lundi 13 décembre 2010

Why this book and this blog?

IT is ubiquitous in the company. It is an undeniable source of competitive advantages if it is well managed. However, the IT keeps the reputation of being ‘isolated’, complex and too expensive. Their managers – the Chief Information Officers – struggle to be heard within management committees.

Today, several factors force to questioning: the evolution of usages and related technologies, the emergence of new generations born with a computer and the direct solicitations from IT providers to operational management. IT must reinvent its positioning within the company.

This is the objective of the book (and of this blog dedicated to IT as transformation factor for the organizations), written both for CIOs and members of management committees, as well as for students who wish to acquire robust competences in corporate IT: state a business approach that allows IT to appear not only as a cost center, but to be defined as a service provider, partner to the users and to the general management.

Antoine Gourévitch

The authors

Eric Baudson is Global Manager of the IT and Operations department of a funding and investment bank which groups the operational support (middle- and back-office) nd IT functions. With twenty years of experience in banking, he developed a deep knowledge of the banking sector, and in particular of funding and investment banking business lines. His expertise allows him implementing his vision of IT and the operations as strategic partners to business lines, with an approach focused on innovation and risk control. Eric Baudson is agronomist engineer and holds a degree from ESSEC.

Antoine Gourévitch is a Partner at The Boston Consulting Group in Paris, which he joined in 1995. In charge of the “Information systems” practice area for France, he is also the global leader of “Operations and IT Governance” practice area. In this framework, he coordinated BCG’s research works on the future of IT organizations and worked in Europe on issues of performance improvement, management of large IT programs, and sourcing strategies in the industrial and finance sectors. He teaches at Ecole Centrale Paris, notably about topics of large transformation projects. Antoine Gourévitch is a graduate from Ecole Centrale Paris and holds an MBA from INSEAD.

Vanessa Lyon is Project Leader at The Boston Consulting Group in Paris, which she joined in 2005. She is an active member of the “Information Systems” and “Industrial Goods” practice areas. She intervenes in automotive, capital goods and tourism sectors, and on topics related to business model innovation. Before joining BCG, she held management functions on IT within a large consumer goods group. In the IT domain, she specialized in the operational efficiency of development processes, the steering of project portfolios, and the management of key resources. Vanessa Lyon is a graduate from Ecole Polytechnique and Ecole Nationale des Ponts et Chaussées.

Preface by René Abate, Senior Advisor, BCG

A few weeks ago, I was in a Parisian hospital for a routine check. While the physician was writing his report, I asked him to compare the results with previous ones. He told me, upon consideration, that It had changed and that “they” had not input old examinations. Then came a litany of complaints about the IT system, unfitted for that physician’s usage. I answered him that what he was criticizing was his working tool and I suggested that it wasn’t “their” IT, but his.

This anecdote is indeed still representative of the IT situation today in numerous companies; a strange, technical, distant, and often incomprehensible object. General Managements and Boards are sometimes disconcerted by the lead-times and the cost of the projects presented to them, most often with a technical angle and rarely with a ‘business’ vision. The operational departments which use it are, for their part, sceptical or resigned.

This is unfortunate because new information technologies allow achieving progresses in efficiency, and also create relevant opportunities to increase the turnover, either by creating new business models, new products and services, or by better exploiting available or accessible data about their clients. Numerous companies in the industry, services, retailing or energy, for instance, try and succeed in it. The State services, by developing an online application for income statements and to pay taxes, have increased the service level for the citizens and improved efficiency. Beyond, it is even possible to reinvent some markets, as Apple proved with iTunes, or as Amazon and FNAC are now trying to do with the Kindle/FnacBook.

The digitalization of products and services brought about by internet and that the systems have to support is an accelerator for our companies. A recent study by BCG commissioned by Google about the internet impact in the United Kingdom showed that internet economy represents 7% of the GDP, growing by 10% per year, the greatest beneficiaries being the SMBs which seized the opportunity to propose new services (searching for clients, organizing contacts or selling goods).

In front of those challenges, the companies must evolve their systems. They are sometimes embarrassed by the complexity of existing systems which do not allow developing applications with the desired speed or cost. It is very tempting, in order to adapt to the rhythm of the markets, to tend toward a complete redesign of the systems with the objective of replacing current Information Systems. Those attempts have not always been successful! On the other hand, the systems can be evolved and, by doing so, satisfy the requests from business lines. This requires establishing a quality dialogue and shared interests between the IT department, the operational departments, and service providers. Such a dialogue allows creating new value and better reconciling the long and short terms.

