The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
Getting IT Right
1. Getting IT Right:
How to Plan, Manage, and Deliver on IT’s Promise
Audit | Tax | Advisory | Risk | Performance The Unique Alternative to the Big Four ®
2. Despite the integral role that information
technology plays in today’s businesses, many
companies approach major IT initiatives in a
way that is far from businesslike. Frequently,
six- or seven-figure investments are made
without tying these decisions to clearly
defined business results.
3. Getting IT Right: How to Plan, Manage,
and Deliver on IT’s Promise
Moreover, businesses often fail to tie IT spending
directly to the business’s daily operational performance Table of Contents
or, even more critically, to its long-term strategic goals. Current Concerns Over
Small wonder, then, that surveys of C-suite executives IT Effectiveness .............................. 5
consistently reflect significant levels of discomfort with Rising Expenditures,
Diminished Expectations ............... 5
the way IT investments are selected and managed.
Why Businesses Struggle
With IT Issues ................................. 6
What is needed is an objective, performance-based
methodology for developing an appropriate IT strategy, Warning Signs of
IT Management Problems ............. 6
making sound IT investment decisions, and then
The Critical Need for
executing and managing the chosen initiatives in a Improved IT Management .............. 7
way that relates these steps directly to organizational Common Executive
Concerns Over IT Spend .............. 7
performance measures including both financial and
nonfinancial metrics. Critical Business Triggers Bring
Urgency and Importance ............. 10
Fortunately, resources are now available to help Core Concepts of the
Crowe® IT Advisory Solution ........ 12
businesses of all types and sizes to quickly develop
The Major Stages of
a business-focused approach to critical IT issues. IT Investment................................ 12
Crowe’s Suite of IT
Advisory Solutions ....................... 14
Conclusion: An Objective and
Results-driven Approach ............. 19
About Crowe Horwath LLP .......... 20
Contact Information ..................... 20
www.crowehorwath.com 3
5. Getting IT Right: How to Plan, Manage,
and Deliver on IT’s Promise
Current Concerns Rising Expenditures, investment to potentially increased
sales. Or, they may develop inflated
Over IT Effectiveness Diminished expectations for sales increases that
The way IT investments are prioritized, Expectations are not realistic given a limited or
misaligned implementation scope.
implemented, and managed can
Despite the overwhelming misgivings
have a tremendous impact – both
uncovered by an FERF survey (see The challenge can be especially acute
positive or negative – on organizational
sidebar), most businesses expect to in companies where the executives
performance and, ultimately, the
continue making significant IT investments who make IT decisions are managing
overall value of an enterprise.
in the near future. When hundreds of multiple initiatives at once, and do not
Despite IT’s critical impact on the
manufacturing industry executives have adequate time or resources to
business, however, the prioritization
were surveyed by IndustryWeek analyze IT initiatives thoroughly. As a
and management of IT initiatives are
magazine and Crowe Horwath LLP result they may fail to fully understand
often misaligned and inconsistent.
in late 2009, 70 percent said they how deeply rooted IT is to overall
expected to increase their IT investments business performance.
over the coming three years.4
A survey by the Financial Executives In many cases, however, the underlying
Research Foundation revealed Why is this so? Why are financial problems are more complex – and the
significant dissatisfaction with executives resigned to spending more solutions must be more comprehensive.
the way their organizations use on IT while achieving less?
information technology to improve
business performance. A primary objective of major IT software investments must be
■ Only 7 percent of the survey
to “do more with the same” – that is, to leverage automation
respondents said they had made and technology in both production and back-office functions
substantial progress with their top
in order to increase capacities, improve efficiency, enhance
information need in the past year.1
■ About 70 percent of the financial
workflows, and support greater access to the information that
officers surveyed said they believe is needed for effective decision-making.
