PreparingITforbusinesschange ITDResearch#12:28October2011

1 ITD#12PreparingITforbusinesschange ITDecisions28October2011Allrightsreserved

Introduction
Theonlyconstantischange:thisisthemodernmottoof theITleaderinthisdayandage.Thiscanseemlikea businessschoolclich,butfortheCIOtryingtosteer theirdepartmentaccordingtotheorganization'sneeds,it feelsastrueasever. Despitetheregularchallengesofjustkeepingthe businessrunningeffectively,thereisalwaysthedanger thatthebusinesswillchangesuddenlyamajorshock fromleftfield.Anothercompanybuysyourcompany, yourcompanybuysacompetitor,afriendly(ornot) mergerisarranged,ortheorganizationjustdecidesto completelychangeitsactivity. Whentheseshockstakeplace,howcantheITleader reactandworktosupporthisouherorganization?In manycasesitmayinvolveworkingwithanewITteam, auditingentirelydifferentsystemsandprocessesand tryingtofigureouthowtomergeoneormore technologyportfolios.ItisrarefortheCIOtobeallowed tojustripuptheexistinginfrastructureandtostartover againhoweverattractivethisoptionmayseem. Andwhentheshockofamerger, acquisitionormajorchangeoccurs, thereisalsothemoreimmediate concernaroundwhichteamandwhich CIOwillsurvive?Howdoyougoabout provingtothemanagementthatyour teamhasthebestperformance,skills andmethodsandshouldberetainedin theneworganization? Ourresearchthisweekfocusesonthese oftendelicatequestionsofhowtodeal withamajorshocktothebusiness.How tokeepITontrackduringsucha process?Howbesttoprepareforthis kindofchange?Weallknowthatsuch situationswillcomeupinour organizationsatsomestage,soitsbest tobeprepared.

Despitetheeveryday ITchallenges,thereis alwaysthedanger thatthebusinessmay changesuddenly

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Participantfeedback
ToexploretheissueofpreparingtheITdepartmentforachangeinbusinessstrategyweaskedfour questionsthreeofwhichweremultiplechoiceandonedesignedtopromoteanopendiscussion. Wereceivedanswersfrom20executivesfrom15industrysectors:shipbuilding,realestate, consumergoods,logistics,insurance,education,automotive,telecoms,broadcasting,chemicals, media,foodandbeverages,consumerservices,retail,andfinancialservices. Question1:WouldyousaythatanITmanagershouldalwaysbeflexibleintheirpresentstrategy toabsorbapossible"shock",amerger,acquisitionorstructuralchangeintheorganization?

Having4lexibilityisnecessary,butnotalways possible

20%

No,itisimpossibletopredictanyfutureevent

0%

Yes,itisessentialtohave4lexibility

80%

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Asmentionedintheintroduction,thebusinessschoolprofessorstellyouthatagoodexecutive shouldalwaysbereadyforchange.Butsometimesyoujustwanttoupgradeasystemandrunata stablestateforawhile.Withthisinmind,wantedtoaskourexecutivecommunityabouthowanIT chiefshouldoperateintermsofstrategy. Theyoverwhelminglysaidthatbeingreadyforchangeisimportantwith80%sayingthatitis essentialtohaveaflexibleapproachtoyourstrategytoday.ThissuggeststhatlifeinamodernIT departmentisalmostneverstable;thebusinessalwayshassomethingnewaroundthecorner. 3 ITD#12PreparingITforbusinesschange ITDecisions28October2011Allrightsreserved

Therewasasignificantminorityof20%whosaidthatitisdesirabletobereadyforchange,butit isnotalwayspossible.Perhapsthesearethepragmatistswhoareconfessingthatyoujustcant bereadyforeverypossibleeventnomatterhowmuchyouwanttobe. Question2:Whatisthebestwaytoquicklydemonstratethevalueofyourteamwhensuch changesmaymeanthat,suddenly,thedepartmentwillbecomparedtootherITstaffand/or outsidevendors?

