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Strategy to Execution – Hoshin Kanri

November 11th, 2017 No comments
Reading Time: 3 minutes

I can’t believe it’s been 7 weeks since moving to ServiceNow and the Inspire team. In this time I feel like I’ve gone from knowing everything and being absolutely confident in what I’m doing to clear signs of the Imposter Syndrome showing. As one of my old colleagues reminds me, this is normal.

In these last few weeks I’ve been learning, and re learning, a lot of the things I used to do and scratching in the deep dark recesses of my brain for those nuggets of knowledge. So rather than do this aimlessly I thought I’d start putting some of these ideas down here.

My new role has me helping clients with taking their Strategy and mapping it through to clear objectives and measurable outcomes. One of the challenges is finding different ways to help clients see this and then be able to continue to develop this on their own.

Today I was looking at Hoshin Kanri and the 7 step planning cycle.

Hoshin Kanri is a policy management process that attempts to link the corporate strategic direction with the measures, goals and actions of those doing the work.  Or more simply, get everyone pointed in the same direction.

The 7 steps are:

  1. Establish Organisational Vision
  2. Develop strategic plan (3-5 year)
  3. Develop annual objectives
  4. Deploy objectives
  5. Implement
  6. Regular reviews of progress
  7. Annual Review

These steps are good, and there are some very detailed templates and matrices out there if you need them, but I found it easier to look at it from the simplified approach of the idea of the flow from vision through to measurable actions. Mapping the Vision to Objectives (these essentially being Business Drivers) which set the Goals (being the Outcomes you wish to achieve) that drive Actions (that need to be measurable).

 

My crude attempt to illustrate this is to show that there is clear ownership of Vision by Senior executives and together they work with middle management to create the Objectives (and define the Business Drivers) and finally middle management take those Objectives and work with their teams to develop specific measurable Actions; based on the agreed Goals and Outcomes that the teams execute on.

A lot of the time, this doesn’t happen. I’ve worked in many businesses where no one knew what the corporate vision was, let alone there being clearly communicated objectives, goals and measures.

The final piece of the puzzle is measuring these Actions regularly and adjusting the objectives, goals and actions as necessarily.

So to summarise:

  1. Develop Strategic Objectives and Goals based on Vision
  2. Get consensus of the objectives, goals and actions
  3. Implement what’s been agreed
  4. Measure it constantly (and review those measurements)
  5. Adjust accordingly.

This may seem basic and straight forward, but implementing it in a meaningful way, with good thought, and actually measuring it is hard, especially if the processes are manual and are not being reported back effectively in a timely manner… But that’s a post for another time.

 

Oh No!

April 21st, 2017 Comments off
Reading Time: 1
image by Tom Woodward

image by Tom Woodward

I only recently realised that it’s been over a year since I posted anything here.

Sad I know.

The last 18 months have been a little hectic with moving from one company to another, and refocusing on being a husband and a father rather than on a career and living out of a suitcase.

That said there are some exciting things in the works, one of which is a book. Whilst there isn’t a lot to say about it yet, it will be based on a couple of things, Wardley Mapping and Outsourcing. I’ll also add that my co-writers and I will bring rather unique “insiders” perspective to the process; we might even start to release some drafts here.

IT outsourcing Frameworks – Part 3

October 30th, 2015 Comments off
Reading Time: 6 minutes

In Part 1 and Part 2 I looked at reasons why outsourcing fails and what to consider when looking to outsource. In this last instalment I look at recommendations for structure and framework.

 

Part 3 Recommendations

 

Is important to understand that IT should not be treated as a single amorphous blob (BANNISTER, F and Remenyi, D, 2005). To successfully structure, and then manage, an outsourcing contract in such a way that provides for flexibility in delivery model and successful ability to backsource functions as needed the following model should be employed.

A mixed methodology approach (ALEXANDROVA, 2015; MCKEEN, J D and Smith, H A, 2015; LACITY and Willcocks, 2000) allows the contract and service flexibility. A clear framework for contracting and delivery of services (CHOU and Chou, 2009) and strong governance and leadership (MCKEEN, J D and Smith, H A, 2015; GARTNER, 2008)

 

 

Contracting Flexibility

Having used the models and techniques identified in this report, like-services should be grouped into towers or tranches the contracting. Each of these tranches would take into account the relative maturity of the IT service on the continuum as identified above the organisational needs and desires to attain hi operational maturity and a clear understanding of the service and deliverables. The releasing of the outsourcing in tranches or stages would allow the organisation to test IT outsourcing, building their own maturity in outsourcing and contracting and testing their vendor.

