Key Debates
Chapter 1
IT is a commodity
As IT is commercially available to all, it is just a commodity and not a source of competitive advantage. The strategic challenge is simply to manage costs through effective procurement and outsourcing. The IT function and IT Director will be relatively low profile operational roles.
How does this IT as a commodity perspective relate to the view put forward in Competing with IT? What is your view and why?
Thoughts…
The question tends to mix up the role of information technology, where we are seeing waves of innovation for example with the Internet of Things, Cloud based services and mobile devices, with the role of the IT function. This seems a fair reflection of the situation within organizations i.e. confused.
Within many organizations IT is managed as a commodity, with the focus of the IT function on costs, security and availability of systems. In that sense it is not a source of competitive advantage.
If you look more broadly across an organization, you will usually find pockets of innovation even when this commodity approach is taken by the IT function. A Chief Innovation Officer or Chief Digital Officer may be taking the lead in realizing the competitive potential of IT, while the IT manager keeps existing systems running. This reflects the ideas put forward by Cash et al (2008) of two different roles.
Carr (2003) put forward the idea that IT is a commodity. From my perspective in writing this book that is clearly wrong. The value does not come from the technology itself but how it is used within the organization as part of a wider socio-technical system (Melville et al, 2004).
There is an opportunity and a challenge brought by the broad availability of IT services and capabilities. The playing field is leveled, with smaller organizations able to provide services that only larger organizations could have delivered until recently. Also there is a premium on delivery of IT enabled change, to rapidly and cost effectively realize the potential benefits.
Chapter 2
The business case and clear metrics drive benefits realization
In practice, an alternative approach to benefits management is to focus directly on metrics and specifically financial return of the planned investment. The departmental budget is changed to reflect the savings (etc.) in the business case. IT are responsible for delivering the system. The department / business unit are responsible for operating with the new system and meeting their targets. From this perspective planning is about the financial business case.
Can this approach work? In what situations?
Thoughts…
This approach is certainly used. In a sense it is almost guaranteed to work in terms of departmental or business unit P&L in the short term. The impact on service, quality, the customer and longer-term performance is less clear.
I think there are underlying assumptions about the alignment of local priorities with wider organizational priorities (i.e. how and where are any cuts made) and the ability to plan and manage change at a local level. The need for a local change capability to make this work is an example of the need for a benefits realization capability to be embedded throughout an organization.
There is certainly value in local ownership of change. It is needed when organization-wide change programmes reach a specific business unit. There is quite a risk that they become technology implementation and that any benefits focus is lost in the pressure to follow an imposed plan.
I think this budget-driven approach is most likely to work:
- Where there is a good change capability locally.
- The changes are relatively straightforward.
- The local organization can operate with some degree of independence in terms of how work gets done.
Chapter 3
Effective Measurement – Competing Views
Metrics and measurement are crucial elements of both a business case and a benefits realization plan.
There are competing views about good practice. One approach is that every benefit must have a measure, target, timescale for realization and an owner. Realization of benefits is measured against this detailed plan. A second approach emphasizes that measures drive behavior and that a small set of benefits should provide the focus for a change programme. This small set can evolve over time as targets are met and new opportunities emerge.
What is your view? How would you approach this in practice? Does the type of project affect your views?
Thoughts…
Benefits Management, as described in the book by Ward and Daniel (2006) seems to imply the first approach. Identify every benefit and confirm relevant measures, owners and tracking.
In practice this very rapidly becomes a major undertaking and can become a new bureaucracy around project planning and delivery.
In practice our key goal is change and improvement. In this context the measures identified are important drivers of change. They will provide focus and help change behavior. In many case we get what we measure (i.e. the measures drive change) and we don’t simply measure what we get (the results of a change process).
A small set of measures, carefully thought through may be important drivers of change.
Another problem with the measure everything approach, is that very often the information on the current situation is poor. So it is very easy to get dragged into making detailed assessments of the ‘as is’ situation to make it possible to track the improvement. But of course this is even more energy diverted from actually making improvements to keeping busy doing something superficially useful but possibly of limited direct value.
Chapter 4
Making Procurement Work for Benefits Realization
There can be a tension between a focus on procurement, often to minimize costs, and a benefits-driven approach, which typically focuses on maximizing benefits.