Iftheteamprovideagoodservice,itwillbe noticed

0%

Focusoncommunicationstrategy

30%

Focusonquickwins

10%

Focusonindicatorsandmetrics

60%

10

12

Therealfearisofbeingreplaced.AcompanycomesalongandbuysyoursandtheCIOinthe acquiringcompanytakesoveryourrole.Nobodywantsthistohappentohisorherjobandthe teamsohowbestdoyouensurethatwhenamajorshockcomesalong,youcanproveyour valuetothebusiness? Itsclearlyamixtureofstrategies,butaswehaveseenfromarecentITDecisionsresearchpaper onmeasuringtghevalueofITtothebusiness,thetwomaintoolsBrazilianITleadersareusingto provetheirownwortharekeyperformanceindicators(KPIs)andstructuredcommunication. Afull60%ofourrespondentssaidthatusingyourmetricstopresentagoodpictureofwhatyour departmentisachievingisthebestwaytoensureagoodoutcomeforyouandyourteamduringa timeofmajorchangesinthebusiness. Addthistothe30%whosaidyouneedtoensureyouarecommunicatingyourachievementsand thereisaoverwhelmingsupportforjustmakingsureyoumeasuretheITdepartmenteffectively andtellthebusinessthosenumbers. 4 ITD#12PreparingITforbusinesschange ITDecisions28October2011Allrightsreserved

Question3:Whichofthefollowingstatementsisclosesttohowyoufeelaboutthe managementofITinthemidstofamajororganizationalchange?

CIOsmustthriveinachangingenvironment

40%

IfIdonotagreewiththenewstructure,will seekanewjob

0%

Suchsituationsoffermoreopportunities thanthreats

60%

Theseunexpectedeventsarejustahassle

0%

10

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Thisisaveryinterestingoutcomeandshowsperhapsjusthowentrepreneurialandvisionarythe ITleadersinBrazilareatpresent.Theconventionalwisdomofjobsecuritywouldsuggestthat mostpeoplewouldbeworriedaboutamajorshocktotheirbusinessherewecanseethatmost ITleadersenjoytheexcitementofachangetothebusiness. Afull60%ofrespondentssaidthatamajorbusinessshockusuallyoffersmoreopportunitiesthan threatsandalltheremainingrespondentssuggestedthatCIOsneedtothriveinachanging environment. Itsinterestingtonotethatnotasinglepersonsuggestedthattheywouldleaveforanewjobif theydidnotagreewiththebusinesschangealltheCIOsinoursurveybelievethatachanging businesscanonlyofferthemopportunitiesfornewITchallenges.

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Question4:Ifyou'vebeenthroughamajororganizationalchange,whatwerethedecisionsyou madetokeeptheIT"ontrack"duringthisprocess?Ifyouhaveneverexperiencedsucha situation,howdoyouensurethatyourITportfoliowillbeabletoabsorbamajorchangeinthe future? SeveralparticipantsoftheResearchNetworksharedtheirexperienceswithus.Themostrelevant impressionsarelistedbelow: RealestateKeepingstakeholdersawareoftheprocessiscritical Communicationandalignmentarecrucial.Mergersinvolveculturalclashes,newpeoplewith habitsandneedsoutsideoftheusualpattern.Clarifyservicesandthemechanismsavailableto obtain,establishgovernanceprocessesandchangemanagementwherestakeholdersknowwhat ishappeningandwhy.Puttingeveryoneonthesamepageiscritical. ConsumergoodsITprocessesremainedstabledespitetheoverload Theprocesseswereprettysolid,ITremained"ontrack"evenwiththedepartureofseveral people.Ofcourse,therewasatemporaryworkoverloadforsomepeople. LogisticsUndergoingamergerwasjustlikechangingjobs Iwentthroughamerger(jointventure)whichwasveryconfusing.Ididcontinuewiththe strategicprojects,demonstratingthevaluetheyhadforthebusiness,andalsosoldinnovative solutionsforthenewcompany.Ikeptthebasicstructureofmyteamandincreasedthedelivery ofhighimpactprojectsfortheneworganization. Atthesametime,Idiscontinuedallprojects/systemsthatposedarisktothenewstrategy,so thatthisnewstrategycouldbevaluedandtheoldsolutions,forgotten.Ichangedmymindsetinto thatoftheneworganizationassoonasthemergerwasannounced,asifIhadchangedjobs.This allowednewthinkingandtheabilitytoabandontheoldveryquickly. FinancialServicesIfITisaccepted,changebecomeseasierandmorepleasurable Rightatthefirstmomentoftheannouncedchanges,themosteffectivestrategyisto communicatetherelevancethatthedepartmenthad/hasintheorganization.Ifthatiswidely accepted,itiseasier(andenjoyable)toguidesuchprocesses.However,nostrategysurvivesfora longtimewithoutresults,soaholisticviewoftheCIOresilienceinassessingthenewsituationis morevaluablethanthedesireofholdingontoadepartment.