Each Group of services would utilise various contracting methods depending upon the relative maturity of that service and the needs of the organisation. This would create a flexible contracting model, combining fee-for-service, strategic partnerships and buy-in contracting models; as depicted in Figure 4.

Tranches- model

Figure 4 Grouping by contracting model

Intellectual property and Knowledge management would be clearly defined not only as a deliverable as part of the IT outsourcing contract, but a deliverable as part of any backsourcing of services (KIEN et al., 2010; LACITY and Willcocks, 2000; MCKEEN, J D and Smith, H A, 2015). The IP and KM aspects would pertain to the processes tools and techniques needed to run the IT operation. This could be delivered in the form of a concept of operations (CONOPS) document specifically detailing those processes and functions needed to deliver IT services (MBAX9106 – ISM, 2015). This may require some contract negotiation around one time perpetual use of the vendor IP if it has become integral to the delivery of the IT service.

This would be delivered as clear termination clauses, detailed documentation during outsourcing, detailed transition plan, and HR considerations (VELTRI et al., 2008).

 

Governance Framework

The government framework employed needs to be made of multiple parts this includes an overarching governance model, that dictates common components of the engagement; a contract management component, that allows for the management of the individual towers and tranches; and the individual measures.

Measures will comprise of both common measures and deliverables along with tower specific ones. Figure 5 shows a common measures and deliverables. These include those outlined previously, including any knowledge management or IP retention deliverables and specific tower measures and deliverables applying only the specific SLA and the KPIs needed.

measures - model

Figure 5 Measures and Deliverables

 

The resulting governance framework can be found in Figure 6. This provides a flexible and agile IT outsourcing model that supports the business with its current and future needs.

 

Assignment2 - model

Figure 6 ITO Governance and contract structure

 

Whilst this looks relatively simple, it is, contractually speak, fairly complex and requires that all parties (client and vendor) understand the purpose of each engagement and the visions an goals of the client organisation. This is possible, using the governance engagement model to socialise and communicate the necessary strategy components to provide the appropriate context and direction to vendors and the business alike.

 

References

ALEXANDROVA. 2015. Risk Factors in IT Outsourcing Partnerships: Vendors’ Perspective. Global Business Review. Vol 16 iss 5, pp.747-759.

BAHLIA and RIVARD. 2005. Validating measures of information technology outsourcing risk factors. The international Journal of Management Science. Omega(33), pp.175-187.

BANNISTER, F and D REMENYI. 2005. Why IT Continues to Matter: Reflection on the Strategic Valie of IT. The Electronic Journal Information Systems Evaluation. Vol 8 iss 3, pp.159-168.

BARKER, J R. 1993. Tightening the Iron Cage: Concertive control in self-managed teams. Administrative Science Quarterly. Iss 38, pp.408-437.

BENAROCH, JEFFERY, KAUFFMAN, and SHAH. 2007. Option-Based Risk Management: A Field Study of Sequential Information Technology Investment Decisions. Journal of Management Information Systems. Vol 24 iss 2, pp.103-140.

CARR, NG. 2003. IT Doesn’t Matter. Harvard Business Review. Vol 81 Iss 5, pp.41-49.

CARR. 2004. Does IT Matter. Harvard Business School Press.

CHOU and CHOU. 2009. Information systems outsourcing life cycle and risks analysis. Computer Standards & Interfaces. 2009. Iss 31, p.1036–1043.

CIOINSIGHT. 2012. BYOD Sends Mobile Device Management Costs Soaring. CIO Magazine, 7 November, p.1.

CROMAR. 2014. From Techie to Boss: Transitioning to Leadership. APRESS.

GARTNER. 2008. Gartner IT Infrastructure and Operations Maturity Model.

ISACA. 2012. Cobit 5 – A Business Framework for the Governance and Management of Enterprise IT. Information Systems Audit and Control Foundation.

KAISER and BUXMANN. 2012. Toward a Dynamic View on Client Dependence in IS Outsourcing Relationships: A Qualitative System Dynamics Approach. In: Systems Dynacmics Conference. St. Gallen.

KIEN, KIAT, and PELLY. 2010. Switching it OutSOurcing SupplierS: enhancing tranSitiOn readineSS. MIS Quartely Executive, March, pp.23-33.

