Matakuliah
Tahun
: M0624/Information Technology Valuation
: 2008
MEASURES OF THE EFFECTIVENESS AND EFFICIENCY OF
IT SUPPLY
MODUL 6. SESSION 22- 26
INTRODUCTION
• AS DISCUSSED IN CHAPTER 2, THERE ARE 3 TYPES
OF IT SUPPLY ACTIVITIES:
A. MANAGING THE IT INFRASTRUCTURE AND
OPERATIONS
B. DEVELOPING, IMPLEMENTING AND MAINTAINING
IT APPLICATIONS
C. SUPPORTING IT USERS
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INTRODUCTION
• THE MAJORITY OF COMPANIES HAVE ADOPTED
SOME KIND OF FEDERAL IT MANAGEMENT
STRUCTURE. THE FEDERAL IT MANAGEMENT
STUCTURE FEATURES DEVOLVED RESPONSI-BILITY
FOR IT TO BUSINESS UNIT, THE DEVELOPMENT OF IT
ARCHITECTURE FOR THE BUSINESS UNIT AND
DERIVATION OF BUSINESS UNIT IT PLANS IS AN
ACTIVITY OF EACH BUSINESS UNIT.
• THE FEDERAL IT MANAGEMENT STRUCTURE LEADS
TO 6 SETS OF INTERRELATED, CORPORATE IT
MANAGEMENT AND SUPPLY ACTIVITIES, SEE FIG 6.1.
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Figure 6.1: Corporate IT Management and Supply Activites
Corporate
Functional
Leadership and
Guidance
Defining the
corporate IT
architecture,
standards and
policies
Promoting
innovative use
of IT
Managing IT Supply and Account Management
Shared IT
Supply
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Managing the IT
infrastructure and
operations
Developing and
maintaining IT
applications
Supporting IT
users
INTRODUCTION
• THE FUNCTIONAL LEADERSHIP AND
GUIDANCE FUNCTION, AND THE
PROMOTION OF INNOVATIVE USE OF IT, ARE
REGARDED AS IT MANAGEMENT RATHER
THAN IT SUPPLY ACTIVITIES.
• THE SUPPLY OF SHARED, CENTRAL IT
SERVICES CAN BE ORGANISED IN
DIFFERENT WAYS.
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INTRODUCTION
• IN PRINCIPLE, COMPANIES CHOOSE FROM A RANGE
OF SIX OPTIONS, LISTED HERE IN INCREASING
ORDER OF COMPETITIVENESS:
1. IN HOUSE SERVICE UNIT, AS A SOLE SUPPLIER AND
WORK-ING ONLY FOR THE BUSINESS, FUNCTIONING
AS A COST CENTER.
2. IN HOUSE SERVICE UNIT, CHARTERED TO SEEK
EXTERNAL BUSINESS, FUNCTIONING AS A PROFIT
CENTER.
3. PATNERSHIP WITH EXTERNAL SERVICE SUPPLIER
4. JOIN VENTURE WITH EXTERNAL SERVICE
SUPPLIER.
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INTRODUCTION
5. IN HOUSE UNIT TRANSFERRED TO
OUTSOURCING SUPPLIER
6. ALL IT SERVICES PURCHASED COMPETITIVELY
FROM EXTERNAL SUPPLIERS.
• AS THE LEVEL OF COMPETITIVENESS OF IT
SUPPLY INCREASES, IT SUPPLIERS ARE MORE
OFTEN ASKED TO DEMONSTRATE AND QUANTIFY
THEIR PERFORMANCE LEVELS, INCREASINGLY
THROUGH BENCHMARKING AGAINS OTHER IT
SUPPLIERS AND INCLUDING DIRECT
COMPETITORS.