their current level of information
– Josh P. Cole, Partner, Crowe Horwath LLP
integrity is negatively affecting their
organization’s ability to achieve its
In many cases, management recognizes
business objectives.2
the problems, but may simply not
■ About 40 percent of the responding recognize the potential impact IT
financial officers reported unknown, investment will have on solving
low, or even negative returns on those problems. For example, they
their IT investments.3 may not link a business intelligence
www.crowehorwath.com 5
6. Crowe Horwath LLP
Why Businesses an IT problem. Rather, it is a management
problem, and management commitment
■ A lack of common references,
priorities, and expectations;
Struggle With and involvement will be needed to ■ Internal biases or inaccurate
IT Issues address it. perceptions of technology providers,
It is important to recognize that when based on outdated history or word-
This situation can result from a number
this situation exists – when the existing of-mouth impressions;
of ongoing challenges, including:
IT foundation and proposed set of IT ■ Increasingly complex IT solutions,
■ Poor communication between
initiatives are not linking to financial and and highly complex business
nontechnical business leaders and
operational goals – it is not fundamentally system maps;
those in charge of the IT effort;
■ Limits on funding for IT priorities,
mismatching expectations in terms
Warning Signs of IT Management Problems of real results from IT investments –
Is your organization struggling with IT strategy, prioritization, implementation, or in short, IT is expected to “do more
management? How do you know if you have a problem? with less”; and
■ Opportunities that may be
Here are some common indicators of decision-making and management problems: misunderstood or underexploited
when considering new models of
1. There is a lack of proper evaluating 7. Compliance still depends on information management such as
and planning for IT investments. manual detective-type financial software as a service (SaaS).
2. Poor implementations controls rather than automated
preventive systems. A recent article in InformationWeek
destabilize your ability to
Analytics described the current
transact with customers. 8. Spending on noncore and costly
environment in stark terms:
3. Complex IT decisions are items such as internal data centers
sometimes made more on the does not consider innovative “Not mincing words, CEOs and CFOs
salesperson’s strength rather alternatives such as outsourcing want to know why the firm is spending
than the technology fit. or virtualization. so much on IT and what can be done
4. IT spending is considerable, but 9. Financials must be restated for to bring those costs down.”5
the business sees little or no any reason.
Leaders will not be satisfied without
measurable improvement. 10. Competitors deliver a richer IT
an understanding of the value driven
5. Upgrades to your IT platform customer experience and your
by the investment.
do not produce new benefits or competitive edge is eroding due in
capabilities, but merely do what part to inadequate IT capabilities.
your old systems did. 11. The organization is not reacting
6. An integration is not delivering to IT trends such as social
anticipated synergy. networking.
Many of the items in this list highlight the often unseen cost of poor IT planning
and management. Beyond the significant price of the technology itself is the often
greater cost that comes from failing to achieve the expected results. These costs
include internal inefficiencies, poor information to support management
decisions, and a frustrating customer experience.
6
7. Getting IT Right: How to Plan, Manage,
and Deliver on IT’s Promise
The Critical Need
for Improved IT Common Executive Concerns Over IT Spend
Management Many executives with a decision-making role regarding IT initiatives
have concerns and questions – questions they may be reluctant to voice aloud.
The InformationWeek Analytics article
Are questions such as these keeping you up at night?
mentioned earlier presented a clear
indication of the critical need for improved
methods of strategizing, prioritizing, ■ “Are scarce resources being used to ■ “Am I holding the right people
implementing, and managing IT initiatives. serve genuine business needs – or accountable for getting results?”
are we merely pursuing the newest ■ “A significant project was recently
“Unfortunately,” the article noted, “IT
technology for its own sake?” stopped or reprioritized. Why? Was
leadership is often handicapped by not
having the right data and tools to support ■ “Will the IT projects I have in motion it due to a change or were there
analysis of what’s actually driving costs.”6 deliver as expected? Will they work? problems with execution?”
Will I get the results I promised?” ■ “Will my current IT projects come
This convergence of challenges is ■ “I’m not sure what’s happening in on budget and on time? If not,
producing new models for chief with an IT investment, or the status will I be able to face my board and
information officers to consider as of a current project. How can I get executives, my colleagues, and
they investigate their options and take updated information that’s reliable my employees to justify the choices
advantage of evolving technologies. and understandable?” I made?”
■ The ability to accurately define the full ■ “How can I be sure our IT
return on investment for technology investments are truly aligned with
spending requires analytical tools our business objectives? What
that directly relate IT to the business’s standard can I use to judge?”
financial and operational goals.
