IT or digital capability on your Board or governing group. Do you need it? Why?

By Mark Nicholls, Partner, Information Professionals
 
Considering whether you need information technology (IT) or digital capability on your Board? Then the first question to ask yourself is why.
 
It’s interesting how views have changed in just a few years. Take the Australian Institute of Company Directors (AICD) over the past five years. Each year, the AICD runs their Essential Director briefing and produces the Essential Director Handbook.  This is a useful gauge of where the peak body sees the role of IT/digital.
 
Alan Cameron, NSW Law Reform Commission

When presenting the 2013 Essential Director briefing, at the Wesley Conference Centre in Sydney, Alan Cameron said: “IT is now such a critical issue that failure to monitor and govern it properly is likely to be a failure of the director’s basic duty of care and diligence”.

 
He reflected on his own perspectives, stating that when the Essential Director handbook was first drafted, he considered removing the IT matters from it.  On further consideration, he accepted that many IT issues confront all directors, not just those of IT organisations.
 
2013 was the first year where IT/digital was covered.  Since then this trend is demonstrated by the IT/digital topics covered within the Essential Director Handbooks.  Let’s take a look:
 
Year
Total Pages
Dedicated to IT/Digital
Pages
%
2013
51pp
5.5pp
11%
2014
48pp
8.5pp
18%
2015
38pp
8 pp
21%
2016
39pp
6 pp
15%
 
In this past year, the % seems to have plateaued.  However, I will be interested to see where it lands in 2017 given the increased focus on digital both as a disruptor and an opportunity.  It is certainly now clear that IT/digital is firmly a key issue that should be continually addressed as part of a Board’s governance and strategy role.
 
IT management meeting

However, one objection has been stated by some very experienced Directors. It is that bringing in “special” skills like IT onto a Board comes at the cost of “traditional” skills, like being able to read financials or understand risks.  In my opinion, this view is a little misplaced for a few reasons.  Firstly, it sounds like they may have experienced a less than optimal Director appointment process. Perhaps there was a requirement to populate the Board with only a relatively narrow range of capabilities and without sufficient diversity. That can happen.  Not having the minimum mandatory skills to be a Board member should never be sacrificed, and shouldn’t have to be. However, the ideal Board composition should contain enough diversity of skills and backgrounds to adequately address all the challenges that the organisation faces, and of course this should include IT. There are many capable people out there that have the basic competency requirements as well as that of ICT/digital.

 
Secondly, there is an error in thinking that an understanding and appreciation of IT/digital is a specialist skill.  It is not.  It is a new general skill for all managers and directors.  I am old enough to remember a time when some senior executives and managers had trouble reading a set of financial statements, leaving such an understanding to the “bean counters”.  These days this attitude would be rare.  Today, financial literacy is an accepted general skill.  I would argue that the same evolution is underway with IT/digital.
 
If you need any more convincing, and I am sure most of you don’t, ask yourself these questions… who are the global leaders in:

Bookselling, then publishing then retailing and more………………..Amazon
Video entertainment………………………………………………….Netflix
Music entertainment………………………………….iTunes, Spotify and Pandora
Movie production ……..……………………….. Pixar (bought by Disney)
Photography…………….…….Apple, Samsung plus Shutterfly, Snapfish and Flickr
Advertising…………………………………………………………Google
Direct marketing ……………………………………………….Google, Groupon
Telco……………………………………………..………………….Skype
Recruitment Company ….………….…………………………..LinkedIn
Taxi/Personal transport……………………………………………Uber
Accommodation………………..………………………………..AirBNB
News media…..…………………………………….Google, Facebook, Apple
 
Each of these are leaders in a marketplace that used to be a physical marketplace, that is now largely a digital marketplace and they have leading IT capability to support them. 
 
If you accept the need for improved managed IT services capability on your Board, then the next question is, in which areas and how.  There are a few methods that are available to you to make these determinations.  We’ll cover that in an upcoming blog.
About the Author:Mark Nicholls, Managing Director, InformProsMark Nicholls is the Managing Director and a Partner with Information Professionals Group (IPG). He formed IPG in 2005, after a career of delivering software development and business transformation programs in the telecommunications, transport and government sectors in Australia and overseas including the United States.  Mark leads IPG’s Programs, Projects and Change Practice.  He is a highly skilled program manager and adviser, specialised in leading, managing and advising organisations on the delivery of ICT, digital and business transformation.  

