DMR Article: IT Fitness Check

8/4/2019 DMR Article: IT Fitness Check

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IT Fitness Check

Raising the level of speed and flexibility in IT presumes an

in-depth determination of the current position

Published in "Think!", DMR 04/2010

Online:http://www.detecon-dmr.com/en/article/it-fitness-check_2010_12_16

Dr. Nikolaus Bubner

Wolfgang Pantwich

Always swimming ahead of the wave! Having a solution waiting in the

bag before the IT customers have even noticed there is a problem -

flexible, capable of quick response, competitive, and customer-centric,

and all of that at reasonable costs. The vision of modern companies

confronts the IT department with special challenges.

IT departments today find themselves caught between two trends in

development. On the one hand, competitive pressures force companies to

strive continuously to optimize as well as to reorient existing procedures.

Delivery times need to be shortened and existing business fields must be

expanded by the addition of innovative products or redesigned with

convergence products for new customer segments, just to mention a few

examples. The IT department is expected to provide implementable, reliable,

and cost-efficient solutions quickly to achieve these aims. On the other hand,

evolving technology and methodology give IT little choice but to realize new

technologies continuously in short time despite the simultaneous costpressures so that the company can secure and expand sustainable

competitive advantages by means of leading technology. The IT department

must respond flexibly and rapidly: customers should be able to handle their

business transactions easily and quickly with the best possible IT support.

The driving forces

A holistic analysis of the market and customer requirements critical for

success includes the consideration of current trends such as the automation

of business processes, the standardization of IT infrastructure, or the

Published in "Think!", DMR 04/2010 1


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conversion of investment expenditures (Capex) into expenditures for

operational business (Opex). In addition, there is an analysis of the

underlying IT organizational structure.

One process model (IT operating model) offers a typical structural basis for

this analysis. It outlines the fields of activity of an IT department which must

be established in a CIO organization to assure the greatest possible benefits

for the company. Professional journals today emphasize the management of

application and infrastructure portfolios, the determination of the best possible

sourcing behavior, and transparent monitoring and management of data and

process quality using enterprise performance management as examples. In

our view, it is essential to include and analyze additionally the interfaces,

transfer nodes, and interaction modalities among the various fields of

activities in the assessment. A typical business case in the CIO organization

such as the development of an IT strategy or the sustained establishment and

exercise of a portfolio management assumes the interaction of all fields of

activities if optimal results are to be obtained. A possible structure of the IT

fields of activities is illustrated in Figure 1.

The challenges

Jrgen D. had just started working in his new position as CIO in the

company. When he accepted the responsibility, he had been very well aware



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that there was room for improvement. But now everything had happened all at

once an experienced employee had left the company, the pressure of

managements expectations was very high: Jrgen D. was supposed to, and

wanted to, address the current challenges for his IT division and initiate areorientation wherever this appeared to be sensible and necessary.

The identified challenges can often push the IT organization to the limits of

what it can handle. An objective assessment of the performance capability of

IT operations examines the fundamental suitability (effectiveness: Do the

right things) and the economical factor utilization (efficiency: Do things right)

of the IT corporate activities. Since this distinction addresses a broad range of

strategic and operative methods, it is advisable to set focal points by

preparing a specification catalog.

For example, the traditional way of looking at the value chain in IT

outsourcing will be going through far-reaching transformations in view of the

dynamic developments and the field of research and practice of cloud

computing. When todays requirements on the IT organization, characterized

by demand fluctuation and iterative patterns and trends, are taken into

account, the consolidation and the subsequent virtualization of computing

capacity offer a sensible method for countering cost pressures. This incentive

to reduce costs is reinforced by the fact that historically developed,

heterogeneous system landscapes are often the cause for steadily rising

costs. In contrast, it initially appears logical to benefit from the exploitable

synergy potential or cost advantages.

