Top 10 Imperatives for Leading a Successful IT Improvement ProgramWhen companies understand the critical success factors for leading an IT performance and process improvement program, they can advance their business objectives and increase adoption across the corporation.

Executive SummaryRapid technological advancement (e.g., cloud, social media, mobile and analytics) and increased globalization are having a profound impact on the IT operating model.1 IT organizations are struggling to improve their operating perfor-mance in response to market demands for lower costs, higher quality services, shorter response times and higher return on investments.

Many IT organizations are applying quality improvements pioneered and perfected in the manufacturing sector to drive organizational per-formance and process excellence. Although most organizations clearly understand the benefits, it has traditionally been a struggle to successfully implement IT organizational performance and process improvements, even for top-performing companies.

This paper presents solutions and best practices for mitigating challenges and success-fully deploying such initiatives. Based on our experience assisting Fortune 1000 clients with large IT organizational performance and process improvement programs, we believe there are 10 key implementation imperatives:

1. Obtain senior leadership commitment to initiating and managing IT organizational performance and process improvement initia-tives.

2. Perform an objective assessment, leverag-ing standard models, for defining realistic improvement goals.

3. Focus on identifying the right processes and their process owners to achieve the established goals.

4. Develop a roadmap that is well understood and accepted by the identified process owners.

5. Institute a targeted marketing strategy that creates enthusiasm and greater participation.

6. Establish a governance model that enables effective management of the program.

7. Develop processes that are standard and “fit to use.”

8. Facilitate organizational change management to ensure smooth implementa-tion of the recommended improvements.

9. Enable effective benefit tracking and reporting to ensure sustained top-manage-ment support.

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10. Focus on continuous improvement of the IT organizational performance and process improvements.

The New IT Mandate Several technology trends are building the case for enhancing IT performance, including exter-nalized service delivery, global market demand, increased data volumes, social media explosion, IT in business shared services and increased complexity of the IT ecosystem (see Figure 2, next page). Overcoming these challenges will help the IT organization increase its agility and respon-siveness to business requirements.

IT organizations are responding to these trends by adopting effective IT operating models (see Figure 3, page 4). The building blocks for any IT operating model — organization, process and technology — are undergoing a radical rethink to ensure tight alignment to meet the demands of the aforementioned trends.

To improve their IT operating model, companies are increasingly adopting IT performance and process improvement initiatives based on indus-try-standard frameworks such as CMMI, ITIL, COBIT, Lean, etc. to support and drive changes to their IT organizational functions or technologies.

The next section describes how to effectively lay out the vision of such initiatives, as well as effec-tively manage the implementation journey for achieving desired goals and outcomes.

Top 10 Imperatives for IT Improvement1. Obtain senior leadership commitment to

initiating and managing IT organizational performance and process improvement ini-tiatives.

Key Challenges

IT organizational performance and process improvements require sustained effort and commitment across all levels of the organization. The morale of employees and their involvement in the improvement initiative is directly related to CIO/top management commitment and clarity of goals.

Key Recommendations

Based on our experience, IT organizational per-formance and process improvements that have been driven or sponsored by the highest levels in the organization are more likely to succeed. We advised one of our clients to include improvement goals and objectives as part of the company’s CIO performance targets and cascade them down to various departmental leaders. This strategy resulted in increased commitment from all levels.

Top 10 Imperatives for IT Improvement Programs

Figure 1

Goal setting Execution

CIO/top management commitment (required across the program)

Program Management

Program governance

Program change management

Program marketing

Cont

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2 3 4 7 9

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identificationRoadmap creation

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2. Perform an objective assessment, leveraging standard models, for defining realistic improvement goals.

Key Challenges

It has been a challenge to establish appropriate goals and objectives for an IT organizational per-formance and process improvement initiative. Various organizations have struggled to set realistic goals based on change management considerations.

Key Recommendations

IT organizational performance and process improvements should focus on every aspect of the IT value chain (as described in Figure 4, page 5) and set up realistic goals that reflect the orga-nizational appetite for the change. There are several industry-standard assessment models (e.g., CMMI, ITIL, the Gartner IT maturity model,2 etc.) that could help chart out an improvement roadmap.

The two forms of assessment methods seen in the industry are formal third-party assessments and self-assessments. The choice of a maturity model and assessment methodology will depend on the focus of the improvement initiative (e.g., CMM/CMMI is more focused on software processes, while ITIL is aimed at operations), organizational relevance and cost considerations. It typically takes 18 to 36 months to transition from one level to the next. We helped one of our

large insurance clients define and manage a com-prehensive two-year roadmap to transition from Level 2 to Level 3 on Gartner’s IT maturity model (see sidebar, page 8).

