Growth of IT Outside IT - an Evolution of Success
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More and more, Information Technology is expanding beyond the domain of the IT department and Chief Information Officer. For some companies, this can be a symptom of an obsolete organizational structure or outdated IT. For other companies, this can be the sign of a successful evolution in management leadership and the growing value of IT. To determine the areas of success and areas in need of attention, a complete picture of IT beyond the traditional IT department and budget visibility needs to be created. Todays accounting systems rarely track or report total IT in a meaningful way. This presentation pulls from my own successes and challenges as CIO for an international public company as well as over 20 years of management consulting for Fortune 500 and other high performance companies. Youll gain an understanding of techniques to both quantify and then drive multiple times more value from expanding consumption and utilization of IT throughout your company. In my experience, companies spend up to 30% more on IT than they think is currently being spent. Measuring and utilizing tools to effectively manage IT is no longer just the responsibility of the IT department and CIO.
Growth of IT Outside IT - an Evolution of Success
- 1. 息 Accelaway Inc. 息 Accelaway Inc. www.accelaway.com GROWTH OF IT OUTSIDE IT (AN EVOLUTION OF SUCCESS) Accelaway Inc. Joel Munch jmunch@accelaway.com (303) 835-7950
- 2. 息 Accelaway Inc. JOEL MUNCH 2 JDRF - Walk To Cure Team Captain - 2006 to Present JDRF Board of Directors, 3-terms from 2006 to 2012 (Rocky Mountain Region) Management Consulting: Over 75 clients, most major industries Charitable Cause: Juvenile Diabetes Research Foundation
- 3. 息 Accelaway Inc. TOTAL IT MANAGEMENT 3
- 4. 息 Accelaway Inc. UNDERSTANDING TOTAL IT 4
- 5. 息 Accelaway Inc. IT IS GROWING AND EVOLVING In the 1970s & 1980s, economists saw a Productivity Paradox: productivity declined as businesses deployed more technology. The 1990s showed evidence of substantial improvements of productivity. Later in the 2000s, economists concluded that businesses achieved even more dramatic productivity gains resulting from technology-enabled innovation. Todays automobiles have dozens or microprocessors and many hybrids and luxury models have over a 100 microprocessors and millions of lines of software code. A Boeing 787 Dreamliner has hundreds of microprocessors, approximately 70 terabytes of solid-state storage, and multiple wired and wireless networks. 5
- 6. 息 Accelaway Inc. USING DATA ABOUT TOTAL IT 6 Step 1. Define how you plan to use data about Total IT.
- 7. 息 Accelaway Inc. PLAN OF USE SUGGESTIONS How will we use our new insights about Total IT? 1. Identify and involve the unofficial technology leaders. 2. Give IT cause to kill outdated systems and services. 3. Leverage the CIO to get more from the other IT vendors. 4. Foster internal collaboration and competition. 5. Discover and disseminate productivity innovation. 6. Crack down on wasteful and indulgent spending. 7. _____________________________________________ 8. _____________________________________________ 9. _____________________________________________ 10. _____________________________________________ 7
- 8. 息 Accelaway Inc. CHALLENGES OF IT OUTSIDE OF IT Who is selecting the technology? Who ensures compliance? Who manages the system security and sustainability? Who is accountable for the spending? 8 Its in the cloud, so IT shouldnt even care. Thats for the accounting system, not us. We trust our vendor and you should too. This is my budget and Ill do what I want.
- 9. 息 Accelaway Inc. TRADITIONAL IT The IT Department: People Employees Contractors Hardware Laptops & Desktops Servers & Network Software Server Software PC Software Services Network Bandwidth Large Outsourcers Projects ERP Implementation 9 $$$
- 10. 息 Accelaway Inc. EXERCISE: WHERE IS IT? WHERE IS YOUR IT TODAY? The Board asked the CIO to give a report on the historical trend and future outlook for ALL of the companys IT initiatives and spending. Lets assume you are helping the CIO What departments or groups will you need to speak with to get the bulk of IT spending information? (example: Marketing) 10
- 11. 息 Accelaway Inc. WHERE WE FOUND IT CEO Procurement Warehouse Financial Planning Maintenance Sales Tax Marketing Public Relations Facilities Engineering Branch Office Admin Buried deep in WIP & COGS 11 Step 2. Get key departments/divisions involved. ITITITITITITITITIT
- 12. 息 Accelaway Inc. IT CAN MEAN DIFFERENT THINGS 12 Step 3. Make IT Personal and Meaningful.