Procurement is a major driver for a traditional, waterfall approach to projects. Requirements are defined in detail and then provide a basis for a formal statement of requirements and services required. Potential suppliers then submit bids for the work and there is a formal selection process.
It is undoubtedly the case that with many suppliers there is a lot of room for negotiation and the customers with good procurement expertise can negotiate a much better overall deal.
How might you approach procurement when adopting a more agile, benefits-driven approach? What are the implications for the contribution of the supplier and governance of the relationship? How might the approach differ for different types of projects?
Thoughts…
Procurement and negotiation with suppliers is a reality. It is also clear that a traditional approach of writing a detailed Invitation to Tender or statement of requirements at the very beginning of a project can only work in very limited circumstances. There is just not enough knowledge at this point in the project. A process of exploration is required as opportunities and needs are considered.
There is also a risk that a lot of energy is diverted into documentation and negotiation that ultimately doesn’t help move forward with the creation of value from the intended project.
Good procurement is very important to get a good price and to establish terms and conditions that are fair to both parties. This is an area that I haven’t emphasized in the book.
A benefits-driven approach might be established through a more strategic relationship with a supplier, even to the extent of a joint venture in some cases. The aim is to build a longer-term relationship not focus on a transactional view of profit / cost of a single contract. The supplier then becomes a source of insight and expertise to help create competitive advantage. In that case they would be part of governance for the business change and part of exploring possibilities and developing the benefits realization plan.
Chapter 5
Power and Politics
It is true that benefits-driven projects are really about people – the sponsor, the project manager and team, benefits owners, the project board, many other stakeholders. Even which projects are selected for investment can be seen as largely a political decision influenced by the power of the actors involved.
One response to this is focus directly on power and politics as the way to achieve success. The project process and toolkit are seen as having limited impact.
What is your view and experience? Acknowledging the importance of communication, power and politics what is the role of the framework and toolkit for benefits realization? How might we extend to toolkit to address power and politics more directly?
Thoughts…
One perspective is that power and politics become the focus and the driver of decisions and actions in the absence of an approach to project appraisal and delivery that is fit for purpose.
Senior managers recognize that something is seriously wrong with a traditional IT and cost driven approach. Their response is to use power and politics to try and do better.
The intention of a benefits-driven approach is to provide a more effective set of principles and tools, providing a common language and a new way for senior stakeholders to engage with a project, potentially reducing the need for reliance on power and politics.
However, we have to recognize that organizational cultures vary and that a very political approach is deeply embedded in many places.
It would certainly be valuable to look beyond the existing tools of benefits management to leadership and organizational behavior for tools that would help tackle people, power and politics more directly. One example would be to extend the stakeholder map and focus on key individuals more directly.
Chapter 6
Embedding Expertise Across the Organization vs. Specialist Teams
The view put forward in this chapter is that improving how the job is done is part of the job (see Drucker on knowledge workers). The implication is that business leaders need a broad range of competences for change and improvement.
An alternative view is that a more cost effective approach is to focus managers and teams on running the business. Central, specialist teams are the place for project, change and business process management expertise.
What is your view? What are the benefits and risks of the two approaches? How would you find the right balance in a particular context?
Thoughts…
The solution depends on the organizational context and the degree of change and volatility in the industry, organization and department involved. The capability to change does not come for free, so it is important not to overinvest and to change simply for the sake of it.
On the other hand the pressure for change is huge. Doing nothing and leaving things as they are is not really an option.
The approach I’m proposing is that there should be a broad capability to deliver change throughout an organization. It is part of every management role. However, there is also a need for specialists to coach, mentor and be part of delivery of specific projects.
Chapter 7
Complexity of the Benefits-Driven Approach
“This emphasis on a benefits-driven approach is just making a difficult job bigger and harder. We simply don’t have the time.”
How would you respond? Are benefits driven approaches feasible in the ‘real world'? What are the alternatives?
Thoughts…
The evidence of a high failure rate of investments in IT is compelling evidence of the need for a change.
The quote is a defensive response, which might often be followed up with something along the lines of “if IT did their job we wouldn’t have a problem”. It seems to me to be a classic case of the IT Attention Deficit and a lack of understanding and ownership of the problem.
