architectural management strategies. KeyCorp’s principles reflect a single overarching theme: the simplification of the technology environment as a means to an end—the creation of a standard enterprise applications architecture and infrastructure. The net effect of these principles is to link simplicity with better, faster, cheaper IT performance. Every resource allocation decision made by KeyCorp’s Key Technology Services group invokes the filter of these eight guiding architecture principles.
Laying a Solid Foundation KeyCorp elevates simplicity to a strategic goal
KeyCorp’s 2001 IT Architecture FrameworkRepresentative Overview
Use of technology for cycle-time reduction
Embrace of open standards and nonproprietary approaches
Proactive management, high scalability, and security
Standard applications and infrastructure
Enterprise TCOperspective (particularly with applications)
Systems simplifi cation, code reduction, and retirement
Minimal package customization
Culture of reuse
Source: KeyCorp; CIO Executive Board research.
*
Web
EDI/XMLHub
MROB2B Infrastructure N-Tier Middleware eCRM Database
ERP
Sales
Store
Fulfillment
Strategic CustomerCampaign Management
Data Marts
Content
Supplier
Marketplace
Knowledge Management
Legacy
Secu
rity
Bu
siness L
ogic
Messa
gin
g
Warehouse
Call Center
Focus on Platform Focus on Life Cycle
1
2
3
4
5
6
7
8
Sigma
δ
* The CIO Executive Board does not endorse or recommend technology vendors. The technologies listed here are for illustrative purposes only and do not necessarily represent the technologies used by profi led companies.
IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs 43© 2005 Corporate Executive Board
Visualizing Project Portfolio ValueTo ensure objective alignment of future IT spending with stated corporate and business unit objectives, new CIOs must establish a transparent prioritization framework by which they evaluate project proposals. Schlumberger segments its IT projects into four “asset classes,” each with a unique goal and target spending allocation, to guide the budgeting process. By quantifying both financial and strategic project benefits through project sponsor questionnaires tailored to each of the four asset classes, Schlumberger creates a holistic view of each project’s impact on the organization.
Responsive IT Portfolio Prioritization
Source: Schlumberger Ltd. ; CIO Executive Board research.
To enable portfolio prioritization, Schlumberger creates an IT project portfolio with principled project categories…
Schlumberger “Asset Classes” and Target Allocations
…and estimates the strategic, nonfi nancial value of projects based around the following categories
Asset Class-Specifi c Value DriversRepresentative
Realize measurable business benefi ts (revenue generation or cost savings)
Innovation 25%
Business Opportunity
25%
Infrastructure40%
Mandatory10%
Realize measurable business benefi ts (revenue generation or cost savings).
Confer competitive advantage, e.g., incubating new platforms, or responses to competitors’ offerings
Confer competitive advantage, e.g., incubating new platforms or responses to competitors’ offerings.
Legal or regulatory compliance
Ensure legal or regulatory compliance.
Optimize the use of existing IT assets and reduce IT costs
Optimize the use of existing IT assets and reduce IT costs.
Innovation Business Opportunity
• Reusability across BUs• Speed of technology adoption• Competitive advantage potential• Enhancement of reputation as
technology leader• Fit with long-term corporate
strategy
• ROI• Potential increase in market share• Potential to attract new customers
or facilitate new market entry• Simplifi cation of end-user workfl ow• Improvement in speed and quality
of decision making• Fit with short-term corporate
strategy
Infrastructure Mandatory
Application• ROI• Reusability across BUs• End-user satisfaction and urgency• Functionality versus technology
life spanNetwork• ROI• Reusability across BUs• Improvement to network
bandwidth, reliability, security, or performance
• Cost per user• Deployment velocity• Ease of use by end user• Ease of deployment• Impact on network bandwidth
and support resources
Diagnostic Questionnaire on p. 81
Visit Portfolio Management Resource Center at www.cio.executiveboard.com
The CIO’s First 100 Days 44© 2005 Corporate Executive Board
IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs 45© 2005 Corporate Executive Board
Ensuring Benefits Capture Across All ProjectsResponsible for ensuring that all IT projects achieve full business case realization and maximum end-user adoption, new CIOs must institute a defined approach for ongoing communication with all project stakeholders. Texas Instruments addresses this challenge by assigning a business readiness rating for each project and accurately describing the engagement scope and communication level with sponsors, in addition to end-user training processes according to the rating.
Increasing User AbsorptionLevel of business readiness support aligned to end-user impact
Business Readiness Life Cycle
Source: Texas Instruments; CIO Executive Board research.
1 2 3Business Readiness Rating
Business Readiness Resources Engagement Scope Communications Plan Training Protocol
Full-time business readiness lead dedicated to project
• Conduct a deep stakeholder analysis cataloging all affected staff
• Dedicate full-time resource to project
• Conduct frequent in-person meetings with steering teams to update them on the progress and risk of the project
• Inform end users about project status and related disruptions through targeted e-mail updates and newsletters
• Train power users to conduct adoption sessions for all end users
• Develop and run training classes for end users
Part-time involvement in project
• Identify project owners and immediate end users
• Deliver routine progress reports to steering committee
• Design an online training module for all affected end users
Informal advisory role
• Consult with business sponsors and selected users on an informal basis
• Deliver a detailed checklist to project manager containing communications guidelines for status and risk reporting to stakeholders and selected users
• Deliver adoption instructions to end users via e-mail
• Support and monitor training
Stakeholder Segmentation Analysis
E-Mail Updates End-User Training Modules
Sample Deliverables
SAPWhat You
Need to Know
Pack
aging
Engin
eerin
g
Desig
n Eng
ineer
ing
Proc
ess E
ngine
ering
Plann
ing M
anag
erMa
rketi
ng C
ontac
tBu
sines
s–IT
Liais
on
Tasks
Rolling Quarterly Forecast S C R I I
Procure Subcontracting Capacity A R I
Transition Support R S
Setup and Implementation S R
Device Setup R S
Starts R
Execution R I I S S S
Ship R C A
Roles
Business Unit Liaison Subject-Matter Experts
Responsibility Assignment KeyR Responsible Accountable in Status Reviews
A Approver Veto Power
S Support Team Members
C Consultant Acknowledged Expert
I Informed Nonparticipant
To: All StaffFrom: CIORe: SAP Upgrade
High
Medium
Low
Net Unrealized Appreciation Scenario #2:
????? Sum Distribtution
Order Relevant Published Research: Achieving Responsive Scale (pp. 90–91)
The CIO’s First 100 Days 46© 2005 Corporate Executive Board
Accelerating the TransitionA road map for successful onboarding
Understanding Performance Expectations
Gaining Visibility into CurrentPerformance and Resources
Executing on Transition Initiatives
I.
Identifying Decision Makers’ Perceptions of the IT Value
Proposition
Executive Partnering Program (p. 16)
Expectations Profi ling Exercise (p. 17)
Best-in-Class Learning (p. 19)
II.
Evaluating IT Effectiveness and Optimizing
Organizational Design
IT Competency Diagnostic Tool (p. 26)
Organizational Design Diagnostic (p. 28)
Defi ning Competencies and Career Paths (p. 29)
2
Core Competency Rankings by Role (p. 30)
Personalized Development Plans (p. 35)
III.
Aligning with Business Goals and Prioritizing Needs
Aligning IT Strategy with Corporate Goals (p. 39)
Business Unit Alignment Diagnostic Tool (p. 40)
Guiding IT Architecture Principles (p. 42)
Visualizing Project Portfolio Value (p. 43)
Ensuring Benefi ts Capture Across All Projects (p. 45)
IV.
Realizing Operational Objectives
Legacy System Sunset Project Cards (p. 49)
Revalidating Business Case Assumptions Midcycle (p. 50)
Project Cycle Time and Cost Reduction (p. 51)
Scorecard Development andLife-Cycle Management Compendium
(pp. 54–55)
Scorecard Rollout (p. 56)
Data Collection and Quality Assurance (p. 57)
Scorecard Review and Revision (p. 58)Facilitating Scorecard Adoption (p. 59)
Additional Transitioning SupportDiagnostic Questionnaires(pp. 73–89)
Vendor Management and Outsourcing (pp. 67–72)
IT Budget Benchmarks(pp. 61–66)
Visit Resource Center @ www.cio.executiveboard.com
Relevant Published Research (pp. 90–91)
1 Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.2 Pseudonym.
1
47© 2005 Corporate Executive Board
IT Strategy ExecutionRealizing Operational Objectives
Action Steps
Simplify Existing Systems Portfolio: Establish a set of methodologies to reduce duplicate/obsolete systems, thereby cutting maintenance costs.
Legacy System Sunset Project Cards (p. 49)
Review Project Risks: Develop a detailed project-assessment framework to mitigate risks and prevent ROI degradation.
Revalidating Business Case Assumptions Midcycle (p. 50)
Decrease Project Cycle Time: Develop a set of disciplined implementation strategies to reduce costs and compress cycle time of large-scale IT projects.
Ensure Continuity with Direct Reports: Engage directors of Infrastructure and Applications, diagnosing their current operational objectives.
Measure Strategy Execution: Establish performance metrics to gauge the performance of IT and track the progress of strategic initiatives.
Scorecard Rollout (p. 56)
Data Collection and Quality Assurance (p. 57)
Scorecard Review and Revision (p. 58)
Facilitating Scorecard Adoption (p. 59)
The CIO’s First 100 Days 48© 2005 Corporate Executive Board
IT Strategy Execution: Realizing Operational Objectives 49© 2005 Corporate Executive Board
Legacy System Sunset Project CardsIT budgetary pressures coupled with complex systems architectures require new CIOs to reduce rising maintenance spending through systematic rationalization of the existing legacy portfolios. IBM, for instance, developed a set of strategies that allowed it to reduce maintenance spending and divert the funds to more strategic, value-added activities. As part of IBM’s annual strategic planning cycle, business process IT heads determine a sunset target for each application and enforce timely retirement of all obsolete, redundant legacy systems.
Principled RationalizationCost–benefi t analysis of applications produces sunsetting target and project plans…
➤
…while a dedicated team monitors BU performance against commitments
BU IT Head
Corporate CIO Staff
BP IT Head
Two CIO staff members track compliance with application sunset targets
Transparency of performance against sunset targets incents BU IT heads to retire systems expeditiously
BU and BP IT heads and corporate CIO representative review application portfolio as part of strategic planning cycle to identify applications for sunsetting
Sunset Target-Setting Session
Review yields individual BU sunset targets and application sunset project plans; assigned to project managers
Sunset Project PlanIllustrative
BU IT Strategic Plan 2000
Sunset Project Plans
Sunset Target12%
❏ Testing Application #3
❏ Procurement Application #4–10
❏ Intranet Application #2
BU 2 April
Below Schedule
Sunset Progress–Tracking Team Monthly CIO Report Card on Sunset ProgressIllustrative
Source: IBM Corporation; CIO Executive Board research.