The method

IT strategy and IT organization must be subjected to a structural examination

so that all of the topics can be covered and prioritized for a company. A

specific analysis should entail reference to current business processes and

crossover aspects. This means shifting the focus from the consideration of

isolated solution approaches in favor of complex structures. Future

developments on the market and in the company as a whole lay the

foundation for determining which complex interdependencies must be

described. Essential questions on core topics such as What contribution does

IT make to corporate value, and in what IT projects should investments be

made? or How must the technological position of the company be appraised

in comparison with best practice companies? must be answered on the basis

of valid diagnoses or performance indicators on the financial and

technological situation.

The nature of the strategy concept in the IT department is of key significance

in the context of successful corporate management. This is reflected

especially in the companys capability to respond contemporaneously and



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flexibly to external changes or to adapt to market demands with little

expenditure of effort. At a high level of abstraction, this means knowledge and

control of the companys own resources and capabilities, even though the

business environment is highly dynamic and involves many otherdeterminants. One of these factors determining performance is the demand

for declining IT costs and an improvement in the cash situation while at the

same time achieving a higher value contribution from IT. Strict customer and

service orientation of the IT is indispensable to secure this contribution and to

optimize the performance of IT services.

Another requirement addresses the holistic competence of internal

capabilities of IT to manage successfully requests from the business

departments as they grow in complexity and do so faster and faster in

comparison with the past. Such requests include implementations as well as

concrete help in making decisions such as a feasibility study or economic

efficiency analysis.

An objective assessment of the performance capability of IT operation is

inevitably based on a quantified understanding of the company strengths and

opportunities as well as the related target variables. In this context, the degree

of automation and standardization of IT service plays a special role, especially

during the preparation of decisions concerning the optimal value creation

depth of the IT department. This lays the foundation for the optimal allocation

of resources within the company because the departments within and outside

the IT are usually interdependent on one another and the definition ofperformance targets coordinated with one another is decisive for the

consistent development of the company.

Another characteristic of current market and customer requirements can be

seen in the management of the increasing complexity which confronts

companies today. It includes organizational changes, new technologies, and

the increasing dependency of business processes on IT. This is why open

and flexible or continuous planning processes are becoming increasingly

important in place of the classic strategic management and planning process.

This situation arises from the general internal and external dynamics which

demand a permanent state of change for targets and general conditions in IT

as well. One possible negative trait of this development is the shift of IT

budget and competencies into the business units; this frequently encourages

wild growth, a lack of transparency, and increased difficulty in managing IT

landscapes which have grown naturally as a consequence of parallel and

redundant developments. The preparation of an overall image drawing on the

corporate strategy and the business process specifications for the future

orientation of the IT organization is required.

The motivation



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Jrgen D. decided to have an independent assessment of his IT department

carried out. An appraisal of the location of this type must be seen as the

prerequisite for the application of best practice models and the subsequent

preparation of a change profile. The identification of the optimization potentialof the IT organization is followed by an expert opinion on the current

development status of the organization and concrete proposals for

optimization (and the procedures required for this purpose). They must be

closely linked with a strategic outlook for the continuous process improvement

of IT, employee development, and the underlying service culture of the IT

organization.The compulsion towards agility in IT as well as the differences

in further development of the IT fields of activities in comparison cyclically

require a correction and a new determination of position so that specific

changes can be implemented. Depending on the current situation of a CIO

organization, IT has a broad range of methods at its disposal to determine its

position in peer comparison and best practice models. They include

established methods of benchmarking and various models for appraising the

maturity level for the focal points process management and project/product

management. Methods such as Six Sigma are also being used more and

more frequently in IT operations. However, Jrgen D. did not want to conduct

a time- and effort-consuming project with comprehensive analysis results; he

was looking for a solution which would give him a good overview of the

necessary room for action in the shortest possible time.

Determining position

The IT Fitness Check provides a fast and simultaneously in-depth

determination of the position of a CIO organization. This fitness check

examines all of the important IT management tasks on the basis of 12 defined

diagnosis clusters, taking into account specific focal points. An important

focus is on the interaction of the clusters, taking into consideration the typical

business events in the IT organization. The following questions are at the

core: What strengths and weaknesses does the IT department have? How

can the maturity level of the IT department, its ability to enable the effective

and cost-efficient realization of the corporate vision, continuously and

sustainably enhance the respect it commands from the business units and

business customers?The IT Fitness Check is based on a strict, systematic

procedure which considers in each case the specific corporate requirements,

the customer situation, and the customer needs. One point is essential: the IT

Fitness Check is not an automated tool, but is carried out by experts who

have at their disposal many years of experience and profound business and

management competence at the interface between the IT department and the

business.



