(From FAQ) I’ve heard a lot of talk about the Value Proposition of IT. What is it?

Value, at least economically speaking, is simply what you receive for what you are spending. In determining the value of IT services, depending on the business and the particular service, that value may have other dimensions than cost. The value proposition of IT depends on the services offered by IT, the measures of value articulated for these services by the business, how well IT is delivering against those measures and the weighting of that performance across services.

For example, I would suggest that for commodity services, where industry standard measures of service quality exist and may be benchmarked against, that the main dimension of value is cost at the standard service level. For delivery of business solutions or capabilities, the main dimension of value may be speed to implement (versus the most economical method), thus enabling a business advantage in time to market. For other services, quality may be the most important dimension of value to the business.

The business plays a key role in ensuring that the appropriate value proposition is defined and realized. IT can help frame the discussion, but it is the business that has to articulate the appropriate weightings for the dimensions of value. From that information, and agreed-upon measures, an objective scorecard may be built and maintained to determine how well IT is delivering against that value proposition.

(From FAQ) Isn’t IT transformation to a managed services model a big deal – and what about the people in IT?

Before going further, let’s make an important distinction between transforming to the managed services model and outsourcing or multi-sourcing. One is not the other.

Implementing a managed services model gives you the tools to run IT like a business. That includes the ability to source services in different ways (insource, outsource, multi-source), but does not require it. The changes for IT people during the implementation of a managed services model are primarily in roles and responsibilities that correspond to new or modified service delivery processes. People’s jobs are changing. When implementing a multi-sourcing strategy, jobs are at stake.

The transformation to a managed services model is a big deal. It involves fundamental changes to processes, organization and technology. Extensive support is required from the Finance and HR functions. Customers of IT will interact differently with IT in procuring services. It’s a lot of change. In my experience, IT people can learn and operate successfully in the new paradigm fairly quickly – a matter of a few months – so long as the management team invests heavily in time to communicate the vision and value of the new managed services model (not just speeches, true interactive sessions) and provide training.

Implementing a multi-sourcing strategy is much more difficult to manage from a staff impact perspective. Presuming that you have already done the diligence and have a compelling case to pursue significant outsourcing of services, my advice is for full disclosure as soon as you have any sort of timeline for the process. If you are in an IT leadership role, you will soon find that your communications and staff interaction on this topic consume the lion’s share of your time. It’s time well spent, since you’ll want to minimize attrition – particularly of your best people, who know that they have options and can easily make a move.

Unfortunately, the answers that IT people most want to know (what happens to me, specifically) aren’t generally available until the end of the process. That is deeply unsatisfying to someone who is directly impacted. What I’ve found to be of value is to communicate throughout the process about what the various steps of the process are and will be known when.

The bottom line is that people will have choices to make and a time frame in which to make them. If someone is in the outsourced services scope, then the choices are generally pretty straightforward:

• A non-IT role at the current company
• An IT role that is not in-scope at the current company
• An IT role with the company that the services are sourced to
• Severance Package
• Retirement

The timing of when each of these will be known and available varies; so impacted staff will probably have multiple decisions to make. HR will be your best friend in helping to manage the information and processes for the various options.

Successful transformation programs invest heavily in an Organizational Change Management program of work that runs in parallel to the transformation workstream. These efforts are mostly communications-based and are vital in keeping the IT group informed and engaged during the transformation.

One of the most important points in these communications is that the transformation to a managed services model does not mean that IT jobs are being outsourced. In fact, unless both the goals of the business and IT transformation are best met by outsourcing as soon as possible, I would strongly suggest against the two efforts (IT transformation to a managed services model and IT outsourcing) being done as one – and then even so, I would caution that it will be a very bumpy ride for both the business and IT.

Again, the transformation to a managed services model positions IT to be able to source its services internally, externally or in any combination along the sourcing continuum. I believe that this multi-sourced model is the only way for IT to be competitive from cost, service quality and capability dimensions in today’s continuously changing global technology marketplace. However, it is highly advisable that the managed services structure first be in place and operational before implementing a multi-sourcing strategy.

Be prepared that no matter how well you communicate and execute this process, you will be the least popular person in IT for some time. Read Colin Powell’s Leadership Presentation – particularly the last page on “Command is Lonely.” It may help you though a difficult time.

2009 Greetings and Housekeeping Notes

Hello Everyone,

I hope that you all had a great holiday season and are now well-positioned for a prosperous 2009!

Before getting to the new posts for this year, I wanted to give you all a heads-up on two changes to the site. This week, I’ll be moving the posts on the FAQ page to the main blog page and deleting the FAQ page (it wasn’t being hit often and hadn’t been updated since the site launch). Also, I’ll be implementing a a new Theme to freshen things up bit (nothing radical, just something a bit brighter). After those items are taken care of, we’ll get to the new posts for 2009.

Thanks for your continued interest, and keep those comments, questions and suggestions for new topics coming!