➤
Sunset Results
BU 1
4%
BU 2
0%Retired
Savings $100,000 $0BU 1 April
Ahead of Schedule
Order Relevant Published Research: Institutionalizing IT Cost Effi ciency (pp. 90–91)
The CIO’s First 100 Days 50© 2005 Corporate Executive Board
Revalidating Business Case Assumptions MidcyleAs IT’s credibility correlates directly with project success rates, many new CIOs are required to build their reputations by delivering on detailed midcycle project—a potentially daunting task if initial business case assumptions lack support. New CIOs, therefore, can use risk as a means of continuously revisiting those business case assumptions to ensure project success. Progressive organizations such as Merrill Lynch employ cross-functional governance teams that oversee progress on large projects every quarter and provide an independent assessment of project risks.
Midcycle Project Risk ReviewProjects over $2.5 M require reviews to determine ongoing funding…
Quarterly Project Review Process at Merrill Lynch
Source: Merrill Lynch; CIO Executive Board research.
Diagnostic Questionnaire on p. 83
Visit IT Management Implementation Tools at www.cio.executiveboard.com
Risk Ratings Scale Defi nitions
Very High Risk1
High Risk2
Moderate Risk3
Low Risk4
Very Low Risk5
S Scope Management
Numerous scope changes (> 30%) impact project (functionality, schedule, or cost)
Major increases in scope (10%–30%); major functionality changes
Scope changes with 5%–10% impact on costs
Consistent history of small changes to scope < 5% of costs
Minimal scope changes
C Clarity of Business Benefi ts
Business benefi ts unquantifi ed and not verifi able
Major areas of benefi ts quantifi ed but not verifi able
Most benefi ts quantifi ed but little confi dence in benefi ts capture
Most benefi ts quantifi ed; medium confi dence in benefi ts capture
Most benefi ts quantifi ed; high degree of confi dence in benefi ts capture
O On-Time Delivery
Delays > 40% of lead time for major deliverables
Delays 20%–40% of lead time for major deliverables
Delays 10%–20% of lead time for major deliverables
Delays < 10% of lead time for major deliverables
On-time delivery
R Remaining on Project Budget
Costs > 20% higher than planned Costs 15%–20% higher than planned
Costs 5%–15% higher than planned
Costs up to 5% higher than planned
On-budget delivery
E Engagement of Business Leaders
Initiative not project owners’ primary responsibility; sporadic business attendance at steering committee meetings (< 50%)
Initiative not project owners’ primary responsibility; leadership team attends majority of steering committee meetings (50%–75%)
Initiative not project owners’ primary responsibility; steering committee meeting attendance high (75%–100%)
Initiative primary responsibility of operations, IT, and business owners; 75%–100% attendance at steering committee meetings
Full-time business operations and IT owners; 100% attendance at steering committee meetings
…relying on detailed risk-assessment criteria
Benefi ts Contract Affi rmation
GO FIX
KILL
Risk S.C.O.R.E.
1–5
Risk Reassessment 2 Distressed Project Review
Recommitment of Project Funds
• Sponsor recommits to ROI• Revisit projects
highlighted as high risk
3a
3b Proactive Termination
Project Sponsor ContractCosts Benefi ts
Initial Forecast $1.2 M $3.5 M
FY 2004 Budget Adjustment
($3.5 M)
Current Estimate $1.0 M $3.7 M
Signature Tom K ovackSponsor
Craig ReistIT Project Manager
Costs Benefi ts
1a 1bUnused project funds returned to the business
IT Strategy Execution: Realizing Operational Objectives 51© 2005 Corporate Executive Board
Project Cycle Time and Cost ReductionOne of the challenges commonly cited by new CIOs is determining the tactical levers that they can use to improve cycle time and contain costs of ongoing large IT projects, such as ERP implementation. Project-management exemplars increase project throughput by defining a set of execution strategies that focus on priorities such as project-team efficiency, quality assurance, and business process change management across the stages of a project’s life cycle.
On Time and on BudgetDisciplined implementation strategies during the project life cycle provide improved cycle time
Source: Applications Executive Council research.
Visit Project Execution Resource Center at www.cio.executiveboard.com
Stage of Life Cycle
1
Cost Savings
Typical Life Cycle
Improved Life Cycle
Cycle Compression
Launch and OngoingSupport
Installation and Test
Planning and Architecture
2
3
45 6 7
9
8
10
4 Quantify the seven critical cost drivers: 1) number of customizations, 2) complexity of legacy systems environment, 3) number of interfaces, 4) participation level of sponsors, 5) language and country versions, 6) number of users, and 7) forms and reports.
5 Identify the ways business processes are interconnected, on an enterprise level, to manage downstream effects of process change.
6 Test a day in the life of a system using production data.
7 Test integrated complete business cycles (semimonthly payroll, monthly reporting) and transaction-based cycles (sales orders).
1 Invest in a business case around the value of unifi ed business processes.
2 Physically relocate members of the core process team to have them work together.
3 Middle management backing is the hardest and most crucial support to get. Make this a priority of local area teams.
8 Move people around proactively, prior to go-live, to refl ect the new workload distribution from new processes.
9 Addressing the user’s grasp of new (and sophisticated) concepts should be the key change management focus.
10 Build sustainable power user cohort with substantial infl uence over training and utilization enhancement to “step up” in the go-live environment and mitigate any productivity disruptions.
The CIO’s First 100 Days 52© 2005 Corporate Executive Board
Source: Infrastructure Executive Council research.
As new CIOs move forward with IT project plans, they must take inventory of the infrastructure function’s current systems and project pipeline to ensure the function’s resources and capabilities will fulfill the revised agenda. The Infrastructure Executive Council, a sister program to the CIO Executive Board, provided the following checklist for the new CIO as a means of engaging the head of Infrastructure and uncovering infrastructure objectives and effectiveness.
Competency Diagnostic: Assessing Your Infrastructure Organization
Order Relevant Published Research: Emerging Management Strategies for IT Infrastructure (pp. 90–91)
Cost TransparencyWe maintain visibility into unit-cost for infrastructure services to understand our cost drivers and identify potential effi ciency improvements.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Demand ManagementWe manage user demand effectively to control total consumption volume.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Asset ManagementWe track and manage hardware and software assets deployed across the enterprise.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
SourcingWe investigate and secure opportunities to leverage vendor effi ciencies for optimal scale and scope, both internally and externally.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Applications AlignmentOur processes ensure transfer of applications development knowledge to optimize the production environment and vice versa.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Global CoordinationWe manage globally distributed functional infrastructure with common goals and methodologies.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Business LinkageOur efforts are highly integrated into business processes and activities, making us a valued business partner.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Performance ReportingWe distribute concise, actionable performance reports to IT and business audiences on a timely, periodic basis.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Business Focused Reporting
We defi ne performance metrics in business terms that serve as a shared decision-making platform between infrastructure and the business.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Resource AllocationWe actively use performance reports to inform fact-based decisions that optimize the cost-performance trade-off.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Infrastructure Systems Monitoring
Our automated performance monitoring systems enable us to quickly and effectively identify potential problems.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Performance IncentivesWe motivate all levels of infrastructure staff through formal and informal mechanisms to continuously improve service delivery and effi ciency.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
AutomationWe continuously explore and exploit opportunities to automate manual infrastructure processes.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Change ManagementOur institutionalized change and confi guration processes minimize change-related problems and business user disruption.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Availability ManagementWe set and manage the availability requirements of IT systems based on business criticality.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Continuity ManagementWe develop and regularly test disaster recovery plans that ensure continuous support of core business processes.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Architectural StrategyOur architectural principles provide fl exibility while promoting standardization to minimize cost and complexity.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Emerging Technology Strategy
We use a consistent decision framework to continuously and proactively evaluate the adoption of emerging technologies.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Security ArchitectureWe perform risk audits across internal and external constituencies to identify gaps and prioritize security investments.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
PrioritizationOur project prioritization framework is based on comprehensive, fact-based criteria and anticipates operational costs before deploying capital.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Risk MonitoringWe actively monitor risks in the supply base to avoid potential interruption in service delivery.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Process DisciplineWe ensure enterprise-wide use of repeatable, best-in-class processes to promote high quality service delivery.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Vendor SegmentationWe segment vendors based on defi ned criteria and allocate vendor management resources accordingly.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Supplier ConsolidationOur supplier strategy is to reduce the total number of vendors with whom we contract, minimizing the number of relationships we manage.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
1. Cross-Functional Alignment
4. Cost-Effi cient Service Delivery
6. A
rchi
tect
ural
Gov
erna
nce
and
Stan
dard
s
5. Infrastructure Operations and Service Delivery
3B
3C
6C
6B
Gain-SharingWe align suppliers’ incentives with our own long-term goals through formal contract mechanisms.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
6D
1A 1B 1C 2A 2B 2C 2D 2E 3A
3D
4A
4B4C4D5A5B5C5D5E6A
Using This Diagnostic ToolFor each objective select the values that best refl ect your organization using the two scales below. For the performance scale, rate the standard to which your organization currently performs an activity. For importance, indicate your view of the importance of an activity in overall infrastructure performance and in customer value creation.
Grading Scale
Performance Importance
5 = We are excellent at this 5 = Critical
4 = We are good at this 4 = High Priority
3 = We are average at this 3 = Priority
2 = We are poor at this 2 = Low Priority
1 = We are terrible at this 1 = My Eyes Glaze Over
PerformanceImportance
Objective
SourcingWe investigate and secure opportunities to leverage vendor effi ciencies for optimal scale and scope, both internally and externally
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
2. Performance Measurement and Management
3. Strategic Supplier Managem
ent
IT Strategy Execution: Realizing Operational Objectives 53© 2005 Corporate Executive Board
Source: Applications Executive Council research.
In addition to diagnosing the infrastructure function, new CIOs must reach out to applications heads to uncover the function’s current objectives and limitations and begin long-range planning. The Applications Executive Council, a sister program to the CIO Executive Board, has provided the following diagnostic for the new CIO as a means for engaging applications executives early on in the CIO’s first 100 days.
Competency Diagnostic: Assessing Your Applications Organization
OrganizationalResponsiveness
We are organized to effectively drive top-down mandates and center-enabled standardization while remaining agile and responsive to business needs.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
1
How to Use This Diagnostic Please select the value (1 to 5) that best describes your Applications organization using the two grading scales provided. The top scale measures performance in each competency, and the bottom scale measures the importance of each competency.