■ The ability to efficiently execute Uncertainties such as these are often warning signs of a flawed IT strategy,
and manage IT initiatives in a way an inadequate decision-making process, or ineffective implementation and
that maintains a clear connection management. The right approach to the complex issue of managing IT and
to business results requires IT investments can remove these concerns from the executive’s desk,
implementation methodologies that or greatly minimize their impact.
are specifically designed to achieve
this purpose.
www.crowehorwath.com 7
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9. Outgrown IT Foundation
Recent Merger or Acquisition
Changing Business Model
Excessive Internal Audit or Compliance Costs
Globalization
Any Business Failure in Which IT Played a Role Critical Business Triggers
Any Major IT Project Failure
Cost Reduction Challenge
Critical Risk Management Issue
The Start of a Return to Growth
Stages of
Assess Evaluate Implement Sustain IT Investment
Free IT Diagnostic System Selection Program and Project
Change Management
Management
IT Assessment Ongoing IT Effectiveness
System Implementation
Review
IT Due Diligence Custom Application IT Portfolio Value
Development Assessment
Business System
Lean IT
Assessment
Strategic IT Road Map
Crowe’s Suite of IT Advisory Solutions
ER
O RD
9
10. Crowe Horwath LLP
Critical Business ■ Outgrowing the current IT
foundation. Years of organizational
Triggers Bring growth, accompanied by under-
Urgency and investment in IT capabilities or by
piecemeal solutions, can produce
Importance a patchwork of systems requiring
Certain critical business events often add a comprehensive upgrade. It is
urgency and importance to IT decisions. worth noting the last major cycle of
Examples of these events include: enterprise IT investment occurred
during the Y2K era. The time span
that has passed since then is close to
the average life span of an enterprise
system, at which a major upgrade or
replacement is generally needed.
■ A recent merger or acquisition.
Disparate systems and competing
technologies are among the most
commonly encountered challenges
in an M&A event. Beyond the capital
investment that may be required,
there is almost always significant
personnel change, as well as manage-
ment and business disruption risk.
When contemplating an acquisition
or divestiture, IT decision-making
requires special consideration due
to the rapid and critical nature of
solution deployment.
■ Excessive internal audit and
compliance costs. Reducing the
costs of internal audit while also
Organizations often must make significant IT investment delivering business process improve-
decisions in an uncertain environment. Critical business ment offers the opportunity for both
immediate financial savings as well as
events highlight the uncertainty and inject additional
a long-term reduction in future costs.
urgency into the situation. Crowe’s IT Advisory framework Building automated controls into the
addresses these complex, interlaced challenges. system itself can reduce the need for
external or manual interventions.
10
11. Getting IT Right: How to Plan, Manage,
and Deliver on IT’s Promise
■ A changing business model. As ■ Any business failure in which IT of the coming three-year period,
a result of strategic restructuring played a role. Examples include while the projected growth rates
initiatives, some organizations have financial control failures that cause in the work force are considerably
made wholesale changes to their restating of financial results, regardless less.7 In this environment a
business models. For example, many of whether the restatement is primary IT objective is to increase
consumer product companies now required by Sarbanes-Oxley or other efficiency and improve workflows
consider themselves marketing, regulations. Beyond the immediate in order to “do more with less.”
customer, and sales-focused compliance costs are the indirect costs ■ Business continuity issues. With
organizations – outsourcing much of of reduced business valuation and the heightened business reliance on IT,
their manufacturing and distribution credit limitations that can result. businesses must address resiliency
operations. Such a change greatly ■ Any major IT project failure. and recovery issues. For example, in
affects the focus of internal enterprise Negative memories of past failures many industries today, the impact of a
systems as the traditional product can create organizational barriers company’s website going down is an
functions associated with an ERP to investing appropriately in future immediate interruption to the revenue
solution no longer support the initiatives. Examples that illustrate this stream – a business continuity risk
new strategy. New needs such as include missed cutover dates, budget today that was immaterial – if it existed
product development management, overruns, poorly managed change at all – 10 or 15 years ago. Mitigating
sophisticated forecasting, and driven by IT, or unrealized benefits. such risk must be a top IT priority.
improved customer relationship
■ Cost reduction initiatives.
management (CRM) are often needed.
