Outorganize Your Competition: The Future of IT Organization

1. The end of the Traditional IT Organization or …. or how to “outorganize” the competition” Integrate2010, June 24th 2010 Marius Sluijters, VP Service Delivery m.sluijjters@quintgroup.com

2. Topics • Quint Wellington Redwood • Today’s IT/business environment • Organizing IT: History lessons • Organizing IT: Today’s organizational trends • The future of Business/IT- alignment: SGFtm and DSO • Questions & Discussion

3. Introducing Quint Wellington Redwood • Global independent management consulting firm specialized in IT related organizational challenges • Established in1992, based in 18 countries • 200 Consultants • Thought leadership and practice leadership in IT: • strategy • sourcing • service management • Creating business excellence by offering consultancy, education and measurement services • 15,000 people trained annually

4. Today’s Business/IT environmentUniversal trends/developments • Individualization • Globalization • Virtualization • And… at an ever increasing pace !

5. Today’s IT/business environment

6. What is your strategy? IN OUT Then a miracle occurs “Good work . . . but I think we need just a little more detail right here”

7. Organizing ITHistory lessons Centralize/ concentrate • Make or buy • Centralize or decentralize • Concentrate or deconcentrate • Professionalize • Commercialize Make Buy Decentralize/ deconcentrate

8. Holding IT DV 1 DV 2 DV n From the 70’s……Fully Centralized • Hidden organizations • Central systems/applications • Central decision making • Central budgets The introduction of the minicomputer !

9. Holding IT B 1 B 2 B n IT IT IT …. into the future …Federation • Collaborative IT organizations • Shared systems/applications • Group decision making • Dynamic budgets The Introduction of…..?

10. Organizing ITToday’s organizational trends Service Management Shared Services (Out)- sourcing

11. Today’s state of art: Service ManagementThe symbiosis of Business & IT The business is IT and IT is the business

12. IT Business availability performance level Delivered atagreed upon: cost business alignment required business services Today’s state of art: Service ManagementPutting the business back in the middle

13. Today’s state of art: Shared servicesProfessionalize, Share & Commercialize • Delivery and support costs are reduced in a shared services environment through: • Fewer, more productive staff; • Greater infrastructure and software standardization allowing more efficient purchasing; • Lower software licensing costs; • Reduced management overhead; • Quality is improved through: • Better service management processes (e.g. incident, change, configuration, service level management); • Faster response to change requests and incidents from single, centralised service support team.

14. Today’s state of art:Shared Services, current Professionalize Commercialize

15. Today’s state of art:Shared services, direction Professionalize Commercialize

16. Today’s state of art: OutsourcingThe solution ? • 53% Infrastructure • 17% IT helpdesk • 15% Application management • 15% Application development

17. Today’s state of art: OutsourcingOr the problem ? • 44 % of the IT outsourcing contracts are being renegotiated within a year; • 90% within 3 years. Profit outsourcer Buy into market

18. Manage suppliers • Ensure delivery of contracted (Quality of) services at contracted costs BundlingSupply • Manage definition and prioritization ofbusiness requirements and demands Bundlingdemand The future of IT business alignmentThe Sourcing Governance Framework Secure benefits Support Business Processes with IT

19. contracts Customer Supplier(s) Market best practices SGF interface interface benchmark Service delivery The future of IT/Business alignmentBasic SGFtm operation • A situation in which: • The customer organization has captured its IT demand • In contracts with selected IT suppliers • Who deliver IT services to the customer organization.

20. contracts Customer Supplier(s) Market best practices SGF interface interface benchmark Service delivery Elements ofSuccess • The 5 key elements of success are : • Right Services -The customer organization receives the IT services they need, functionally, technologically and financially • Right Suppliers - Services are obtained from the most capable suppliers, • Right Price - Service are obtained against best possible prices and conditions (in the market) • Right Contracts - Contracts fit services and situations in terms of contract duration, flexibility, KPI and management effort • Right Relationships - Stakeholder perception of services live up to (realistic) expectations

21. Supply Supply Supply The Future of IT/Business alignmentInnovating your IT organization Board Support IT Department Business A Demand Supplier A (via IT) Business B Supplier B (via IT) Business C External Direct supplier C

22. Supply Supply Supply The Future of IT/Business alignmentThe Demand Supply Organization Board Support Business A Demand Supplier A Business B Supplier B Business C External Direct Supplier C IT Department

23. The Future of IT/Business alignmentThe DSO based on SGF Business Demand Governance/DSO IS Supply Information Policy Architecture and Strategy IT Strategy Information policy Long term IT plan Architecture Compliance Business and IS Innovation HR and Financial Management Application innovation IT Infra innovation Financial Mgt HR IS Innovation Management Service Design Project Mgt Information Mgt Requirements Mgt Service Build & test Demand Management (service portfolio) Supply Management (Contract portfolio) Client Strategy Sourcing Strategy Serv.Portfolio Mgt Procurement Business and IS Support Application Mgt. IT infra Mgt Contract Mgt Relation Mgt Cost Control Service Level Mgt ASL Functional Mgt IS integration and control ITIL Service Delivery mgt Auditing

24. Implementing DSO: New Capabilities needed Profiles are different: • New type of activities: • Requirements management • Market analysis • Managing, not doing • Commercial and legal knowledge • More business-like relationships (with former colleagues) • Governance

25. 4 Clusters of Capabilities Organization and Management • Financial management, • Management of change, • Project- and program management • Knowledge of supplier markets • Auditing Business Knowledge • Knowledge of business strategy and business context • Knowledge and experience in business processes Sourcing • Relationship management • Procurement and negotiation skills, • Knowledge of and experience in contract management, • Result based management • Knowledge of supplier markets • Auditing Management of the Business interface and IT • Information and demand management • Business analysis and applications • IT standards en architecture • Knowledge of IT processes and IT security

26. The future of Business/IT alignmentBenefits of SGF & DSO • Financial • Economies of scale in IT procurement (5 to10%) • Organizational Efficiency (possible FTE reduction) • Bundled competencies and specialization result in better negotiation results • Control • Transparency of supplier performance and cost (can be a prerequisite for outsourcing to external suppliers) • Tight coupling of policy and execution through performance management • Auditable processes (compliance requirements) • Quality of service • Execution power in the realization of standardization policies • Critical test and clear specification of business demand • Bundled competencies and specialization result in adequate and focused supplier management

27. Discussion….. …. Questions

28. Thank you! Marius Sluijters VP Service Delivery m.sluijters@quintgroup.com