Architectural StrategyOur architectural principles provide flexibility while promoting simplification and reuse to minimize cost and complexity
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
8
PerformanceImportance
Competency
Scoring ScalePerformance5 = We are excellent at this4 = We are good at this3 = We are average at this2 = We are poor at this1 = We are terrible at this
Importance5 = Critical 4 = High Priority3 = Moderate Priority2 = Low Priority1 = Not a Priority
Business Case DisciplineWe employ a standard business case template for all Applications investments that captures project life-cycle costs, benefits, and risks and hardwires benefits into the budget of the business.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Portfolio ManagementOur project prioritization framework is based on comprehensive, fact-based criteria and revisited with enough frequency to ensure optimal deployment of capital.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Business PartnershipOur staff are highly integrated into business processes, placing us at the forefront of business process redesign and making us a valued business partner.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Stakeholder InvolvementWe stress early stakeholder involvement in the SDLC, monitor business sponsor commitment at every stage gate, and have dedicated teams to amplify business productivity and utilization of applications.Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Requirements Prioritization
We evaluate and prioritize software functionality through a cascading analysis that quantifies impact on business processes and life-cycle costs.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Customer SatisfactionWe denominate customer satisfaction in terms of senior executive perceptions of value created across the portfolio, not just sponsor satisfaction with individual projects.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Architectural StrategyOur architectural principles provide flexibility while promoting simplification and reuse to minimize cost and complexity.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Infrastructure AlignmentWe closely coordinate with Infrastructure colleagues to build infrastructure compatibility into applications and control change in the production environment.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
EmergingTechnology Strategy
We use a consistent decision framework to continuously and proactively evaluate adoption of emerging technologies.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
1098765432
Project Effort EstimationWe make accurate and justifiable project effort estimates, informed by consistent applications sizing criteria.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
11
Developer ProductivityWe have an objective and robust measure of developer productivity.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
12
Project ExecutionWe manage the SDLC using actionable performance metrics and project management methodologies that enable us to meet budget, scope, and schedule goals.Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
13
Risk ManagementWe have a comprehensive risk-management process that allows us to audit and track project risks (including risks to the business case) throughout the SDLC.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
14Scope Volatility
We manage scope change control via the embedding of objective renegotiation triggers in contracts and by transparent visualizations of cost–functionality trade-offs.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
23Vendor
CompetitionWe engineer cost efficiency by active competition across multiple vendors to maximize transparency regarding “market pricing”.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Resource ScalabilityWe are able to supplement our internal staff by scaling skilled external resources up or down at will to meet dynamic business demand.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Outsourcing FrameworkWe evaluate externalization decisions based on a cohesive enterprise skills map which ranks role criticality and hedges against dissipation of business knowledge.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Systems RetirementWe use a detailed road map for systems retirement, which clearly demarcates areas to invest in and selectively eliminates legacy systems over time.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
DeploymentWe have a configuration management and release plan with clearly assigned tasks, responsibilities, and contingency plans.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Quality AssuranceWe follow a documented quality control process to discover defects and limit their occurrence.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Coding StandardsWe establish coding standards and enforce them to ensure that our developers produce code that is clear, structured, and easily understood and maintained by other developers.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
AutomationWe make full use of IDEs, version control, code generation, and integrated project management tools to automate the applications development and enhancement process.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
1516171819202122
Staff DevelopmentWe have a career path framework that provides our staff with visibility into competency requirements, opportunities for technical and business skills development, and mentoring to advance their careers.Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
Performance Management
We closely link compensation of senior Applications staff to desired outcomes such as business value and customer satisfaction.
Performance (Circle below):
1 2 3 4 5Importance (Circle below):
1 2 3 4 5
24
I. Governance and Prioritization
III. Technology and Systems Strategy
VI. Sourcing Strategy
VII. Talent Management
IV. Project Management
II. Business Stewardship
V. Applications Development and Maintenance
25
Order Relevant Published Research: Key Developments in the Applications Function (pp. 90–91)
The CIO’s First 100 Days 54© 2005 Corporate Executive Board
Scorecard Development and Life-Cycle Management CompendiumIn order to gauge IT’s performance and track the progress of operational objectives against strategic initiatives, new CIOs need to establish appropriate IT performance metrics. The CIO Executive Board offers the following key differentiations between dashboards and scorecards. Although both dashboards and balanced scorecards measure IT performance, the tools differ fundamentally across several key dimensions. As dashboards primarily monitor operational indicators, scorecards reflect business priorities as dictated during IT strategy planning.
Differentiating Dashboards and ScorecardsMigrating from “in-the-moment” operational oversight to infl uencing strategic management decisions
IT Operational Dashboards IT Balanced Scorecards
Purpose Operational—Real-time performance tracking and alerting
Analytical—Trend analysis and tracking of strategy execution
Audience Access generally limited to IT management
Executive-level audience, both within IT and the business
Metrics Tracked Operational performance data abouta particular system or process Performance against organizational goals
Data Collection Process
Automated data collection, in many cases integrated into monitored systems
Portions of required data collected, aggregated manually
Frequency of Data Update Continuous At set intervals (quarterly, annually, etc.), with
individual metrics updated at differing frequencies
Sample Metrics
• Percentage of projects delivering new business functionality
• Global desktop availability• Percentage of applications
meeting security standards
Source: CIO Executive Board research.
Diagnostic Questionnaire on p. 85
Address:
StopForwardBack Refresh !
Sample Metrics
• Web server uptime• SAP availability• Help-desk fi rst-call
resolution rate
Order Relevant Published Research: IT Balanced Scorecards (pp. 90–91)
IT Strategy Execution: Realizing Operational Objectives 55© 2005 Corporate Executive Board
Scorecard Development and Life-Cycle Management Compendium (Continued)To ensure utility and support user adoption, executives should select optimal metrics to reflect business priorities and tailor reports to the needs of the specific audience. Based on the CIO Executive Board’s review of IT balanced scorecards collected from corporate exemplars, incoming CIOs should consider the following six key attributes when designing an IT balanced scorecard.
Structural Attributes of the IT Balanced Scorecard IdealSix design principles of world-class IT balanced scorecards
Simplicity of Presentation
• Single page of key performance categories and metrics
• Nontechnical language for easy consumption by business sponsors
• Limited number of metrics (10 to 20)
Informed by Goals of Annual Plan
• Categories and metrics directly linked to strategies articulated in annual IT strategic plan
• Provides insight into ongoing progress of strategy execution by tracking performance against goals
Broad Senior-Level Ownership
• Representative cross-section of senior IT and business leaders involved in scorecard creation and metrics selection
• Scorecard results are regularly reviewed by CIO and IT and business management
Clearly Defi ned Metrics
• Each metric has a clear defi nition, agreed on by IT and the business
• Companion scorecard document outlines metric defi nitions, assumptions, and collection methods
Drill-Down Capability and Metric Context
• Scorecard allows for drill down into more granular data underlying metrics
• Metrics annotated with source information and contextual explanation of variance or trends
Links to Individual Compensation
• Achievement of balanced scorecard targets linked to individual compensation of IT leadership team $
1
2
3
4
5
6
Source: CIO Executive Board research.
Diagnostic Questionnaire on p. 86
The CIO’s First 100 Days 56© 2005 Corporate Executive Board
Scorecard RolloutTransitioning CIOs should view the use of IT balanced scorecards as an ongoing process rather than a discrete event. To ensure that the IT balanced scorecard is a useful decision-making tool, exemplars regularly refresh the scorecard to 1) maintain its alignment with IT strategy, 2) take steps to help ensure the timeliness and accuracy of scorecard data, and 3) facilitate scorecard adoption by codifying data collection roles and responsibilities and creating template and incentives to encourage scorecard use. Bowne’s balanced scorecard implementation, part of a corporate-wide scorecard initiative, involves seven key steps.
The IT Balanced Scorecard Life CycleScorecard rollout: Bowne creates a “closed-loop” IT balanced scorecard process
Bowne’s IT Balanced Scorecard Adoption ProcessIllustrative
Source: Bowne; CIO Executive Board research.
2. Ongoing Strategy Mapping
• Annual IT strategy devolved from corporate strategy
5. Assigning Metric Ownership
• Owners assigned to each metric are responsible for scorecard completion
• Owners report to CTO and their bonuses are linked to their scorecard-related duties
4. Metrics Defi nition
• CTO-led team creates standard defi nitions for all metrics, defi nes measurement technique and data collection processes, and outlines initiatives that must be completed to allow tracking of metrics
3. Metrics Selection
• Team of CTO and direct reports creates list of metrics
• List refi ned by using analysis of each potential metric’s strengths and weaknesses
• Final approval by CIO
Metric Brainstorming
Metric Brainstorming
¸
¸
6. Data Collection and Quality Assurance
• Data collection frequency varies by metric based on cost of collection, the corporate fi nancial reporting cycle, and volatility of the business climate
7. Scorecard Review and Revision
• CIO, CTO, and corporate offi cers review scorecard every six months
• Metrics revisited annually by CTO-led group
1. Kick Off Training for IT Staff
• Balanced Scorecard 101 for divisional and functional senior managers
• Initial strategy alignment and metrics selection exercise
Process Costs
Initial consulting fees
$10,000 license fee for software and $3,500 per year maintenance and support costs
120 person-days per year for ongoing process management
IT Strategy Execution: Realizing Operational Objectives 57© 2005 Corporate Executive Board
Data Collection and Quality AssuranceWhile establishing and continually updating categories and metrics are critical for the success of an IT balanced scorecard, those metrics are useless if the underlying data are outdated or inaccurate. Exemplars define a clear collection process, designating an owner for each metric, and in some cases basing a portion of the owner’s compensation on timely, accurate delivery of data. To help ensure scorecard data are aggregated in a timely, accurate fashion from across its distributed operations, Cemex’s IT organization developed an eight-step process for scorecard data collection.
Routinizing Scorecard Data AggregationCemex’s IT organization clearly defi nes roles and data collection process to ensure timely, accurate scorecard data
Cemex’s IT Balanced Scorecard Data Collection ProcessIllustrative
Source: Cemex; CIO Executive Board research.
Data Request Data Collection Data Proofi ng
• Collection coordinator (a direct report to director level) requests data from regional collection agents
• Four regional collection agents coordinate with local metric experts to collect requested data
• Collection coordinator receives data from regional collection agent and conducts initial accuracy check
• In case of data inaccuracies, data are sent back to local metric experts for verifi cation
Data Verifi cationQuarterly Scorecard Presentation
• IT’s balanced scorecard is presented to CIO and IT management quarterly by objective owners
• After presentation, scorecard is made available to IT department
• Local metric experts verify data and communicate them back to collection coordinator
Scorecard Creation Data Analysis Data Finalization
• Collection coordinator aggregates data and populates balanced scorecard template
• Objective owner receives and analyzes data for assigned objective
• Collection coordinator receives fi nal data and passes them to objective owner
4
567
8Where the Going Gets Tough
“It is easy to defi ne a great model on paper for a balanced scorecard. However, a consistent and reliable process for data collection and analysis is key in order to make it work.”
