IT Strategy & Business Alignment
IT strategy is about how IT will help the organization win in its chosen markets. IT strategy has two roles of guiding the business strategy and IT delivering on the business strategy. 'What does a great IT strategy look like?' is hard to define. Gartner, one of the world's leading IT research and advisory company's believe it should include information on demand, control and supply as shown in the figure below.
IT Strategy Planning:
Covers business models, business strategy, growth markets served, customer segments and relevant technology trends.
Clarifies the organizations strategic ambitions of "How we will win" and it is about the overall direction to drive business success.
Used to bridge the gap between out-ward facing corporate strategy and inward-facing internal plans and activities
Describes IT's 'value proposition' to the business and should form the core of the IT teams strategy.
Describes IT contribution (if any) to the organization's innovation process and environment required to support this.
Drive behaviors and provide a framework to guide the IT leadership team's strategic decisions.
The definition of decision rights and the accountability framework to encourage desirable behavior in the use of IT - how IT decisions get made strategically.
IT Financial Management
Describes how finances flow in and out of the IT function supported by planning, cost control and allocation financial processes.
Used to measure success of the IT organization clearly linked to business success metrics.
Project & Portfolio Management (PPM)
Covers the approach taken to determine the optimal mix and sequencing of proposed IT projects to best achieve the organization's business goals.
Covers the scope, depth and breadth, of IT services and processes provided by the IT team.
Enterprise Architecture (EA)
The construct used to describe the relationship between the organizations business, applications, technology and information services.
Assessment of the people capability and training needs today and in the future as well as critical HR processes.
Covers the organizations approach to IT sourcing across the different IT services.
Describes linkages between the strategy components such as the inter-dependencies between project portfolio management, EA and the application portfolio life cycle.
Role of IT has shifted beyond its traditional back office support model to provide an integral part of an organizational strategy. Organizations fail to realize the value of IT investments due to the lack of alignment between the business and IT strategies of an organization.
Proper alignment will allow an organization to use information technology efficiently to achieve it's business objectives.
The Strategic Alignment Model (SAM) is based on the concept of strategic fit between external and internal views and the functional integration between business strategic view and technology views.
There are four domains involved in the strategic alignment model. There are two internal and two external domains.
External: Business Strategy and IT Strategy
Internal: Business Infrastructure and IT Infrastructure
IT Alignment Model : Technology Transformation Model
The technology transformation model is the ability to transform technology into business success.
This perspective is anchored on the notion that a business strategy through appropriate IT strategy and the articulation of the required infrastructure and processes.
- What is KPI ?
- KPI is a measure of efficiency or effectiveness. It is also called "strategic measure"-are both actions and tools of measurement used to monitor the progress toward achieving these objectives.
- KPI was introduced by Peter Drucker when he envisaged "management by objectives" a situation where defining a clear objective is paramount in effective management.
- KPI Framework : A framework consisting of processes, measures, and targets that are used to communicate, monitor and manage performance as well as align resources to achieve the objectives of the organization. Result indicators: Tell you what you have done. Performance indicators: Tell you what you must do.
It's also called "Balanced scorecard measures" as follows.
Type of Indicators
- Financial Indicator
- Process Indicators
- Customer Service, SLA and Satisfaction Indicators
- Organization Culture Indicators
Balanced score card measures
1. Working Capital KPI
2. Operating Cash Flow KPI
3. Current Ratio KPI
4. Payroll Headcount Ratio KPI
5. Return on Equity KPI
6. Quick Ratio/Acid Test KPI
7. Debt to Equity Ratio
8. Accounts Payable Turnover KPI
9. Accounts Receivable Turnover KPI
10. Inventory Turnover KPI
11. Net Profit Margin KPI
12. Gross Profit Margin KPI
13. Finance Error Report KPI
14. Payment Error Rate KPI
15. Budget Variance KPI
16. Line Items in Budget KPI
17. Budget Creation Cycle Time KPI
18. Expense Management KPI
19. Internal Audit Cycle Time KPI
20. Customer Satisfaction KPI
Customer Service - Quality Key Performance Indicators
The following are KPI examples for gauging Customer Service Quality performance:
Cycle time from request to delivery
Call length - the time to answer a call
Volume of calls handled - per call center staff
Number of escalations how many bad
Number of reminders - how many at risk
Number of alerts - overall summary
Customer ratings of service - customer satisfaction
Number of customer complaints - problems
Number of late tasks - late
Process Performance Indicators
Percentage of processes where completion falls within +/- 5% of the estimated completion
Average process overdue time
Percentage of overdue processes
Average process age
Percentage of processes where the actual number assigned resources is less than planned number of assigned resources
Sum of costs of "killed" / stopped active processes
Average time to complete task
Sum of deviation of time (e.g. in days) against planned schedule of all active projects
Process Efficiency Indicators
The following are KPI examples indicating Efficiency performance:
Cycle time from request to delivery
Average cycle time from request to delivery
Volume of tasks per staff
Number of staff involved
Number of reminders
Number of alerts
Customer ratings of service
Number of customer complaints
Number of process errors
Number of human errors
Time allocated for administration, management, training
Organization Culture KPIs
Employee Satisfaction Index
Number of Employee Satisfaction Surveys
Percentage of Employees Trained in Company Culture
Percentage of Vacation Days Used
How do you Measure the Business Success?
