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- 2. 2© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
Setting the Stage – World-
Class IT Organizations Moving
from IT Effectiveness to
Business Effectiveness
“What are they Doing?” –
Transitioning IT Service
Delivery Model to Delivering
Innovative Business Outcomes
“How are they Doing it?” –
Leveraging the “Post ERP”
agenda as a Transformational
Lever
Q/A
- 3. Setting the Stage –
World-Class IT
Organizations Moving
from IT Effectiveness to
Business Effectiveness
- 4. 4© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
56%
36%
Peer Group World Class
EffectivenessEfficiency
HR Cost (per employee)
Source: 2015 Hackett G&A Benchmark Database
53%
100%
Peer Group World Class
Peer Group World Class
Extent senior HR executives tie
business strategy to people
strategy
$1.6K
$2.3K
Peer Group World Class
Procurement Cost (% of spend)
Peer Group World Class
.59%
.73%
Cost savings around annual
procuring of products & services
% of FN analysts' time spent
collecting vs. analyzing
Finance Cost (% of revenue)
1.03%
0.59%
Peer Group World Class
43%
32%
60%
Peer Group World Class
% Projects Meeting ROI
Peer Group World Class
IT Cost (per end user Equivalent)
$6.1 K
$7.6K
World-Class IT organizations aggressively focus on
driving business outcomes outside of IT
Finance IT HR Procurement
36%
19% 31% 18%
116%
88%
90%
4.4x
9.4x
- 5. 5© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
And they do so by maximizing the total contribution of the
three basic components of business value
ITEffectiveness
IT Efficiency
Improving the “Old”
Innovating the “New”
Running the “Railroad”
1
2
3
- 6. 6© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Simply put, IT has three basic capabilities to generate direct
business value outside of IT
Data
Business Process
Enablement
Decision Support
Functional
Cost Savings
Customer
Engagement
IT Business Value
Drivers
IT Value-add Capabilities
Applications
Infrastructure
- 7. 7© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
But even internal IT support processes can directly impact
business value
30%
49%
0%
10%
20%
30%
40%
50%
60%
None/ Low Medium/High
ProjectDelivery
PerformanceIndex
Utilisation of Centralised Request Management
Centralized Request Management Impact on
Delivery Performance
63%
32%
52%
0%
10%
20%
30%
40%
50%
60%
None/ Low Medium/High
BusinessOutcomes
PerformanceIndex
Utilisation of Business Cases with CBA
Business Case Study and CBA Impact
Business Outcome Performance
38%
58%
None/ Low Medium/High
Adherence to Methodology Standards
Methodology Standards Impact on
Delivery Performance
12%
50%
0%
10%
20%
30%
40%
50%
60%
None/ Low Medium/High
BusinessOutcomes
PerformanceIndex
Utilisation of Centralised Request Management
Centralized Request Management Impact on
Business Outcome Performance
4x
40%
62%
0%
10%
20%
30%
40%
50%
60%
70%
None/ Low Medium/High
BusinessOutcomes
PerformanceIndex
Utilisation of Project Reviews
Centralized Request Management Impact on
Delivery Performance
63%
18%
57%
None/ Low Medium/High
Adherence to Architecture Standards
Architecture Standards Impact on Business
Outcomes Performance
55%
Those with a centralized process for
managing IT demand enjoy 63% greater
delivery performance and over 4x
greater business outcomes
performance than those that do not.
Selecting projects based on business
cases that include a cost-benefit analysis
attain 63% greater business outcome
performance. Reviewing projects
against those business cases can give a
55% performance edge.
A narrow footprint of methodologies
positively impacts delivery performance.
Architecture standards positively impact
business outcomes performance
Centralized Demand Management
Business Case Evaluation
Process & Architecture Standards
- 8. 8© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
And finally, a new breed of “IT Business Value Optimization” must be
leveraged to address the convergence of Business & IT objectives and
strategies
Quality of service
Operational efficiency
Cost Takeout
“ROI”
Strategic alignment
Shareholder value
Revenue growth
IT Value Creation
Components
IT Business Value Optimization Processes
IT Value Measurement Framework
Portfolio
Management
Business Relationship Management
Governance
Performance Management
Technology
Strategy &
Roadmap
Run the business
Improve the business
Innovate the business
Technology
Value Drivers
(Capabilities)
Business
Value Drivers
Shareholder
Value Drivers
- 9. 9© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Organizations are leveraging IT business value management
(BVM) frameworks as a tool to align IT & the business
One example of the model that translates the concept into execution
- 10. 10© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
It’s critical that the framework focus on Targeting, Improving,
Measuring, and Tracking Business Outcomes as well as TCO
The IT BVM Framework
1. IT Financial Management
2. Business Benefits Accounting
3. Business Value Contribution as KPI
4. Move up the Maturity Curve
5. Account for Delivery and
Consumption of IT
Do Wells
- 11. 11© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
World-Class IT
Moving from IT Effectiveness to Business Effectiveness
Key Takeaways
1. World-Class IT organizations are moving from driving IT Effectiveness to Business
Effectiveness
2. IT Service Delivery Models are transitioning to measuring and delivering targeted business
outcomes
3. World-Class IT organizations maximize the total contribution of the three components of IT
business value: Run the Railroad, Improve Business Ops, Disruptive Digital Innovation
4. Achieving World-class performance requires the design and execution of an optimized
Service Delivery Model
5. There is currently an IT Skills Gap in most companies in areas critical to driving partnership
and collaboration with the Business including, collaboration, relationship management,
process improvement, analytics.