Sergio J. Escobedo IT Planning, Cemex
321
The CIO’s First 100 Days 58© 2005 Corporate Executive Board
Scorecard Review and RevisionWhile offering a snapshot of IT’s current performance, the IT balanced scorecard can also help CIOs and business decision makers track IT performance over time. This requires a sustained commitment by IT management, including the review of the scorecard on an ongoing basis to align scorecard metrics with changing business goals and strategies, and the creation of a process to help drive adoption of the scorecard to all levels of the IT organization. To maintain the continued viability of its IT balanced scorecard, Corning adapts it to keep pace with shifting business and IT strategies through an annual series of three senior IT leader meetings.
Ensuring Continued Scorecard Comparability and Relevance
Corning adjusts its IT strategy and metrics to respond to the changing business environment…
Objectives and Metrics for Financial Performance Category of Corning’s IT Balanced Scorecard2000–2003
…while migrating from lagging to leading measures at the level of individual metrics
Operational Performance Metrics of Corning’s IT Balanced Scorecard2000–2003
Source: Corning; CIO Executive Board research.
2000 2001 2002 2003Operational Performance Metrics
• Application availability (100)• Percentage core infrastructure
offerings achieving commitments (100)
• Application availability (100)• Percentage core infrastructure offerings achieving
commitments (75)• IT expectations established for Corning employees (75)
• Percentage of service commitments met (150)
• Implement customer feedback process and system (100)
• Strengthen and expand processes to plan and coordinate work (250)
Metrics focus on performance of systems that have already been deployed.
Forward-looking operational expectations are added to existing metrics.
Measures of customer feedback are added to proactively improve service offering.
Metrics focus on pre-deployment systems planning to avoid potential future problems.
2000 2001 2002 2003Objective Maximize the value of dollars invested
in ITComplete, commit to, and communicate a comprehensive IT strategy for identifi ed organization
Today’s reality—conserve cash, return to profi tability, protect the future
Support the company’s strategy at a signifi cantly lower cost
Metrics • Contribution to business cost and revenue objectives (100)
• Percentage core service offerings at benchmark (50)
• Percentage IT spend in application development (50)
• Variance to global IT budget (50)
• Identifi ed business/functional units have an IT strategy (125)
• Contributions to business profi t objectives (75)
• Percentage IT planned spending in application development (50)
• Performance to spending targets (90)
• Strengthen IT strategies (160)
• Meet commitments for worldwide IT cost (150)
• Updated and integrate unit IT strategies (100)
As corporate business strategies change in response to external economic factors…
…and new metrics are added to refl ect new demands on IT.
…metrics that are retained in the scorecard change weighting based on changing business priorities…
IT Strategy Execution: Realizing Operational Objectives 59© 2005 Corporate Executive Board
Facilitating Scorecard AdoptionCorning ensures a sustainable IT balanced scorecard by creating a customizable template and linking scorecard use to individual compensation, thus driving scorecard adoption throughout all levels of the IT organization. The corporate scorecard’s four categories are evenly weighted for purposes of incentive compensation, and while each functional or business unit–based IT organization must use the corporate-standard balanced scorecard template, they are free to alter the category weightings as they see fit to determine their functional or business unit–level incentive payouts.
Making the Scorecard Relevant to All of ITTo facilitate scorecard adoption, Corning creates
a tiered system of customizable scorecards for each functional and business unit IT group…
…and makes a substantial portion of bonus compensation contingent on achievement of scorecard goals
2003 Scorecard Performance “Odometer” for Talent ManagementIllustrative
Source: Corning; CIO Executive Board research.
Talent ManagementObjective: Effectively transition the workforce to new model Max. = 100 miles
By the end of February 2002, each unit CIO and the IT shared services leader will have a transition plan for their employees.
All units meet their plan, some late 60 miles
All unit meet their plan 80 miles
All units meet their plan, some early 100 miles
These measures will be confi rmed by a random survey of employees taken Q2, Q3, and Q4
Objective: Meet employees’ learning plans Max. = 150 miles
Each unit CIO will count the total number of learning plan items on 2003 Learning Plans and measure achievement of those plans. All will use the following defi nitions of success:
a. 88% of learning plan items met
b. 94% of learning plan items met
c. 100% of learning plan items met
90 miles
120 miles
150 miles
Total Actual/Possible 230/250 miles
Clearly defi ned performance targets are linked with value to individual.
Bonus compensation of 200 IT employees is dependent to varying degrees on “odometer mileage” of corporate balanced scorecard.
Enterprise-Level ITBalanced Scorecard
Financial Performance 25%
Project Performance 25%
Operational Performance 25%
Talent Management 25%
Display Technologies Scorecard
Financial Performance 25%
Project Performance 35%
Operational Performance 15%
Talent Management 25%
Infrastructure ServicesScorecard
Financial Performance 30%
Project Performance 30%
Operational Performance 20%
Talent Management 20%
Enterprise-level IT scorecard is fed by functional and business unit IT scorecards.
The corporate scorecard weights all categories equally.
Business units and functions use corporate template sbut can weight each category as they see fi t.
A set of core metrics is required at business unit/functional level, but units/functions can add supplemental metrics.
The CIO’s First 100 Days 60© 2005 Corporate Executive Board
61© 2005 Corporate Executive Board
Appendix IIT Budget Benchmarks
Recent IT Spending Trends (p. 63)
IT Spending by Industry (p. 64)
IT Budget Allocations (p. 65)
Cost-Containment Checklists (p. 66)
The CIO’s First 100 Days 62© 2005 Corporate Executive Board
Appendix I: IT Budget Benchmarks 63© 2005 Corporate Executive Board
2002 2004 2006
50%
88%95%
2003 2004 2005
2.50%3.00%
4.25%
CIOs in transition are charged with directly supporting the corporate growth strategy—aspirations to increase top-line revenue while driving down operational costs. As CIOs increase control over IT spend and architecture, newly appointed senior IT executives must very quickly uncover the inner workings of the typically complex IT budget to ensure responsible investment and cost-cutting decisions. By reviewing industry benchmarking data on IT budgets, new CIOs can obtain a quick gauge on industry spending priorities.
Recent IT Spending TrendsPercentage of IT Spend Controlled Centrally by the Group CIO 2003–2005 Increase in IT Spending
Percentage of Growth from Previous Year
Innovative Technologies Driving Increases in 2005 IT spendingPercentage of Respondents Who Intend to Increase Spend on Each Technology
Source: Author unknown, “InformationWeek 500,” InformationWeek (20 September 2004); Togut, David and Evan Bloomberg, “Morgan Stanley CIO Survey Series: Release 5.0,” Morgan Stanley Equity Research (15 December 2004); CIO Executive Board survey, 2003.
= 225 CIOs.
Wireless Workforce Collaboration Tools
Storage Virtualization
Corporate Performance/
Business Intelligence
Blade Servers
Voice over IP
RFID Technologies
Unified Messaging
Web Services/ Component
Architecture for Applications
49%38%
32% 28% 27% 27% 25% 22% 19%
= 45 CIOs.
= 225 CIOs.
Voice Over IP
2006(E)
The CIO’s First 100 Days 64© 2005 Corporate Executive Board
Overall
Consulting & Business Services
Hospitality & Travel
Metals & Natural Resources
Retail: General
Construction & Energineering
Logistics & Transportation
Consumer Goods
Manufacturing
Retail: Speciality
Media & Entertainment
Health Care & Medical
Information Technology
Electronics
Automotive
Distribution
Chemical
Telecommunications
Energy & Utilities
Biotech & Pharmaceuticals
Insurance
Banking & Financial Services $44.6
$28.0
$21.6
$15.9
$13.6
$7.9
$7.5
$7.3
$6.3
$6.2
$5.8
$5.5
$4.8
$4.7
$4.6
$4.3
$4.0
$3.2
$2.7
$1.4
$1.0
$9.6
IT Spending by Industry2004 IT Spending by Industry
As a Percentage of Revenue2004 IT Spending per FTE by Industry
In Thousands of U.S. Dollars
Source: Author unknown, “InformationWeek 500,” InformationWeek (20 September 2004); CIO Executive Board research.
= 500 companies.
Overall
Construction & Energineering
Distribution
Metals & Natural Resources
Retail: General
Automotive
Chemicals
Consumer Goods
Energy & Utilities
Hospitality & Travel
Manufacturing
Retail: Speciality
Electronics
Health Care & Medical
Insurance
Logistics & Transportation
Media & Entertainment
Consulting & Business Services
Information Technology
Telecommunications
Biotech & Pharmaceuticals
Banking & Financial Services 9%
6%
5%
4%
4%
3%
3%
3%
3%
3%
2%
2%
2%
2%
2%
2%
2%
1%
1%
1%
1%
3%
= 500 companies.
Appendix I: IT Budget Benchmarks 65© 2005 Corporate Executive Board
IT Budget Allocations2003–2004 IT Budget Categories
As a Percentage of IT Budget2004 IT Budget Allocations by Industry
As a Percentage of Total IT Budget
Source: Author unknown, “InformationWeek 500,” InformationWeek (20 September 2004); CIO Executive Board research.
Industry Salaries Apps Hardware Services Other R&D
Automotive 32% 18% 16% 19% 12% 3%
Banking & Financial Services 30% 22% 18% 15% 13% 2%
Biotech & Pharmaceuticals 34% 10% 10% 24% 16% 6%
Chemicals 28% 17% 20% 18% 14% 3%
Construction & Engineering 34% 21% 18% 13% 9% 5%
Consulting & Business Services 31% 23% 15% 11% 17% 3%
Consumer Goods 37% 19% 14% 14% 14% 2%
Distribution 44% 15% 17% 7% 14% 3%
Electronics 35% 22% 14% 13% 13% 3%
Energy & Utilities 36% 17% 15% 18% 12% 2%
Health Care & Medical 31% 21% 19% 14% 11% 4%
Hospitality & Travel 36% 19% 15% 15% 11% 4%
Information Technology 33% 20% 19% 13% 11% 4%
Insurance 39% 20% 13% 12% 13% 3%
Logistics & Transportation 31% 22% 16% 13% 15% 3%
Manufacturing 36% 18% 17% 13% 13% 3%
Media & Entertainment 28% 21% 13% 15% 21% 2%
Metals & Natural Resources 36% 21% 16% 10% 15% 2%
Retail: General 27% 22% 21% 12% 11% 7%
Retail: Speciality 30% 23% 23% 11% 10% 3%
Telecommunications 27% 25% 13% 22% 11% 2%
= 500 companies.