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How do you want to measure success?
KPIs and NPS - To define what success looks like!
There are many factors that drive success for a business, but it's difficult to know which factors are the most critical unless they are being tracked. If you aren't looking at something, how can you tell if it improves or declines? Determining key business drivers and tracking their progress will help ensure that nothing slips through the cracks.
Because what gets measured gets managed!
Measure Accountability: Key Performance Indicators (KPIs) are the backbone of business and it encourages manager's accountability. Holding employees accountable for improving the KPIs under their control provides them (and their managers) with a yardstick to measure their performance.
Measure Productivity: KPI are important element of a business in tracking the business process parameters and the productivity. It is important to develop realistic and achievable KPIs and consistently meet or exceed the set targets.
Strategic Planning and Portfolio Alignment
A collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives.
Business Strategy-Formulation Analytical Framework
The Input Stage
IFE - Internal Factor Evaluation Matrix, EFE- External Factor Evaluation Matrix and CPM - Competitive Profile Matrix
2. The Matching Stage
SWOT Matrix, Space Matrix, BCG Matrix, IE Matrix and Grand Strategy Matrix
3. The Decision Stage
Quantitative Strategic Planning Matrix (QSPM)
Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management approach for evaluating possible strategies. QSPM provides an analytical method for comparing feasible alternative actions. The QSPM method falls within so-called stage 3 of the strategy formulation analytical framework.
QSPM approach attempts to objectively select the best strategy using input from other management techniques and some easy computations The QSPM method uses inputs from stage 1 analyses, matches them with results from stage 2 analyses, and then decides objectively among alternative strategies.
Steps to form a QSPM
1. The overall strategic management analysis is used to identify key strategic factors. This can be done using the EFE & IFE matrix.
2. Formulation of the type of the strategy we would like to pursue. This can be done using the SWOT analysis, SPACE matrix analysis, BCG Matrix Model, or the IE matrix model.
3. Each key external and internal factor should have some weight in the overall scheme. These weights from the IFE and EFE matrices.
4. Attractiveness Scores (AS) how each factor is important or attractive to each alternative strategy. Attractiveness Scores are determined by examining each key external and internal factor separately(0,1,2,3,4).
5. Total Attractiveness Scores are defined as the product of multiplying the weights (step 3) by the Attractiveness Scores (step 4) in each row.
6. Calculate the Sum Total Attractiveness Score by adding all total Attractiveness Scores in each strategy column of the QSPM.
- Exploration Phase
- Execution Phase
- Validation Phase
- Deployment Phase
Goal is to understand the use of KPIs and identify KPIs that the SCA should consider for performance management of design and construction projects.
Result: Set of recommended KPIs for the M&D Task Force and Technical Analyst to review.
Goal Identification of the software tools available to collect, analyze, and report on the selected KPIs. Approval of the suggested KPIs.
Result: Defined set of KPIs, along with a rollout strategy, to present to the SCA Steering Committee.
Goal Select real-life projects to pilot the KPIs against.
Result: Feedback results from actual implementation of the KPIs.
Goal officially release the final set of KPIs to the entire organization, and prepare for continuous improvement.
Result: Achieved the M&D Task Force goal of establishing performance management measures for design and construction projects.
KPI - Life Cycle
Identify categories to group KPIs to ease the communication and implementation of these performance measures.
Inventory existing KPIs, query industry standard and institutional KPIs, and assign them to the KPI categories.
M&D Task Force/Technical Analyst reviews the proposed KPIs and approves the KPIs prior to submitting them to the SCA Steering Committee.
Accept, eliminate, or establish mitigation plans for any risks identified during the Review of KPIs.
Establish a timeline, with measurement targets, for the deployment of the new KPIs.
Identify the Phase 2 Activity to ensure that a vehicle is put in place to consistently receive and act on the acquired process improvement data.
Market the design and construction performance management strategy to support organizational change management.
What is the Net Promoter Score?
Customer Loyalty Metric
Indication of the growth potential of your company or product
Easy Interpretable Customer Satisfaction Score
How to improve NPS?
Passives do not count.
Harder to make a passive a promoter.
Detractors share more.
Easier and better to convert a detractor to a passive.
Get everyone in your organization involved.