“I know half my IT Budget is wasted, I just don't know which half.” (Modified from the famous saying about advertising)
Enterprises the world over spend billions of dollars on technology enablement of business functions. A significant portion of those dollars end up creating suboptimal solutions. Most IT project problems are rooted in ambiguous business definition, churn in requirements gathering, scope creep beyond a minimum marketable feature set, wild cost guestimations, not planning for interdependencies, and a lack of strong governance.
Everyone agrees that a sizeable portion of IT projects fail to meet or under deliver on expectations. However, while there is agreement that most technology projects end up in trouble, the business and technology teams’ disagree on why IT projects fail.
Several research studies have shown that the larger the budget and the longer the timelines, the greater the cost and schedule overruns, and the poorer the outcomes for IT projects. Business and IT professionals, in fact, believe that 75% of IT projects are doomed from the start (Figure 1).
Figure 1. The Perception and Reality of IT projects
Dissonance and Divergence - The Business / IT interface
A key aspect of this gloomy landscape is the disconnect between business and IT. These teams of smart and talented people lack a common framework and language to communicate with one another often leading to missed expectations, frustration, and unnecessary churn.
For every CIO who hears the common refrain: “IT takes forever and does not deliver what we want” and for every business leader who hears: “If only business provided a big picture with a detailed actionable roadmap”, this thought paper strives to address these issues and offers a framework to solve them (Figure 2).
Figure 2. Does this Dialog sound familiar?
Things that can go wrong and those that shouldn’t go wrong, always do!
Depending on the maturity of a firm’s people and processes, large transformation projects and programs may suffer from many of the following issues.
What happens if some or all of the challenges afflict your enterprise projects and programs?
How do we get out of this morass?
- Understand the business motivation
- Distill the strategy into a succinct target operating model
If the firm’s strategy resides in an ivory tower, it does not help the programs or projects downstream. It is essential to translate the high level business motivation into a target operating model. The target operating model creates a blue print of the future state and allows business to make the right strategic choices to improve the way the organization, business processes, IT and governance are structured and managed.
- Focus on the “What” first – focus on the capabilities
- Foster the discipline of composition and capability reuse
It all should start with understanding the why. The business motivation is the fountainhead decision that leads to strategy, goals and objectives. There are many models in the industry to help enterprises capture the business motivation - at Capstera, we use a model called “BuRST” (Business Rationale, Strategy and Tactics)
Business capabilities are the foundational layer of an enterprise. Business capability modeling represents a stable description of what a business does (capabilities) to reach its objectives, instead of a dynamic description of how it does it (processes). A capability map or model decomposes what a business does into a granular, hierarchical structure.
A capability model that is decomposed to a level one or two captures a 30,000 foot view and mostly works as wall art. It is essential that capabilities are defined to be granular (typically level 4-6), mutually exclusive, collectively exhaustive and individually a whole at each level of granularity.
Also it is paramount to capture rich content and context for these capabilities. The capability semantics will help define the business services, which in turn will inform and influence the coarseness and modularity of the IT services. The MODAF (Ministry of Defense Architecture Framework) SOV (Service Oriented Views) provides a great exposition on how to transition from Capabilities to IT services.
More often than not, projects and product functionality are developed in silos. Instead, in the new paradigm, a product or platform owner can compose a new product or project by leveraging the underlying capabilities as Lego blocks. Since capability maps are cumulatively exhaustive, it should be possible to describe each project and product fully using the underlying capabilities and how these capabilities are expected to be used.
Since the underlying capability map is mutually exclusive, mapping projects and products helps quickly identify overlaps across them, fostering reuse, minimizing replication, lowering cost, engendering agility, and speeding time to market (Figure 3).
Figure 3. Capabilities help quickly identify overlaps and fosters reuse
5. Define requirements as a way to evolve capabilities over the long haul
Some of the constant challenges in requirements gathering and analysis are lack of consistent granularity and detail, and disparateness of requirements with hard to decipher interdependencies across projects. By gathering capability-specific instead of project-specific requirements, interdependencies can be easily spotted and the granularity and required detail becomes immediately obvious. This small change can go a long way in streamlining roadmaps and eliminating churn.
6. Link funding to multi-year capability maturity, not silo’ed projects
Demanding change at the execution layer will only yield minimal dividends if it is not driven by the top and linked to tangible budgets and resources. Funding capability refinements and evolution over piecemeal projects can help ensure that strategy drives execution with complete short, medium and long-term view of expected outcomes.
7. Rationalize the application portfolio
Rationalizing the application portfolio can significantly reduce IT complexity. The best approach to do this is using lenses to evaluate the application footprint across capabilities and quickly identify overlaps. Lenses can also help assess each application across key dimensions such as business value, customer affinity, maintenance and support costs, and architecture compatibility.
8. Layer in process and data
Once the capabilities are defined and the landscape mapped and simplified, it is important to understand how things work or should work. At the highest level, one can start with Michael Porter’s value chain concept to understand the key demand and supply drivers and flows. Stakeholder centric value streams, process models and customer journey maps can further help communicate the business processes and workflows.
9. Monitor and measure against KPIs
“Some is not a number, soon is not a time”. It is essential to set up, monitor and measure granular success metrics and performance indicators across cost, timeliness and quality of each area you want to make progress against. KPIs have to be granular enough to quickly identify and address any problems. If possible, key metrics should be benchmarked against peers to help provide a point of comparison and highlight areas of opportunity.
10. Establish a capability-centric organization design
The pinnacle of this approach is structuring the organization around capabilities, supported by communities of practice and centers of excellence. While it is easier said than done, at least for core capabilities a notional capability-centric organization model can effectively complement the rest of the traditional structure.
It is possible to align business and IT around a common framework and language, link execution to strategy, and optimize the IT landscape. It takes leadership, a holistic framework, and a disciplined implementation plan to make the transformation endeavor a success.
A capabilities-based approach can provide the much needed bridge between business and IT. Here’s how you can get started:
- Secure executive buy-in and support – Unless the top level support to a better way is not strong, the changes will be peripheral and impact will be minimal.
- Showcase small wins prior to firm-wide roll out – Avoid boiling the ocean. Pick a highly visible project and celebrate the win. After refining the approach with the lessons learnt, move forward cautiously.
- This is an evolution, not a revolution - The capabilities-based framework is not a rip and replace method. It is an evolution of various past frameworks and approaches. You can mix it and match it with different ideas – for example, lean manufacturing, extreme programming etc.
- Get training and change management right – Executive fiat does not generally work in fostering inherent and lasting change. Provide adequate training and support throughout the process.
If you are able to encourage your team to adopt the capabilities-based framework to enterprise transformation, you will see:
- A common language between business and technology
- Better alignment and shared vision
- Reduced requirements churn
- Capability evolution, rather than project focus
- Significantly lower IT complexity
- Focus on composition and reuse
- Lower cost structure and faster time to market
- Reduced complexity by avoiding application proliferation
- Global optimization rather than local optimization in silos