The real world is complex. We have to tackle the real issues. The benefits concepts can be used in an effective way to enable people to work together much more effectively to tackle these complex, real world issues. It’s actually a relatively small investment of time to get a major payback in terms on improved results.
However, the benefits approach can represent a substantial shift of practice and mindset. Introduction of the approach needs to be progressed thoughtfully, avoiding bureaucracy and normally starting with an initial set of practices.
Chapter 8
Corporate Strategy
An alternative perspective on strategy is to focus on corporate strategy. For example considering: what business and markets should we be in? What is the core business and what do we outsource? How do we fund the business? How do deliver value to shareholders and owners? What is the role of mergers, acquisitions and divestment?
How does this corporate strategy perspective fit with the approach taken in this chapter?
Thoughts…
The corporate strategy perspective is a bigger picture view. In this chapter the focus has been more at a business unit level. However issues to be tackled across all business units soon start to emerge. Work by Weill and others at MIT CISR is very helpful in tackling some of these issues.
The discussion of Outsourcing in Chapter 12 is also relevant.
Chapter 9
Approaches to Governance of the Portfolio
In a large organization issues of governance and organizational design will interlink with portfolio management. Is there one IT function or several? Are systems organization-wide or local? A centralized, IT owned monopoly is common – is this effective and sustainable?
How would you approach governance of the portfolio in a large organization? What decisions have to be centralized? Which can be taken locally? What is the scope of the portfolio – all projects owned by the IT function; all projects involving IT; all investments in innovation and change?
Thoughts…
A pragmatic approach is the best. Start somewhere and then build from there. Effective portfolio management can only be developed gradually, so its best to start getting some results and then consider the next steps to broad and deepen the approach.
Only a little imagination is required to apply the portfolio model at a local level. You just need to recognize that many projects will be imposed from outside the business unit – but it helps to shift the focus to local ownership and help identify local priorities alongside the top-down corporate plan.
Chapter 10
IT Value Driven by IT Governance
Weill sees IT governance as the key driver of business value from IT: i.e. establishing a clear and effective framework for who takes what decisions.
How does this perspective contrast with, and contribute to, the benefits driven approach to change that is the focus of this book?
Thoughts…
In my view the two perspectives are entirely complementary. Governance is crucial in determining if a project is technology or benefits driven,
The approaches simply have different starting points. My focus here on benefits and projects as a starting point is simply on the basis that this is relevant to many more people. Changing the governance framework is an issue for organizational leadership, where a large number of people across an organization can make a difference to specific projects.
Chapter 11
A New Normal?
One perspective is that ‘everything has changed’. The extent and pace of innovation mean that the digital business is radically different from the past.
An alternative perspective is that we have seen much of this before in the various phases of IT evolution (time sharing, the information centre, application service providers etc.). While there has been a breakthrough in terms of reach, range and cost effectiveness of the technology many of the management issues are familiar.
Is one of these perspectives correct? What are the implications for benefits realization?
Thoughts…
I think there is value in both views. As so often, complex challenges need a variety of perspectives. I think we do have a lot to learn from the past and a lot of our accumulated knowledge remains valuable. On the other hand the pace of change and breadth of opportunities seem very different. I think there is a real danger of getting left behind by the organizations that develop the mix of capabilities required to seize the opportunities.
Arguably, trends such as Cloud are making it much easier to deploy IT solutions and services, so the driver of value continues to shift from solution development to strategic and entrepreneurial leadership of IT-enabled change.
Chapter 12
Is There a Strategic Role for the CIO and IT Function?
There are multiple perspectives on the strategic role of the CIO and IT function. Consider just a few options:
- IT is a commodity. The role is not strategic.
- IT is strategic but the role of the IT function is operational – developing and running systems. Business leaders are taking on the strategic leadership of IT.
- IT is strategic but strategic leadership will not come from the IT function. A new Innovation or Digital Business Director and team will lead on the strategic direction and opportunities.
Is there a right answer? What is the way forward for your organization? What are the risks and opportunities? How do you balance the theory with what works in practice?
Thoughts…
Peppard suggests that the role of the IT function will become more focused on business as usual, as capabilities for strategic leadership of IT exploitation and IT enabled change are embedded across an organization.