Mark is an active industry participant. In 2013 he was elected to the QLD Council of the Australian Information Industries Association (AIIA), was appointed as Chair in 2014 and to the Board of Directors in 2015.

MYO IT – Building an IT organisation

By Tony Welsh, Associate Partner, Information Professionals

Imagine the excitement of starting again, no baggage, and building a new (or improved) IT organisation; Of being able to build the business from the ground up and manage the business of IT properly from the outset. A scenario like this offers immense opportunities but also prompts so many questions:

InformPros business transformation strategy
  • Is there a legacy to inherit or is it Greenfield?
  • Will we be a service provider? A service broker? A smart buyer? Or a mixture of each?
  • Will we do IT ourselves or get someone else to do IT for us? Which bits?
  • What will be our customer value proposition? How will we stay relevant?
  • Will we be on premise or in the cloud? In full or in part?
  • What capabilities will we need? Where are the gaps?


That’s a lot of questions and I’m only scratching the surface! So let’s take the opportunity to explore some of these issues and also some of the tools that might help us answer the questions. We’ll also consider IT operating models and industry frameworks and standards in an attempt to shine some light on the topic.

Contemplating an IT operating model?

When it comes to ICT management there appears to have been recent interest in filling the apparent void of IT standards and practices. For many who thought that the established frameworks such as COBIT® (by ISACA), TOGAF® (by The Open Group) and ITIL® (by Axelos), already filled that void, the news may come as a bit of a shock. 

The most notable new kids on the block include IT4ITTM (the recent offering from The Open Group) and Technology Business Management (TBM) headed by the TBM Council. In addition let’s throw into the mix a commercial take on ‘Enabling IT as a Service’ from a major IT service provider.

These new players seem to be concerned mostly with managing the business of IT or running IT as a business. Equally, both seem to be focused on emphasising the value of IT and showcase progressive approaches to IT such as brokering services, cloud, IT as a Service, DevOps etc. Both approaches are also ‘data-driven’ which resonates with me from my days in the eighties with LBMS in London who took a data-driven approach to its SSADM and LSDM development methodologies. Both approaches are agile-friendly.

Whilst other methods and frameworks have introduced standards for many of the processes in IT, (enterprise architecture, strategic alignment and governance, security, applications development, program, portfolio and project management, operations and support etc.), it is fair to say that for too long IT Managers, CIOs and CTOs have been left to link those standards together in the best manner they can. This has revealed some gaps.

Let’s consider the new players

IT4ITTM provides a Standard Reference Architecture for IT. This comprises an IT Value Chain plus service, information, functional and integration pillars. The IT value chain is based on the work of Michael Porter and it comprises four value streams being:

1. Strategy to Portfolio (S2P)
2. Requirements to Deploy (R2D)
3. Request to Fulfil (R2F)
4. Detect to Correct (D2C)


The primary value streams in the IT Value Chain are underpinned by five supporting activities. IT4IT models the functions that IT performs to help organisations identify the activities that contribute to business competitiveness.

Now let’s look at what TBM has to offer. TBM essentially defines the organisational elements, disciplines and value conversations of an effective TBM program.



Its apparent focus is (to a large extent) on the cost and value of IT. This includes:

1. Run the Business
    – Cost of Performance
    – Business Aligned Portfolio

2. Change the Business
    – Investment in innovation
    – Enterprise Agility

TBM uses ‘value conversations’ across all of these as well as four core disciplines – Create transparency, Deliver value for money, Shape business demand, and Plan and govern – to help run and change the business. These were certainly second nature to me as an ex-CIO.

Creating an IT operating model

In CISCO’s white paper ‘IT Transformation with Cisco’, they describe ‘Creating an operating model that enables IT as a service’. Email me for a copy of the white paper!

This diagram depicts the ‘Capabilities of a transformed IT organisation’.