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INTRODUCTION
• APPROPRIATE PERFORMANCE MEASURES WILL BE
ATTACHED TO THESE 5 SCORECARDS TO
DETERMINE THE EFFECTIVENESS AND EFFICIENCY
LEVELS OF IT SUPPLY AS A WHOLE:
1. IT SUPPLY MANAGEMENT
2. ACCOUNT MANAGEMENT
3. IT DEVELOPMENT MANAGEMENT
4. IT INFRASTRUCTURE MANAGEMENT
5. CLIENT SUPPORT
THIS WILL COMPLETE THE 3RD AND FINAL LAYER OF
THE BTRIPLEE FRAMEWORK.
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MEASURES OF IT SUPPLY MANAGEMENT
• THECONCEPT OF RUNNING IT SUPPLY AS A
BUSINESS MEANS ADOPTING THE PRACTICES A
PROFESSIONAL SERVICE ORGANIZATION MUST
USE TO BE COMPETITIVE AND TO SURVIVE. IN
PARTICULAR IT APPLIES TO IN HOUSE SERVICE
CENTER (NOT FOR PROFIT, BUT NO LOSS) AND
PROFIT CENTER (EXPECTED TO MAKE A PROFIT)
• A PROFESSIONAL SERVICE FIRM MUST FOCUS ON
”OUTSTANDING CLIENT SERVICE, PROFESSIONAL
SATISFACTION FOR EMPLOYEES, AND FINANCIAL
SUCCESS” IF IT IS SURVIVE.
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MEASURES OF IT SUPPLY MANAGEMENT
• THE ORGANIZATION SHOULD FOCUS ON THE ANSWERS
TO 4 SIMPLE QUESTIONS:
1. IS IT SUPPLY EFFECTIVE? (CUSTOMER PERSPECTIVE?)
2. IS IT SUPPLY EFFICIENT? (ULTIMATELY THE CUSTOMER
AND SHAREHOLDER PERSPECTIVEINITIALLY THE
INTERNAL PERSPECTIVE)
3. WILL THE IT SUPPLIER MAINTAIN ITS FULL POTENTIAL IN
THE FUTURE? (INNOVATION AND LEARNING
PERSPECTIVE)
4. DOES IT SUPPLY DELIVER SHAREHOLDER VALUE?
(FINANCIAL PERSPECTIVE)
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MEASURES OF IT SUPPLY MANAGEMENT
• ANSWERS THE 1ST QUESTION MAY BE FOUND BY
MEASURING THE EXTENT TO WHICH PRE DEFINED
GOALS, DERIVED FROM CUSTOMER
EXPECTATIONS, ARE REALIZED.
• ANSWERS THE 2ND QUESTIONMAY BE FOUND BY
INVESTIGATING OVERALL IT SUPPLY EFFICIENCY
FACTORS, SUCH AS:
1. TOO MUCH BUREAUCRACY, MEASURED BY THE
NUMBER OF MANAGEMENT LAYERS IN PLACE.
2. TOO MUCH OVERHEAD, MEASURED BY THE
AMOUNT OF INDIRECT IT SUPPLY ACTIVITIES IN
RELATION TO DIRECT ACTIVITIES.
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MEASURES OF IT SUPPLY
MANAGEMENT
3. REDUNDANCY OF SIMILAR ACTIVITIES
PERFORMED IN DIFFERENT IT SUPPLY
PROCESSES. E.G.: CUSTOMER SERVICE
PERFORMED IN EACH IT SUPPLY PROCESS MIGHT
BE MORE EFFICIENT IN A COMBINED CUSTOMERSERVICE FUNCTION REPRESENTING ALL IT SUPPLY
PROCESSES.
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MEASURES OF IT SUPPLY
MANAGEMENT
• ANSWERS THE 3RD QUESTION, MAY BE FOUND
FROM SELECTED PERFORMANCE INDICATORS,
AIMED AT THE INNOVATIVE CAPABILITY OF IT
SUPPLY, AND ARE DERIVED FROM THE
SCORECARDS OF THE REMAINING IT SUPPLY
PROCESSES AND SUPPORTED BY EXTERNAL
COMPARISONS AND HISTORICAL TRENDS.