R&D
Other
IT Consulting & Outsourcing
New Product & Technology Purchases, e.g Hadrware
Applications
Salaries & Benefits33%
32%
20%
21%
16%
16%
15%
14%
13%
13%
3%
3% 2004
2003
Salaries and Benefi ts
New Product and Technology Purchases, e.g., Hardware
IT Consulting and Outsourcing
The CIO’s First 100 Days 66© 2005 Corporate Executive Board
Nondiscretionary Discretionary
Administration/Overhead
End-User Support
Applications Maintenance
Mandatory Compliance
New Development Enhancement and
Testing/QAVendor Management
Supp
ly Le
vers Process Standardization
Strategic Sourcing
Systems Retirement
IT Asset Management
Dem
and
Leve
rs
Chargebacks
Portfolio Prioritization
Demand Forecasting
Project/Resource Planning
Needs-Based Segmentation
Recognizing that the nature and magnitude of cost-savings opportunity will vary greatly depending on the circumstances and cost structure of each organization, the Infrastructure Executive Council and the Applications Executive Council sought to provide the new CIO with a structured list of cost-savings tactics that cover the primary expenditures in the infrastructure and applications functions. These checklists can be used by the CIO in his/her first 100 days to engage direct reports in identifying cost-cutting opportunities.
Cost-Containment ChecklistTaxonomy of Infrastructure Cost-Containment Activities
Taxonomy of Applications Cost-Containment Activities*
Capital Expenses Operating Expenses
End-User Computing Data Centers Network and Telecom Internal Staff Leases and Licenses External Services Basic Services
Supp
ly Le
vers
Platform Standardization, Commoditization, and Consolidation
Process Standardization
Technology-Driven Effi ciencies
Vendor Management
Strategic Sourcing
Dem
and
Leve
rs
Usage Visibility
Needs-Based Segmentation
Procurement Controls
Budget ItemCost-Savings Lever
Budget Item
Cost-Savings Lever
Twenty percent of overall infrastructure budget*
Source: Infrastructure Executive Council research; Application Executive Council research.
* Using survey data collected by the Corporate Executive Board and other research organizations, this checklist illustrates a prototypical IT budget. While substantial variations exist among IT budgets, the IT budget breakdown provides a useful framework for baseline comparison and prioritization.
Sixty percent of overall applications budget*
Eighty percent of overall infrastructure budget*
Forty percent of overall applications budget*
67© 2005 Corporate Executive Board
Appendix IIVendor Management and Outsourcing
Coordinate Asset-Management and Vendor-Management Strategies: Practice asset management to control IT costs, maximize the use of existing IT equipment, and improve the maintenance of IT assets.
End-to-End Asset Management (p. 69)
Establish Prioritized Vendor-Management Program: Defi ne segmentation practices and vendor oversight processes to maximize negotiation leverage and minimize ongoing coordination costs.
Value-Based Vendor Segmentation (p. 70)
Monitor Vendor Performance: Defi ne objective performance metrics to ensure continuous vendor improvement.
Metrics-Based Performance Scorecards (p. 71)
Evaluate Sourcing Strategy: Determine the benefi ts and risks for externalizing work.
Global Sourcing Feasibility Matrix (p. 72)*
* Pseudonym.
The CIO’s First 100 Days 68© 2005 Corporate Executive Board
Appendix II: Vendor Management and Outsourcing 69© 2005 Corporate Executive Board
Desktop Inventory
Address:
StopForwardBack Refresh !
Source: Wyeth; CIO Executive Board research.
Desktop StandardsDeskpro EN 866$810, Available
Warehoused
In Use
1 BU Request
BU manager reviews IT asset database for item availability and standards
Purchase order issued for standard items not in inventory
Existing equipment is reassigned by IT Operations
3
PO
Procurement
2 Redeployment
New standard used as basis for enterprise deal
Enterprise Negotiation4b
Gaps in architecture prompts due diligence for new standard
Web
EDI/XMLHub
MROB2B Infrastructure N-Tier Middleware eCRM Database
ERP
Sales
Store
Fulfillment
Strategic CustomerCampaign Management
Data Marts
Content
Supplier
Marketplace
Knowledge Management
Legacy
Security
Business Logic
Messaging
Warehouse
Call Center
4a New Standard Development
Item tagged, delivered, and databases updated
5
3 0 4 2 0 9 1 2 7
Tagging and Delivery
End-to-End Asset ManagementAs most large organizations find themselves with a legacy of decentralized purchasing, new CIOs grapple with identifying effective asset-management practices to control IT costs, maximizing the use of existing IT equipment and improving the maintenance of IT assets. Wyeth addresses this issue by maintaining an enterprise portal that provides a real-time view of the firm’s asset inventory, assisting with IT–asset procurement decisions.
A Real-Time ViewWyeth follows a comprehensive, cross-functional process to optimize asset life cycles
Diagnostic Questionnaire on p. 88
Order Relevant Published Research: Strategic Vendor Management and Outsourcing (pp. 90–91)
The CIO’s First 100 Days 70© 2005 Corporate Executive Board
Address:
StopForwardBack Refresh !
Corning differentiates vendors by value and closelymonitors the performance of its largest contracts…
IT Vendor Segmentation MatrixIllustrative
…managing vendor underperformance based on diffi culty of fi nding alternative suppliers
Source: Corning; CIO Executive Board research.* All vendor names are fi ctional and for illustrative purposes only.
Decentralized Specialty Sourcing
• Local contracting
• Example: PC support for Beijing offi ce
Enterprise Specialty Sourcing and Vendor Management
• Large-scale purchases of customized goods and services
• Example: Systems integration consultants
Decentralized Commodity Sourcing
• One-off purchases
• Example: Palm PDAs
Enterprise Commodity Sourcing
• Large-scale purchases of undifferentiated goods and services
• Example: PC hardware and wireless services
Low
LowTotal Contract Value by Vendor
Diffi culty of Vendor
Replacement
Must propose performance improvements
Corrective
Action Plan
Replacements identifi ed and contracts terminated
TERMINATEDTERMINATEDTERMINATEDNATETE
MINATETERMINATERMTE
Underperforming Specialty Vendors
Underperforming Commodity Vendors
High
High
IT VendorPerformance Review*
Qualysis
Infostat
Linnogy
Superior
Acceptable
Probationary
Value-Based Vendor SegmentationIncreased reliance on externally provided IT products and services has led to a consequent rise in vendor-based dependency risks. New CIOs are therefore responsible for overseeing a multisourcing environment, defining practices and processes to maximize the organization’s negotiation leverage and minimizing ongoing coordination costs. Exemplars such as Corning have launched a strategic vendor-management program to segment vendors and monitor their performance. Corning identifies a subset of suppliers for activist management based on contract size and availability of substitutes.
Maximize Your Leverage
Frank Wang
Education
Experience
Appendix II: Vendor Management and Outsourcing 71© 2005 Corporate Executive Board
Address:
StopForwardBack Refresh ! !
Metrics-Based Performance ScorecardsFedEx monitors the vendor performance using a semiannual scorecard of standard evaluation criteria. The scorecards facilitate clear performance metrics, with both objective and subjective metrics. The IT Sourcing Group force-ranks vendors by category and publishes the rankings to the corporate procurement intranet site. Results from the scorecards are also incorporated into future contract negotiations.
What Gets Measured Gets DoneFedEx uses a semiannual scorecard to evaluate vendors… …based on objective criteria
and documented incidents…
* All vendor names are fi ctional and for illustrative purposes only. Source: FedEx; CIO Executive Board research.
…ranking their scores to identify underperformers
IT Vendor Performance RankingIllustrative
Strategic Sourcing Scorecard
Quality of Vendor Personnel
Flexibility—Ability to react to changes 1 2 3 4
Training—Independence and thoroughness 1 2 3 4
Post-Sales Support—Responsiveness to post-sales needs 1 2 3 4
Innovation Contributions
Frequency of continuous improvement suggestions 1 2 3 4
Resulting savings from continuous improvement suggestions 1 2 3 4
Share of savings given to FedEx 1 2 3 4
Price Competitiveness
Relative prices versus comparable vendors 1 2 3 4
Service Quality
Complaints per Product Invoice Accuracy < 1% 1–3% 4–6% > 6%
100–99% 98–94% 93–88% < 88%
On Time Delivery Cycle Time Improvement 100–90% 89–80% 79–70% < 70%
> 50% 30–49% 10–29% < 10%
Operational Effi ciency
Mean Time Before Failure Warranty Claims per Lot 2 x planned rate 1 x planned rate Met plan Less than planned rate
0–2% 3–5% 6–10% > 10%
Rewards ability to share cost-savings ideas
Objective criteria create indisputable justifi cation for scores
Vendor* Score RankHyperient 450 PlatinumDataCom 400 GoldInfoQuest 350 SilverXilinex 300 BronzeVivient 250 Unacceptable
Requires corrective action plan
Web Site Designer’s Performance Report
1 = Poor 4 = Excellent
Explanation Form
Flexibility = 1, Poor
On 10, 17, and 28 March, Vivient was unable to make requested changes and still deliver on time.
The CIO’s First 100 Days 72© 2005 Corporate Executive Board
Source: Iverson Financial; Applications Executive Council research.* Pseudonym.
Global Sourcing Feasibility MatrixAfter building an enterprise competency model to identify needed skills, CIOs must determine the most cost-efficient and effective source for talent. Iverson Financial’s* role-based sourcing strategy provides a powerful alternative to the traditional applications-focused decision criteria used at many organizations. Iverson built the offshore program as a component of a new holistic skills master plan to ensure that offshore goals support overall business and HR strategy.
Choosing a Sourcing StrategyA global sourcing feasibility matrix aligns specifi c roles to business need
Externalization Suitability Framework
*
73© 2005 Corporate Executive Board
Appendix IIIDiagnostic Questionnaires
Balancing Flexibility with Effi ciency (p. 75)
Benchmarking Organizational Preparedness for IT Centralization (p. 76)
Strengthening the IT Leadership Bench (pp. 77–78)
Assessing Organizational Planning Capabilities (pp. 79–80)
Creating an Agile IT Organization (pp. 81–82)
Disciplines for Enabling ROI Transparency and Accountability (pp. 83–84)
Assessing the Need for an IT Balanced Scorecard (p. 85)
Designing and Maintaining a World-Class IT Balanced Scorecard (pp. 86–87)
Enabling Strategic Management of External Suppliers (pp. 88–89)
The CIO’s First 100 Days 74© 2005 Corporate Executive Board
Appendix III: Diagnostic Questionnaires 75© 2005 Corporate Executive Board
Diagnostic Scores
Balancing Flexibility with Effi ciencyThe CIO Executive Board offers the following diagnostic questions to help its member CIOs improve central IT’s alignment with business partners while maintaining operational efficiency across the IT value chain.
Needs Analysis 1. Does the IT organization play a role in “managing demand”
for IT investments by collaborating with business partners to identify potential needs and project opportunities?
2. Does the CIO have credible senior IT “liaisons” who can collaborate with business partners to develop solution alternatives and maximize ROI for new projects?