3. Focus on identifying the right processes and their process owners to achieve the established goals.

Key Challenges

Based on the maturity assessment, once the organization is made aware of areas for improve-ment, the next challenge is to identify process areas with high impact and associate them with the right process owners.

Key Recommendations

A software engineering process group (SEPG)3 — or dedicated cross-functional team respon-sible for driving the performance and process improvement initiative — should lead the exercise of identifying process areas for improvement and associating them with the right process owners. This should be conducted via a series of program definition workshops involving key stakeholders from each of the IT functional areas.

Based on our experience of implementing such programs, the appropriate process owner should be someone who is involved with many aspects of the process. When there are multiple entities using a process equally, then it is best to assign the process governance or ownership to a broader

Drivers for Improving IT Organizational and Process Performance

Figure 2

Externalized service delivery: IT organizations are increasingly leveraging cloud-based or software as a service (SaaS) delivery models, resulting in significant IT operating model impacts.

Global market demand: Business from emerging markets is growing significantly, mandating diverse IT models for supporting business growth.

Increased data volumes: Emerging use of mobile devices is driving a need for enhanced data management to support the exponential growth in data volumes.

Social media explosion: Social media has enhanced customer and employee interaction with the organization by providing an easy-to-use medium.

IT in business shared services: Centrally provided applications and infrastructure are being embedded in business services and delivered by business shared services.

Increased complexity of the IT ecosystem: Significant customization and proliferation of IT assets has increased the complexity of the IT landscape.

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process management entity (e.g., SEPG). The process owner should be sufficiently senior in the organization to drive the change. It is imperative to identify the right process owner with adequate empowerment and interest in driving the change.

4. Develop a roadmap that is well understood and accepted by the identified process owners.

Key Challenges

While developing the program roadmap, IT orga-nizations do not always consider the change impact, as well as process interdependencies.

Key Recommendations

Various process areas requiring improvement are carved out as dedicated projects that form part of the overall roadmap. Key considerations for roadmap definition include:

• Process owner buy-in: It is critical to obtain process owner buy-in, as these individuals are ultimately accountable for making the process implementation successful.

• Project size and complexity: This is an important factor in creating the roadmap, as it helps companies gauge the effort required for each project and aggregate the processes into waves for execution.

• Change impact: Although the appetite for change may vary across organizations, no more than two improvement initiatives should be targeted at the same functional group within a quarter.

• Project interdependencies: All project inter-dependencies must be captured and factored into the roadmap.

For one of our clients, we conducted a joint workshop with various process owners to clearly establish impacts and interdependencies while developing the multi-year roadmap. The joint workshop helped ensure faster consensus-build-ing on the roadmap.

5. Institute a targeted marketing strategy that creates enthusiasm and greater participation.

Key Challenges

IT organization process and performance improvement programs invariably lose traction over a period of time due to lack of top-down commitment, ongoing business distraction and lack of ownership. In addition, when impacted stakeholders are not appropriately engaged through the entire process, the results will be sub-optimal.

Traditional IT Operating Model

Figure 3

Business Corporate Functions

Business Unit 1 Business Unit 2

Plan

• Business relationship management organization• IT portfolio management organization• Vendor management office• Enterprise management

• IT infrastructure services• IT service delivery• IT service support• Application management and support

• Infrastructure standup• Service-level management• Production support• Application maintenance

• Remedy• Service Now

• Business and technical analysis competence• Development organization

• System testing organization• QA support – performance, regression, etc.• IT audit and controls organization

• Test case creation• Load testing• UAT support• IT audit

• Quality center• Performance testing tools• Load testing tools

• Requirements management• Code development• Verification and validation• Code move

• Application lifecycle management tools• Unit and integration tools• Database tools

• Business engagement• Demand management• Finance and budgeting• Vendor relationshipmanagement

• Application portfolio management tool• Project portfolio management

• Collaboration tools

Build Control Operate

IT OperatingModel

Strategic Vendor Services

Tech

nolo

gyPr

oces

sOr

gani

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ns/

Func

tions

External provider-enabled services (e.g., SaaS, integrated BPO, etc.)

IT Organization

Business Unit N

Finance

Enterprise Learning

Human Resource

Risk and Compliance

Procurement

Sales/Marketing

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Key Focus Areas for IT Performance and Process Improvements

Application Portfolio Management

Architecture Management

IT Workforce Management

Project Portfolio Management

Software Engineering Processes

Sourcing and Vendor Management

Business Relationship Engagement

Application Operations and Support

IT Financial Management

Knowledge Management

CMMI Maturity Model Project monitoring and control Project planning Requirements managementSupplier agreement management Measurement and analysis Configuration managementEtc.

