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META Report: The Business/IT Dating Game

Apr 22, 2002
By

Louis Boyle






META Trend: As the IT organization's role moves beyond efficiency to business effectiveness, CIOs will have four primary objectives in 2002: 1) inculcating value management into IT culture; 2) using IT portfolio management as a communication and investment vehicle; 3) developing human capital management processes that increase IT employee productivity; and 4) ensuring that core IT processes are singular, understood, consistent, and scalable. By 2004/05, 50% of IT groups will move beyond cost center status to dynamic planning, enterprise architecture development, IT asset management, and business relationship management.

www.metagroup.com


Our CIO research on three continents shows that business/IT alignment continues to be the top issue for CIOs. North American, European, and Australian CIOs' foremost focus is ensuring their IT organization is delivering bottom-line value to their line-of-business (LOB) and CEO customers. Although this issue has been a top-five CIO issue for the past decade, the alignment perspective (indeed, the definition of aligning IT with business) has evolved to a highly strategic business-value level versus the previously tactical, transactional level.

Leading IT organizations (<3% of the Global 2000 during 2003/04, growing to ~4% during 2005/06 and ~5% during 2006/07) measure their alignment in terms of net profit contribution (or cost avoidance) to the business, with their performance measurements coalescing up from business transaction efficiency support (50% of the G2000 during 2003/04, 63% during 2005/06, and 78% during 2006/07), through business process optimization, and finally to business value chain externalization and optimization. Implementing a formal business relationship management (BRM) process is key to achieving this evolution, as it forms the basis for measuring, communicating, and improving IT organization service levels, which then drive the optimization of the return on the organization's IT investment.

During 2002-04, successful IT organizations will achieve the first level of BRM maturity (the "outbound," proactive phase). Having progressed past the "inbound", reactive listening phase, this level is characterized by mature product/service catalogs, incorporating service levels and pricing options as they progress.

Phase 1: Internally Focused IT Organization
Leading CIOs have accelerated their value center recognition by following these BRM implementation phases and steps. Phase 1 gets relationship management recognized as a formal IT program designed as a listening vehicle. It seeks to understand the business needs of the IT group, to address problems, and to demonstrate a willingness to listen, react, and fix issues as defined from the IT client perspective. The CIO must sponsor this directly and chair the initial meetings (with the IT leadership team participating) that will:

1. Categorize users to most effectively focus initial relationship management efforts by balancing potential for success (user receptivity to the initiative) with areas of perceived maximum benefit (Pareto's 80%/20% law applies well here, as do platinum/gold/silver/bronze levels of IT resource allocation) and assigning IT group executive counterparts. The CIO should expect this to be achievable in the first meeting.

2. Identify the IT organization perspective on user key performance indicators (KPIs). This should begin with a manageable number (five or less). A good approach is to consider user expectations of IT as a basis for KPIs, then seek to confirm them as a basis for IT group performance improvement, as one of the agenda items in Step 3 below. This would be done by each relationship manager assigned by the IT group (usually IT executives at the outset), then reviewed and finalized in a group synthesis meeting chaired by the CIO.

Subsequent to the BRM kickoff meetings, the following Phase 1 activities must occur as the IT group progresses to the first maturity level:

3. Relationship building - Build initial trust in relationships via informal meetings between the clients and IT executives identified in Step 1 above. The concept needs to be introduced as one that benefits the client from the client's frame of reference and encourages additional communication. Although this is common sense, it is not always applied: positive first impressions are crucial to the successful implementation of BRM, as one large organization found to its great chagrin when the IT group tried to kick off BRM with an hour-long presentation of how good the IT shop was at providing outstanding service to the client; however, it was then frostily told about a number of significant problems it was not aware of, and summarily dismissed to go fix the problems! The CIO must be actively involved in client meetings, in defining and setting up the meetings and in ensuring appropriate follow-ups occur.

4. Communicate within the IT organization that the BRM initiative is underway, and develop a role-and-responsibility matrix to use as a communication tool, so that business analysts, developers, help desk colleagues, and those with relationship management duties clearly understand their role and how to deal with the gray areas of overlap that will inevitably occur. The CIO is the prime communicator in this step.

5. Ensure reactive problem resolution is in place via a friendly, courteous, responsive help desk that resolves issues and satisfactorily closes the loop with clients (as always, from the clients' perspective). Where necessary, the CIO will ensure that the help desk gets set up, that a problem management process is deployed (reactive at first, evolving toward proactive), and that feedback "closes the loop."

6. Basic customer satisfaction measurement and feedback will start at a basic level in this phase, creating a baseline from which to improve. Tools include customer satisfaction surveys as well as anecdotal, informal customer satisfaction measures (at the CIO level, this should include a measure of how many complaints and compliments are made directly to the CIO).

7. Begin IT performance reporting in this phase. Business-level reporting should be geared to the expectations documented in the first meetings of Step 3 and working from the baseline of Step 6.

8. Perform account management. The concept that sales professionals apply also applies here, as a simple account plan is developed - initially only for each major (platinum and gold) client identified in Step 1.

In a larger IT organization, the actual mechanics of Phase 1 will be delegated, typically within the planning group to start with. However, the CIO must be a very involved executive sponsor, including ensuring the success of the initiative by actively performing the role of primary IT organization relationship manager.

As evident from above, in most cases (very large IT shops excepted), Phase 1 of BRM will not require additional personnel, but rather focus current IT leadership staff on the additional, softer (creating and keeping IT clients happy, in addition to ensuring delivery of specific IT value) side of their roles and responsibilities. As the deployment of BRM matures through the initial six to nine months of Phase 1, its success, as described by the IT group's clients, will facilitate the approval of the additional resources required to run BRM full-time. Indeed, when one IT organization - which had achieved Phase 2 maturity - was required to cut costs in a companywide exercise, it initially targeted the relationship managers as part of the cuts. Their clients did not accept this, clearly stating and recognizing the benefits of BRM - paying the IT group the highest of compliments by offering to pay for the function out of their own budgets!

Business Impact: Relationship management, strategically implemented and executed, ensures that the IT organization is aligned with key stakeholders' business needs, thus optimizing the return on the IT investment.

Bottom Line: Savvy CIOs will accelerate the evolution of their IT organization to a business value center by applying a structured approach to building the business relationship management function.

IT research and consulting firm Meta Group is based in Stamford, Conn. For more information go to www.MetaGroup.com.


 

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