KRIEGER. 2015. Service Management in an as-a-service world., July, pp.8-9.

KRONAWITTER, WENTZEL, and PAPADAKI. 2013. IT Application Outsourcing in Europe: Long-term Outcomes, Success Factors and Implications for ITO Maturity. In: 46th Hawaii International Conference on System Sciences. IEEE Computer Society, pp.4456-4465.

LACITY, KHAN, and WILLCOCKS. 2009. A review of the IT outsourcing literature: Insights for practice. Journal of Strategic Information Systems., p.130–146.

LACITY and WILLCOCKS. 2000. “An Empirical Investigation of Information Technology Sourcing Practices: Lessons from Experience. MIS Quarterly, p.363–408.

MBAX9106 – ISM. 2015. Information Systems Management – Semester 2. Sydney: University of New South Wales.

MCKEEN, J D and H A SMITH. 2015. IT Strategy: Issues and Practices. NJ: Pearson.

MIYAGI, MONDEN, AZUMA et al. 2014. Align Business Initiatives and IT Solutions: Collaboration Is Critical for Effective IT Governance. ISACA quarterly.

TAPPER, O’BRIAN, DIALANI, and MARSTON. 2014. From Traditional to Cloud-Based Outsourced/Managed Services: Optimal Business Models for Multiprovider Management in Delivering Business Process and Application Services.

VELTRI, SAUNDERS, and KAVAN. 2008. Information Systems Backsourcing: Correcting Problems and Responding to Opportunities. California Management Review. 51(1), pp.50-76.

WARDLEY. 2014. A quick route to building a strategy. [online]. [Accessed 15 August 2015]. Available from World Wide Web: “http://blog.gardeviance.org/2014/07/a-quick-route-to-building-strategy.html”

WARDLEY. 2015. An introduction to Wardley (Value Chain) Mapping. [online]. [Accessed 6 October 2015]. Available from World Wide Web: “http://blog.gardeviance.org/2015/02/an-introduction-to-wardley-value-chain.html

WARDLEY. 2015. Position, Flow and Movement. [online]. [Accessed 10 October 2015]. Available from World Wide Web: “http://blog.gardeviance.org/2015/06/position-flow-and-movement.html

WILLCOCKS, LACITY, and KERN. 1999. Risk mitigation in IT outsourcing strategy revisited: longitudinal case research at LISA. The Journal of Strategic Information Systems. Vol 8 Iss 3, p.285–314.

IT outsourcing Frameworks – Part 2

October 23rd, 2015 Comments off
Reading Time: 8 minutes

This is Part 2 of my ITO framework series. In Part 1 I looked at drivers for back sourcing of services

 

Part 2 Considerations for Outsourcing

 

Jennex and Adelakum (2003 in MBAX9106 – ISM, 2015, pp.8:22-8:24) identify critical success factors to consider for ITO including People Factors; Technical Infrastructure; Client Interface; Business Infrastructure and Regulatory Interface. IT outsourcing failures are due to the lack of understanding of critical success factors (KRONAWITTER et al., 2013). Buxbaum (2002 in MBAX9106 – ISM, 2015) identifies a number of questions to minimise the risk of backsourcing services and in combination with the decision criteria provided by McKeen and Smith (2015), provide a framework to support identifying the risks and reasons for backsourcing from section 3.1. By using this framework to answer the questions that need to be addressed when initially outsourcing, it also prepares the client organisation for backsourcing should it be required.

This framework addresses organisational maturity level, service functionality maturity and appropriate sourcing models, sourcing profile based on function, potential contracting model and most importantly the governance framework needed to manage the relationship.

 

Organisational IT Maturity

Organisational Maturity plays a large part in the success of continued IT Outsourcing and as an organisation matures, the ability to easily switch suppliers in and our increases (KIEN et al., 2010).

Research firm Gartner created an operational maturity model (GARTNER, 2008) ranging from 0 (ad hoc IT operations and poor understanding of how IT supports the business) through to 5 (“IT operations are integrated with the enterprise & provide additional value to the organisation”), see Figure 1 below. This model can be used to determine at what level the entire IT operation, or subcomponents, operate at. Building a picture of where the business is and where it wants to be.

Gartner
Figure 1 Gartner IT Maturity Model

 

In addition to organisational IT maturity, the IT Service Maturity will dictate what can be outsourced (BANNISTER, F and Remenyi, D, 2005).