ITIL is a group of methods that are focused on managing and handling different aspects of information technology such as operations, infrastructure and development.

COBIT provides a set of generally accepted measures, indicators, processes and best practices, to assist in maximizing the ben-efits derived through the use of information technology, and developing appropriate IT governance and control in a company.

CMMI is a collection of capability maturity models that are used as an approach to improve business processes within an organization.

COBITPlanning and organization Delivery and support Monitoring and evaluationEtc.

ITIL®

Service desk Incident management Problem management Configuration management Change management Release managementEtc.

1

2

3

4

5

6

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10

Figure 4

Key Recommendations

Organizations should focus on establishing an effective marketing strategy that helps sustain enthusiasm for IT organizational performance and process improvement efforts. Key facets of an effective marketing strategy are as follows:

• Effective delivery of program- and project-level messages.

• Assurance that marketing is a continuous endeavor throughout the lifecycle of the program.

• A cost-effective approach that leverages existing organizational communication vehicles as much as possible.

Our experience reveals that some of the most effective marketing channels for IT organization-al performance and process improvement include roadshows, newsletters, company town halls and program portals/internal Web site postings. One of our large insurance clients used a combina-tion of roadshows, newsletters and an annual company town hall meeting to champion its program. These mechanisms allowed our client to establish a bi-directional communication medium (i.e., communicate the improvement initiative and also gather feedback on refinements to the initiative) that resulted in greater employee engagement and success.

6. Establish a governance model that enables effective management of the program.

Key Challenges

The lack of well-thought-out program governance impedes progress due to delays in decision-making (e.g., funding, resourcing, change management, etc.).

Key Recommendations

Effective governance depends on factors such as the organization’s culture and size, the diversity of IT functions, improvement approach chosen, etc. It is, therefore, best to include representa-tion from all functional areas within the organi-zation in the governance model (see Figure 5, next page). Typically, three to four governance elements are needed:

• Executive leadership team: The team responsible for sponsoring the program and reviewing/ approving the roadmap, budgets and progress.

• Program steering committee: Typically made up of a cross-functional set of senior team members. This group regularly advises perfor-mance and process improvement teams on the changes desired, plans, progress and status.

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• Software engineering process group: Made up of process experts and champions to drive the improvement program.

• Performance and process improvement team: Formed as needed to execute perfor-mance and process improvement activities (i.e., analysis or aid in implementation). This group is often led by a member of the SEPG and made up of consulting subject matter experts.

• Program manager: Depending on the scale of the IT organizational performance and process improvement program, a dedicated program manager is required to manage the program from inception to closure.

Importantly, periodic governance reviews among these three to four teams ensure that the initiative is continuously steered in the right direction.

The following review checkpoints are usually rec-ommended for successful program execution: weekly status reporting, monthly steering committee updates and monthly process owner forums (i.e., fortnightly meetings to share lessons learned across implementations).

7. Develop processes that are standard and “fit to use.”

Key Challenges

CIOs and top managers most often treat IT orga-nizational performance and process improve-ments as internal projects that can be performed by employees on a part-time basis. This approach fails in most cases, as employees consider the

activity to be of lower priority and do not focus on it adequately, leading to a prolonged turnaround. Moreover, standard process definition shortcom-ings often create difficulties in adoption across the organization.

Key Recommendations

We recommend involving dedicated subject matter experts for process definition. It is also essential to standardize the organization’s processes, including process descriptions, process maps, roles and responsibilities, and measures.

• Process description: Clearly illustrates the purpose of the process. The description may be depicted graphically, textually or both.

• Standard operating procedure: SOPs provide a repeatable way of executing the process. It includes process maps, roles and respon-sibilities, templates, guidelines, standards, checklists, etc.

• Measures and metrics: This enables measure-ment of the improvements and successes of the initiative.

8. Facilitate organizational change manage-ment to ensure smooth implementation of the recommended improvements.

Key Challenges

In our experience, the biggest constraint to a successful IT organizational performance and process improvement program is resistance to change.

