A somewhat ambiguous term in the industry, ‘IT transformation’ is used for a number of reasons. IT transformation is most often used when making a significant change with the goal to improve capabilities, reduce IT costs, and/or mitigate risk. If your transformation involves outsourcing your IT infrastrucutre, here are a few points to facilitate a successful transformation.
Catalyst for Change
Most reasons for change to IT infrastructure can be broken down to reducing cost and/or improving service; two simple reasons for change. However, there are many different ways to get there, with each of your stakeholders offering different opinions.
Cloud computing is driving change because cloud computing is making it easier to provision servers and storage, and at the same time, it is reducing the requests for servers and storage as companies use more and more software off premises.
Start with an understanding of the need for change; what is the catalyst for the change? What is the compelling event or driving forces behind your desired change to IT infrastructure and operations?
IT infrastructure and operations requires a high degree of reliability, availability and security. Changes to IT infrastructure can disrupt workflows, business rules and organizational structure, and the most significant obstacle for change lies within the apprehension to give up control. Outsourcing your IT infrastructure and operations requires a high degree of trust and mutual accountability. Key infrastructure components in an outsourced solution are allocated to varying subject matter experts that specialize in the implementation and management of particular IT modules. An IT sourcing advisor can assist with an IT transformation that cultivates an environment of shared risk and reward. With mutual incentives to optimize processes, increase effectiveness, and drive innovation, these partnerships are highly vested and built on the foundation of driving success for all parties.
Baseline before the Change
In order to determine the effectiveness of any strategic effort, whether it is related to sales, marketing, or IT operations, it is essential to establish benchmarks. Without having clearly defined goals or parameters in place, there is no way to conclude how you are moving the needle. It is not enough, however, to only set internal benchmarks. Prior to establishing internal parameters, it is important to first review historical trends to get a sense of industry standards. From that point, you can use those benchmarks to guide you in the process of defining your own internal performance metrics.
The Three-Step Process to Your Baseline
The ideal approach to establishing your baseline is based on quantiﬁable impact analysis. Break down your decision-making process into manageable components, taking an iterative approach and building consensus as you go. Consider how your decisions affect staff, budgets, risk, compliance and your ability to meet future proﬁtability. This 3-step process will help systematically construct an accurate baseline, identify areas of opportunity within your organization and make a high-level business case.
Step 1: Define your IT services baseline - establish a critical foundation to compare to similar services in the outsourcing marketplace by:
- Organizing IT service costs and outputs as a provider would, identifying platforms, applications and services currently provided to your business units.
- Correlating ﬁnancial data to each area, accounting for all direct and indirect costs.
- Projecting costs over the entire anticipated length of contracted outside services. This is also critical for accurate TCO comparison.
Step 2: Identify areas of opportunity – narrow possible outsourcing solutions by:
- Researching providers to understand major cost drivers associated with each alternative. Identify key volumes and metrics that affect pricing.
- Going beyond the ﬁnancials to understand your internal business drivers, to identify speciﬁc criteria and intangibles that will affect sourcing decisions.
- Evaluating available service offerings to design a high-level solution with best-case pricing.
Step 3: Create high-level business case
It’s time to make a critical strategic decision regarding IT transformation: should we proceed to the next step – a closer examination of the most promising-looking solutions? To make that decision, compare the internal cost of operations developed in Step 1 with the high level design and pricing information generated in Step 2. Include transition and transformational expenses, and, remember, you’re looking at the value of new solutions over time, not just an immediate snapshot.
Estimate the Impact of Change
Project what your IT environment looks like from your baseline. Having attainable and measurable goals in place provides an organization with a systematic approach to evaluating the effectiveness of their IT transformation. With the ability to gain real-time insight into what’s working, what’s not and the areas that require improvement, organizations are able to apply incremental adjustments to their strategy along the way in order to ensure success.
IT transformations, regardless of how they are defined, require a high level of consideration, dedication and involvement. With that said, too many IT transformation initiatives fail due to a lack of clearly defined business goals. Although embarking on an IT transformation journey requires a significant amount of effort and involvement, the true payoff for all that hard work can’t be determined if there is no basis of comparison. Benchmarking is key to effectively measuring the success of any strategic effort, but particularly so in the case of a full infrastructure overhaul. With the help of an IT sourcing advisor, you will be able to strategically identify your organization’s key performance indicators, measure performance, and evaluate the success of your IT transformation initiative.