6. Business Value optimization requires alignment of business and IT goals, objectives and
KPIs – Business & IT Value Drivers are converging
7. IT value measurement framework must be complemented with discrete competencies to
optimize value
- 12. “What are they Doing?” –
Transitioning IT Service
Delivery Model to
Delivering Innovative
Business Outcomes
- 13. 13© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Enterprise innovation agenda and business services
80%
75%
13%
15%
7%
10%
Strongly Agree/Agree Neutral Disagree/Strongly Disagree
Percent of IT organizations
planning to great expand their
role in supporting enterprise
innovation in the next 5 year;
100%
Business services (incl IT) are
integral to supporting our
company’s innovative capability
Business services (incl IT) need
structural transformation to
adequately support
enterprise innovation
Source: Hackett 2014 Innovation Study
Innovative Service Delivery Enable Enterprise Delivery
Service
Delivery
Components
Information
Service
Placement
Process
Sourcing
Process
Design
Enabling
Technology
Skills
&
Talent
Governance
&
Organization
- 14. 14© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Priority of IT's 2015 objectives
IT is focusing on improving alignment and agility, without sacrificing efficiency and
customer service levels
37%
32%
16%
16%
37%
16%
32%
16%
Improve IT support of
execution of strategic and
operational plans of the
business
Improve IT's ability to
respond swiftly to changes
in business demands (i.e.
agility)
Drive down cost of the IT
function through efficiency
and productivity
improvement
Improve IT customer
experience / service levels
Priority #1 Priority #2
Source: Key Issues Study, The Hackett Group, 2015
Priority of IT objectives, 2015 Hackett IT Value Pyramid
Drive
Business
outcomes
Enhance business
agility
Deliver new business
capabilities
Run the business
Innovate
OperationalStrategic
- 15. 15© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Innovation – Finding a new or better way of doing
something
EFFICIENCY
(reduce costs)
SUSTAINING
(improved replacement)
DISRUPTIVE
(change the way we live, work, play)
- 16. 16© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Five key technologies driving business innovation
Platform 1.0:
Computing
Platform
centric
Platform 2.0:
Interconnected
computing
platforms
Value driver: Efficiency improvement
Silo’ed technology support for business
Value driver: business process improvement
Pervasive technology adoption in business
Platform 3.0:
Interconnected
virtual
services
Time
Value
OS 390
Value driver: Business model innovation and disruption
Convergence of technology and business
Commoditization
Commoditization
Innovation
Innovation
Innovation
Client/
Server
Middle-
ware
Internet
Analytics
(big data)
Cloud
Internet of
Everything
Social
Media
Mobile
Commoditization
We are here
Source: The Hackett Group
- 17. 17© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
“Digital transformation” is an enterprise-wide value opportunity – An
opportunity to “rebrand” IT around a proactive focus on Digital Business
Transformation leveraging ERP at the CORE
Digital Business Transformation
“The pervasive use of digital technology in
products, services and value chains,
fundamentally transforming traditional
business outcomes
Technology
Innovation
Business
Innovation
- 18. 18© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Digital Business Transformation
“The pervasive use of digital technology in
products, services and value chains,
fundamentally transforming traditional
business outcomes
Technology
Innovation
Business
Innovation
“Digital transformation” can be leveraged as a way to
develop both culture and buy in across the business
- 19. 19© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Enabling business innovation through six “Do Wells”
1. Re-allocate resources towards
innovation supporting activities by
bridging the efficiency gap
2. Redefine IT’s Role and Value
Proposition
3. Cultivate and mobilize organization-
wide technology talent
4. Adapt solution development
methodology to demands of digital
business and platform 3.0
5. Develop the competencies needed to
support next generation BI &
Analytics
6. Develop or adopt new thinking &
processes to innovate
- 20. 20© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Category 1 Category 2 Category 2 Category 3
Category 1 Category 2 Category 2 Category 3
#1: Re-allocate resources towards innovation supporting
activities by bridging the efficiency gap
Business Improvement
Innovation
Run the business
Value Multiplier < 1
Value Multiplier = 1 - 5
Value Multiplier = 5 - 10
Resource Allocation
0%
100%
Value Creation
ROI = 0% - 50% ROI = 50% - 100% ROI > 100%
Cost
Benefit
(Value)
Source: The Hackett Group
Efficiency
Gap
Effectiveness
Gap
Business PartnerUtility
- 21. 21© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
#2: Redefine IT’s role and value proposition
Cohesive bundles of products, services and
delivery mechanisms
Business
strategy
partner
Business
results driver
Business
effectiveness
enhancer
Business
capability
provider
Business
utility provider
Create new business ecosystems,
revenue streams and lines of
business
