The Business of IT - Part 3

By Mark Johnson

In the last edition of the newsletter I addressed the first three items from the list below, originally published in an article that ran in the newsletter entitled “The Business of IT.”

1. Overall, how well do you believe your IT business is run?
2. Do you have a multi-year, integrated strategic plan that guides investment, mission planning, and execution for IT?
3. Does this plan include strategies for cost optimization, including globalization, consolidation and virtualization?
4. Do you have clearly documented technology architecture and standards for the products and services you provide?
5. Do you have marketing, sales, and customer service functions to engage with your internal customers?
6. Do you have a formal manufacturing resource planning and control framework managing and controlling the software and technology acquisition, deployment, and production operation of IT?
7. Do you have a robust quality assurance function to ensure the highest quality in the products and services you provide?
8. Do you have formal service contracts that codify the service level expectations of your internal customers providing a standard against IT performance that can be measured?
9. Do you have a robust process for ensuring that your hardware, software, and services providers are contracted with you in a way that enhances the success of overall mission execution?
10. Do you have a robust information security and awareness framework to ensure protection of your enterprise’s information assets and intellectual property?

In that article, I asserted that well run IT departments function like a service business whose customers are internal to the enterprise. In fact, I went on record as saying that “IT may well be the most important service partner with which your enterprise contracts.” This is because without IT, your enterprise simply could not function. The more agile, flexible, resilient, and responsive your company’s IT organization is, the greater enablement your company will experience as it evolves its customer, product, and marketing strategies to generate value for its stakeholders.

At Taos we believe that today’s IT plays an increasingly critical role in the ability of the enterprise to successfully participate in the global economy of the 21st century. It is no wonder then that the job of the CIO is so demanding.

In this article I continue the series addressing items 4, 5, and 6 from the preceding list.

4. Do you have clearly documented technology architecture and standards for the products and services you provide?

In any business, it is important to understand the business model, manufacturing equipment, and processes necessary to enable the business to operate efficiently. IT is no different. In fact, for many organizations, the investment in information technology facilities, hardware, software, and tools represents one of the largest investments they will make outside of real estate.

Having a well-understood and documented enterprise architecture is critical to cost-effectively managing the IT infrastructure of the enterprise over time. The Information Technology Architecture of the enterprise is akin to the blueprint for a high-rise building. One would never undertake to construct a 20 story high rise without first creating a comprehensive set of blueprints and standards as the starting point. Yet organizations routinely invest tens of millions of dollars on IT “construction” projects (over 70% of which fail) without requiring a clearly defined and validated set of architectural blueprints and standards.

I have built world class enterprise architectures using the John Zachman Framework for Enterprise Architecture. The following diagram depicts Zachman’s Framework:

Zachman Framework for Enterprise Architecture
Order	Layer	What (Data)	How (Function)	Where (Network)	Who (People)	When (Time)	Why (Motivation)
1	Scope Planner	List of the things important to the business	List of processes the business performs	List of locations in which the business operates	List of the organizations important to the business	List of events significant to the business	List of business goals/strategies
2	Enterprise Model Owner	e.g., Semantic or Entity-relationship Model	e.g., Business Process Model	e.g., Business Logistics System	e.g., Work Flow Model	e.g., Master Schedule	e.g., Business Plan
3	System Model Designer	e.g., Logical Data Model	e.g., Applications Architecture	e.g., Distributed System Architecture	e.g., Human Interface Architecture	e.g., Processing Structure	e.g., Business Rule Model
4	Technology Model Builder	e.g., Physical Data Model	e.g., System Design	e.g., Technology Architecture	e.g., Presentation Architecture	e.g., Control Structure	e.g., Rule Design
5	Detailed Representations Implementer	e.g., Data Defination	e.g., Program	e.g. Network Architecture	e.g., Security Architecture	e.g., Timing Definition	e.g., Rule Specification
6	Functioning Enterprise Worker	e.g., Data	e.g., Function	e.g., Network	e.g., Organization	e.g., Schedule	e.g., Strategy

The Zachman Framework offers an architectural frame within which various representations (blueprints) of the elements of the IT infrastructure can be represented. The vertical axis (rows) defines the following levels (or layers) of abstraction of the functioning enterprise (represented on the bottom orange row) as follows:

1. Scope (Conceptual)
2. Enterprise Model (Conceptual)
3. System Model (Logical)
4. Technology Model (Physical)
5. Detailed Representations (Out of Context / Physical)
6. Functioning Enterprise (Physical)

The horizontal axis (columns) in the matrix (from right to left) identify the critical categories of the business and IT architecture as follows:

1. Motivation
2. Time
3. People
4. Network
5. Function (Process)
6. Data

Row/Column intersections of the framework, for example System Model/Function, identify the type of model-based representation that should be produced as a blueprint, in this case, the business process model.

As a meta-model, the Zachman Framework for Enterprise Architecture has stood the test of time. In 1987, John Zachman wrote "To keep the business from dis-integrating, the concept of information systems architecture is becoming less of an option and more of a necessity." 20 years later, this statement could not be truer. As a reference framework, your organization can leverage the Zachman Framework to ensure that robust architectural representations of the critical elements of your organization’s IT infrastructure are rationalized and standardized to ensure manageability and cost effectiveness over time. Visit The Zachman Institute for Framework Advancement, for more information about the Zachman Framework for enterprise architecture.

