What is World Class IT?

January 25, 2019
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Metis Strategy’s World Class IT Assessment provides a holistic perspective of companies’ IT performance, evaluates where the greatest sources of value and risk exposure lie and identifies areas for improvement specific to the IT organization. Offering an analysis based on five principles and 33 sub-principles, our methodology has enabled the IT departments of various Fortune 500 companies to implement organizational change, improve strategic planning and development and assume increasingly valuable roles in supporting - and even defining - their companies’ overall business strategy.

Principle 1: People

The first of the five World Class IT principles – People – focuses on the recruitment, training and retention of employees, to ensure that an IT department is staffed by top-tier talent and delivers excellent performance. This principle looks at multiple areas of assessment for a company’s IT department.

The first area is about inventorying existing skills. What do you know about your IT department’s skills base? Does your company’s IT department have people with the right skills (technical, management, business or other) for the job? In order to efficiently allocate talent or determine what skill gaps exist, companies need to understand the skills that existing employees have and document them in a manner that allows employees to assess themselves against the defined skills base, as well as determine which abilities they should build on. Subsequently, workforce planning should be aligned to the insights or findings from the skills inventory. Within your IT workforce, which skills should be prioritized when recruiting new talent? What does the direction of the company suggest in terms of IT skills that will be necessary? After understanding the existing skills base, it is essential for IT leaders to consider which skill sets will become increasingly important in the future, which skills gaps need to be filled and what  abilities the broader company may value most.

However, like technology, skills can quickly become outdated. Having a structured and thoughtful recruiting approach is vital for an IT department to truly become world-class, as new talent can offer diverse skill sets or fresh perspectives, revitalize existing processes and thinking. Investing in the right people, with the right skills, early on ensures that your IT department has a strong foundational talent base.

Other aspects of the “People” principle – if executed well – will also help your IT department move towards being a world-class place to work. For instance, it is crucial to clarify roles and responsibilities for employees that have various skill sets and of different levels across the IT department, as it can make it easier for employees to succeed in their daily jobs. Moreover, clearly delineating roles and responsibilities helps mitigate redundancies in teams, reduces employee frustration and improves working relationships. In turn, this allows employee performance evaluations to be more easily conducted. Performance evaluations for employees should be prioritized by management, as well as be detailed and constructive. A streamlined, helpful evaluations process can go a long way in nurturing and retaining key talent at every level of the IT department – talent that could play a fundamental role in the future of the company.

Another area that underpins the “People” principle is employee compensation and recognition. Understanding employees’ preferences for recognition and compensation helps enhance employee satisfaction and in turn, their tenure. Additionally, across many industries, IT employees are often overlooked compared to their business counterparts, as they are approached only when technical issues arise. Recognizing and compensating high performers in appropriate ways, as well as emphasizing the relevance that IT’s work has on the business, can incentivize IT employees to go above and beyond in their roles. Career planning – which is heavily related to employee recognition and compensation – is an area which IT leaders should focus on as well. Establishing clear technical and managerial tracks through which IT employees can progress, as well as providing employees with a support structure, will give IT employees the opportunity to define their career goals and motivate them to perform better.

Furthermore, although regarded as difficult to assess, the culture and work environment within your company’s IT department can significantly impact employee happiness and the department’s overall performance. Understanding the existing culture and identifying gaps that need to be filled, followed by implementing positive cultural changes can greatly improve the perception that other business divisions have of IT, as well as facilitate closer collaboration between IT and these other divisions.

In addition to the areas mentioned above, training is vital to how new employees are introduced to the IT organization, how skills are acquired and how practices are shared more broadly. How is training currently conducted in your company’s IT department and how can it be transformed? IT leaders should consider these questions when designing or implementing training, so that training for employees that is up-to-date, engaging and flexible, thereby ensuring that IT employees – both new and existing – are equipped with the necessary skills and knowledge to succeed. Finally, as your company’s IT department continues to evolve, it is essential for IT leaders to think about what the department’s retention strategy should be. A culture of merit-based advancement can help maintain those employees that are looking to develop a career and attract new talent for a truly World Class IT department.  