Most noticeable is the resemblance between the IT4ITTM Value Chain and the Cisco Capabilities Model above. This suggests some element of synergy, intentionally or otherwise.

So which is the best framework?

To give a practical example it’s worth referring to a presentation on ‘How Shell IT manages data to bend the cost curve’. This is a case study of TBM presented by Shell’s IT4ITTM Team on the TBM Council website. They claim to have achieved a 20% cost reduction in applications run costs. As Shell is one of the principle architects and proponents of IT4ITTM this provides a good indication of how the two approaches might complement each other.

It is most likely that IT4ITTM represents a more extensive and comprehensive IT Management framework whereas TBM offers a richer coverage of specific features and disciplines. The latter would appear to be particularly true in relation to cost containment, business value and portfolio management. COBIT® v5 combined with Val IT (Business Value of IT) clearly offers additional perspective on those topics covered by TBM.

The short answer is to apply the best horse to suit the course you’ve set about travelling. If you’re specifically looking at cost containment or value management initiatives then the best short term approach will most likely involve TBM. If on the other hand what you crave is end to end IT service management and execution, then IT4ITTM would provide a more prescriptive platform.

Although these frameworks have been around (at least in part) over a few years, this does make them relatively immature when compared with COBIT® (v5) and TOGAF® (V9.1). At the same time, both IT4ITTM and TBM are heavily supported (and developed) by a range of significant industry leaders. Hence they are worthy of significant attention. In an industry that has long suffered the consequences of inadequate standards, it is reassuring to know that we (IT Professionals) may finally be headed towards the same standing that is enjoyed by the likes of HR and Finance practitioners.

IT operating model and organisation structure

The following diagram is an example of another IT operating model. It was designed for a client to respond to the internal and external drivers in their industry.


It generally reflects similar elements to the Cisco model, that is, strategy and planning, governance, IT solutions (i.e. service design and development), IT operations and client services (i.e. support). In addition, its features include Agile Development, Bimodal IT, I/S/PaaS and DevOps. Various frameworks and methodologies have been overlayed including COBIT®, TOGAF®, ITIL® and Prince2 (by Axelos).

It’s also worth introducing Gartner’s IS Lite and IS Lean models at this stage:


Over many years I have applied Gartner’s Lite and Lean models to assist in identifying the most appropriate allocation of capabilities to both in-house and outsourced IT organisations. This knowledge is a critical ingredient in building effective and efficient IT business models and structures.

With all of these models available, the task of designing an appropriate business model for your organisations should be relatively straight forward.

What’s the final step? 

Moving from business model, through macro and then micro structure design, is the last step before such things as job specifications, recruitment and so on. The challenge is to try to maintain the integrity of the underlying business model when building the structure. For example, a structure based upon the four IT4ITTM value streams might well be considered. However, an alternative functional structure might better suit the particular circumstances. The level of IT4ITTM maturity may also be a factor.

So what can we take away from this?

In order to build your IT organisation (MYO IT) you need to:

1. Understand the internal and external drivers for your IT business.
2. Contemplate your customer value proposition.
3. Initiate a change management process.
4. Identify your target capability profile and any gaps (See Gartner’s IS Lite and IS Lean).
5. Design your IT operating model (see IT4ITTM, TBM, Cisco and Client models).
6. Design your macro and micro organisation structure.
7. Complete role descriptions, sizing etc.
8. Build your core IT team.
9. Procure your partners.
10. Complete the change management process.

Now you’re ready to start!


About the Author:

Tony Welsh is an Associate Partner with Information Professionals where he leads their Strategic ICT Practice. He has over 30 years’ ICT experience gained in the United Kingdom, New Zealand and Australia. Over half of that time has been spent working as a CIO for large and diverse organisations. In particular he’s been engaged in ICT strategic planning for organisations including a rural fire service, a union, a large government rail organisation and two large city councils.

He led a team of consultants in developing an IT Sourcing Strategy for a large health organisation and he’s designed IT operating models and IT organisation structures for water and electricity utilities and higher education organisations. Tony is a Certified IT4ITTM Professional.