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MEASURES OF IT SUPPLY
MANAGEMENT
• ANSWER THE 4TH QUESTIONS, DEAL WITH THE
BUDGET VERSUS REALIZATIONS RELATIONSHIP,
ETC., AND PERFORMANCE INDICATORS THAT ARE
COMMONLY USED TO MEASURE THE HEALTH OF
ANY BUSINESS, SUCH AS PROFIT AS % OF
TURNOVER, PROFIT PER EMPLOYEE, ROS, ROA,
ETC.
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Figure 6.2 : Positioning the IT Supplier
Close
Faithful Servant
Business Partner
Always helping,
wherever possible, no
questions asked
Top quality, knows what
we want, always one leap
ahead
John Average
Prima Donna
As good as many
other, does what we
want, first asks for
the budget
Best in town, very
innovative, hand to get
hold of
Relationship
with Customers
Distant
Basic
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High
Sophistication
of Services
•
MEASURES OF IT SUPPLY
FIG. 6.2. CAN BE
USED TO DERIVE A MISSION AND
MANAGEMENT
ROLES OF IT SUPPLY BY ELABORATING ON THE
ANSWERS TO 2 BASIC QUESTIONS:
1. WHAT ARE THE SERVICES REQUIRED BY OUR
CUSTOMERS, RANGING FROM BASIC TO
ANVANCED?
2. HOW CLOSE IS THE CUSTOMER RELATIONSHIP,
RANGING FROM DISTANT TO CLOSE?
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MEASURES OF IT SUPPLY
THE ANSWERSMANAGEMENT
LEAD TO 4 POSSIBLE:
•
1. BASIC SERVICE, DISTANT CUSTOMER: THE IT
SUPPLIER IS REGARDED AS AN IT SERVICES AND
FACILITIES SUPPLIER, DELIVERING COMMODITY
SERVICES THAT ARE NOT DISCRIMINATING BY ANY
STANDARD.
2. BASIC SERVICE, CLOSE CUSTOMER: THE IT
SUPPLIER IS REGARDED AS A FAITHFUL SERVICES
AND MAINTAINING LARGE CORPORATE
INFORMATION SYSTEMS ARE GENERALLY THE
MOST IMPORTANT PARTS OF THE TOTAL SERVICE.
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MEASURES OF IT SUPPLY
MANAGEMENT
3. ADVANCED SERVICE, DISTANT CUSTOMER: THE IT
SUPPLIER IS SEEN AS A HIGH QUALITY
CONSULTANT AND SUPPLIER OF STATE OF THE
ART IT SERVICES.
4. ADVANCED SERVICE, CLOSE CUSTOMER: THE IT
SUPPLIER PERFORMS AS A BUSINESS PARTNER:
DESIGNING, BUILDING, INTEGRATING, OPERATING
AND SUPPORTING IT APPLICATIONS AND IT
INFRASTRUCTURE THAT MEET THE HIGHEST
PROFESSIONAL BUSINESS STANDARD.
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MEASURES OF ACCOUNT
MANAGEMENT
• MEASURES OF ACCOUNT MANAGEMENT BECOMES
INCREAS-INGLY IMPORTANT IN TODAY’S IT SUPPLY
ORGANIZATIONS.
• THT IMPORTANT QUESTIONS IS: “WHAT
CONSTITUTES GOOD ACCOUNT MANAGEMENT?”
• KOTLER, BELIEVES AN ACCOUNT MANAGER
SHOULD MASTER THE MARKETING CONCEPT:
DETERMINING THE NEEDS AND THE WANTS OF
TARGET MARKETS AND DELIVERING THE DESIRED
SATISFACTIONS MORE EFFECTIVELY AND
EFFICIENTLY THAN COMPETITORS.
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MEASURES OF ACCOUNT
MANAGEMENT
• THE TRADITIONAL MARKETING MIX (4 P: PRODUCT,
PRICE, PROMOTION AND PLACE) SHOULD REFLECT
GOOD ACCOUNT MANAGEMENT.
