The CIO’s First 100 Days - kenstott.com - First 100 Days.pdf · Catalog No.: CIO1387OQD IT...

© 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

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.

*


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.


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)


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.


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


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.


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


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).


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)



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






I.


Proposition




II.






2



III.







IV.






(pp. 54–55)










1


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.


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.

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?



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.


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


Expectations Profiling Exercise

% %

%

%

%

%

%

%

%

%

%

%


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.


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


Project Support Desk


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.






I.


Proposition




II.






2



III.







IV.






(pp. 54–55)










1


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.


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.


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.


2


1

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


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


Key Attributes of the World-Class IT Organization: A Competency Diagnostic

CIO Executive Board


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.



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.



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.



1 2 3 4 5

Portfolio ManagementWe help the business prioritize projects using a defi ned set of objective, weighted criteria.



1 2 3 4 5

Value DemonstrationWe track metrics that demonstrate IT’s contribution to the achievement of desired business outcomes.



1 2 3 4 5

Performance ReportingWe provide regular reports tailored by channel and content for specifi c business and IT audiences.



1 2 3 4 5

Risk ManagementWe have created a principled framework for assessing relative risk and sequence risk mitigation investments accordingly.



1 2 3 4 5

Security Policies and Standards

We have defi ned andcommunicated a set of enterprise information security policies and standards.



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.



1 2 3 4 5

Availability ManagementWe ensure the availability of systems based on SLAs that consider business criticality.



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.



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.



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.



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.



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.



1 2 3 4 5

23

Community Seeding

Data and Knowledge Management

We provide the business with accurate, timely, and required information.



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.



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.



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.



1 2 3 4 5

Vendor SegmentationWe segment vendors based on contract value and strategic contribution and allocate management resources accordingly.



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.



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.



1 2 3 4 5

Project Management and Execution

We manage projects using a standard methodology to meet budget, scope, and schedule goals.



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.



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.



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


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


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


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=




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


Order Relevant Published Research: Strengthening the IT Leadership Bench (pp. 90–91)

*


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.

*


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.


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)


Creati

ng Le

ader

ship

Develo

pmen

t Plan

Inter

actin

g with

Peer

s

Meetin

g with

an Ex

ecuti

ve C

oach

Meetin

g with

a Men

tor

Feed

back

Amount

of Dec

ision-M

aking

Auth

ority

Turn

ing A

roun

d a St

rugg

ling B

usine

ss

Wor

king i

n New

Func

tiona

l Are

as

Wor

king i

n For

eign C

ountr

ies

Wor

king i

n New

Line

s of B

usine

ss

Laun

ching

New

Bus

inesse

s

Numbe

r of D

irect

Repo

rts

Qua

lity o

f Dire

ct Re

ports

Peop

le-Man

agem

ent S

kills C

ourse

s

Off-S

ite Se

minars

in Bu

sines

s Skill

s

Tech

nical

Skills

Cou

rses

Busin

ess S

kills C

ourse

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


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

*


III.











I.


Proposition




II.






2



IV.






(pp. 54–55)










1


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.


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.


Establish Governance Structure Around Future IT Investments: Establish an objective prioritization framework to ensure transparency around IT resource allocation.


Ensure Maximum User Absorption: Incorporate change-management strategies during project implementation to ensure maximum end-user adoption of IT projects.


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


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:


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


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


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


Gap: 0.57


Gap: 0.53


Gap: 0.49


Gap: 0.33

IT Effectiveness Rating

Business Partners’ Effectiveness Rating* BP = Business Partner.


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.


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


Visit Portfolio Management Resource Center at www.cio.executiveboard.com


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)






I.


Proposition




II.






2



III.







IV.






(pp. 54–55)










1


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.


Review Project Risks: Develop a detailed project-assessment framework to mitigate risks and prevent ROI degradation.


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 Review and Revision (p. 58)

Facilitating Scorecard Adoption (p. 59)

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)


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.


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


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.


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.



1 2 3 4 5

Demand ManagementWe manage user demand effectively to control total consumption volume.



1 2 3 4 5

Asset ManagementWe track and manage hardware and software assets deployed across the enterprise.



1 2 3 4 5

SourcingWe investigate and secure opportunities to leverage vendor effi ciencies for optimal scale and scope, both internally and externally.



1 2 3 4 5

Applications AlignmentOur processes ensure transfer of applications development knowledge to optimize the production environment and vice versa.



1 2 3 4 5

Global CoordinationWe manage globally distributed functional infrastructure with common goals and methodologies.



1 2 3 4 5

Business LinkageOur efforts are highly integrated into business processes and activities, making us a valued business partner.



1 2 3 4 5

Performance ReportingWe distribute concise, actionable performance reports to IT and business audiences on a timely, periodic basis.



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.



1 2 3 4 5

Resource AllocationWe actively use performance reports to inform fact-based decisions that optimize the cost-performance trade-off.



1 2 3 4 5

Infrastructure Systems Monitoring

Our automated performance monitoring systems enable us to quickly and effectively identify potential problems.



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.



1 2 3 4 5

AutomationWe continuously explore and exploit opportunities to automate manual infrastructure processes.