3. Is IT actively involved in the process of documenting and optimizing business processes across the enterprise?
Implementation and Operations 4. Has the organization created cross-enterprise standards to
promote systems integration and development asset reusability across business units?
5. Are there formal processes in the project management life cycle to identify and facilitate opportunities for development asset reuse?
6. Does IT employ virtual teams to encourage horizontal collaboration across geographically dispersed IT staff?
7. Has IT created local management positions to maximize the effectiveness and professional development of IT staff in remote locations?
Yes No User Absorption 8. Does IT have formal methodologies to assess and mitigate
risks to user adoption in the earliest stages of the project life cycle?
9. Does IT have formal roles to determine necessary change-management investments needed for small and medium projects (not simply large enterprise system rollouts)?
10. Does IT segment user populations and create targeted communications and engagement strategies accordingly to ensure absorption of new functionality?
Organizational Design 11. Are the structure and role of central IT designed
to capture scale efficiencies while maintaining an acceptable level of responsiveness to local/business needs?
12. Are the structure and role of central IT aligned with core business objectives, such as M&A growth, accelerated product rollout, or end-to-end process integration?
Yes No
Total “Yes”
Number of “Yes” Answers Assessment
9–12 IT Has Achieved a Balance of Scale and Responsiveness to the Business
5–8 Progress Is Needed to Balance Organizational Scale and Responsiveness
0–4 IT Should Revisit Its Organizational Structure to Improve Responsiveness
The CIO’s First 100 Days 76© 2005 Corporate Executive Board
Benchmarking Organizational Preparedness for IT CentralizationThe CIO Executive Board offers the following diagnostic questionnaire to help its member CIOs design, win support, and manage migration toward a more centralized IT organization.
Optimizing the Balance Between Central and Local
1. Does the company have a clear view of all existing business unit IT spend and resources?
2. Does the company use objective criteria around skill and scale requirements to determine which IT activities are best delivered locally, centrally, and externally?
3. Are business unit managers involved in the design and role definition of central IT?
Winning Business Support for Centralization
4. Does IT employ a dedicated communications professional to help win support for IT consolidation?
5. Has IT identified and segmented potential champions and resisters to centralization?
6. Has the CIO clearly communicated the costs, benefits, and risks of centralization to business unit peers?
7. Has IT developed a campaign plan that maps key messages to specific constituencies and events related to centralization?
8. Has IT clearly communicated its centralization agenda to vendors?
Yes No Yes NoManaging Stakeholder Transition
9. Has IT mapped clear transition steps designed to build IT staff loyalty to the organization?
10. Has the CIO personally communicated the benefits and costs of centralization to IT staff?
11. Does IT assign to each business unit a liaison who has sufficient business context to support business unit technology strategy and the seniority and credibility to manage demand?
12. Has IT baselined performance and user satisfaction prior to centralization to use as a benchmark for the centralized organization?
Diagnostic ScoresNumber of
“Yes” Answers Assessment
10–12 IT Is Well Prepared for Transition
6–9 Signifi cant Gaps in IT Preparedness for Transition
0–5 IT Is Ill Prepared for Transition, Serious Risk of Failure
Total “Yes”
Appendix III: Diagnostic Questionnaires 77© 2005 Corporate Executive Board
Strengthening the IT Leadership BenchThe following questions are intended to facilitate discussion between senior IT, line IT, and HR decision makers about the IT organization’s efforts to create a continuous pipeline of business-focused IT leaders.
Transparent Development Road Maps 1. Has the IT organization conducted a formal skills assessment
and forecasting exercise to identify the most critical staff leadership characteristics?
2. Has the IT organization identified the development activities most effective at closing skills gaps?
3. Has the IT organization recalibrated the allocation of resources toward activities with the highest yield in leadership and skills development?
Personalized Leadership Development Planning 4. Has the IT organization formally defined a key set
of competencies that will be critical to employee and organizational success?
5. Has the organization integrated the IT and corporate competency models to provide staff with a comprehensive set of required skills and behaviors?
6. Has the organization linked competencies and levels of maturity to specific IT job titles to provide staff transparency into the competencies that are required for each?
7. Has the organization linked competencies and job titles to recommended development curricula that are best suited to build required competencies?
8. Does the IT organization communicate competency requirements and available career-management resources to IT staff across multiple channels?
9. Does the IT organization provide insight into the skills and experience of existing IT leaders through face-to-face or “virtual” mentoring?
10. Does the IT organization create personalized development plans for at least a subset of all IT staff?
11. Does the IT organization provide staff with a suite of self-service developmental planning tools to alleviate managers’ administrative burden and drive employee ownership of career-pathing activities?
12. Does the IT organization conduct regular employee segmentation exercises to prescribe development strategy at the individual level and gauge overall IT bench strength?
13. Does the IT organization help high-potential leaders strengthen business relationships and build peer networks by assigning them to cross-functional teams tasked with enterprise-level assignments?
14. Does the IT organization instill organizational and company process knowledge via rotational assignments through IT groups serving various lines of business?
Subtotal “Yes”
Yes No Yes No
The CIO’s First 100 Days 78© 2005 Corporate Executive Board
Development Opportunity Brokering 15. Does the IT organization utilize flexible staffing protocols
to reduce the “lag time” between classroom-based training and experiential work, driving on-the-job reinforcement of key skills?
16. Does the IT organization task-specialize employee career management to balance skills development with effective project execution?
17. Does the organization employ customized training modules with company-specific case studies to build a “common vocabulary” around subjects such as IT architecture, project and business case methodologies, and key business processes?
18. Does the IT organization maintain an employee skills inventory to track individual and organizational skills gaps?
19. Does the IT organization maintain a project skills database to provide a holistic view of experiential development opportunities?
20. Does the IT organization identify “best fit” development opportunities that remediate employee skills gaps while ensuring successful project delivery?
Strengthening the IT Leadership Bench (Continued)
Subtotal “Yes”
Total “Yes”
Yes No Yes No
Diagnostic ScoresNumber of
“Yes” Answers Assessment
15–20 Leadership Development Exemplar
8–14 Progressive Leadership Development Practitioner
0–7 Baseline Leadership Development Capability
Appendix III: Diagnostic Questionnaires 79© 2005 Corporate Executive Board
Assessing Organizational Planning CapabilitiesThe CIO Executive Board offers the following diagnostic questionnaires to help its member CIOs assess organizational planning capabilities.
Expanding Planning Inputs
1. Do we systematically require senior thinkers at strategic vendors to critique our IT strategic planning assumptions?
2. Do we have early-warning systems for line customers and infrastructure managers of changes in vendor product strategy that may affect existing technology services and capabilities?
3. Do we have ongoing staff resources and planning activities devoted to exploring the impact of emerging technologies on industry structure?
4. Do we systematically consult with organizations in the company’s value chain web to identify opportunities for collaborative IT strategic planning, standards-setting, and infrastructure investments?
Educating Business Decision Makers
5. Do we provide senior executives and business unit leaders with experiential learning activities prior to funding discussions?
6. Do we have a network of contacts at frontier academic and commercial research organizations who can host off-site learning experiences for senior executives?
7. Is the CIO perceived internally as an “educator” rather than a “salesperson” for emerging technology investments?
Subtotal “Yes” _______
Yes No Yes No
The CIO’s First 100 Days 80© 2005 Corporate Executive Board
Assessing Organizational Planning Capabilities (Continued)Hardwiring Strategic Alignment
8. Do we set objective criteria for evaluating the importance and effectiveness of individual IT projects?
9. Do we have an objective basis for reprioritizing projects based on changes in external market conditions?
10. Have we separated reprioritization of internal or supply chain IT projects from customer-facing projects?
11. Do we reprioritize internal projects at least quarterly and customer-facing projects at least monthly?
12. Can we promise less than a one-week lag between communication of changes in senior executive strategic priorities, reprioritization of the IT queue, and reassignment of IT staff and funding resources?
13. Is the governing body responsible for project reprioritization separate from the body responsible for resource allocation?
14. Is at least 25–50% of the discretionary IT budget unassigned to accommodate unanticipated additions to the IT queue?
15. Is the IT portfolio completely free from projects that do not directly map to current strategic opportunities?
16. Is the focus of discretionary IT spending proportional to the most current corporate strategic priorities?
Multichannel Broadcasting
17. Does the CIO make regular presentations of IT strategy to line managers and end users?
18. Are at least 75% of employees able to name the key IT strategic initiatives going on in the corporation?
19. Does the IT department produce annual reports, newsletters, and intranet banner ad campaigns recording the evolution and accomplishments of its IT strategy?
20. Does the company maintain an IT strategy intranet site that monitors strategic assumptions and provides useful information to line customers regarding competitors’ IT capabilities and changes in consumer use of IT?
Subtotal “Yes” _______
Yes No Yes No
Diagnostic Scores
15–20 Highly Aligned and Responsive IT Planning
10–14 Somewhat Aligned and Responsive Planning
5–9 Constrained to Resource Calendars
0–4 Infl exible, Unaligned Planning
Total “Yes” _______
Appendix III: Diagnostic Questionnaires 81© 2005 Corporate Executive Board
Creating an Agile IT Organization
Responsive IT Portfolio Prioritization
1. Has the IT organization developed an enterprise-standard business case template, including a set of standard cost and benefi t assumptions, to facilitate comparison of projects across all business units/regions/functions?
2. Does the business case require an estimation of total project costs, moving beyond initial purchase and implementation expenses to encompass future support, maintenance, and retirement costs?
3. Is the IT organization able to provide prioritization decision makers with detailed IT budget information, including the “keep-the-lights-on” costs of IT operations and the costs of ongoing project work?
4. Has the IT organization created a dedicated project-management offi ce to oversee the implementation of a standard project-management methodology and coordinate the collection and consolidation of project data?
5. Does the project-management offi ce manage the IT projectportfolio in addition to disseminating project-management expertise?
6. Has the IT organization identifi ed a subset of all projects, either on the basis of project cost, project size, or project impact across organizational silos, that will be subjected to greater project and portfolio management scrutiny?
7. Has the IT organization created a set of weighted project criteria to allow the objective comparison of projects with divergent business cases?
8. Does the IT organization provide regular (monthly or more frequent) reports on the status of critical project metrics, such as project scope, schedule, and cost?
9. Has the IT organization segmented the IT project portfolio, creating categories of projects with like business drivers and differentiating the metrics used to assess the value of projects in each?
10. Does the IT organization conduct a comprehensive project risk assessment, including project interdependencies and technological and organizational risks?
11. Does the IT organization supplement sponsor-generated business cases for major projects with a portfolio category–specifi c estimate of each project’s strategic value, including alignment with short- and long-term business strategy, reusability, and simplifi cation of end-user workfl ow?
12. Does the company audit IT projects for business case realization—comparing actual costs and business results with the original estimates included in the project proposal—to identify the root causes of variance and improve the accuracy of future estimates?