A comprehensive IT plan must take into account the following areas:

1. Business Demand Management
2. Application Architecture
3. Enterprise Architecture
4. Enterprise Strategy and Master Planning
5. Program and Portfolio Management
6. Value Management
7. Release Management

Now, it should go without saying that establishment of a robust architectural representation of your company’s Information Technology infrastructure requires an investment in skilled resources, and may well represent a fundamental change in the culture of your IT organization. Achieving the same is no small task, and will require strong, engaged, leadership.

If you are on the outside looking in to this critical aspect of IT success we strongly suggest you engage with a consultancy that can help you cost-effectively introduce this foundational element of your company’s IT department without disrupting your current business operations. It will be time and money well spent.

5. Do you have marketing, sales, and customer service functions to engage with your internal customers?

I know you will agree that these functions are essential for every business. As it is commonly said, sales is the engine that drives the business. Marketing (and Public Relations) provide critical messaging services to make customers (and prospective customers) aware of the high quality products and services available from the business.

In every business, these functions play a critical role in sustaining the business. They provide for the identification and intake of new business and customers, and ensure that existing customers remain satisfied by enabling high quality proactive and reactive customer touch points. To enable these functions, most businesses employ some sort of CRM (customer relationship management) automation system.

When IT is run like a business, these customer-facing functions are present with well-defined processes, integrated tools, and most importantly, IT personnel aligned with the goals of the business which will manage functions such as:

1. Business Engagement Management
2. Demand Management and Work Intake
3. IT Governance

In addition, well run IT shops understand the value of proactive targeted communication that promotes the value of IT contributions to business success, drive awareness, and provide helpful tips and tricks for getting maximum value out of the IT resources available to the business.

To enable this function, human resources must be allocated. In many IT organizations these resources can be found in the IT Service (or Help) Desk, Business Engagement Managers, and the like. Leading organizations may even have an IT Business Office wherein these resources report, along with a Portfolio or Program Management Office. At the end of the day, well run IT organizations recognize that the customer is king, that IT exists to serve the internal customer, and that IT must focus on excellence in customer service.

6. Do you have a formal manufacturing resource planning and control framework managing and controlling the software and technology acquisition, deployment, and production operation of IT?

Supply Chain Management and that ugly acronym – MRP. These functions are critical to the overall success of every business, and IT is no exception. Mature IT organizations have made a science out of the following three functions:

1. Supply Chain Management (Vendor Management, Human Capital Acquisition, Global Sourcing)
2. Portfolio & Project Management
3. Resource Allocation & Utilization Management

It is impossible to run a business well without the ability to manage the supply chain and manufacturing resources, and optimize the two together. Yet how many of you can say that you are on top of these aspects of your operation? Be honest.

Your level of success with these functions will determine, in large measure, the predictability of your organization’s ability to deliver. Make no mistake, a business that fails to deliver will find itself out of business or under new management before long.

When you think about it, without contracts IT cannot effectively exist. That’s why Vendor Management (which includes contract negotiation) must be a science. Well-negotiated contracts and tight vendor management for everything from hardware to software, maintenance and support, labor, managed services, and telecommunications services are all essential to overall IT mission success. This includes cost optimization. In addition, the ability to rapidly identify, recruit, hire, board, and ramp new resources (both contract and full-time employees) is an essential ingredient in your organization’s ability to meet customer demand while sustaining day-to-day operations.

The degree to which your leadership team has control over the allocation and utilization of the organization’s manufacturing and operations resources will predict the degree to which your organization will meet or exceed customer expectations. At the end of the day, the degree to which your organization meets or exceeds customer expectations will have a direct impact on the longevity of your role as CIO in that business, period.

While tools are critical in this important area, it is equally important to keep in mind that you must foster a culture of operational excellence to generate a return on your tool investments. Tools alone will not solve the problem. Establishing clear processes and getting them adopted in the organization is the secret to success (on the subject of adoption, I will write an entire article in an upcoming newsletter).

Success in this area will require strong leadership, because at the end of the day, your staff will have to keep track of and report their time. That’s right: well run IT organizations of any size have implemented some sort of time accounting process and system.

Conclusion

In this installment we have looked at three critical areas Architecture, Marketing/Sales/Customer Service, and Supply Chain/MRP. These functions are at the core of all businesses and the better organized and efficient they are the greater level of success the business will experience in the marketplace.

In the case of the internal IT service business, the department that you lead, these customer-facing and internally operating functions are going to be key to your success. If you found yourself wondering how these functions are being performed in your organization, you’ve got a problem that requires immediate attention.

That’s it for this installment! I hope you’ve found these insights useful. Feel free to drop me a line to share your thoughts. In the next issue, I will complete this series by elucidating items number 7 – 10 in the list at the top of this article. Until then, I recommend that you get started planning the changes necessary in the areas outlined in this article to enhance the performance and value of your IT business!

Cheers,

Mark Johnson
VP Strategy & Customer Solutions