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The IT Fitness Check consists of the following elements:

The configuration of pre-structured questionnaires and linked interviews

with respect to the concrete corporate context size, organization, businessfields, current challenges, strategic goals and vision, etc.

Assessment of prioritized IT management tasks in direct discussion with the

people in charge of IT (view from the inside) and the IT customers (view

from the outside)

Consideration of the hard and soft facts within the organization and of the

interdependencies in the specified tasks

Assessment of the analysis results by experienced managementconsultants (not an automated analysis tool).

The result

Jrgen D. received an IT Fitness Report with key statements on the current

status of the IT as a result of the IT Fitness Check. The report describes the

top strengths and top weaknesses that had been identified as well as

recommendations for the further development of the IT

organization.Following the analysis on the basis of the defined 12 diagnosis

clusters, the performance capability and quality of the IT is assessed and



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visualized with the help of strength and weakness profiles. Taking the

aggregate examination results as a starting point, e.g., related to maturity

level in process management and project/portfolio management, the as-is

status of the IT is determined.As envisioned by Jrgen D., the IT FitnessCheck is not limited to the development of new concepts, but also contains

recommendations which help him and his IT management to achieve a better

positioning with regard to the internal and external challenges. The concluding

IT Fitness Report is discussed with management to find the proper balance of

all of the pros and cons of possible activities and to initiate the introductory

measures.

The value contribution

The IT Fitness Check is aimed at generating a joint dialog about IT quality

and IT performance between decision-makers in the IT management and their

relevant customers. It provides a fast, well-founded diagnosis on the IT status

in terms of maturity level and sustainability in relation to all of the relevant

tasks of IT management. It takes into account current framework conditions

and corporate goals and quickly brings about planning security, orientation,

and transparency concerning the present position of IT in the company,

generates ideas for continuous improvement of position, and offers optimal

support in preparing decisions. Moreover, the consulting solution includes an

assessment of the optimal implementation depth, the IT portfolio, IT

governance, management and control systems, and the process and

organization model. The action and problem fields thus identified are linked tostatements concerning the impact on business budgets and the value

contribution for the IT organization. Besides serving as leverage points for the

solution of present tasks, they make a decisive contribution to the creation of

a solid and sustainable communication and discussion foundation for the

analysis of architectural changes, for example, on both the demand and

supply sides.

Jrgen D. is satisfied: Now I know what my employees and I have to focus

on. The strengths in daily operation which have been identified give us the

confidence we need for the development of new fields; the weaknesses

identified in the cooperation with the business units appear to be a red thread

running through all of the blocks of topics the strategic realignment is

affected just as much as the change management and the solution delivery in

the projects. This is where we will apply the recommended measures. Thanks

to the IT Fitness Check, we have shortened the required time period by at

least six months!

Dr. Nikolaus Bubner



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Dr Nikolaus Bubner is a Managing Consultant and works in the Group

"Executive Advisory". He was formerly employed in the Volkswagen

Corporation, the Deutsche Post DHL Corporation, and in various midsize

businesses around the world as a management consultant as well as programand project manager. The focal points of his work are in the areas IT strategy,

IT transformation, enterprise architecture, and IT merger and cost and value

management.

Wolfgang Pantwich

Wolfgang Pantwich is a Managing Consultant and works in the Group

"Executive Advisory". Before joining Detecon, he held a broad range of line

and staff positions in the IT industry, working on both the supply and demand

sides. His work at Detecon focuses on management consulting with the topics

IT strategy and portfolio management, IT service management, project

management, outsourcing, and transformation of organizations.


Documents

DMR Article: IT Fitness Check