13. Are prioritization decisions made by a steering committee or board that includes senior-level representatives from IT and all affected business constituencies?
14. Has the IT organization consciously calibrated the frequency of prioritization activities to the pace of change in the company’s business environment?
Subtotal “Yes” _______
The following questions are intended to facilitate discussion between senior IT, line IT, and corporate business decision makers about the corporation’s progress toward creating an IT organization that is responsive to the business’s evolving needs.
Yes No Yes No
The CIO’s First 100 Days 82© 2005 Corporate Executive Board
Creating an Agile IT Organization (Continued)Rapid Resource Redeployment
15. Has the IT organization created an enterprise-wide IT skills directory to facilitate rapid identifi cation of staff and skills in the event project priorities change?
16. Has the IT organization put into place a fl exible staffi ng mechanism, e.g., a staffi ng pool, to facilitate rapid redeployment of staff toward new projects when priorities shift?
17. Has the IT organization put into place a dedicated group of resource managers to ensure the continued career development of staff who reside in the staffi ng pool?
18. Does the IT organization maintain standing relationships with a small set of strategic vendors in order to quickly source necessary staff and skills if they are not available within the company?
19. Has the IT organization created a mechanism, e.g., a funding pool, to fund off-cycle project demand in response to changing business strategies?
20. Has the IT organization developed a set of weighted, objective criteria to facilitate the dispersal of funds from this pool?
21. Are projects that receive funding through this mechanism subject to strict project-management discipline, including time-boxed project deliverables, project accounting, and process compliance audits?
22. Has the IT function put into place a project life-cycle process, included stage-gated funding for major projects and clear criteria for project cancellation at each life-cycle stage?
Subtotal “Yes” _______
Total “Yes” _______
Yes No Yes No
Diagnostic ScoresNumber of
“Yes” Answers Assessment
16–22 Agility Exemplar
11–15 Maturing IT Agility
7–10 Nascent IT Agility
1–6 Unresponsive IT Organization
Appendix III: Diagnostic Questionnaires 83© 2005 Corporate Executive Board
Disciplines for Enabling ROI Transparency and Accountability
Perfecting Large Project Execution Full Life-Cycle Cost Estimation
1. Do all IT projects above a given cost threshold follow a standard business case justification process that includes estimates of all project life-cycle costs and benefits?
2. Does the company regularly revisit the business case assumptions of large ongoing IT projects and require business sponsors to attest to their continued validity across the project development cycle?
Project Sponsor ROI Contracts
3. Do we incorporate business case assumptions of large IT projects into the budgets, performance targets, and bonus incentives of their business sponsors?
4. Are project business sponsors empowered and encouraged to proactively terminate projects for which there no longer remains a sound business case?
Ongoing Risk Scoring for Large Projects
5. Does the IT organization use objective criteria to periodically assess risks facing large IT projects to provide early warning for threats to benefits realization?
6. Do we have a mechanism for flagging the risks to IT projects arising from low engagement of business sponsors?
7. Do we have a mechanism for identifying the risks to IT projects arising from lack of clarity in the definition of business requirements?
Continuous Improvement Through Postmortem Assessments
8. Does the IT organization conduct post-implementation reviews measuring IT project execution success?
9. Are lessons from those IT project post-implementation reviews codified in a central “lessons-learned” database to improve future estimate accuracy and process execution?
“Rightsizing” Applications Maintenance CostsAlternative Cost/Functionality Scenarios
10. Does the IT organization proactively provide the business with IT project cost/functionality scenarios to help it choose between project alternatives?
Legacy Maintenance Cost-Reduction Campaigns
11. Has the IT organization conducted an applications inventory to determine potential opportunities for retiring redundant legacy systems?
12. Do project budgets for new systems development take into account the costs of replacing redundant systems slated for retirement?
13. Are maintenance resources prioritized based on an application’s business value, revenue impact, and geographic scope?
Objective Risk Segmentation for Applications Outsourcing
14. Has the organization explored opportunities to reduce maintenance expenses by shifting labor-intensive commodity maintenance work to lower-cost geographies?
15. Has the IT organization sequenced its outsourcing strategy to focus its initial efforts on the lowest-risk applications while it develops offshore management capabilities?
16. Has the company developed objective criteria to assess the risks and feasibility of outsourcing candidates?
Subtotal “Yes”
The CIO Executive Board offers the following diagnostic questionnaires to help its member CIOs assess the disciplines for enabling ROI transparency and accountability.
Yes No Yes No
The CIO’s First 100 Days 84© 2005 Corporate Executive Board
Achieving Infrastructure Cost TransparencyCustomer-Focused IT Product Catalogs
17. Are we able to calculate the unit costs of infrastructure products delivered so as to determine how consumption behaviors drive total costs?
18. Does the IT organization conduct periodic benchmarking of costs in order to determine competitive market prices for its services?
19. Do we have an IT product and service catalog that provides end users with plain-English descriptions of specific IT services and their cost drivers?
Collaborative Consumption Reviews
20. Has the organization created dedicated infrastructure “product managers” who help define and manage unit products to optimize consumption and spending levels?
21. Do IT representatives regularly meet with business unit management to spotlight variances in IT consumption and cost trends to identify potential avenues for optimization?
Disciplines for Enabling ROI Transparency and Accountability (Continued)
Subtotal “Yes”
Total “Yes”
Yes No Yes No
Diagnostic ScoresNumber of
“Yes” Answers Assessment
15–21 Culture of Continuous Cost Improvement
7–14 Developing Ethic of Cost Effi ciency
0–7 Uncoordinated Approach to Cost Effi ciency
Appendix III: Diagnostic Questionnaires 85© 2005 Corporate Executive Board
Diagnostic Scores
If four or more “No” answers, then adoption of an IT balanced scorecard may facilitate IT performance management at your organization.
Assessing the Need for an IT Balanced ScorecardThe following questions are intended to assist CIOs in diagnosing whether an IT balanced scorecard would be a useful addition to their current IT performance-management framework.
1. Can I clearly articulate the link between IT operational and project activities and the organization’s stated strategic business goals?
2. Is there a process or mechanism in place to track the impact on service levels and satisfaction of ongoing cost-efficiency efforts?
3. Can I describe the performance of the IT function in a concise, nontechnical, business-friendly fashion?
4. Can I effectively communicate the value that IT creates for the business?
5. Can I communicate a holistic perspective of IT performance consistently across various geographies and business units?
6. Can I easily compare the performance of my IT function to that of industry competitors or companies with similar geographic dispersion or scale?
7. Do IT performance-management meetings focus almost solely on discussions of metric comparability and validity rather than on making resource allocation decisions?
8. Do I have a sufficient understanding of the progress and status of ongoing IT project work to allow for corrective action if major projects are at risk for scope creep, budget overruns, or schedule delays?
Total “No” _______
Yes NoYes No
The CIO’s First 100 Days 86© 2005 Corporate Executive Board
Structuring the Scorecard
1. Does the IT balanced scorecard fit onto a single page (or screen)?
2. Are the IT balanced scorecard’s metrics devolved from the goals articulated in the IT strategic plan?
3. Are these metrics expressed in nontechnical language, allowing business decision makers to easily understand IT performance?
Selecting Scorecard Categories
4. Does the IT balanced scorecard supplement financial and operational metrics with categories that track project performance, user satisfaction, and talent management?
5. Does the IT balanced scorecard also include categories for information security?
6. Does the scorecard outline target levels for each metric that have been agreed upon by both senior IT and business leadership?
7. Are scorecard categories, metrics, and weightings revisited on an annual cycle to ensure continued relevance to changing business needs?
Selecting Scorecard Metrics
8. Do financial metrics move beyond simple reporting of total IT spend to help decision makers reallocate IT funding between functional areas, business units, and portfolio categories?
9. Are operational metrics aggregated to provide decision makers with a “user’s perspective” of IT performance?
10. Does the balanced scorecard’s project performance category include an assessment of compliance with enterprise architecture goals and contribution to corporate business strategies?
11. Do measures of customer satisfaction incorporate both end-user and executive perspectives on IT performance?
12. Do talent-management metrics focus on gauging staff satisfaction, external reputation of the IT organization, and other organizational attributes likely to make the company a destination for high-potential IT talent?
13. Does the balanced scorecard build awareness of information security issues by providing senior decision makers with an assessment of the organization’s vulnerability?
14. Are metrics designed to track IT’s contribution to major enterprise initiatives aggregated in a single scorecard category, allowing business sponsors to quickly assess IT’s level of support?
Designing and Maintaining a World-Class IT Balanced ScorecardTo assist member companies in the initial design and implementation of IT balanced scorecards, as well as the reevaluation of existing scorecards, the CIO Executive Board has created the following diagnostic questionnaire.
Subtotal “Yes” _______
Yes No Yes No
Appendix III: Diagnostic Questionnaires 87© 2005 Corporate Executive Board
Ensuring Data Accuracy and Relevance
15. Do all metrics have clear, well-documented definitions, agreed upon by senior IT and business leadership?
16. Does each IT balanced scorecard metric have a defined collection frequency (e.g., monthly, quarterly, annually) based on the volatility of the business strategy it helps enable?
17. Have all scorecard metrics been assigned to a metric owner whose compensation is based on his or her timely delivery of required data?
18. Is data accuracy verified by local metrics experts before data are published to the scorecard?
19. Does the IT balanced scorecard provide readers with the ability to drill down into the data underlying scorecard metrics?
20. Does the IT balanced scorecard provide readers with context for changes in performance (for example, historical reference data, external benchmarks, or metric owner comments)?
Facilitating Management Decision Making
21. Have business decision makers, metrics owners, and IT leaders received training on the basic concepts and uses of balanced scorecards?
22. Is the IT balanced scorecard reviewed on a regular basis by IT and business executives senior enough to make decisions based on scorecard information?
Subtotal “Yes” _______
Total “Yes” _______
Designing and Maintaining a World-Class IT Balanced Scorecard (Continued)
Yes No Yes No
Diagnostic ScoresNumber of
“Yes” Answers Assessment
17–22 Balanced Scorecard Exemplar
9–16 Developing IT Balanced Scorecard Competency
1–8 IT Balanced Scorecard Novice
The CIO’s First 100 Days 88© 2005 Corporate Executive Board
Enabling Strategic Management of External Suppliers
Part 1. Vendor ManagementCentralized Strategic Sourcing
1. Does the company have a centralized procurement and vendor-management team capable of creating enterprise-wide contracts to take advantage of purchasing and volume-based discounts?
2. Does the centralized procurement utility handle at least 70% of purchasing volume?
3. Has the company identifi ed a subset of its largest vendors as “preferred” providers that together represent at least 60% of enterprise-wide procurement spending?
4. Does the company have an intranet to communicateprocurement information to internal buyers such as contracting processes and approved technology standards?