• LAUTERBORN, CLAIMS THE 4 C AS A NEW ONE
(REPLACE 4 P):
1. CUSTOMER WANTS AND NEEDS
2. COST TO SATISFY THOSE NEEDS
3. CONVENIENCE TO BUY
4. COMMUNICATION
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MEASURES OF IT DEVELOPMENT
MANAGEMENT
• THE CONCEPT OF RUNNING IT SUPPLY AS A
PROFESSIONAL BUSINESS IS EQUALLY VALID FOR
IT DEVELOPMENT AND MAINTENANCE ACTIVITIES.
• FIG. 6.3 ILLUSTRATES THE SPECTRUM OF
DEVELOPMENT AND MAINTENANCE ROLES.
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Figure 6.3: Roles of IT Infrastructure Management Functions
Emphasis on
effectiveness
of results
Business
consultants
Centers of
Expertise
Infrastructur
e Service
Providers
Culture of
the
Organization
Facilities
Managers
Data Center
Operators
Emphasis on
effectiveness
of activities
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Emphasis
on IT
Issues
Skills,
knowledge and
experience of
people
Emphasis on
Business
Issues
MEASURES OF IT DEVELOPMENT
MANAGEMENT
• DEVELOPMENT AND MAINTENANCE OF LARGE
SCALE SYSTEMS;
THE EFFECTIVENESS OF IT DEVELOPMENT CAN BE
MEASURED USING INDICATORS RELATED TO 3
PRINCIPAL CATEGORIES OF REQUIREMENTS:
1. RESPONSIVENESS TO CUSTOMERS AND
BUSINESS NEEDS.
2. EFFECTIVE AND RELIABLE PROJECT
MANAGEMENT.
3. ADHERENCE TO IT ARCHITECTURE STANDARDS.
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MEASURES OF IT DEVELOPMENT
MANAGEMENT
• RAPID APPLICATION DEVELOPMENT (RAD)
RAD IS A DEVELOPMENT APPROACH THAT
INCORPORATES STATE OF THE ART:
1. DEVELOPMENT TECHNIQUES, SUCH AS RE-USE
OF INTERMEDIATE AND FINAL DEVELOPMAT
DELIVERABLES, OBJECT ORIENTATION,
PROTOTYPING
2. DEVELOPMENT TOOLS, SUCH AS REPOSITORY
BASED I-CASE TOOLS
3. PROJECT MANAGEMENT APPROAVHES, SUCH AS
TIME-BOXED PROJECT MANAGEMENT.
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MEASURES OF IT DEVELOPMENT MANAGEMENT
• PACKAGE IMPLEMENTATION
THIS APPROACHES DRASTICALLY REDUCE THE
TIME TO DEVELOP NEW IT APPLICATIONS, REDUCE
DEVELOPMENT COSTS, IS TO BUY FUNCTIONALITY
(FUNCTION POINTS), DELIVERING A LARGE
AMOUNT OF USEFUL WORK AT ONCE.
PACKAGES WILL NEARLY ALWAYS PROVE TO BE
BETTER INVESTMENT, PROVIDED THEY MEET THE
ESSENTIAL REQUIREMENTS, SINCE THEY SRE NOT
ONLY LESS EXPENSIVE TO ACQUIRE AND
MAINTAIN, BUT ALSO BECAUSE THEY CANBE
IMPLEMENTED MORE QUICKLY SO THAT ITS
BENEFITS CAN BE ACHIEVED EARLIER.
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MEASURES OF IT DEVELOPMENT MANAGEMENT
• APPROPRIATE CLASSES OF MEASURES FOR IT
DEVELOPMENT ACTIVITIES:
1. BUSINESS PROCESS KNOWLEDGE: THE ABILITY
TO UNDERSTAND THE BUSINESS WORKS IN TERM
OF FLOW OF BUSINESS PROCESSES AND THEIR
STRUCTURES, AND THE ANALYTICAL SKILLS TO
FIND OUT HOW THE BUSINESS CPULD WORK
BETTER.
