UK: IT Strategy and Effectiveness - In Pursuit of IT Excellence

Last Updated: 22 March 2011
Article by Deloitte LLP

Most Read Contributor in UK, August 2017

FOREWORD

The current market conditions are placing a demanding set of challenges for IT. The need to meet stringent cost control, while simultaneously supporting the business growth agenda, has placed IT effectiveness at the heart of the CIO agenda. Deloitte has conducted a wide-ranging survey of IT leaders, across multiple industries, to understand how organisations are rising to the challenge.

The scale and breadth of the challenge facing IT today is truly breathtaking. Firms have been battered by the global economic conditions, stringent cost control is a fact of life for most organisations for the foreseeable future and IT organisations are having to adapt to this leaner world. At the same time, companies and organisations are looking to IT to support and enable the business growth agenda. How IT meets these potentially conflicting priorities will help determine the winners and the losers, and IT effectiveness will be a key contributor to the overall performance of IT.

This study examines how various organisations are set to meet these challenges. We have examined what differentiates top performing IT organisations from their peers and what key capabilities underpin their performance. We have identified the specific, key challenges that are changing the IT industry and flagged the capabilities that IT needs to develop in order to succeed going forward. We have also examined the priorities of the various respondents to understand where the focus of IT will be over the coming period and what the key priorities and challenges will be.

The study took the form of an online survey, complemented by a number of face-to-face interviews. Both were targeted at senior IT leadership, typically CIO/CTO and CIO minus one. Ninety-three IT leaders responded to the survey, covering Financial Services, Energy & Utilities, Manufacturing, Technology, Media & Telecoms, Life Sciences, Consumer Goods and Public Sector (Central and Local/Regional). The respondents were asked to self-assess their IT capability and rate their overall IT effectiveness. These data were then used as a reference point for the subsequent questions. We are grateful to all those who took the time to complete the survey and participate in the face-to-face interviews.

The full set of responses to the survey are included at the back of this report.

TIGHT BUSINESS AND IT ALIGNMENT IS INCREASINGLY CRITICAL

Robust processes, standard artefacts and clear delineation of accountabilities are features of good business-IT interaction

The drive for operational efficiencies is increasingly pushing IT towards a shared-service model and a resultant switch from business unit-aligned to functional-aligned IT. Retaining close integration with the business users is key to making this model work.

A functionally-aligned IT organisation delivers major benefits in terms of scale, consistency and technology convergence. However, a potential downside of this model is the decoupling of IT from the business units and the resultant loss of responsiveness to the differentiated needs of the various business functions.

This places increasing responsibility on the Business Relationship Management function to "connect the dots" and ensure that IT and business do not diverge.

Rigorous processes and consistent ways of working allow IT organisations to mitigate the potential negative impact. Effective demand management will ensure that the critical business requirements are communicated to IT and that IT can deliver to these priorities. A standard service catalogue will ensure that key business services are clearly understood and delivered to agreed service levels. Robust service charging will ensure that costs are charged fairly and transparently to the business units and should act as a natural governor on demand.

Our survey reflects these facts. Two thirds of effective IT organisations reported strong demand management processes. 43% of effective IT organisations had clear IT recharging processes versus only 25% of those organisations who reported their IT effectiveness as Poor or Very Poor.

There was also a clear difference in Service Catalogues with a clear trend towards business service aligned catalogues among the most effective IT organisations. Indeed, 88% of organisations who rated themselves as Poor or Very Poor did not have a formal service catalogue.

THE IT FOCUS IS CHANGING, WITH A SWITCH TO BUSINESS GROWTH

Going forward, IT needs to switch from a cost focus to one of innovation, competitive advantage and growth

Many IT organisations have already gone through cost reduction initiatives, with benefits now coming through. With operational costs under control, businesses are now looking to IT to enable and, in some cases, drive the future growth agenda.

The challenging economic climate remains high on board agendas and cost pressures remain a fact of life for all departments, including IT. Process redesign, headcount reduction, device rationalisation and stronger contract management have all contributed to trimming expenditure within IT. These facts are borne out in our survey, where 74% of respondents stated that cost cutting had been a high or medium priority in the last 12 months.

However, now that such departmental cost cutting initiatives are beginning to deliver the required savings and efficiency improvements are becoming more embedded, organisations are looking longer term. This means a switch in focus to delivering sustainable solutions to support future business growth. Innovation, new products and new delivery models are the order of the day and senior management are looking to their IT departments to support such growth through the implementation of new and improved technology solutions.

Again, this is reflected in our survey, where almost all of those asked (92%) now rank the driving of innovation and growth opportunities as a high or medium priority for the next 12 months. This obviously poses a major challenge for IT as these new services and solutions will be delivered within tighter budgets and more limited resources. Good project management, governance and control will be even more critical to ensuring that technology projects and services deliver to scope and budget, and realise the necessary return on investment.

Interestingly and, indeed, reassuringly, such innovation will not be at the expense of providing a robust, resilient service as 90% of respondents also stated that providing business as usual services will remain a medium or high priority.

To read this Report in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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