1 2 3 4 5

Change ManagementOur institutionalized change and confi guration processes minimize change-related problems and business user disruption.



1 2 3 4 5

Availability ManagementWe set and manage the availability requirements of IT systems based on business criticality.



1 2 3 4 5

Continuity ManagementWe develop and regularly test disaster recovery plans that ensure continuous support of core business processes.



1 2 3 4 5

Architectural StrategyOur architectural principles provide fl exibility while promoting standardization to minimize cost and complexity.



1 2 3 4 5

Emerging Technology Strategy

We use a consistent decision framework to continuously and proactively evaluate the adoption of emerging technologies.



1 2 3 4 5

Security ArchitectureWe perform risk audits across internal and external constituencies to identify gaps and prioritize security investments.



1 2 3 4 5

PrioritizationOur project prioritization framework is based on comprehensive, fact-based criteria and anticipates operational costs before deploying capital.



1 2 3 4 5

Risk MonitoringWe actively monitor risks in the supply base to avoid potential interruption in service delivery.



1 2 3 4 5

Process DisciplineWe ensure enterprise-wide use of repeatable, best-in-class processes to promote high quality service delivery.



1 2 3 4 5

Vendor SegmentationWe segment vendors based on defi ned criteria and allocate vendor management resources accordingly.



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.



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.



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


Objective

SourcingWe investigate and secure opportunities to leverage vendor effi ciencies for optimal scale and scope, both internally and externally



1 2 3 4 5

2. Performance Measurement and Management

3. Strategic Supplier Managem

ent


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.



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



1 2 3 4 5

8


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.



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.



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.



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 5

Requirements Prioritization

We evaluate and prioritize software functionality through a cascading analysis that quantifies impact on business processes and life-cycle costs.



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.



1 2 3 4 5

Architectural StrategyOur architectural principles provide flexibility while promoting simplification and reuse to minimize cost and complexity.



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.



1 2 3 4 5

EmergingTechnology Strategy

We use a consistent decision framework to continuously and proactively evaluate adoption of emerging technologies.



1 2 3 4 5

1098765432

Project Effort EstimationWe make accurate and justifiable project effort estimates, informed by consistent applications sizing criteria.



1 2 3 4 5

11

Developer ProductivityWe have an objective and robust measure of developer productivity.



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 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.



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.



1 2 3 4 5

23Vendor

CompetitionWe engineer cost efficiency by active competition across multiple vendors to maximize transparency regarding “market pricing”.



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.



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.



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.



1 2 3 4 5

DeploymentWe have a configuration management and release plan with clearly assigned tasks, responsibilities, and contingency plans.



1 2 3 4 5

Quality AssuranceWe follow a documented quality control process to discover defects and limit their occurrence.



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.



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.



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 5

Performance Management

We closely link compensation of senior Applications staff to desired outcomes such as business value and customer satisfaction.



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)


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



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)


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




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


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


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…


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





Infrastructure ServicesScorecard





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.


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)

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)


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


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*


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.

Appendix II: Vendor Management and Outsourcing 69© 2005 Corporate Executive Board

Desktop Inventory

Address:


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


Order Relevant Published Research: Strategic Vendor Management and Outsourcing (pp. 90–91)


Address:


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:


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.


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

*


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)

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


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”


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


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



15–20 Leadership Development Exemplar

8–14 Progressive Leadership Development Practitioner

0–7 Baseline Leadership Development Capability


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


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?


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” _______


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?


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


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?



Yes No Yes No



16–22 Agility Exemplar

11–15 Maturing IT Agility

7–10 Nascent IT Agility

1–6 Unresponsive IT Organization


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


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



15–21 Culture of Continuous Cost Improvement

7–14 Developing Ethic of Cost Effi ciency

0–7 Uncoordinated Approach to Cost Effi ciency


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


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.


Yes No Yes No


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?



Designing and Maintaining a World-Class IT Balanced Scorecard (Continued)

Yes No Yes No



17–22 Balanced Scorecard Exemplar

9–16 Developing IT Balanced Scorecard Competency

1–8 IT Balanced Scorecard Novice


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



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)



Yes No Yes No



21–30 Sourcing Management Exemplar

11–20 Sourcing Management Leader

1–10 Sourcing Management Laggard


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


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


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


CIO Executive Board

Order Form 91


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



• 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?


• 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

w w w . c i o . e x e c u t i v e b o a r d . c o m

CIO Executive Board

Corporate Executive Board2000 Pennsylvania Avenue NW

Washington, DC 20006Telephone: +1-202-777-5000

Fax: +1-202-777-5100

The Corporate Executive Board Company (UK) Ltd.Victoria House

Fourth Floor37–63 Southampton Row

Bloomsbury SquareLondon WC1B 4DR

United KingdomTelephone: +44-(0)20-7632-6000

Fax: +44-(0)20-7632-6001

The CIO’s First 100 Days - kenstott.com - First 100 Days.pdf · Catalog No.: CIO1387OQD IT...

Documents

Transcript of The CIO’s First 100 Days - kenstott.com - First 100 Days.pdf · Catalog No.: CIO1387OQD IT...