2. UNDER STANDING AND APPLICATION OF STATE
OF THE ART IT: THE INSIGHT INTO MODERN IT
APPLICATIONS AND THEIR POTENTIAL IMPACT ON
THE BUSINESS.
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MEASURES OF IT DEVELOPMENT
MANAGEMENT
3. RAPID APPLICATION DEVELOPMENT:
PROTOTYPING TECHNIQUES, JOINT APPLICATION
DESIGN (JAD) TECHNIQUES, EVOLUTIONARY
DEVELOPMENT METHODS, ETC., HAVE TO BE
MASTERED.
4. EFFECTIVE COMMUNICATION AND TEAMWORK:
JOINT DEVELOPMENT TEAMS PENETRATE
EXISTING FUNCTIONAL BOUNDARIES AND
QUESTION FUNCTIONAL RESPONSIBILITIES.
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MEASURES OF IT INFRASTUCTURE
MANAGEMENT
• THE VERY IMPORTANT ASPECT OF
INFRASTRUCTURE MANAGEMENT IS EFFICIENCY,
MAINLY BECAUSE OF THE LARGE PART OF THE IT
BUDGET CONSUMED BY INFRASTRUCTURE.
• LARGER DATA CENTER CAN REALIZE GREATER
ECONOMIES AF SCALE AND BIGGER PAYOOFS
FROM AUTOMATION, PARTICULARLY THE USE OF
HARDWARE AND SOFTWARE DATA CENTER
AUTOMATION PRODUCTS.
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MEASURES OF IT INFRASTUCTURE
MANAGEMENT
• THERE ARE 6 KSF FOR EFFICIENCY:
1. USE ECONOMIES OF SCALE TO REDUCE H/W
AND S/W COSTS
2. LOCATE IN A LOW COST GEOGRAPHIC AREA TO
REDUCE FACILITY AND STAFF COSTS
3. IMPLEMENT FORMAL CAPACITY PLANNING AND
INCREASE H/W UTILIZATION
4. ESTABLISH STANDARDS AND PROCEDURES TO
ACHIEVE A HIGH DEGREE OF AUTOMATION
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MEASURES OF IT INFRASTUCTURE
MANAGEMENT
5. OPTIMIZE WORKFLOWS TO ELIMINATE OR
REDUCE PHYSICAL MOVEMENT OF ITEMS INTO
AND OUT OF THE DATA CENTER
6. IMPLEMENT ORGANIZATIONAL CHANGES TO
PROMOTE QUALITY, EFFICIENCY, AND DEFECT
PREVENTION.
TO ASSESS EFFECTIVENESS AND EFFICIENCY IT
INFRASTRUCTURE AND AS ASSOCIATED WITH THE
BALANCED SCORE CARD, USED 3 STAGES
PERSPECTIVES.
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MEASURES OF IT INFRASTUCTURE
MANAGEMENTMEASUREMENT
1st STAGE OF IT INFRASTRUCTURE
(THE INTERNAL PERSPECTIVE)
A. COLLECT INTERNAL MEASURES ON DATA CENTER
OPERATIONS
B. THERE ARE NO REAL DIFFICULTIES IN MEASURING
THE PERFORMANCE OF OPERATIONS FOR
PURPOSES OF INTERNAL MANAGEMENT,
ESPECIALLY IN LARGE MAINFRAME ENVIRONMENT.
C. PLENTY OF LOCAL HISTORY FOR COMPARISON
AND TREND ANALYSIS.
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MEASURES OF IT INFRASTUCTURE
MANAGEMENT
• TWO EXCEPTIONS CONDITION:
1. THE MOST TECHNICALLY SOPHISTICATED AND
PEOPLE INTENS-IVE FUNCTIONS WITHIN
OPERATIONS, SYSTEMS PROGRAMING, AND
TECHNOLOGY PLANNING.
2. EXTENSIVE H/W MONITORING FACILITIES ARE NOT
AVAILABLE IN SOME ENVIRONMENT, ESPECIALLY
THR NON MAINFRAME, SUCH AS CLIENT SERVER
MONITORING. THE MAJORITY OF COSTS TO MANAGE
ARE INCRESINGLY FOUND ON YHE USER SIDE.