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EducationManagersshouldbecollaborativeandenablenewrealitiesinmergersituations Experienceinatleastthreemergersituationsinmycareerhasreallyhelpedmeunderstandthat inamomentofincorporation,theacquirerhasastrongdesireofcompletingitsimplementation plan.TheITmanager'schallengeistoenablesuchplans,signalingtherealityofthecorporate environmentandmaintainingacollaborativeattitude.Theleaderwhoremainscalminthat processthiswillhavegreatchancesofsurvivalintheneworganization,evenbecausethevalue he/shebringsfromthepreviousscenariowillbe,foralongtime,importantinthenewstructure. TelecommunicationsFocusonprocessestoensurerapidintegrationisessential ThevastmajorityofITprocessesareverysimilarinbusinesses,withitsvariations.Themost importantthingistohaveawellstructuredprocesswhichcanbeadaptedtothesechanging needs,sothestandardizationbecomesquickandefficient,ensuringintegrationintheshortest time! ChemicalsItisimperativetostrengthenresourcestoenabletheintegration Wewentthroughmanychanges.Large"unexpected"projectscanalwayshappen.Giventhatour participationisessential,itisimportanttosupporttherestofthecompanyintheoverallchange. Recommendations: 1)Ifnecessary,allocateallnecessaryresourcesfulltimeintheventure.Themorefocusedthe better. 2)Useofbestpracticesisessential:projectmanagement,documentation,approvals,etc.The applicationofgoodgovernancehelpsinthe"postproject"phase. 3)Useconsultantsandoutsourcingtostrengthentheteam.Amegaprojectoftransformation mayrequiretensorhundredsofprofessionals.ItisuptotheCIOtoredistributeinternaland externalresourcestomeeteverydayneedsandpreparationforchange.Consultantsbring expertise,powertoachieveandflexibility(theygoawayaftertheproject). 4)Puttogetheraleadershipstructureforthechangeprocess,makingitclearthatthebusiness leadsandisresponsibleforit. Often,ITmayevenfeel"honored"togetagreaterroleinthisprocess,butthatisatrap.The bottlenecksintheprocessesofchangeareinthebusinessandnotinIT.