Principle 2: Infrastructure

Infrastructure – which consists of IT hardware, software, data, components, systems applications and the service desks supporting them – is crucial to the day-to-day operations of the IT department, as well as those of the broader company’s Not only is it imperative to have an efficient, well-managed and highly available IT infrastructure, but it is key for IT to be able to translate infrastructure-related jargon into terms that can be easily understood by IT’s business partners. As such, we assess the robustness of our clients’ IT infrastructure on several elements, which we elaborate on below.

Much like Principle 1 (People), the first element of the “Infrastructure” principle involves understanding your company’s existing IT infrastructure, by creating an infrastructure roadmap that displays various components in order of business importance. This exercise can provide the IT department with a comprehensive view of existing tools and technology, help IT understand the components for which maintenance and protection should be prioritized and enable IT leaders to determine a strategy for future investments in infrastructure. A roadmap can also help with efforts to maximize systems’ up-time — another key element of this principle. As systems up-time is directly correlated to business productivity and revenue gain/loss, IT departments should engage in root cause analysis (RCA) when encountering system issues. Moreover, IT leaders should consider the different systems’ criticality to business operations – how can up-time be maximized in a way that is resource and time-efficient? These approaches to issue resolution will allow employees to apply fixes that truly address systemic problems and minimize technical risk to the business.

Overall infrastructure health is, of course, critical to business productivity and revenue attainment as well. Regularly scheduling maintenance and upgrades for all major aspects of infrastructure is a must for any world-class IT department to optimize performance. Additionally, maintenance planning should be based on criteria such as system age, reliability and cost of replacement. This list is not exhaustive, but is a good start to monitoring the status and stability of existing infrastructure. With that, IT leaders should plan to retire and replace infrastructure when appropriate and needed. Incorporating infrastructure lifespan into the IT department’s roadmapping and budgeting process at an early stage can help IT leaders plan for, as well as acquire, replacements on schedule. In turn, this mitigates the risk of a system failure or any interruption to business activities.

Nowadays, another increasingly important element of concern is infrastructure and information security. In addition to conventional physical security practices, a growing number of companies are proactively adopting cybersecurity measures, as well as revisiting existing security practices. Legislation such as the General Data Protection Regulation (GDPR) in 2018 have heightened the sensitivity of issues such as consumer data privacy. Given the wide range of potential threats to security – such as natural disaster, network attacks, viruses, fraud, espionage, data portability etc. – it is crucial for organizations to have a designated team or individual (such as a CISO) whose responsibilities are completely security-oriented, rather than assign security as a second or lower-priority responsibility to existing management The CISO and their team should also be up to date on new security threats and trends, industry regulations or best practices, as well as factor security investments into IT’s annual budgeting and resource planning processes. However, it is worth noting that security awareness and compliance apply to every employee – not just the CISO and their team. Approaches such as socializing best practices among employees, conducting company-wide security training or hosting security simulations can help mitigate the regulatory, financial and technical risk of a security incident.

Consequently, business continuity and disaster recovery (BC/DR) is another element of infrastructure on which companies should heavily focus. Disaster recovery is the process by which business resumes after disaster (which can be both man-made or natural) has occurred, whereas business continuity is about how business resumes during other events besides disaster (e.g. leadership changes). When engaging in BC/DR planning, companies should evaluate and identify the primary business units/functions, the people affected, as well as the underlying systems, hardware and software to be prioritized in the case of unexpected scenarios. Furthermore, it may be helpful to determine the probability that certain hypothetical scenarios will occur and develop mitigation and recovery strategies based on that analysis.

Finally, IT leaders should focus on improving their service desk (or help desk). It is vital for the help desk to build credibility among its user base (i.e. employees from the rest of the company), since the help desk is often regarded as the face of IT by the rest of the company and can play a small but significant role in deepening relationships between IT and the rest of the business. Truly World Class IT departments will recognize this and enable their help desk to provide the best services possible, as well as leverage the help desk to boost IT’s reputation for creative solutions. For proposed ways to enhance the help desk function, please refer to the book World Class IT by our CEO, Peter High.