The interest of this book, written by a professional and two consultants, is to propose a ‘business’ approach of the IT, and a conceptual framework that allows thinking about it with method and common sense, while ensuring that the operational departments are not sceptical or ‘resigned’, but stakeholders…

If this approach is implemented, then the anecdote of the physician will become an anomaly, because after all ‘one has the IT one deserves.’

René Abate

Managing Partner, Delphen

Senior Advisor, Former Chairman of BCG Europe

Director of companies

Postscript by Christian Mardrus, SVP, Renault-Nissan

When I have been appointed CIO of Renault mid-2006, the IT faced numerous fundamental problems. The overall quality of the service was insufficient and the department experienced a problem of image within the company. Our management thought that the IT was expensive and did not provide the expected benefits to the business lines. This is why, since my arrival, we designed an ambitious project to transform the IT over three years and with three objectives.

The first was to improve the quality of the service provided to the company in the framework of the ‘Renault 2009 Contract’ growth plan. The second consisted in reinforcing the alignment between the IT and the business lines in order to better support the latter in their projects. This presupposed reinforcing the geographic proximity between part of the IT workforce and our internal client to reinforce the dialogue. The third objective was cost optimization while improving productivity but without decreasing the number of our projects; all of it while implementing our three outsourcing contracts which had just been signed.

In order to orchestrate the transformation, we rallied the support of IT operational teams, then the one of the executive committee to the transformation plan we finalized and 2006. We then split the effort among 11 work groups, each one provided with a mission and clear objectives, but also with a certain degree of freedom in the way they would achieve them. In order to inculcate the rigor and discipline required for the good course of the project, we performed a weekly team follow-up during meetings in which decisions were agreed upon.

The results were quickly there. Our IT transformation project allowed for a significant improvement of our service quality. The users’ satisfaction rate proved it with a 26% increase according to the monthly barometer.

The cost reduction would also allow consolidating the technical base. It was not about renunciation but about transformation: working differently. Thanks to our cost optimization efforts, we have been able to reinvest 100% of the economies achieved over the first year in new projects and in the modernization of the infrastructure. This quickly made our action credible. Overall, we reduced our budget by 17% while improving the productivity: three years after the launch of the initiatives, we succeeded in completing a greater number of projects with a better level of service.

Today, I draw three major lessons from this large-scale project.

  • The most important concerns the definition of performance objectives and indicators: “what gets measured gets done.” We had defined the key performance indicators that we monitored over the three years.
  • We had the support from the general management which had understood the purpose of the plan and was following it up regularly.
  • Lastly, the plan had been co-built with 150 employees split in 11 work groups and followed-up by the management committee every weak.

That transformation required a lot of energy and daily involvement. One must show to the field troops that it is possible by taking the problems one after the other with a classical ‘business’ approach.

This book illustrates the good practices to be implemented in an IT transformation. By applying them, the CIOs will outlive Darwin!

Christian Mardrus, CIO and Senior Vice President in charge of Information Systems at Renault from 2006 to 2009, currently SVP Global Supply Chain, Renault-Nissan.

Postscript by Hervé Biausser, Director of ECP

There is about 500 000 IT professionals in France. India and China ‘manufacture’ each year 1 000 000 IT graduates. Let alone the United States where information technologies attract the best talents due to the job opportunities promised by the Silicon Valley or the Route 128 in Massachusetts.

While information technologies are becoming the growth driver of our economies, it is important for France to equip itself with first-rate education in that area, able to attract the best talents of their generation.
One of the crucial objectives of the alliance between Ecole Centrale de Paris and Ecole Supérieure d’Electricité is precisely to favour the development of such first-rate curricula at global level.

The book you have in hand allows bridging technology and business by adopting a systemic vision. This approach is specific to the French school; it is in line with what we are developing at Ecole Centrale de Paris. Its reading will interest both the practitioners and the students who wish to acquire robust competences in corporate IT.

Hervé Biausser, Director of Ecole Centrale de Paris

Content of the book

Section I – Considering IT as a business
  • Which vision should IT support within the company?
  • How can it implement that vision?

Section II – Managing shareholders and clients
  • How to develop an IT strategy in line with the company’s stakes?
  • How to create the conditions of cooperation with the business lines?
  • Which products and services should the IT produce?
  • How to steer the strategy?

Section III – Steering the factory
  • How to ensure that fundamental elements are achieved: sustainable project steering and infrastructure?

Section IV – Managing the organization
  • How to act so as IT and business line players find their place?
  • What are the ingredients of a high-performance organization?

Section V – Transforming
  • When should one transform? How far should it go?
  • How to ensure that “during the works, the sale continues?”