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MediaServiceorientationofITiskeytosuccessinchangesituations Iwentthroughsuchanexperienceand,indeed,wasnotsmooth.Thestrategywasafocuson communicationand,ofcourse,thepresentationofindicatorsandmetrics.Theguarantee,inmy view,istohaveaportfolioofITthatisveryserviceorientedandalignedwiththeorganization's strategy.Youmustnotforgettocontinuetotakecareofrelationshipswithpeersinthe organizationandworkalotoncommunication. FoodProductionTojoinorleadachangeprocess,thehousemustbeinorder Inourindustry,mostcompaniesmustgrowtocompeteonanequalfootingwiththemarket leaders,oratleast,togetagoodsale.Havingnogrowthmaymeanbeingswallowedinfuture. Andthisgrowthcanbeorganicorthroughmergersandacquisitions,whichhasbeenthepattern ofrecentyears. Inthisscenario,everyCIOshouldbepreparedforbigchanges,andIunderstandthattheIT infrastructure(servers,desktopPCs,notebooks,printers,networking,communicationsetupand soon)mustbepurchasedasaservicefrompartnersthathavethescaletosupportpeaksof growth. TheinternalteamofinfrastructureshouldspecializeinfollowingthesecontractsthroughSLAsand seekcompetitiveunitcosts.Atthispoint,ITcanhavecompetitivemetricsandindicators,both technicallyandfinancially. Ontheotherhand,fromthefunctionalandprocesspointsofview,Ithinkthatfieldexpertise shouldstayinbusiness,andhavinginhouseexpertsisessential.Butthefocusshouldbeon business,notonthetechnology.Forthis,yoursystemarchitectureshouldhaveagoodmarket ERPplatformasabackbone,whichismanagedbyexpertswithafocusonprocesses. Ingeneral,theseguidelinesmakeITmanagementmoreagileandconsistentenoughtobeagood optiontotakealeadershiprole(orbeapartofit)inaprocessofchange.Andleadershipmeans beingpartofthechange,whichenhancesopportunitieswithinanenvironmentofuncertainty. ConsumerServicesITstrategyshouldalwaysconsiderfuturechanges Thesecrettosuccessisinthetransparencyofcommunicationandmediumandlongterm planning.TheITinitiativesandprojectsshouldbeconductedwithavisionofextremeflexibility. Systemsshouldbeimplementedinaconfigurablemanner,thinkingnotonlyaboutmergersor spinoffs,butalsoinordertosupportthelaunchofnewproductsandservices.Theinfrastructure shouldalsobedesignedinascalableway,soastoallowquicksetupsincaseofchangesinthe sizeofthebusiness. 8 ITD#12PreparingITforbusinesschange ITDecisions28October2011Allrightsreserved

FinancialservicesMaintainingobjectivityinsituationsofchangeisfundamental Iwentthroughatleasttwolargemergersandsomemoresignificantorganizationalchanges.In thesescenarios,focusonthefactsisessentialtomaintainobjectivityinthediscussions. Consistentindicatorsandmetricsacrossallinvolvedpartsisessential.Anotheraspectthatcannot beoverlookedistheimportanceofkeepingtheoperationrunningwithoutlossofqualityduring thetransitionperiod. OtherITleadersmadethefollowingobservations: Broadcasting Havingwellpreparedleadersandarobustprocessofcommunicationandalignmentisessential.I havealreadystructuredorrestructuredITdepartmentsseveraltimesthroughoutmycareer,and havealwaysbeensuccessful. Shipbuilding TheITstrategyshouldalwaysconsiderchangescenarios.Flexibilityinthereactionmayallow opportunitiesandvaluecreationintimesofinstability. Retail Focusonprojectmanagementandoperationsthroughestablishedindicatorsandmetrics.

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ConclusionandExecutiveSummary
Welearnedthisweekthat,ingeneralterms,BrazilianITexecutivesarealwaysreadyfora challengeandthatchangedoesnotfrightenthem.Thesearevaluablequalitiesforanyexecutive, butwithuncertaintyusuallycomesfearourITleaderscertainlydontshowany. Theoverwhelmingmajorityofrespondentstooursurveysaidthatbeingreadyforchangeisa criticalpartofbeingaseniorITexecutive.Itsnowsomethingthathasjustbecomeanexpected partofthejob. TherearestepsITleaderscantaketoensuretheydontendupacasualtyofamajorbusiness changethough.If,forexample,amergeristakingplaceandtheCIOcanpointtohighquality metricsdemonstratinggreatperformance,andtheyhavetakenthetimetoregularly communicatethisthentheywillprobablybetheongoingITleaderratherthantheonewhois castaside. Possiblythemoststartlingsingleresultfromourcommentsthisweekisthestrongsupportfor majorbusinessshocksbeinganopportunityratherthanathreat. MostCIOsloveachallenge.Whenamajorimplementationisoverthenitisusuallytimetolook foranewjob.SoalthoughitmayseemlikeasurpriseforourCIOstofindmajorbusinessshocks exciting,itdoesalsofitwithintheprofileofanexecutivewhoisalwayslookingforsomethingnew togetstuckinto. SomekeylessonslearnedbyourgroupITleadersduringtheirownexperienceofmergersand otherbusinessshocksinclude: Atthefirstmomentyouhearnewsofbigchangescoming,communicatethevalueofyour teamandwhattheydo.Makesuretheexecutiveteamrunningthebusinessknowexactlywhat youhaveachievedinthelastyearandwhatyouhaveplannedforthenearfuture. Focusonfactswhencommunicatingyourachievements.Metricsandmeasurementssuch asServiceLevelAgreementsarethebestwaytodemonstrateexactlywhathasbeenachieved notsubjectivemeasurementssuchasusersbelieveweoffergreatservice. MostcompaniesaresimilarITsystemsattheircore,sobewellstructuredandensureyou canquicklyandeasilydescribeyourITstrategyatshortnotice,andbeabletodefendwhythings areplannedthewaytheyare.