These initiatives affect all areas
■ Globalization. In addition to changes of a business, including IT. In many
directly related to outsourcing, the cases, however, technology may
increasingly global nature of today’s actually help reduce organizational
businesses also sparks indirect costs or help improve flagging
changes in IT requirements. These revenues. When cutting is applied to
are necessary to meet the more the IT investment category, a refined
sophisticated collaboration require- prioritization mechanism is important
ments that occur when working with when choosing between alternatives.
trading partners across vast spaces,
■ Supporting a return to growth.
multiple time zones, and multiple
In the “Future of Manufacturing
currencies. For example, long lead
2009” survey cosponsored by
times demand greater clarity into
Crowe and IndustryWeek magazine,
shipment status as well as ability to
more than one third of respondents
allocate shipments directly to
are forecasting greater than 10
customer orders.
percent annual growth by the end
www.crowehorwath.com 11
12. Crowe Horwath LLP
Core Concepts In developing and defining its IT Advisory
services framework, Crowe Horwath LLP
The Major Stages
of the Crowe IT has followed a comparable approach, of IT Investment
Advisory Solution developing solutions to help businesses
make IT decisions that achieve critical
For an executive who is seeking to
bring order to shifting and interlacing
In his precedent-setting book, “The
strategic and operational goals: challenges of IT investment, there is one
Information Paradox,” author John Thorp
more question that must be considered:
suggested four critical questions to guide 1. Doing what’s right. Crowe’s
Where does the business stand in terms
IT decision-makers: approach helps businesses
of the specific IT issue being addressed?
objectively manage IT as an overall
1. Are we doing the right things?
portfolio, rather than as a series In general terms, the answer to this
2. Are we doing them the right way? of one-off projects. The approach question can be expressed as one of
3. Are we getting them done well? also helps companies ensure that IT four broad stages of IT investment
spend is evaluated based on clear shown in the center of the illustration
4. Are we getting the benefits?8
business cases, with a focus on on pages 8 and 9:
validating the assumptions that
were made to justify projects. 1. Assess: Enable understanding
and alignment
2. Aligning with standards. Crowe’s
approach applies leading research 2. Evaluate: Support informed
and best practice experience to help decision-making
executives understand the risks and 3. Implement: Plan and
benefits of alternative decisions, and execute effectively
to recognize the various categories
4. Sustain: Manage and improve
of investments and business
for long-term results
applications that must be managed.
3. Executing with rigor. Crowe’s Depending on the particular IT issue being
methodologies and tools help ensure addressed, a business typically finds
new projects are implemented itself in several stages of this continuum
correctly, enable quick recovery at once. One specific technology issue
or termination of unsuccessful may require support in selecting the
initiatives, and establish clear appropriate system, while another will
accountability for results. require only steady management and
ongoing review of an existing platform.
4. Realizing the benefits. Crowe’s
approach focuses on helping Moreover, the solution to IT issues
organizations minimize total cost of does not always progress in a linear
ownership and maximize total value fashion. For example, an execution and
over the full life cycle of IT initiatives, implementation challenge can cause
not just the acquisition and the business to rethink its initial system
implementation phases. selection – or even reassess its original
strategic goals for the initiative.
12
13. Getting IT Right: How to Plan, Manage,
and Deliver on IT’s Promise
www.crowehorwath.com 13
14. Crowe Horwath LLP
Crowe’s Suite of IT Advisory Solutions
The Crowe suite of IT Advisory solutions offers effective tools for addressing critical
issues at all stages of the IT development and execution continuum:
Assess: Enable Understanding and Alignment
Free IT Diagnostic IT Assessment/IT Due Diligence
1 Day 2 – 3 Weeks
A rapid diagnostic of the existing A structured exploration and
environment. Identifies the key risks analysis of business systems,
and opportunities in leveraging IT security, spending, integrations,
within the business along with a hardware, communications,
high-level path to realizing benefits, personnel, policies and procedures,
and suggests a series of next steps and intellectual property. Designed
to capitalize on areas of opportunity. to uncover hidden risk and
opportunity and communicate
complex issues in a format that is
accessible and actionable by the
business owner or leader.
