Driving Operational Excellence in IT ManagementPosted 04-10-2013
Driving Operational Excellence in IT Management
By James C. Hamilton
Companies that practice operational excellence in delivering internal IT services enjoy a distinct advantage over their competitors. Despite all the marketing hype from computer vendors about the latest “gee whiz” technology or killer app, the true and lasting competitive edge from IT is achieved by a disciplined commitment to operational excellence in IT management. By applying a strict management discipline and following proven best practices, the IT function can be transformed from a difficult-to-manage cost center into a value-added service to the corporation. This approach has been proven to be a winning strategy throughout the highs and lows of business cycles, and it is an even more important discipline for companies weathering the storms of a recession.
Over the years, IT in the corporate world has seen an enormous amount of change, both in the rapidly evolving technology itself, but also in the approach to effective management of these complex systems.
The good news is that IT has been an enormous enabler of productivity and with the powerful networks, computing platforms, and sophisticated application environments available today, enterprises can do so much more—and do it more rapidly and economically—than ever before. With the advent of the PC, the Internet, and other portable and wireless personal devices, businesses and consumers can employ an impressive array of capabilities, such as information access, information sharing, knowledge acquisition, decision making, automation, and market development, that were not possible just several years ago.
However, while much has changed, many of the challenges experienced by business leaders—as they try to make sense of the complexities, opportunities, risks and costs associated with IT—remain the same. Many companies are struggling with these challenges, and they are also missing out on opportunities that go well beyond the immediate internal efficiencies that result from an operationally excellent IT function. IT today is absolutely critical to any business, and while some business leaders may still consider IT to be non-core or non-strategic, most CEOs recognize that their businesses cannot survive and prosper without a well-functioning IT service, underpinning and supporting every transaction and activity throughout the enterprise.
The average company today spends between 4 and 5 percent of revenue on IT, and the figure can be 10 percent or more in industries highly dependent on IT. This is a substantial investment that can add significant value to the corporation, but it also represents a very large component of expense. However, the quality (or lack thereof) of IT services can have an even broader impact on the success of the enterprise. IT service management can literally make the difference between a thriving, successful business and one that struggles—or fails. Information technology is an integral and vital element of any organization, and a smooth-running IT operation will not only directly impact the bottom line, but it will also project a quality, professional image of the company externally.
From a business leader's perspective, the world of IT can be an intimidating maze of terminology and hype, one with an insatiable appetite for new and ongoing project funding. Business leaders struggle with questions of how much to spend on IT, how to ensure benefits will accrue from the very significant investments, and how to effectively organize and manage IT. This is all the more challenging as IT is not normally the main mission of the enterprise, nor the core competence of senior business leaders. Even within IT management circles, the complexities can be overwhelming in the absence of a disciplined approach to managing IT services.
As a consequence, there is ample evidence today in trade journals and the popular press about IT management failures, and many published surveys show a low level of satisfaction with the performance of internal IT departments. Across all industries there is a widespread need to demystify IT from a business perspective and to provide a blueprint for managing IT services in the corporation. There are no magic answers, but by learning from what has worked well over many years, a clear picture emerges of what a company needs to excel at.
Driving Operational Excellence in IT Management
Success is the result of meticulous preparation, following sound, proven processes and hard work. Excellence in IT operations results from a habitual and relentless commitment to executing quality IT processes that are tightly coupled with the business processes they serve, a strong focus on managing the details, and a pervasive culture of continuous improvement. It starts with the engagement and commitment of the CEO and the senior executive team, which is composed of business and IT leaders. It requires implementing mechanisms to ensure that IT activities are fully aligned with business priorities, and that they remain aligned. Important concepts—such as developing and adhering to an IT architecture and key strategic principles, organizing and delivering services, measuring and stewarding performance, and implementing a culture of continuous improvement—are all critical to the success of the enterprise.
Applying the discipline of operational excellence across all aspects of a company's business activities is a key competitive advantage, and nowhere is this more evident than in the realm of internal IT services. Operationally excellent companies get more value from their IT investments and benefit from a much more stable and robust operating environment. They avoid debilitating scenarios in which a server crashes with no viable back-up, ransomware shuts down the network, security breaches compromise corporate databases, or large and costly IT projects fail due to poor definition or execution. Employing a disciplined IT management process can have a dramatic effect on the bottom line, and in some cases it may determine the long-term viability of the enterprise.
Excellence in managing IT processes and consistently executing best practices are the keys to success. Yes, there is a need to stay abreast of emerging technologies and to capitalize on these at the right time in the product cycle, and companies need to monitor the marketplace and quickly identify new trends that can offer an advantage. From time to time, individual companies will realize significant advantages from implementing new technologies; however, these advantages will tend to be short-lived as competitors follow suit and catch up. It is also very true that, depending on the industry, there will be specialized areas of technology that companies need to stay on top of in order to be industry leaders, but the enduring competitive edge will be achieved through operational excellence in managing these IT services.
Companies that master the discipline of operational excellence in managing their IT services will see benefits in a number of critical areas, including flawless execution; robust, reliable operations; lower costs; effective change management; and a “great deal” for the customer.
Companies committed to operational excellence in managing IT services gain a real and sustained competitive advantage in terms of reliability, effectiveness, efficiency and cost control. This means keeping a strong focus on “doing the right things” and “doing things right” in IT service delivery.
About the Author
James C. Hamilton is the principal and founder of JCHamilton Consulting LLC. He is the author of Unlocking the Power of Information Technology, and an experienced IT manager and consultant with a broad background in managing all aspects of IT for large corporations. He has held a variety of executive and senior IT management positions within ExxonMobil Corporation, Exxon Chemical Company, Imperial Oil Limited and TPC Group.