Governance Model for the IT Improvement Program

Executive Leadership Team

Program Steering Committee

Program Manager

Process Owner 1 Process Owner 2 Process Owner 3 Process Owner N

Performance / Process

Improvement Team, Led by

SEPG

Figure 5

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Key Recommendations

• Adoption model: There are several ways to adopt effective IT organizational performance and process improvements. Some of the best ways to do so (but not exclusive of each other) include:

> Top-down adoption: This approach first focuses on appropriate buy-in at the cor-porate level (top management) and then drives adoption down to the individual busi-ness units.

> Bottom-up adoption: This approach assumes that change is defined for any smaller sub-group through a project, or a series of projects, and is then adopted across the organization based on proven results. Typically, this approach is utilized for driving improvements within business units (BU), based on specific BU goals. A BU blueprint drives organizational change.

> Agile improvement adoption: This agile method of adoption focuses on iterative changes to the process using a continu-ous customer feedback mechanism. This approach is typically suitable for mature or-ganizations requiring continuous improve-ments.

• Change agent involvement: Involvement of empowered stakeholders from impacted groups ensures a smooth process roll-out.

• Adoption survey: An evaluation is conducted as part of the process roll-out to assess adoption effectiveness.

• Piloting: This provides a means of verifying that the processes will work in a broader practice and allows for necessary adjustments before they are fully deployed.

• Communication: As part of the program plan, an elaborate communications strategy is needed that aligns with overall organizational communication activities.

• Training: Roll-out usually entails training activities that officially introduce the new or revised processes. Typically, the process owner identifies a training subject matter expert who is closely involved in the process definition to instruct program participants. A best practice is to record the training and host it as part of the company’s intranet.

9. Enable effective benefit tracking and reporting to ensure sustained top management support.

Key Challenges

Aligning improvement measurements with orga-nizational objectives has always been a challenge. In our experience, demonstrating ROI of the improvement effort has proved to be a bane for many companies.

Key Recommendations

Based on industry best practices, high-level benefit categories include reduced cycle time, improved quality, increased customer satisfaction and reduced costs.

It is imperative that the metrics are natural byproducts of the process and that minimal effort is spent on collecting and reporting. A typical best practice is to define, baseline and set targets for benefit measures during process definition. As part of the implementation, realized benefits should be assessed on a periodic basis.

Based on our experience, IT organizational per-formance and process improvement programs typically help reduce costs by 8% to 10%, reduce cycle time by 8% to 10%, reduce defects by 10% to 12% and improve customer satisfaction by 2% to 5% over a two- to four-year time horizon.

10. Focus on continuous improvement of the IT organizational performance and process improvements.

Key Challenges

IT organizational performance and process improvement is often treated as a project, whose focus ends with project completion. This undermines the emphasis on incremental and continuous improvement to the process.

Key Recommendations

IT organizational performance and process improvements should be viewed as an ongoing effort. Once the processes have been rolled out, the program should be reviewed and adjusted at least once a year. User feedback, ongoing assessment of audit findings and effectiveness measurements drive the future direction of the improvement. Key success drivers include continuous planning, monitoring and control of the organizational process assets.

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Three-Step Approach

# Action Item

Q4 ‘11 Q1 ‘12 Q2 '12

Owned by Supported byDec Jan Feb Mar Apr May JunPre-rollout activities

1 Develop / update communication material for rollout -Mgmt. Owner -AIT Communication team

Rollout of Vendor Management2 Communication on rollout of improved / Target State AIT

Financial Governance CBA processes-Mgmt. Owner -AIT Leadership

-AIT Communication team

3 Conduct training sessions on improved AIT Financial Governance CBA processes for various audiences-Stakeholders internal to AIT (ROM estimation team, BRM, IT Leads, etc.)-Business, PMO, Annuities Finance-Sample Benefit owners

-Mgmt. Owner -Training SMEs

4 Rollout formalized AIT Financial Governance CBA processes

-Mgmt. Owner -Business-PMO-Annuities Finance-BRM-ROM Estimation team-IT Leads

Adoption Assessment5 Assess adoption of Target State Vendor Management

processes-Mgmt. Owner

Project Closure6 Conduct lessons learned session -Mgmt. Owner

Initiation and Planning Implementation Phase

Organizational readiness

Project Plan

CurrentState

FutureState

Onboard Team

ImplementationPlan

Trained Utilized Benefits Realized(Project Closed)

Communicated Adopted

Analysis Phase

Key Activities

Perform process improvement analysis and develop stan-

dard operating procedures for the desired process area.

• Current-state assessment

• Gap identification

• Future-state definition

Key Deliverables • Standard operating procedure

• Implementation plan

Key Activities

• Change communication

• Training

• Adoption success measurement

• Project closure/benefit realization

Key Deliverables • Communication and training

• Benefits measurements

• Project closure documentation

Key Activities

Onboard the process

improvement team. Plan for

the process improvement.

