Challenges Facing Business Leaders in the New Millennium Zia Qureshi, Chief Executive & Chairman Business Catalyst International Zia Qureshi, Chief Executive & Chairman Business Catalyst International Business Practices for IT Strategy and Management Frameworks to Maximise Business Practices for IT Strategy and Management Frameworks to Maximise

This presentation is based on unique insights gained through our extensive practical work with Blue Chip clients, research and innovative ideas. IT focuses on four key topics. Introduction 1. Business IT Strategy and Management Framework for sustainable business performance 2.IT Benefit realisation - Are we doing enough? 3. Impact of Technology on organisational success - the hidden risks 4. Challenges facing Organisational Leaders/ Chief Executive Officers

We see many different approaches to IT strategy and management framework across our client base They all claim to achieve business and IT alignment, management involvement and achievement of the usual benefits Achievement of true business alignment, optimisation of IT benefits and avoiding major disasters are still rare events. We see many different approaches to IT strategy and management framework across our client base They all claim to achieve business and IT alignment, management involvement and achievement of the usual benefits Achievement of true business alignment, optimisation of IT benefits and avoiding major disasters are still rare events. Introduction

Three main approaches to IT strategy and management frameworks: 1. IT leads and drives the strategy, structure and management framework 2. Business takes over responsibility for driving its IT strategy 3. Integrated business and IT planning, strategy, and management framework

Introduction Buzz words and jargon, make it difficult for CEO’s and Directors to identify which approach their organisation has taken. It is not so difficult for us (Business Catalyst) to determine which category a particular organisation is in. Buzz words and jargon, make it difficult for CEO’s and Directors to identify which approach their organisation has taken. It is not so difficult for us (Business Catalyst) to determine which category a particular organisation is in.

1.IT Leads  But the business doesn’t follow  IT people cannot be expected to understand business operations  IT people love to develop technically advanced systems Commercial reality High IT costs  But the business doesn’t follow  IT people cannot be expected to understand business operations  IT people love to develop technically advanced systems Commercial reality High IT costs

1. IT Leads (cont)  “Us and them” approach confusion in relation to accountability Business management have an easy way out … blame the IT department  End result: IT strategy and service delivery not aligned with business Business management do not try hard enough to realise the benefits of IT  “Us and them” approach confusion in relation to accountability Business management have an easy way out … blame the IT department  End result: IT strategy and service delivery not aligned with business Business management do not try hard enough to realise the benefits of IT

2. Business takes over IT (cont)  Knowledge gap in relation to IT can lead to two main problems: unrealistic IT delivery expectations fail to comprehend the emerging IT trends/options - strategy based on old technology paradigm  IT personnel lose interest - retention becomes a problem  Knowledge gap in relation to IT can lead to two main problems: unrealistic IT delivery expectations fail to comprehend the emerging IT trends/options - strategy based on old technology paradigm  IT personnel lose interest - retention becomes a problem

 Business management tends to rely too heavily on external advisors who may have vested interests in pushing a particular solution (eg. You need $120m SAP implementation to sort out all your problems and to get competitive advantage)  Usually leads to strategic misalignment, service delivery problems and project failures  Business management tends to rely too heavily on external advisors who may have vested interests in pushing a particular solution (eg. You need $120m SAP implementation to sort out all your problems and to get competitive advantage)  Usually leads to strategic misalignment, service delivery problems and project failures 2. Business takes over IT (cont)

3. Integrated Business & IT planning, strategy & management framework  Organisations that are maximising the benefits of IT use this approach  This is the only approach that will work in the new millennium  Organisations that are maximising the benefits of IT use this approach  This is the only approach that will work in the new millennium

Commonwealth Bank provides an excellent case study. CBA has been transforming its approach: from: “IT Leads and Drives” to: “Integrated Business and IT” Commonwealth Bank provides an excellent case study. CBA has been transforming its approach: from: “IT Leads and Drives” to: “Integrated Business and IT” 3. Integrated Business & IT planning, strategy & management framework (cont)

Integrated Business & IT  Business and IT alignment is achieved  Good potential to achieve optimised e-business model  Accountability rests with both business management and IT management There should be no option to blame each other - failure must impact the performance evaluation of both parties in the same manner  Business and IT alignment is achieved  Good potential to achieve optimised e-business model  Accountability rests with both business management and IT management There should be no option to blame each other - failure must impact the performance evaluation of both parties in the same manner

Integrated Business & IT  Learning organisation model can be achieved

Business Principles for IT Strategy & Management Framework IT Strategy reacts to Business Planning Three to Five Year Planning Horizon Preference for internal competence and knowledge predominantly in- house Hierarchical Discrete organisational functions Knowledge-orientated Traditional New Approach Business Leadership drives IT Strategy jointly with IT Managment Transitional Strategy - shorter term horizon - flexibility Significant outsourcing and external service providers Networked Integrated business & IT Teams Learning-orientated moving from traditional approach to e-business environment