 

Service maturity and appropriate sourcing models

 

Smith and McKeen (2015, pp.122-127) provide a service function maturity model associated with IS/IT functions, ranging from unique to commodity and utility; this is analogous to Carr (2003; 2004) and Wardley (2014) models for the evolution of IT. This model provides a continuum, with guidance, for what should be delivered by a business versus what can be outsourced or procured externally.

This model is then overlaid on the Lacity and Willcocks classification model (2000) for outsourcing options to provide a multi-axis model for identifying the relationship between services, the maturity of the services and the potential sourcing options, depicted in Figure 2.

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Figure 2 – Sourcing strategies (MCKEEN, J D and Smith, H A, 2015, p.128)

This model, due to the overlapping of sourcing options, makes it difficult to decide on what is best (MCKEEN, J D and Smith, H A, 2015, p.128). Identifying your core functions (MCKEEN, J D and Smith, H A, 2015) and then, using the Gartner model above, identify the detail needed to determining the appropriate sourcing model.

 

Function sourcing profile

An additional technique to assist in identifying what sourcing model to use employing a value-chain mapping technique like the Wardley Map (WARDLEY, 2015), This will help not only identify how the various components are inter-connected, it supports grouping supportive services together, that can be used for the contracting construct (WARDLEY, 2015) discussed later in this report.

This creates the ability two developed a Framework for sourcing. Understanding what sourcing strategy to use (KAISER and Buxmann, 2012). Fee for service requires maturity, strategic partnerships require both parties to be equal on many levels; and Buy-in-contracts that requires body shopping (LACITY and Willcocks, 2000).

Contract Problems

 

Organisational IT maturity comprises of IT operational maturity and contracting experience. (LACITY et al., 2009). “Much of the fear of losing control comes from the feeling that IT departments are relinquishing control to IT third parties because they no longer own the IT and can’t see, touch or grab it” (KRIEGER, 2015). How much should be contracted out, how many contracts should exist (WARDLEY, 2015) and how much control is needed? When outsourcing services, there is an all or nothing approach taken by some organisations, though this is not necessarily the best, or most appropriate answer (CHOU and Chou, 2009). Contracting of ITO services should be designed to guide and protect all parties involved in the outsourcing arrangement (CHOU and Chou, 2009; LACITY and Willcocks, 2000).

Contracts are often seen as one-sided either benefiting the Client or benefiting the vendor (ALEXANDROVA, 2015). Using the models supplied above, understanding of what services and capabilities could and should be outsourced along with what outsourcing arrangements make the most sense is possible. There are some common elements that need to be considered when looking at sourcing contracts. The elements include knowledge enhancement or management, cost management, HR aspects and sufficient flexibility to allow the business to adapt and change (MCKEEN, J D and Smith, H A, 2015).

Knowledge enhancement is one area of value when looking at IT outsourcing arrangements (LACITY and Willcocks, 2000). During the process of transitioning to outsourcing an ongoing management of the service processes policies in cool should become well documented. This raises the concern of IP ownership, who owns the resulting IP; and IP retention, what happens to the IP in a back sourcing situation (BENAROCH et al., 2007).

In the contracting framework it should be clear who owns what IP, this should includes access to IP (KAISER and Buxmann, 2012). To ensure that IP is also retained the contract should include a knowledge management component, which addresses the systematic update and refreshing of process and business knowledge during the lifetime of the contract. This is especially pertinent when process improvements clause have been included in the contract, providing reduce cost of service and increased business efficiencies overtime. Where the outsourcing partner brings their own IP or joint IP is created, there needs to be provision for access and use of this IP should the services be backsourced. This protects both the client’s business now relies on new process and the vendor you may have enhanced or improved their own outsourcing capability during this time (KIEN et al., 2010). This is assists in controlling costs where services maybe backsourced or outsourcing suppliers change. Understanding what information needs to be generated and created adds to the transition-in costs (KRONAWITTER et al., 2013). Understanding what information needs to be handed over at the end of the contract supports identifying and understanding the scale operation needed to take on the services, the transition out costs.

HR costs, those associated with downscaling an existing IT operation in an ITO or up scaling and IT operation during a backsource are also contract considerations (MCKEEN, J D and Smith, H A, 2015). In an outsource these costs include redundancies and pay-outs but also include potential loss of it. In a backsource these include recruiting costs and delay in service transition due to recruiting activities. Both of these can be addressed contractually with the transfer of key staff. This may not be possible in situations where offshore resource thing is use, as noted previously the intense pressures of globalisation requires Service providers to use global labour arbitrage.