Benefits Benefits
■ Objective opinion by third-party ■ Formal written deliverable,
experts consumable by IT and business
■ Identification of key risks leaders
■ Documentation of opportunities ■ Series of prioritized, specific
recommendations
■ No cost
■ Actionable direction focused
on highest business value
14
15. Getting IT Right: How to Plan, Manage,
and Deliver on IT’s Promise
E
Business System Assessment Strategic IT Road Map
3 – 5 Weeks 6 – 8 Weeks
A deep dive into understanding An effective bridge across all stages
and documenting the entire suite of of IT strategy, decision-making, and
sponsored and user-created busi- execution planning. Draws from
ness system software tools used to time spent with the IT and business
run the organization. An important leaders to clarify organizational
foundational element for evaluating strategy and performance goals,
major initiatives such as possible identify and evaluate a series of
ERP replacement or M&A activity, alternative IT investment decisions
and to identify strategic and func- and projects, and then weigh their
tional gaps, potential areas of risk, impact on each of the objectives.
and opportunities for improvement.
Benefits Benefits
■ Visual representation of all user ■ Clear, 18 – 24 month plan for all
tools actually used to run the recommended IT investment
business ■ Investment options delivered
■ Clarity to functional gaps, for various budget levels
software integrations, ■ Resource plans that indicate
unmanaged tools, risks, exactly what is needed to
opportunities, unmet needs, execute
and support
■ ROI analysis for each
investment alternative
www.crowehorwath.com 15
16. Crowe Horwath LLP
Evaluate: Support Informed Implement: Plan and
Decision-making Execute Effectively
System Selection Program and Project Management
4 – 8 Weeks Determined by project
A proven and pragmatic approach, Helping to ensure that all defined
combined with Crowe experience projects are progressing in a
with a variety of software systems, coordinated and managed fashion,
that quickly and effectively guides with speed and efficiency. Includes
the organization to the best determining and assigning work
decisions for critical business to be done, tracking progress,
systems. Work covers areas such managing exceptions, balancing
as strategy, selection criteria, conflicting priorities, and
requirements definition, and vendor communicating to all parties
evaluation, selection, negotiation, involved to help ensure all stay
and implementation planning. focused on the end-goal.
Benefits Benefits
■ Objective and structured ■ Project support activities
leadership for significant are planned, managed, and
system decisions communicated regularly.
■ Insight from hundreds of system ■ Scope of the work, and
selection decisions and leading associated risks, schedules,
industry research costs, and needed resources
■ Enhanced speed and quality of are accurately defined.
decision-making ■ Quality work is delivered and
■ Negotiation support to drive issues are addressed as they are
cost savings encountered.
16
17. Getting IT Right: How to Plan, Manage,
and Deliver on IT’s Promise
I
System Implementation Custom Application Development
Determined by project Determined by project
The use of proven methodologies Custom-built solutions for niche
and vision to anticipate looming circumstances or online/Web needs
issues, and the application of skills where business requirements can-
to manage internal and external not be met though out-of-the box
resources. Key to realizing the applications. Leverages more than
benefits of the planning phases, 20 years of Crowe experience with
independent implementation known platforms such as Java™ ,
oversight reduces the risk of going Microsoft® .NET, and open source
over budget, missing deadlines, or tools and applications.
failing to deliver on promises.
Benefits Benefits
■ Reduced risk of scope creep ■ The ability to leverage onshore/
and budget overruns offshore models that are truly
■ Quicker path to value through cost efficient
structured methodology ■ An established organization to
■ Business-first advice designed support solution implementation
to drive value from the ■ An established development
technology being implemented toolkit to provide velocity, reduce
costs, and minimize coding
www.crowehorwath.com 17
18. Crowe Horwath LLP
Sustain: Manage and Improve for Long-term Results
Change Management Ongoing IT Effectiveness Review IT Portfolio Value Assessment
Determined by project Determined by project Determined by project
A structured approach to Provides an ongoing evaluation Leveraging the portfolio of IT invest-
transitioning individuals, teams, and tuneup on completed ment to derive maximum business
and organizations to a desired implementations and new projects value from IT assets. Involves the
future state. Aligns expectations, in motion. Key components of the application of systematic manage-
communicates, integrates teams, Crowe toolkit are used to advise on ment to large classes of IT items
and manages people training, using risks and opportunities, and provide including planned initiatives, proj-
a pragmatic approach that includes a scorecard on the organization’s ects, and ongoing IT services, to
skill upgrading to maximize the use of IT. help organizations determine which
implementation effort. portfolio of IT spend truly delivers
value for the investment.
