Economic downturns and financial duress tend to lead enterprises and industries to toughen up their governance practices. All too often, we see these tightened controls relax again once dollars start to flow and budgets for IT projects increase. It's smart, though, to retain rigorous governance practices in good times. This way, when the next downward cycle hits, your IT organization will already have its practices fine-tuned, and it will not have to scramble to create processes applicable to distressed times.
David Smoley, senior vice president and CIO of Flextronics International, says one key to his team's success has been imitating the "lean" practices of his business partners. "In getting closer with our business colleagues, we have adopted their practices, which have translated into better governance practices," he says. Although Flextronics, a provider of vertically integrated advanced design and electronics manufacturing services to original equipment manufacturers, recently announced record earnings, Smoley is in the midst of a global optimization campaign to continue to ensure that IT is operating as efficiently as possible.
This begins with having a solid prioritization process. By standardizing around criteria, it is possible to generate a true one to "n" list of projects across business units. The following criteria are of greatest importance to consider in building your prioritization process:
- strategic fit;
- return on investment;
- project interdependency; and
- project risk.
You'll also want to bolster portfolio-management practices. This includes having the right people in place, perhaps in a program-management office, and the right processes in place to ensure that data is entered in a timely fashion. It also includes investing in tools that will provide a window into the health of the portfolio, and allow for quick action to course- correct when necessary.
Duane Anderson is CIO at Marquette Group, an advertising agency that delivers qualified, local customers to national brands by designing integrated media strategies, and USMotivation, which focuses on incentive strategies, group travel and creative communications.
Says Anderson: "We evaluated our IT portfolio and found we were focused on too many smaller projects that didn't always align with our strategic goals and move the company, or our customers, forward.
"With senior leadership buy-in, we focused on a smaller number of high-impact projects and included these as part of our annual strategic planning function to ensure the most senior-level focus. This has allowed us to really move the dial on strategic efforts, such as growing our revenues non-linearly with costs and greatly increasing our customer-facing IT efforts."
Likewise, project management and execution must be contemplated. This requires having a robust development life cycle in place with stage gates at which projects can be continually evaluated. Although there may be different "flavors" of the life cycle to accommodate projects of different sizes (in terms of budget and timing), some principles should be common across all development efforts.
For example, ensuring that projects are developed on-time, on-budget and on-scope is essential. These three metrics should be your baseline to determine the efficacy of the project-management and execution practices.
As part of your good governance efforts, you'll want to focus on developing robust vendor-management practices. If you don't already have solid project- and portfolio-management practices in place, it is almost impossible to manage vendors to assure the highest level of value.
Flextronics' Smoley asserts that improved vendor-management practices have been a major factor in his team's success: "We rely on our vendors to a great extent, and we have developed practices to ensure that we get the most out of them, while also treating them like true partners rather than like vendors." Rather than having the company's sourcing department take over this process, Smoley's team is involved in RFPs, contracting, onboarding and managing external partners to ensure that the relationship is always managed with value in mind.