Identify opportunities for
boosting business revenue and
margin, shape the benefits that
get realized
Proactively enable business partners
to respond quickly to changing
conditions
Value
Provide the right business
capabilities at the right time
Bulletproof business
operations
Just-in-time time business insight,
scenario modeling, product mix and
profitability assessment
Intelligent process automation, self-
service, effective enterprise
architecture
Low IT complexity, effective
demand and program
management
Efficient and effective
provisioning of IT
capabilities
Drive
Business
outcomes
Enhance business agility
Deliver new business capabilities
Run the business
Innovate
Source: The Hackett Group
Value proposition of IT Key IT competencies Role of IT
- 22. 22© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Skills &
talent
management
#3: Cultivate and mobilize organization-wide
technology talent
Source: The Hackett Group
Pressure
for profits Increased volatility/
uncertainty
Decreased emphasis
on administrative/
transactional work
Need to deliver
high value
Globalization of
talent pools
Greater demand
for business skills
Demographic
shiftsService providers
drawing top talent
More
outsourcing
Global growth
imperative
Education/training
not keeping pace
Business
drivers
Technology
drivers
Talent
drivers
IT–enabled
tools
Task
automation/
digitization
Large amounts of data
Greater
dependence
on IT
Technology innovation;
I-SMAC
Function
drivers
- 23. 23© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
#4: Adapt solution development methodology to demands
of digital business and platform 3.0
Requirements
Analysis
Design
Coding
Testing
Acceptance
Development cycle time: months or years Development cycle-time: days or week
Platform 1.0 – 2.0: Waterfall Platform 2.0 – 3.0: Agile
STORY 2
Develop,
integrate & test
STORY n
Develop,
integrate & test
RELEASE
Feedback,
review &
accept
STORY 1
Develop,
integrate &
test
CONTINUE
Iteration ADJUST
Priorities
RECORD
Changes
DEPLOY
INITIATE
Define,
requirements
& priorities
- 24. 24© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
#5: Develop the competencies needed to support next
generation BI & Analytics
Need for a new BI “paradigm” - Sensemaking The next generation BI capability – Sensemaking – will
drive sustainable competitive advantage
An illustrative Sense-making thinking model
- 25. 25© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
#6: Develop or adopt new thinking & processes to
innovate
1. A Well-Defined Goal
2. Design-Thinking Based or Similar
Innovation Process
3. Need to Link Innovation Process To
Operational Implementation
4. The Right People & Competencies
5. The Right Tools For Collaboration &
Knowledge Sharing
- 26. 26© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Current trend - IT service delivery transition to delivering
innovative business outcomes
Key Takeaways
1. The importance of innovation is increasing – universally. 98% of companies believe
innovation is a strategic differentiator
2. Only 1/3 of companies believe they have the KPIs, practices, incentives in place to foster
innovation
3. Priority of IT's 2015 objectives - IT is focusing on improving business alignment and
agility, without sacrificing efficiency and customer service levels
4. “Digital transformation” is an enterprise-wide value opportunity – An opportunity to
“rebrand” IT around a proactive focus on Digital Business Transformation leveraging ERP
at the CORE. “Digital transformation” can be leveraged as a way to develop both culture
and buy-in across the business
5. Enabling Business innovation requires Six “Do Wells” addressing resource allocation, IT
role redefinition, talent cultivation, new solution development methods, developing
analytics competencies & capabilities, as well as a wholly new way thinking and process
around innovation.
- 27. “How are they Doing it?”
- Leveraging the “Post
ERP” agenda as a
Transformational Lever
- 28. 28© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
#1 Best Practice Pillars for Post Implementation ERP Support –
Transition from a Technology Implementation organization to a Process Excellence
organization
Break fix
Configuration
Software Updates
Performance Tuning
1. Keeper of the “golden
template”
2. Actively pursue process
improvements
3. Actively pursue BI &
Analytics Improvements
4. Drive performance through
process and business value
metrics
5. Prioritize demand and
execute
Business Value FocusedTechnology Focused
Production
Support
Process
Excellence
Architecture &
Integration
BI & Analytics
Excellence Technology footprint
Data Integration
App Services
UIX and Mobility
ODS
DW
Reporting &
Analysis
Advanced
Analytics
Contract to Cash
Forecast to Fulfill
Source to Settle
Account to Report
Regulatory/ Compliance
Role
- 29. 29© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Roadmap to Future-
State SDM
Recommended approach to building the “Post-ERP”
service delivery model (SDM)
The Service Delivery Model (SDM) playbook is a standard methodology containing a logical
sequence of steps and a collection of supporting templates that can be applied to improve the
delivery of a broad range of services (business or IT).