- 13. 息 Accelaway Inc. Traditional IT costs: (mostly found in IT) Hardware, Software, People and Services IT Savvy Workforce Super-User Support Virtual Teams Cloud & Hybrid Services Mobile Devices Virtual Infrastructures TRANSFORMATION OF IT 13
- 14. 息 Accelaway Inc. EXERCISE 2: WHAT ARE IT COSTS? 14 IT Costs Yes No Company provided mobile phones Engineering software (e.g., AutoDesk AutoCAD) Apple iPads and Android tablets Internet bandwidth Leased multifunction copiers Conference call service for quarterly investor call Website development and hosting Tax provisioning software Board of Directors online board books portal ERP/Accounting Software Employee portal for benefits self-service Managed by IT = In the I.T. Budget = $ $ $ $ $ $ $ $ $ $ $ $
- 15. 息 Accelaway Inc. BALANCING THE ROLE OF IT 15 Servant Enforcer IT
- 16. 息 Accelaway Inc. IT DEPARTMENT = HELP OR HINDER? Sometimes, IT is the cause of IT growing outside of IT 16 Mobility and B.Y.O.D.
- 17. 息 Accelaway Inc. YESTERDAY, IT OWNED: Sales & Customer Relationship Management System Document Management & File Sharing Web Servers (Company Website) Web Portals (Intranets and Extranets) Customer Service Websites Financial Planning System TODAY, ANYONE CAN OWN: SalesForce.com, Microsoft Dynamics CRM (online), etc. File Sharing: DropBox.com, Google Drive, Microsoft SkyDrive, etc. Web Hosting Hosted SharePoint, Documentum, Alfresco, etc. Facebook, Twitter, LinkedIn, Social Media Services, etc. Oracle EPM in the Cloud 17 NEW TECHNOLOGY AND IT VENDORS Step 4. Drive vendor costs to IT.
- 18. 息 Accelaway Inc. EXERCISE: FIND YOUR IT VENDORS 18 VENDORS HQ Inc Site Inc TOTALS % IT IT Costs IT Dept? Inside IT Outside IT AX CONSULTING 2,800$ 2,800$ 100% 2,800$ TRUE 2,800$ -$ DELL-USA 1,360$ 1,360$ 100% 1,360$ TRUE 1,360$ -$ REGIONAL ELECTRIC 1,300$ 1,300$ 0% -$ FALSE -$ -$ PROTIVA CONSULTING 900$ 900$ 25% 225$ FALSE -$ 225$ TA LOGISTICS 600$ 600$ 0% -$ FALSE -$ -$ MICROSOFT 400$ 400$ 100% 400$ TRUE 400$ -$ LIBERTY ENGINEERING 400$ 400$ 10% 40$ FALSE -$ 40$ ATT 270$ 70$ 340$ 100% 340$ FALSE -$ 340$ SOLVIS 320$ -$ 320$ 100% 320$ FALSE -$ 320$ CDW 280$ 30$ 310$ 100% 310$ TRUE 310$ -$ TEK NETWORK 300$ 300$ 100% 300$ FALSE -$ 300$ DC HOSTING 280$ 280$ 100% 280$ TRUE 280$ -$ TAX SOLUTIONS 210$ 210$ 100% 210$ FALSE -$ 210$ ORACLE 160$ 160$ 100% 160$ TRUE 160$ -$ AX-CONSULTING 90$ 90$ 100% 90$ FALSE -$ 90$ VIP WAREHOUSE 60$ 60$ 0% -$ FALSE -$ -$ CENTURY TELCO 50$ 50$ 100% 50$ FALSE -$ 50$ EXPENDABLES 50$ 50$ 0% -$ FALSE -$ -$ BOARD BOOKS 40$ 40$ 100% 40$ FALSE -$ 40$ DELL 30$ 30$ 100% 30$ TRUE 30$ -$ TOTALS 7,070$ 2,930$ 10,000$ OK -> 6,955$ OK -> 5,340$ 1,615$ % of Total 77% 23% VENDORS HQ Inc Site Inc TOTALS % IT IT Costs IT Dept? Inside IT Outside IT AX CONSULTING 2,800$ 2,800$ 100% 2,800$ TRUE 2,800$ -$ DELL-USA 1,360$ 1,360$ 100% 1,360$ TRUE 1,360$ -$ REGIONAL ELECTRIC 1,300$ 1,300$ 0% -$ FALSE -$ -$ PROTIVA CONSULTING 900$ 900$ 25% 225$ FALSE -$ 225$ TA LOGISTICS 600$ 600$ 0% -$ FALSE -$ -$ MICROSOFT 400$ 400$ 100% 400$ TRUE 400$ -$ LIBERTY ENGINEERING 400$ 400$ 10% 40$ FALSE -$ 40$ ATT 270$ 70$ 340$ 100% 340$ FALSE -$ 340$ SOLVIS 320$ -$ 320$ 100% 320$ FALSE -$ 320$ CDW 280$ 30$ 310$ 100% 310$ TRUE 310$ -$ TEK NETWORK 300$ 300$ 100% 300$ FALSE -$ 300$ DC HOSTING 280$ 280$ 100% 280$ TRUE 280$ -$ TAX SOLUTIONS 210$ 210$ 100% 210$ FALSE -$ 210$ ORACLE 160$ 160$ 100% 160$ TRUE 160$ -$ AX-CONSULTING 90$ 90$ 100% 90$ FALSE -$ 90$ VIP WAREHOUSE 60$ 60$ 0% -$ FALSE -$ -$ CENTURY TELCO 50$ 50$ 100% 50$ FALSE -$ 50$ EXPENDABLES 50$ 50$ 0% -$ FALSE -$ -$ BOARD BOOKS 40$ 40$ 100% 40$ FALSE -$ 40$ DELL 30$ 30$ 100% 30$ TRUE 30$ -$ TOTALS 7,070$ 2,930$ 10,000$ OK -> 6,955$ OK -> 5,340$ 1,615$ % of Total 77% 23%
- 19. 息 Accelaway Inc. THE NEW TECH SAVVY WORKFORCE 19 Step 5. Drive employee costs & headcount to IT.
- 20. 息 Accelaway Inc. EXERCISE: FIND YOUR IT EMPLOYEES 20 Employees Department FTE Cost % of IT TOT FTE TOT $ IT Dept? In IT FTE Out IT FTE Inside IT Outside IT Brand, Pam Financial Plng 1 150$ 20% 0.20 30$ FALSE - 0.20 -$ 30$ Cardon, Nikki Accounting 1 180$ 90% 0.90 162$ FALSE - 0.90 -$ 162$ Carter, Jason I.T. 1 180$ 100% 1.00 180$ TRUE 1.00 - 180$ -$ Colfer, Cindy Accounting 0.8 120$ 10% 0.08 12$ FALSE - 0.08 -$ 12$ Guzac, Steve Warehouse 1 130$ 20% 0.20 26$ FALSE - 0.20 -$ 26$ Hatter, Brenda I.T. 1 150$ 100% 1.00 150$ TRUE 1.00 - 150$ -$ Johns, Kiki Engineering 1 170$ 50% 0.50 85$ FALSE - 0.50 -$ 85$ Mason, Jonny Quality 1 170$ 50% 0.50 85$ FALSE - 0.50 -$ 85$ Miller, Joe I.T. 1 270$ 100% 1.00 270$ TRUE 1.00 - 270$ -$ Morrow, Pete I.T. 1 120$ 100% 1.00 120$ TRUE 1.00 - 120$ -$ Peterson, Kelly Accounting 1 90$ 0% - -$ FALSE - - -$ -$ Turner, Bill Procurement 1 130$ 20% 0.20 26$ FALSE - 0.20 -$ 26$ Vassic, Chris I.T. 0.5 140$ 100% 0.50 140$ TRUE 0.50 - 140$ -$ TOTALS 12.3 2,000$ OK-> 7.08 1,286$ OK-> 4.50 2.58 860$ 426$ % of Total 64% 36% 67% 33% Employees Department FTE Cost % of IT TOT FTE TOT $ IT Dept? In IT FTE Out IT FTE Inside IT Outside IT Brand, Pam Financial