Principle 3: Project and Portfolio Management

Project and portfolio management is becoming more and more essential for IT departments, as the need for greater transparency continues to increase. Previously, a lot of business executives did not always understand what went into procuring, creating and maintaining technology and as such, were often reliant on the cost and time estimates provided by their IT departments. However, recent reporting regulations as well as rapid digitalization of business and commerce means that companies now need more clarity and insight into where investment in IT is going. If executed well, several components of project and portfolio management can distinguish a World Class IT department from its peers – idea generation, prioritization, budgeting, portfolio management, project management and execution, quality assurance (QA) and post-project analysis.

First, idea generation is a process that is often problematic for companies. Many companies only allow more senior staff members to generate and submit ideas for projects, or give staff a limited time window to submit their ideas. These rules often lead to ideas not being sourced from the broader employee population and cause ideas that emerge outside of the submission window to be held off until following years. Given all of these issues, companies could establish a clear governance structure, comprising several review committees of appropriate business and IT stakeholders. This approach could help align idea generation to the company’s overall strategic goals. Within the governance structure, each committee should have clearly designated roles and various levels of the company should be involved, to ensure that perspectives and feedback are representative of the broader employee base. The submission and review process for ideas should also occur more regularly, rather than once a year. Once determined, projects and portfolios should then be prioritized by the review committees. There are many ways to do this, but several criteria to be considered include: strategic fit, cost to benefit analysis, project interdependency, qualitative benefit versus change and risk analysis. For further elaboration on each of these criteria and how they affect the prioritization process, please refer to World Class IT by our CEO, Peter High.

Furthermore, budgeting can occur more easily once projects have been prioritized. By allocating funding to projects from in order or priority, the IT department can set an expectation of projects that will be deferred to the next budgeting cycle. Budgets could also account for projects that may emerge later or throughout in the year, to encourage innovation within the department.

Good budgeting, in turn, helps the IT department better manage its portfolios. However, what defines good portfolio management? Several suggestions include: regular meeting cadences, establishing a program management office, effective project monitoring via dashboards and other tools and so on. When it comes to portfolio management, one key challenge that many companies face is the inability to cancel projects, as sunk costs are often used to justify continuing non-performing projects, rather than canceling them and redistributing resources to other initiatives. Truly World Class IT departments are unafraid to delay or cancel non-performing projects and reallocate resources to initiatives that they know will create move value in the long term. Similar to portfolio management, IT leaders can rethink their approaches to project management and execution. It is interesting to note that truly World Class IT departments typically have a well-developed, well-documented project methodology or toolkit that is applicable to and can be tailored to all kinds of projects. In particular, project managers should play a dynamic role in leading and coordinating the teams for the project, monitoring milestones, etc. IT leadership can significantly encourage active and diligent project management by identifying the appropriate talent, as well as recognizing project managers for their efforts. As such, effective portfolio management, project management and execution can enable IT to maximize performance and deliver better results.

Moreover, quality assurance (QA) is often overlooked by many companies, but is critical in ensuring that any technology released by IT is high-performing, high-quality and does not require constant fixes. Some high-level suggestions for bettering QA processes include clearly defining quality gates and involving QA early on in the development lifecycle, but this list is not exhaustive. World Class IT departments have no qualms reviewing and revamping QA processes as needed and ensuring that they are consistent across portfolios and projects. Similarly, performance reporting can be done on a more regular basis to ensure that resources allocation, obstacles and milestones are all being tracked. In particular, World Class IT departments also track benefits – financial or otherwise – after projects have been completed, as such accomplishments can significantly boost IT’s credibility. Finally, post-project analysis is extremely valuable, as it provides the IT department with benchmarks and lessons learned for future project development and idea generation. All of these components combined can truly help IT become more efficient, organized and an example to follow by its business counterparts.

Principle 4: IT-Business Partnerships

Often considered the “holy grail” of an effective IT organization, IT’s strategic alignment with the rest of the business is no longer a nice-to-have, but rather a necessity in today’s digital marketplace. IT’s alignment with the rest of the organization hinges on five key components: cross-organization communication, IT-business strategic alignment, innovation, IT strategy and internal IT communication.