Finally there are the internal and external opportunity considerations providing the flexibility that is the agility and speed which service functions can be delivered and business exigency to rapidly shift or pivot to meet the market demands. If the contract has been set up with the above provisions in mind you should be sufficient flexibility in the structure to allow this.

ITO contracting experience is gained through the act of contracting services. Those organisations without experience should seek external assistance in structuring and negotiating contracts (LACITY and Willcocks, 2000).

 

Governance

Governance brings together these principals, policies and frameworks with structures and resourcing (ISACA, 2012) , it is critical to the delivery and ongoing success of ITO services (MCKEEN, J D and Smith, H A, 2015). Governance is delivered through open and clear communication between the parties encompassing not only the contractual obligations but look too validate and manage ongoing risks (BAHLIA and Rivard, 2005), communicate changing needs, future visions (KAISER and Buxmann, 2012) and strategies (BENAROCH et al., 2007) and provider model for engagement an issue escalation (MCKEEN, J D and Smith, H A, 2015).

Screen Shot 2015-10-11 at 1.28.46 PM

Figure 3 COBIT Governance structure (ISACA, 2012)

Governance models put in place the measures by which services will be monitored, aligning to the service and business specific needs (Key Performance Indicators and Service Level Agreements). By structuring the interaction and governance of IT formally, it allows the aligning of IT solutions to business initiatives (MIYAGI et al., 2014), these all lead to the formation of a Governance strategy (CHOU and Chou, 2009). Figure 3 depicts the COBIT 5 (ISACA, 2012) model for governance. This incorporates the necessary functions for successful governance of IT (MIYAGI et al., 2014), by measuring and monitoring progress, that can be used to not only manage the outsource, but support backsourcing activities.

Complex Service Level Agreement (SLA), Key Performance Indicator (KPI) structures and penalty clauses put undue risk on the vendor, adding to the cost of service. SLAs and KPIs within the contract should aligning outsourcing goals with the vendor incentives. This last piece I cannot stress enough. Too many times have I seen arbitrary SLAs and deliverables applied across contracts that add risk that MUST be accounted for (people or money to partly or completely mitigate, depending on penalties). 

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In part 3 I make my recommendations for sourcing framework and governance model.

Collaboration vs. Co-creation

October 18th, 2015 Comments off
Reading Time: 3 minutes

CollaborationI had an interesting conversation the other evening with Markus Andrezak (@markusandrezak). It was using music co-creation and collaboration as an analogy of how to interact with your customers in the business world.

I like the analogy of music and music creation having once, in a previous life, been one (or a joke goes been the guy who hangs around with musicians). when you create music with fellow musicians it really is both collaboration and co-creation, everyone feeding off each other’s ideas essentially starting from one persons base concept. Extending that analogy into business you can look at a start-up where they originally set out to solve their own problems as the basis of the initial product being created. That same problem solving “thing” is discovered to work for others and a new business is formed.

As the start-up grows it starts listening to its initial customers for changes and enhancements, directly adding in features and capabilities. Again this works with the music analogy; the musicians listen directly to the friends and fans, those that attend the performances, and adjust accordingly; changing tempo, changing key, even playing in a different style. In both instances again this is Co-creation because it is a small group able to communicate their needs wants and expectations. As both the music analogy grows into wider distribution of the music, be it online or via physical distribution,separating musicians from direct interaction with their fans, as an organisation grows to include many more clients, it is very hard for almost impossible to maintain or even regain that level of initial intimacy and Co-creation.

What happens when you do reach such scale is that there is a lot of noise that need to be picked through.

There was a lot of debate as to what was collaboration and what was co-creation. Both are the process of working together for a common end. I’m hard pressed to really distinguish between the two and could easily argue that try differentiate is degenerating into an argument about semantics.

Trying to find other people’s views on this was interesting. over at this site I found a reference to this paper: A Typology of Customer Co-Creation in the Innovation Process, where they define co-creation as –

“Customer co-creation is an active, creative and social process, based on collaboration between producers (retailers) and users, that is initiated by the firm to generate value for customers” (Piller, Ihl & Vossen – 2010)

Where as over here  they assert that collaboration is co-creation.

Where I think the difference could be is, collaboration is a structured coming together to address a specific issue or problem and co-creation is a broader, ongoing engagement. Either way, I think the point is that it’s a good thing and should be embraced, unless of course you just meme copy and take your strategies from others