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MEASURES OF IT INFRASTUCTURE
MANAGEMENTMEASUREMENT
2ND STAGE OF IT INFRASTRUCTURE
(THE CUSTOMER PERSPECTIVE)
A. MEASURES ASSUME THE PERSPECTIVE OF THE
BUSINESS LOOKING FOR SERVICE, NOT THE
MACHINE PROVIDING IT
B. PERFORMANCE MANAGEMENT TAKES THE FORM
OF A SERIES OF KEY INDICATORS AND OF FORMAL
SERVICE LEVEL AGREEMENTS (SLA) NEGOTIATED
WITH BUSINESS MANAGEMENT.
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MEASURES OF IT INFRASTUCTURE
MANAGEMENT
3RD STAGE OF IT
INFRASTRUCTURE
MEASUREMENT (THE INNOVATION AND LEARNING,
AND FINANCIAL PERSPECTIVES)
A. THE ORGANIZATIONS ONLY REPORT OPERATIONS
PERFORM-ANCE ANNUALY, SHOWING HOW
FORMAL SLA’S HAVE BEEN MET.
B. THIS APPROACH REPRESENTS A DESIRABLE
CONDITION: PERFORMANCE AND USER
RELATIONSHIP ARE STRONG.
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MEASURES OF CLIENT SUPPORT
• CLIENT SUPPORT IS THE OVERALL LABEL OF
ACTIVITIES NORMALLY FOUND IN FUNCTIONS
SUCH AS END USER COMPUTING (EUC) SERVICES,
INFORMATION CENTER (IC), CALL CENYERS, USER
EDUCATION AND TRAINING DEPT., DATA CENTER
HELP DESK, AND OTHER ON DEMAND USER
SERVICE.
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MEASURES OF CLIENT SUPPORT
10 KEY QUALITIES OF THE HELP DESK AS
FOLLOWS:
1. GOOD COMMUNICATION SKILLS: ORAL, LISTENING,
WRITTEN
2. TECHNICAL SKILLS: COMPUTER S/W AND SYSTEMS
KNOWLEDGE
3. PEOPLE, SERVICE AND CUSTOMER ORIENTED
4. PATIENT, RELAXED, EVEN-TEMPERED
5. WORK WELL UNDER PRESSURE
6. GOOD PHONE SKILLS
7. INTELLIGENT, ABLE TO LEARN AND THINK
LOGICALLY
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MEASURES OF CLIENT SUPPORT
8. PROBLEM SOLVING SKILLS
9. GOOD ANALYTICAL, QUESTIONING SKILLS
10. FRIENDLY, PERSONABLE, OUTGOING
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CONCLUSION
• TO ADDRESS EFFECTIVENESS AND EFFICIENCY
MEASUREMENT ISSUES OF IT SUPPLY, THE 4
PERSPECTIVES OF THE BALANCED SCORECARD
CONCEPT OF KAPLAN AND NORTON HAVE BEEN
INTRODUCED: THE CUSTOMER, INTERNAL,
INNOVATION AND LEARNING, AND FINANCIAL
PERSPECTIVE.
• IF IT SUPPLY IS RUN AS A BUSINESS, WHICH IS
MANAGED AS A PROFIT CENTER, THESE
SCORECARD CAN BE COMPLEMENTED BY 2
ADDITIONALLY DEFINED SCORECARDS: ACCOUNT
MANAGEMENT AND IT SUPPLY MANAGEMENT.
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CONCLUSION
• SEE APPENDIX C WICH IS SHOW THE 20
DEVELOPED SCORECARDS (4 SCORECARDS FOR 5
IT SUPPLY PROCESSES).
CHOICES ARE CONTINGENT ON THE GOALS,
ROLES, RELATIVE STRENGTHS, AND WEAKNESSES
OF THE IT SUPPLIER IN QUESTION.
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• THE END OF SESSION 22 - 26
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