Standardized Contracting Templates
5. Has the company created standardized contract templates including a list of terms and risk-mitigation clauses that it consistently tries to incorporate into all of its contracts?
6. Do at least 75% of deals rely on these standardizedtemplates?
End-to-End Asset Management
7. Has the company inventoried and incorporated all of its existing IT assets into a central database (includingitems such as servers, desktops, printers, cell phones,software licenses, etc.)?
8. Does the company have processes in place to ensure thatthe asset inventory remains current and refl ects changesfor Install, Move, Add, or Change of systems?
9. Does the company use the asset inventory to track thetotal cost of ownership of assets over their life cycle(including maintenance and integration) to informdecisions about retirement and replacement?
10. Does the company have the capability to identify andredeploy existing assets when a purchase request couldbe fulfi lled out of existing inventory?
Vendor Solvency Scanning
11. Are staff dedicated to performing ongoing due diligence (after the RFP process is fi nished) on vendors’ continued solvency to provide early-warning signs of potential fi nancial distress?
12. Does the company use this information to engage in“opportunistic renegotiation” with solvent vendorsfacing short-term fi nancial pressure?
13. Does the company have a process in place to “watchlist” at-risk vendors and develop proactive contingency plans and identify alternative providers?
Value-Based Vendor Segmentation
14. Has the company established objective criteria to determine which vendors are “strategic” based on measures of contract value or switching costs?
15. Does the company attempt to segment its vendor baseto focus ongoing relationship-management resources on vendors that provide the most strategic value?
The CIO Executive Board offers the following diagnostic questionnaires to help its member CIOs assess the strategic management of external suppliers.
Yes No Yes No
Subtotal “Yes” _______
Appendix III: Diagnostic Questionnaires 89© 2005 Corporate Executive Board
Metrics-Based Performance Scorecards
16. Has the company established predetermined metricsand service levels against which supplier performancewill be assessed on a regular schedule?
17. Do business unit and fi eld representatives provideregular feedback on vendor performance against thesemeasures to ensure that service quality is consistentand transparent across the organization?
18. Are the results of this “scorecard” communicatedinternally to buyers and externally to vendors to create a competitive internal market and direct future spending toward the top performers?
Part 2. Outsourcing RelationshipsReverse-Engineering Negotiation Targets
19. Has the company outlined clear cost-savings targets with which to measure the success or failure of an outsourcing deal?
20. Has the company retained standards setting and capabilities that provide competitive advantage?
21. Has the company achieved internal cost transparency of its current IT cost structure and spending drivers prior to consideration of an outsourcing partnership?
22. Does the company evaluate outsourcing bids based oninformed negotiation targets by reverse-engineeringactual supplier costs and comparing them with in-house alternatives?
Utility-Based Pricing Structures
23. Is the outsourcing contract denominated in terms ofunit-based prices that can be externally benchmarked,allowing continued comparison with competitive market prices?
24. Does the outsourcing contract stipulate that total fees will fl uctuate to directly refl ect the unit volume of services consumed?
Activist Oversight and Issue Resolution
25. Has the company created a dedicated team for vendor governance and performance management?
26. Are these relationship managers’ incentives tied to maximizing the outsourcer’s performance and minimizing relationship disputes?
27. When outsourcers underperform, do predetermined escalation procedures exist to correct that performance?
Closed-Loop Performance Improvement
28. Has the company identifi ed a subset of key service-level agreements to monitor on a monthly basis?
29. Does underperformance against one of these indicators launch a corrective action plan to solve underlying problems?
30. Are recommended performance improvements hardwired into the vendor’s de facto SLAs?
Enabling Strategic Management of External Suppliers (Continued)
Subtotal “Yes” _______
Total “Yes” _______
Yes No Yes No
Diagnostic ScoresNumber of
“Yes” Answers Assessment
21–30 Sourcing Management Exemplar
11–20 Sourcing Management Leader
1–10 Sourcing Management Laggard
The CIO’s First 100 Days 90© 2005 Corporate Executive Board
ORDER FORM The CIO’s First 100 Days and the following list of books referenced in this study are intended for broad dissemination among senior executives and management. Members are welcome to unlimited copies without charge. Online ordering is available at www.cio.executiveboard.com. Alternatively, you may call the Publications Department at +1-202-777-5921, e-mail your order to [email protected], or fax in the order form on these pages. Additionally, members interested in reviewing any of the CIO Executive Board’s past strategic research are encouraged to request a complete listing of our work by visiting our Web site at www.cio.executiveboard.com.
CIO Executive Board
Study Requested Quantity QuantityThe CIO’s First 100 Days Accelerating the Onboarding of Transitioning IT PrincipalsCATALOG NO.: CIO1387OQD
You may order an unlimited number of copies without additional charge.
Charting the Course for Principled IT Centralization Organizational Migration Paths to Responsive Scale in Corporate ITCATALOG NO.: CIO11U1M4X
You may order an unlimited number of copies without additional charge.
Achieving Responsive Scale Balancing Effi ciency with Responsiveness in Corporate ITCATALOG NO.: CIO11V7A7P
Emerging Management Strategy for IT Infrastructure A Briefi ng for Chief Information Offi cersCATALOG NO.: IEC12TE7SR
Calibrating the Partnership A Quantitative Analysis of the Drivers of IT–Business AlignmentCATALOG NO.: CIO12XCLET
Institutionalizing IT Cost Effi ciency Disciplines for Embedding ROI Transparency and AccountabilityCATALOG NO.: CIO113BL47
Case Studies in Enterprise Architecture Migration Self-Funding Architectures to Advance Corporate StrategyCATALOG NO.: CIO1DKGVL
IT Balanced Scorecards End-to-End Performance Measurement for the Corporate IT FunctionCATALOG NO.: CIO1L9VDH
Governance and Prioritization for Agile IT Organizations Practices to Inform Business Prioritization and Mobilization of IT Resources in Volatile Business EnvironmentsCATALOG NO.: CIO1SDK0T
Key Attributes of the World-Class IT Organization A Competency Diagnostic—Benchmark Results and User’s Guide CATALOG NO.: CIO12L397T
© 2005 Corporate Executive Board
Study Requested Quantity
Key Developments in the Applications Function 2004 Update for Chief Information Offi cersCATALOG NO.: AEC12QSHYC ____________
Strategic Vendor Management and Outsourcing Pioneering Practices to Maximize Value and Service Quality from External IT PartnersCATALOG NO.: CIO1SU1IT ____________
Strengthening the IT Leadership Bench Practices and Processes for Developing Next-Generation IT LeadersCATALOG NO.: CIO111KUV9 ____________
Name & Title __________________________________________
Institution __________________________________________
Address __________________________________________
__________________________________________
Telephone __________________________________________
E-Mail _______________________________________________
COPY AND FAX TO: CIO Executive Board+1-202-777-5822
ORDER FORM (CONTINUED)
CIO Executive Board2000 Pennsylvania Avenue NW
Washington, DC 20006Telephone: +1-202-777-5000www.cio.executiveboard.com
You may order an unlimited number of copies without additional charge.
CIO Executive Board
Order Form 91
The CIO’s First 100 Days 92© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
In-Person Research Presentations
Frequently Requested Presentations
1. Structural IT Cost Effi ciency: What tools and processes are CIOs using to achieve structural IT cost effi ciency?
2. Strategic Vendor Management: How are pioneering organizations managing IT vendor performance to maximize value and fl exibility?
3. Responsive IT Portfolio Prioritization: How are leading companies structuring and reprioritizing IT portfolios to ensure continued alignment with changing business strategies?
4. End-to-End Data Visibility: What technical and organizational innovations are exemplars using to enable end-to-end data visibility?
5. Rapid Resource Redeployment: How are CIOs enabling rapid resource redeployment in response to changing priorities?
6. Aligning IT with Corporate Strategy—Case Studies in Enterprise Architecture Migration: How are premier companies creating self-funding IT architectures that mirror and advance corporate strategy?
7. IT-Enabled Collaboration: What are the most effective uses of IT-enabled collaboration? How are exemplars deploying these tools to ensure effi ciency and maximize collaboration?
8. Deploying Enterprise Portals: What are the functional capabilities and IT requirements of “world-class” portals and enterprise information systems?
9. IT Strategic Planning Excellence: What are the leading practices for aligning corporate and IT priorities?
10. Customer Relationship Management: How are exemplars rescoping CRM initiatives for high-impact management of internal and external customers?
Formal ResearchPresentation
Facilitated ResearchDiscussion
Interactive WorkingSession
One-to-One Briefi ng
An in-person research briefi ng is an interactive session that members can use to spark internal discussion and debate around strategic issues the CIO Executive Board has researched. A senior research director will travel to a member’s location to present and discuss research fi ndings that are most relevant to member issues and challenges. This in-person research briefi ng service allows member CIOs to share CIO Executive Board case studies, practices, and insights with their staff and larger audiences within their organization.
Common Formats
Photo Credits: Digital Imagery® copyright 1999 PhotoDisc, Inc.
In-Person Research Presentations 93
The CIO’s First 100 Days 94© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
Project Support Desk
• Research resource for strategic IT staff, available free of charge
• Customized, member-initiated research projects
• Fast turnaround (overnight to three weeks)
• For ideation in strategic planning, data support, and qualitative benchmarking for business cases and budgets
• Not intended for technology assessment, benchmarking, or competitive research
To request a project, contact your relationship manager, send an e-mail to [email protected], or visit www.cio.executiveboard.com
Custom research for strategic IT staff, available (free) for the asking
As a complement to our ongoing research, members are encouraged to take advantage of the Project Support Desk. A free resource to assist senior IT staff with “work in the moment,” the Project Support Desk offers fast-turnaround research for business case preparation, strategic planning exercises, and budgeting. Members describe their project goals and time constraints and then decide what combination of literature search, fact retrieval, and networking contacts best suits their needs. In keeping with the CIO Executive Board’s charter, the Project Support Desk does not conduct competitive research, benchmarking, or vendor assessments.
What are job descriptions and career paths for “IT Centers of Excellence?”
What are the featuresof world-class, IT fi nance–reporting intranet sites?
What are the key vendor contracting trends impacting my peers?
What is the typical payback period for call center technology investments?
Project Support Desk
• Research resource for strategic IT staff, available free of charge
• Customized, member-initiated research projects
• Fast turnaround (overnight to three weeks)
• For ideation in strategic planning, data support, and qualitative benchmarking for business cases and budgets
• Not intended for technology assessment, benchmarking, or competitive research
To request a project, contact your relationship manager, send an e-mail to [email protected], or visit www.cio.executiveboard.com.
CIO Executive Board Project Support Desk
IT HR
IT Finance
IT Procurement
BU CIO
CIO Executive Board Project Support Desk 95
CIO1387OQD
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CIO Executive Board
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