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IMPAQ Case Studies
New Service Delivery Model-Worldwide IT Division
Company Situation and Drivers
The XYZ Group (16+BEuros revenues; 115.000++ FTE’s) is active in 170 countries across the globe. As a vertically integrated company, XYZ notably controls 70 production factories producing equipment goods addressing B2B, B2C and B2E market segments.
To support the accelerating pace of its global business ambitions and competitive pressures, the company started a major organizational transformation, evolving from country based to a matrix mix of product lines, regions and support functions.
Accordingly, their IT/IS (1350 FTE’s, 4 Data Centers) aligned its organizational design. Coming from separate IT organizations in each region, they progressively adapted a global centrally coordinated model, with a mirror-image IT function in each of their regions: North and South America, Europe, Asia and Middle East Africa.
While the percentage of total IT spending centrally controlled by HQ CIO moved from 10% to 95+%, IT/IS’s management team started addressing 4 key recurrent generic objectives:
- Increased Efficiency (through synergy and scale benefits of centralization),
- without undermining Effectiveness (Product Differentiation and Services Innovation; Anticipation of and response to either global or local fast-changing business needs).
- Modify the mix of investments by reducing allocations to Commodities while tripling the percentage dedicated to High Value Business Focused Applications, and simultaneously improve overall productivity ratios by a minimum 10% per year.
These objectives were rapidly declined in a number of distinct initiatives:
A short, middle and long term Convergence plan still in progress, to reduce technical dispersion (number of technology constituents and providers), identify High Value Business Needs, promote technology and applicative consistency worldwide and insure aligned on time availability of necessary competencies in adequate geographies;
- Infrastructures outsourced globally to an ESP;
- A Global architectural blueprint managed by global architects on behalf of IT governance in joint IT/Business committees;
- All Application Development and Evolutions governed globally in Business Domains with a focus on Master Applications being the de facto standard for all the company.
Accordingly and to coordinate the overall, a governance and architectural framework was launched a few years later as being XYZ IT/IS’s New Service Delivery Model (NSDM).
The New Service Delivery Model's (NSDM) Challenge
Coming from a country based and moving to a global NSDM required IT/IS’s both Leadership and Middle Management to rapidly change their patterns of work and behaviors. The inherent and on going execution difficulties linked to its deployment brought XYZ’s CIO to ask for IMPAQ’s intervention nearly 4 years after the initiative began.
a) The engagement started with an initial assessment by IMPAQ early in the 4th year of the initiative. The assessment was conducted both in the US and Europe to identify the execution problem(s) and the calendar of the various steps to address them. Three major observations surfaced:
- The model wasn’t clear enough for all of the IT/IS members and managers;
- More importantly, even when understood, people still didn’t know how to practice it (or behave) within the new dimension of transversal geographically dispersed teams;
- And finally, coming from a vertical organization, the IT/IS’s various levels of management had not yet identified the new common shared values, behaviors and roles which are the basic attributes of team building and leading organizations.
As a consequence, one of the identified objectives was to move managers from challenging the model itself to questioning how to implement it more effectively; and to evolve from a vertical silo oriented approach to one of shared accountability for results across teams, functions and vendors.
b) The first step was to form a Leadership Team (a smaller group than the initial IT senior management group) who was to meet regularly and guide the process; and to strategize the role of the team and directions for the middle managers.
- Two distinct working sessions ⅔ days each, enabled both the Leadership Team and Implementation Teams to define
- A compelling vision of what success would look like;
- Their 5 top priorities, including Speaking with one Voice for the Leadership Team;
- Their associated Key Success Factors describing the new ideal habits of performance execution as a unified management group and a self assessment of current performance against the ideal;
- Their interaction agreements such as how should/will we work and recover together;
- And finally, baseline measurements for each of the above that would be monitored and evaluated over time for improvement and effectiveness.
c) These processes were then deployed, reviewed and progressively fine-tuned, both to ensure adjustments were producing results and to adapt with new emerging requirements.
An NSDM Risks Factors and Mitigation Plan covering most of their execution critical aspects (such as Standardization of working environments, Critical Capacities Planning with Recovery Plans and Mandatory Program Management Skills) was implemented; and Leading Indicators were deployed on top of already existing Tracking Indicators.
d) The perimeter was then expanded to
- A breakdown of trust between different regions and IT/IS’s primary external partners resulting in heavily penalized collaboration across the organization;
- And to the 10/15 top projects of their Application Development Portfolio equally suffering difficulties: late deliveries, budgets being exceeded, functionalities misaligned with initial plan, etc.
e) Simultaneously, IMPAQ’s approach was applied to XYZ’s relations with their major ESP where over-reaction and Contract Management were the usual ways to address the many on going critical issues. Relationship and Demand Management was progressively promoted and incidentally extended to IT/IS’s relations with their company’s various internal users and support functions (Marketing, Manufacturing, Supply Chain, Finance, etc).
Obtained Results the Following Year
After 15 months of IMPAQ‘s involvement (roughly 6 working sessions of 2 days each plus one hour conference calls every 2 weeks), various improvements were recorded:
a) The first segment relates to how they now practice the NSDM:
- Trust and Respect, especially with regard to decision making and delegation, were considered a major improvement. Almost all teams reported team spirit and teamwork to be high and any challenge(s) were most frequently to be outside IT/IS’s boundaries.
- Moved from having to explain and justify the Service Delivery Model to full cooperation, use of it and appreciation for middle managers.
- Cross function alignment: Most efforts became focused in a unified way on the difficulties of the new technologies and business challenges.
- The Leadership Team published decisions regularly and received a 90+% positive rating; and Self-Assessment of Middle Manager Success Factors of Performance Execution improved by a 70% increase.
- Progressively improved Relationship and Demand Management with their major ESP.
b) The second resumes specific measurable results. 70% of their most important Success Factors for more effective execution have improved by an average ratio of 65%, which translated into significant outcomes:
- Collective moral high and Productivity Improvement Ratios were met, both in spite of two unexpected budget reductions during the previous 18 months.
- Infrastructure and Working Environments major non conformities (heavily penalizing operations when the engagement started) were significantly reduced, due to jointly shared more accurate Critical Capacities and Recovery Planning with their ESP.
- Operations SLA’s exceeded their yearly objectives.
- The number of projects was progressively reduced from 1300 to 250, the entire Project Portfolio became under control, with conformity to the Enterprise Architecture as a mandatory pre-requisite. A significant achievement.
- Implemented Leading Indicators also lowered project risks while enabling faster implementation.
- Within the portfolio, 13 of their 30 most important projects (representing close to 70% of their annual project budget) were selected, all directly aligned with major business ambitions (Supply Chain, Marketing, Business Intelligence, etc..).
- The first six were on time and budget while meeting expected deliverables; and conformity with targeted KPI’s improved by 50% for the other 7 projects.