Plng 1 150$ 20% 0.20 30$ FALSE - 0.20 -$ 30$ Cardon, Nikki Accounting 1 180$ 90% 0.90 162$ FALSE - 0.90 -$ 162$ Carter, Jason I.T. 1 180$ 100% 1.00 180$ TRUE 1.00 - 180$ -$ Colfer, Cindy Accounting 0.8 120$ 10% 0.08 12$ FALSE - 0.08 -$ 12$ Guzac, Steve Warehouse 1 130$ 20% 0.20 26$ FALSE - 0.20 -$ 26$ Hatter, Brenda I.T. 1 150$ 100% 1.00 150$ TRUE 1.00 - 150$ -$ Johns, Kiki Engineering 1 170$ 50% 0.50 85$ FALSE - 0.50 -$ 85$ Mason, Jonny Quality 1 170$ 50% 0.50 85$ FALSE - 0.50 -$ 85$ Miller, Joe I.T. 1 270$ 100% 1.00 270$ TRUE 1.00 - 270$ -$ Morrow, Pete I.T. 1 120$ 100% 1.00 120$ TRUE 1.00 - 120$ -$ Peterson, Kelly Accounting 1 90$ 0% - -$ FALSE - - -$ -$ Turner, Bill Procurement 1 130$ 20% 0.20 26$ FALSE - 0.20 -$ 26$ Vassic, Chris I.T. 0.5 140$ 100% 0.50 140$ TRUE 0.50 - 140$ -$ TOTALS 12.3 2,000$ OK-> 7.08 1,286$ OK-> 4.50 2.58 860$ 426$ % of Total 64% 36% 67% 33%
- 21. 息 Accelaway Inc. MAKE THE DATA ABOUT IT USABLE 21 Our goal was to spend on IT to become better, faster, and cheaper. What we found is Step 6. Develop the model, report and refine.
- 22. 息 Accelaway Inc. USING IT BENCHMARKING DATA 22 41% 50% 59% 50% $9.0 $7.5 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 Benchmark IT Dept IT Department Expense Cost per User ($000s) IT Staff IT Expense 41% 53% 59% 47% $9.0 $9.9 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 Benchmark IT + Other IT IT Dept + Other IT Expense Cost per User ($000s) IT Staff IT Expense 0.018 0.030 0.025 .00 .05 IT Dept Staffing Industry Benchmark IT Dept + Other IT Staffing IT FTE Staffing per User (All Company)
- 23. 息 Accelaway Inc. THE MANY VIEWS OF IT Costs by System Cost Allocation by Location (driven by users & complexity) 23 L a b o r E x p e n s e $100 $39 $9 $9 $9 $8 $7 $5 $5 $4 $3 $2 $1 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Site 4 40% Site 3 20% Site 2 20% Site 1 10% Corporate 10%
- 24. 息 Accelaway Inc. BUILD THE SUCCESS STORY 24 7. Facilitate the decision making process.
- 25. 息 Accelaway Inc. EFFECTIVELY MANAGING ALL OF IT 1. Define how you plan to use data about Total IT. 2. Get the key department/division leaders involved. 3. Make IT personal and meaningful. 4. Drive vendor costs to IT. 5. Drive employee costs and headcount to IT. 6. Develop the model, report and refine. 7. Facilitate the decision making process. 25
- 26. 息 Accelaway Inc. 息 Accelaway Inc. www.accelaway.com GROWTH OF IT OUTSIDE IT (AN EVOLUTION OF SUCCESS) Accelaway Inc. Joel Munch jmunch@accelaway.com (303) 835-7950