• Project scope

• Project plan

Key Deliverables

• Project charter and

project plan

Figure 6

CASE STUDY >>

Enabling a U.S. Insurer to Boost IT Organizational Maturity

Business Situation

Due to accelerated growth, the IT group of a major U.S. insurance company was facing increasing business expectations. As a result, supporting IT processes needed to be improved/established.

An assessment of the IT organization’s maturity was conducted using Gartner’s IT maturity model. Based on the outcome, an organizational maturity goal was defined by the CIO.

Objective

Achieve Level 3 on Gartner’s IT maturity model.

• Level 1: Ad hoc. The organization does not specify processes and leaves determination of the right approach to individuals.

• Level 2: Repeatable. Processes are estab-lished in work teams or departments. Little consistency of approach.

• Level 3: Defined. Defined and documented processes are established across each applica-tion discipline.

• Level 4: Quantitatively Managed. Consistent measurements are in place to refine and optimize processes.

• Level 5: Optimizing. The organization is consistent, reliable and regularly improves and changes itself based on measures.

Solution

• Created a process improvement team that rolled under the client’s software engineering process group.

• Worked with key stakeholders from the client organization to develop a multi-year IT orga-nizational performance and process improve-ment roadmap. This effort included:

> Identification of the right projects to achieve the maturity level.

> Determination of the schedule and budget requirements.

> Establishment of the approach and gover-nance.

> Buy-in from key stakeholders on the road-map and approach.

• Helped execute roughly 40 IT performance and process improvement projects using our three-step approach (see Figure 6). This effort included:

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Footnotes 1 An IT operating model is a representation of how an IT organization operates across people/organization,

process and technology dimensions to implement various business objectives.2 Gartner’s IT maturity model overview for application organizations,

http://www.gartner.com/resources/175700/175750/itscore_overview_for_applica_175750.pdf.3 A software engineering process group (SEPG) is a one-stop-shop for driving process excellence within

organizations. Typically, SEPG is responsible for process consultation, process assessments, process improvements, process asset governance, process training, and process change management.

ReferencesITIL: http://www.itil-officialsite.com

CMMI: http://www.sei.cmu.edu/cmmi/

COBIT: http://www.isaca.org/Knowledge-Center/COBIT/Pages/Overview.aspx

> Development and syndication of the target state process packages, including process flows, standard operating procedures, roles and responsibilities, control gates and mea-sures, as well as process templates.

> Development and syndication of high-level implementation plans to enable the client to roll out the recommended improvements.

> Facilitated the roll-out of complex process-es (e.g., SDLC, Estimation, etc.), even as the process owner had the primary responsibil-ity of implementation.

Benefits

We successfully implemented the IT organiza-tional performance and process improvement program, delivering the desired benefits of defined and documented processes across the IT value chain. The client achieved an 8% improve-ment in customer satisfaction based on a business partner survey; a 10% reduction in overall post-production defects; a 12% improvement in cycle time due to faster rate of production stabilization of projects delivered; and approximately 10% cost savings per year due to a decrease in post-production defects after the first year of imple-mentation. The success of the implementation has encouraged other business units within the client organization to start emulating the defined implementation model.

About Cognizant

Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 140,500 employees as of March 31, 2012, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.

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© Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.

About the AuthorsPhilippe Dintrans is the Vice President and Practice Leader of the Cognizant Business Consulting (CBC)/Strategic Services Group for North America. Philippe has led numerous consulting engagements on business transformation, IT transformation and change management for marquee clients at Cognizant. Philippe holds a master’s of science degree in engineering from the Massachusetts Institute of Technology (MIT) and an MBA from INSEAD. He can be reached at Philippe.Dintrans@cognizant.com.

Amit Anand is a Senior Manager with Cognizant Business Consulting/Strategic Services. He has 11-plus years of experience in successfully leading and managing large IT performance and process improvement initiatives for various clients. Amit holds a bachelor’s degree from the IIT Delhi and an MBA from the Indian School of Business, Hyderabad. He can be reached at Amit.Anand@cognizant.com.

Madhusudan Ponnuveetil is an Engagement Manager with Cognizant Business Consulting/Strategic Services. He has eight-plus years of experience in leading IT performance and process improvement initiatives, program management and change management. Madhu holds an MBA from Asian Institute of Management, Philippines, and a bachelor’s degree in engineering from MSRIT, India. He can be reached at Madhusudan.Ponnuveetil@cognizant.com.