Benefits Benefits Benefits
■ Reduced resistance to change ■ Short-phased visits that ■ Central oversight of budget
■ Faster adoption of the strategic maintain momentum on projects ■ Risk management
initiatives in process
■ Strategic alignment of IT
■ Early identification of issues ■ Objective evaluation of possible investments and demand
before they drain projects of changes to current plans
■ Standardization of investment
anticipated benefits ■ Highlighting and definition of procedures, rules, and plans
risk redemption requirements
18
19. Getting IT Right: How to Plan, Manage,
and Deliver on IT’s Promise
Conclusion: An to the effort. Project leaders average
20 years of experience in IT-related
Objective and Advisory services working for many
Results-driven industries across a variety of specialty
business application environments.
S Approach
This approach, proven in organizations
Regardless of the specific solutions of all sizes, is also adaptable on a global
Lean IT the client employs within the Crowe scale thanks to the international reach of
Determined by project suite of solutions, Crowe pursues a the Crowe Horwath International network.
rapid, results-driven approach, with
a specific set of deliverables in each At all levels and throughout all phases
The extension of lean manufactur-
ing and lean services principles to phase of the assignment. The overall of the engagement, our emphasis is
the development and management goal is to successfully meld business to provide pragmatic solutions that
of IT products and services. The process needs and company strategy go beyond theory, and to work side-
central concern is the elimination of by-side with client teams in a flexible,
into executable IT plans as quickly as
waste, in particular work that adds
possible, in order to deliver time-phased, collaborative effort that takes into account
no value. Particularly effective for
companies that develop software as budget-conscious solutions. each business’s unique staffing models,
a product or have a high volume of time and resource constraints, and
custom tools. Crowe’s methodologies support available IT investment funding.
clients seeking to assess their current
systems and infrastructure as well as
those organizations making strategic 1
“Technology Issues for Financial Executives,”
investments that are looking for expert Computer Sciences Corporation and Financial
Executives Research Foundation, 2008, p.2.
guidance related to the transaction.
Benefits 2
ibid.
The Crowe suite of IT Advisory solutions
■ Improved investment in Agile
3
“Technology Issues for Financial Executives,”
provides businesses with a proven, Computer Sciences Corporation and Financial
software development systematic process for developing Executives Research Foundation, 2008, p.3.
■ Reduced software defects appropriate IT strategies, making 4
“The Future of Manufacturing 2009,” IndustryWeek,
■ Elimination of unnecessary or objective IT system decisions, and Penton Media Inc., 2009, p. 8.
overbuilt solutions executing and managing their ongoing 5
“Know Your Costs: The Key to IT Business,”
■ Reduction of unnecessary IT initiatives. Crowe’s business-driven InformationWeek Analytics, April 2010, p. 5, http://
equipment and vendor-neutral approach is in many analytics.informationweek.com/abstract/81/2813/
Business-Intelligence-and-Information-
■ Improved productivity due to respects the polar opposite of traditional Management/informed-cio-it-cost-transparency.
reduced “firefighting” vendor-driven IT spend decisions. html.
6
ibid.
The Crowe IT Advisory teams pursue
an investment-minded approach, and 7
“The Future of Manufacturing 2009,” p. 3.
provide client executive teams with the 8
John Thorp, “The Information Paradox: Realizing
tools and techniques to do the same. the Business Benefits of Information Technology,”
Project staffing is composed of more McGraw-Hill Education, 1999.
than technologists – adding a variety
of specialists in personnel, process,
strategy, and performance management
www.crowehorwath.com 19