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 Systemarchitectureisyourbackbone,dontworryaboutlaptopbrandsorothernon strategicaspectsoftheITspend.Focusonthearchitectureandinfrastructurethisisattheheart ofwhatyoudo. YourITstrategyshouldalwaysincludethepossibilitythatamergerwilltakeplace.Dont buildapalacetolastacentury,becauseyouarealmostcertainlygoingtohavetochange direction. ItseemsthatmostofourITleadershaveexperiencedamajorbusinessshockatsomepoint duringtheirleadershipofanITdepartment.Itissomethingthatjusthappensmorefrequentlyin thebusinessenvironmenttodayandhastobeexpected,ratherthanfeared. ThemodernCIOisalwayslookingforanewchallengesoperhapstheclearestmessagetotake fromthesurveythisweekisthatITleadersinBrazilreallyenjoyitwhentheirbusinesssuddenly changes.Farfrombeingworriedabouttheinstabilityofchange,ourgroupofITleadersistelling theirexecutiveteamtobringiton!

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ITDecisionsResearch
ITDecisionsproducesareportlikethiseveryFriday,basedonwhatCIOstoldusthatsameweek. Itisfastandrelevantknowledgefromyourpeers,itisonlyavailabletotheCIOsintheresearch network,anditisfree. Whatisthecatch?Youpaybyparticipating.Everyweek,wewillsendyoufoursimplequestions thatwilltakenomorethanfiveminutestoanswer. Themoreparticipants,thebetterthequalityoftheresearch.Sopleasedoinviteyour colleaguestojoin!Getintouchwithrecommendationsviacontact@itdecs.com. Doyouwanttodirecttheresearchanddefinethetopicsalongsideourboardoffounder members?WealsoofferPlatinummembershipsthatallowyoutosteertheprocess,aswellas otherbenefitsincludingcomprehensivereports,facetofacefocussessionsandmore. TheITDecisionsFutureSkillsfundisacharitable,transparentfundfocusedonimprovingIT educationandtraininginBrazil. IfyourecommendaPlatinummembertothenetwork,wewilldonateR$500tothefundinyour nameandPlatinummemberswillgettochoosewhichorganizationgetsthemoneyattheend oftheyear.Pleasecontactusformoredetails.

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AboutITDecisions
ITDecisionsisthepremiersourceofinsightintothetechnologyandhightechserviceindustryin Brazil.ThecompanycreatesEnglishlanguagenewsandinsightforaCIOaudiencewithregular featuresandanalysisthatcannotbefoundelsewhere. Wefocusondecisionmakersandinfluencersthebuyside.Reproducingthesalespitchor advertsofsuppliersisnotourthing;wefocusonthosebuyingthesystems. ITDecisionswasfoundedin2011byMarkHillaryandAngelicaMari,twoofthemostrespected businessandtechnologywritersinEuropewithacollectionofbestsellingbooksandindustry awardsbetweenthem. TheITDecisionsresearchnetworkisaninvitationonlygroupofCIOsinBrazilwhoworktogether toproduceanewresearchreporteveryweek. TakeamomenttoconnectwiththeITDecisionsmanagementonLinkedInandtakealookatsome oftheirbooks,othermedia,blogs,andpublications: MarkHillary,CEO http://j.mp/markhillary AngelicaMari,PublishingDirector http://j.mp/angelicamari Mark,Angelica,andthewholeITDecisionsteamisbasedinSoPaulo,Brasilthebiggestcityin theSouthernHemisphere.

www.itdecs.com
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