Beginning with communication, it is important to note that truly World Class IT organizations do not solely rely on top-down messaging. Rather, top performing organizations establish information channels at every level between IT and the rest of the business. When successfully implemented, IT is simply considered “part of the team” and less of a reactionary internal service provider. Looking inward into the IT organization itself, there must be robust lines of communication underpinning IT’s role as an internal strategic advisor and enabler. Some of the biggest challenges (communication or otherwise) within IT teams stem from artificial organizational barriers and getting mired in the technical details behind a plan. While not apanacea, rotating employees through IT departments and adopting Agile-style approaches to work are two approaches that can help address poor internal IT communication challenges. Mature internal and external (to the rest of the business) communication habits are hallmarks or any truly World Class IT organization.

In the midst of effective IT and Business Partnerships lies strategic alignment and innovation. Firstly, each party must have their own documented (and used) strategy to guide both daily and long term decision making. With established strategies in place IT and Business leaders can upgrade their conversations from tactical question exchanges to comprehensive collaborative sessions. IT’s role is to both follow and adjust to the direction the business is heading while providing subject matter expertise and driving decisions around technology investments made by both the Business and IT. In well functioning IT-Business Partnerships there is a healthy sense of co-dependence and trust that allows innovation to truly take root and grow. Without alignment around common goals and a sense of team innovation cannot thrive. In well functioning organizations the line (or wall) between IT is blurred and the strengths of each group underpin future success

The concept of IT-Business Partnership may sound simple, but even digitally native organizations can struggle sharing resources and ideas for the common good of the firm. Moreover, leveling the field between IT and the rest of the business should be a top priority for any IT leader serious on maturing her organization.

Principle 5: External Partnerships:

Within many organizations IT is the largest spender and consumer of 3rd-party products and services. Given this concentration of vendor spend, business leaders often lean on IT to drive bottom-line savings by cutting (or increasing) vendor spend inline with the prevailing business climate. The existential (and real) threat of budget whiplash can wear on vendor relationships and breed conflict where partnerships should thrive. The best IT organizations know and segment their vendors, they apply rigorous and fair procurement processes and manage vendor relationships on an ongoing basis. Given the rate of technological change it is unreasonable to assume that IT can deliver an organization’s entire technology needs on its own, but there needs to be a thoughtful strategy behind why work should be done outside the organization’s own four walls.

Establishing governance, process and accountability with vendors begins with adequate vendor segmentation. Segmenting (or organizing) vendors by factors such as their size, strategic importance and total spend will help shape the proper vendor relationship and drive the most value. Taking a one-size fits all approach that treats independent contractors the same as the IBMs of the world can both snuff out potential value-add from smaller contractors, while not providing proper performance controls for large managed service providers. Understanding where each vendor fits across a continuum of factors will help both the procurement process and in-life vendor management.

The best IT groups work hand in-hand with central procurement teams and often form joint or independent teams that can leverage IT’s technology expertise to vet potential suppliers. The procurement process is the time and place for rigorous and fair governance to shine. It is here that inlife performance metrics, penalties and incentives will be set. It is also the beginning of a vendor’s formal relationship with the organization and it sets the tone for the rest of the partnership.

Lastly comes in-life Vendor Management. The best IT organizations recognise this as a discrete function outside of the upfront Segmentation and Procurement processes. It is here that relationships with both key and commodity vendors are built and SLAs are monitored appropriately. This function can be dispersed across organizational subunits or IT can build its own Vendor Management Office, the key is to make sure someone is responsible for each vendor, their performance and the overall relationship. Most vendors appreciate a more hands on approach as it gives them more feedback to improve their own internal contract and service management practices. Moreover, while there should be individuals directly aligned with each vendor Vendor Management is the responsibility of everyone who works with a given vendor. By establishing and more formalize structure, individuals on the IT team are able to better raise grievances and praise and key vendor resources have one place to do the same.

As an IT organization aims to become truly World Class it is important for External Partners to not be forgotten. External Partners can help IT deliver its strategic edge both internally and for the end customer. By conducting sound Segmentation, Procurement and Management practices IT will be helping set its partners (and ultimately itself) up for sustainable success.

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