Traditional New Approach 1. Business Leadership drives IT Strategy 2. Transitional Strategy - shorter term horizon - flexibility 3. Significant outsourcing and external service providers 4. Networked 5. Integrated Business and IS Teams 6. Learning-orientated 1. IT Strategy reacts to Business Planning 2. Three to Five Year Planning Horizon 3.Preference for internal competence and knowledge predominantly in-house 4. Hierarchical 5. Discrete organisational functions 6. Knowledge-orientated moving from traditional approach to e-business environment Business Principles for IT Strategy & Management Framework

Business IT Model Organisational frameworks need a significant change to implement the new Business IT model Business Leadership & Governanc e for IT Competency Business Architecture Competency Sourcing Competency Integration & Program Mgmt Competency Commercial Relationship Management Key Technology Programs Business Developed IT Imperatives Strategic Business Goals IT Investment Portfolio Management Business Systems Framework (Map) Business Direction & Transformation Goals (Integrated Business/ Technology Planning) (EXECS) InformationStrategic Transactional Infrastructure REQUIRES FUNDS DETERMINES GUIDES

IT Benefit Realisation Our experience shows that not enough effort is made to realise the benefits of IT Strategy Aligned Strategy Aligned Successful development & implementation Successful development & implementation Human capability development to effectively use available technology Human capability development to effectively use available technology Management Ownership, buy in & accountability Management Ownership, buy in & accountability Each of the following Key Areas is vital to benefit realisation & achieving value IT Benefits Realised/ Value delivery IT Benefits Realised/ Value delivery

IT Benefit Realisation The problem is often compounded by:  Flawed business cases  Capital expenditure justification is not rigorous enough  Post implementation reviews with a focus on benefit realisation are not conducted seriously/objectively  Realisation of benefits not monitored for management performance assessment  Learning does not take place The problem is often compounded by:  Flawed business cases  Capital expenditure justification is not rigorous enough  Post implementation reviews with a focus on benefit realisation are not conducted seriously/objectively  Realisation of benefits not monitored for management performance assessment  Learning does not take place

Organisational Success - the hidden risks  Impact of Technology on the Organisation’s Talent Pool When Technology changes in major ways - organisations can’t afford not to change: Negative impact on organisational talent pool - both existing and potential Can’t attract the best and brightest people - recruitment difficulties Existing people get concerned about their personal career development and marketability - move on in search of more “switched on/ progressive” organisations.  Impact of Technology on the Organisation’s Talent Pool When Technology changes in major ways - organisations can’t afford not to change: Negative impact on organisational talent pool - both existing and potential Can’t attract the best and brightest people - recruitment difficulties Existing people get concerned about their personal career development and marketability - move on in search of more “switched on/ progressive” organisations.

 IT outsourcing - a great opportunity that can become life threatening for organisations: IT outsourcing can’t be managed through traditional methods - it’s a lot more than a contract management exercise. Need to develop and implement new framework, processes, and skill sets for effectively managing service provider relationships.  IT outsourcing - a great opportunity that can become life threatening for organisations: IT outsourcing can’t be managed through traditional methods - it’s a lot more than a contract management exercise. Need to develop and implement new framework, processes, and skill sets for effectively managing service provider relationships. Organisational Success - the hidden risks

Organisational Success - the hidden risks (cont) Medium/ long term contracts become irrelevant within months of implementation. Outsourced service provider and management need to work as one team. Sharing risks and rewards The outsourced deal must be based on sound commercial footing rather than unrealistic promises/ expectations Medium/ long term contracts become irrelevant within months of implementation. Outsourced service provider and management need to work as one team. Sharing risks and rewards The outsourced deal must be based on sound commercial footing rather than unrealistic promises/ expectations

Organisational Success - the hidden risks (cont) The costs of IT disasters can be enormous both in $ terms and the organisational set back. Ensure adequate risk management practices, and effective auditing approach is in place. The costs of IT disasters can be enormous both in $ terms and the organisational set back. Ensure adequate risk management practices, and effective auditing approach is in place.

Challenges Facing the Business Leaders - You!  Learn learn learn… IT in a conceptual sense - it’s not too hard Invest personal development time Don’t get caught up in technical stuff Demonstrate understanding of new technology and commitment through actions Ensure appropriate level of IT knowledge becomes a core competency for all managers.  Learn learn learn… IT in a conceptual sense - it’s not too hard Invest personal development time Don’t get caught up in technical stuff Demonstrate understanding of new technology and commitment through actions Ensure appropriate level of IT knowledge becomes a core competency for all managers.

 If not already done so, commence a project to review and organise IT operations based on the key principles discussed today Change management must be well handled - will be critical in the rapidly changing face of technology Develop a culture in the organisation that focuses on benefit realisation through the effective utilisation of what we have at a particular point in time… as well as new developments - A Huge Challenge  If not already done so, commence a project to review and organise IT operations based on the key principles discussed today Change management must be well handled - will be critical in the rapidly changing face of technology Develop a culture in the organisation that focuses on benefit realisation through the effective utilisation of what we have at a particular point in time… as well as new developments - A Huge Challenge

Implement the concept of common business management and IT teams… as a mandatory requirement.