Current-State
Service
Delivery Model
Requirements
for Future-
State Services
StrategicAlignment
Organizational
Capabilities
Performance
Goals
Design &
Operating
Principles
Service Delivery
Transformation
Organizational
Acceptance
Execution
Capabilities
Implementation
Roadmap
Service Delivery Model
Service
Delivery
Information
Service
Placement
Process
Sourcing
Process Design
Enabling
Technology
Skills & Talent
Governance &
Organization
Strategic Drivers
+
Activities to Establish
Future-State SDM
Future-State Service
Delivery Model for Targeted
Services
Service Delivery
Model Playbook
Ongoing Transformation Initiatives
- 30. 30© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Example IT Operating Model – “Aligned to the Business”, and to drive
“Technology Enablement” – The new Post ERP organization must be
rationalized and aligned with the rest of IT
BU 1
BU 2
BU 4
A
B
C
B
u
s
i
n
e
s
s
BPO
CIO
EPMO
Relationship
Management
Business
Planning
Business Enablement
Governance Structure
Service
Management
Business
Relationship Mgmt
Business
Solutions
Solution Design
/Build/ Delivery
Strategy &
Emerging
Technology
(this group will be
responsible for driving
2-5 strategic year
plan)
ITaaS
Service Vendor
Capacity
SecurityQuality
Assurance
Integrated
Service Desk
Information Mgmt.
BU 3
Emerging
Technologies
Strategy &
Consulting
New
Business
Solutions
Technology
Architect &
Strategy
Technology Enablement
Digital Transformation
Process Excellence
Business Analytics
- 31. 31© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Ad hoc Mature
Silo’ed Integrated
Operational
Strategic
Value
BRM Engagement model
None
Extensive
DemandManagement
Capability
Best practice post ERP support requires a multi-
dimensional focus on partnering with the business
Source: The Hackett Group
Run the business
Deliver new business
capabilities
Enhance business
agility
Drive
Business
outcomes
Innovate
Prioritization
Relationships Accountability
Communication Standardization
InnovationDecision Making
Business
Relationship
Manager
1. Lagging
2. Achieving
3. Exceeding
4. Leading
Increasing
focus on value
delivered
Pushing the outer
boundaries of
effectiveness
Registered
Demand Filtered
Demand Assessed
Demand
Prioritized
Demand Scheduled
Demand Executed
Demand
Basic
Information
about
Request
Prospective
Projects
Triaged for
Next Step
Project has
Sponsorship
“Project on
a Page”
Benefits or
Business
Case
Scoring
Allocation,
Forecast &
Schedule
Project
Delivery
$
- 32. 32© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
IT business value management (BVM) is a way to measure and drive
ongoing IT business value
ERP Post Implementation Support – Need to transition from transactional implementation
to innovate the business
Cohesive bundles of products, services and
delivery mechanisms
Business
strategy partner
Business
results driver
Business
effectiveness
enhancer
Business
capability
provider
Business utility
provider
Create new business ecosystems,
revenue streams and lines of business
Identify opportunities for boosting
business revenue and margin,
shape the benefits that get realized
Proactively enable business partners to
respond quickly to changing conditions
Value
Provide the right business
capabilities at the right time
Bulletproof business
operations
Just-in-time time business insight, scenario
modeling, product mix and profitability
assessment
Intelligent process automation, self-
service, effective enterprise architecture
Low IT complexity, effective
demand and program
management
Efficient and effective
provisioning of IT capabilities
Drive
Business
outcomes
Enhance business agility
Deliver new business capabilities
Run the business
Innovate
Value proposition of IT Key IT competencies Role of IT
- 33. 33© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Design approach - Leveraging the “Post ERP” agenda as a
transformational lever
Key Takeaways
1. Best Practice Pillars for Post Implementation ERP Support – Transition from a technology
implementation organization to a Process Excellence organization
2. Pre to Post ERP Implementation Support should be viewed as a Transformation Journey in
itself.
3. Leverage a holistic Service Delivery Model (SDM) as the key approach to building an ERP
Post-Implementation Support Model including: governance/organization, information needs,
service placement, process sourcing, process design, enabling technology, skills & Talent
4. Best Practice Post ERP Support requires a multi-dimensional focus on partnering with the
business including: Demand Management, Business Relationship Management, Business
Value Partnership, Process Maturity.
5. IT Business Value Management (BVM) Framework – A way to measure and drive ongoing
IT Business Value