“Please More with Less”

Create an Internal IT Marketplace

Kevin BeldenKevin Belden

Deputy Comptroller & CIODeputy Comptroller & CIO

NYS Office of the State ComptrollerNYS Office of the State Comptroller

NYS Executive ForumNYS Executive Forum

Albany, New YorkAlbany, New YorkSeptember 9, 2011September 9, 2011

Premise…

In our business, the best path to:In our business, the best path to: Satisfy customersSatisfy customers Balance IT service supply and demandBalance IT service supply and demand And add value…And add value…

Is to model a market economy. Is to model a market economy.

We wouldn’t want to live in a centrally planned We wouldn’t want to live in a centrally planned economy; why are we willing to work in one?economy; why are we willing to work in one?

OSC IT Transformation…Five Organizational Systems

Governance Internal Marketplace (staged)

Structure (define implement)

Culture (define educate)

Tools & Techniques (as needed)

Metrics & Rewards (later)

Governance/Internal Marketplace

The resource management and investment The resource management and investment processes that determine processes that determine ::

What gets producedWhat gets produced For whomFor whom WhenWhen At what quality levelAt what quality level

Why should we care?

Sample symptoms that have root causes in Sample symptoms that have root causes in governance/internal marketplace include:governance/internal marketplace include:

Demand exceeds supplyDemand exceeds supply MisalignmentMisalignment Appearance of unresponsivenessAppearance of unresponsiveness Clients feel lack of controlClients feel lack of control Complaints about cost, slowness, qualityComplaints about cost, slowness, quality Lack of investment fundingLack of investment funding Limited understanding of true costsLimited understanding of true costs

What business are you in?

John Scherer, at the 2011 NYS CIO AcademyJohn Scherer, at the 2011 NYS CIO Academy

The answer depends on which hat you’re wearing…

Enterprise

IT “Business”

IT ProviderIT

& S

ecur

ity P

olic

y

IT Enablement Strategy

CEO Role

CIO R

ole

IT Business within a Business (Internal Service Company – Gartner)

We may be single-source internal IT service We may be single-source internal IT service providers, but we operate in a competitive providers, but we operate in a competitive

marketplace.marketplace.

“The surest way to lose a monopoly is to behave as a monopolist.” N. Dean Meyer

Our expectations in the marketplace

1) Demand is constrained by our income 1) Demand is constrained by our income Supply is constrainedSupply is constrained

2) We make choices about what we can buy2) We make choices about what we can buyCustomers feel lack of controlCustomers feel lack of control

3) Someone will sell us what we want…at a price3) Someone will sell us what we want…at a priceIT provides what it can, for “free”IT provides what it can, for “free”

4) We’re accountable for our buying decisions; the 4) We’re accountable for our buying decisions; the provider is responsible for the product/serviceprovider is responsible for the product/service

AAccountability is blurredccountability is blurred

…compared to at work

One thing I learned in Eco101…

When cost is zero, When cost is zero, demand is infinitedemand is infinite

I know I can’t afford one, but I’ll take two if they’re free!

How much money do your customers have to spend on IT?

What’s their “spending power”?What’s their “spending power”? How does it relate to their expectations?How does it relate to their expectations?

Who controls that spending power, sets Who controls that spending power, sets priorities, makes purchase decisions?priorities, makes purchase decisions? Do you have to say “no”?Do you have to say “no”? Does a governance group say no for you?Does a governance group say no for you?

Are you happy with providers who say no?

Recommendation – Empower Recommendation – Empower IT to Say “Yes”IT to Say “Yes”

That’s crazy!

…to any fully-funded, reasonable request.

I said “fully-funded”!

Customers need to be prepared to “pay” the Customers need to be prepared to “pay” the fully-burdened costs of their initiatives and fully-burdened costs of their initiatives and

services, including life-cycle costs.services, including life-cycle costs.

Makes sense!

How do we do it?How do we do it?

Three prerequisites

1.1. Something to “sell”Something to “sell”

2.2. At an associated “price”At an associated “price”

3.3. In a simulated market environmentIn a simulated market environment

You don’t need to get there all at once!

Governance/Internal Marketplace – What We’ve Been Working On

Clear responsibility/accountabilityClear responsibility/accountability Improved financial reportingImproved financial reporting

““Transparency” moving to “accuracy”Transparency” moving to “accuracy” Business within a Business toolsBusiness within a Business tools

Service catalogService catalog Pricing modelsPricing models Cause and effect purchase decisionsCause and effect purchase decisions

As IT service provider, what are your responsibilities in this relationship?

Reduce costs and improve service on the Reduce costs and improve service on the supplysupply side:side: Open the books!Open the books! Make the case for investmentMake the case for investment Simplify architectureSimplify architecture Find efficiencies; increase productivityFind efficiencies; increase productivity Reduce duplication and overlapReduce duplication and overlap Do comparative analysis (benchmarking)Do comparative analysis (benchmarking)

And offer well-defined choices to customers, to support their decisions on the demand side.

What are your customers’ responsibilities, enabled by this approach?

Make wise decisions on the Make wise decisions on the demanddemand side: side: Recognize that IT comes at a priceRecognize that IT comes at a price Understand the limits of spending powerUnderstand the limits of spending power Use scarce resources sensiblyUse scarce resources sensibly StandardizeStandardize Accept enterprise solutions where sensibleAccept enterprise solutions where sensible Reduce demand for custom and “one of a kind” Reduce demand for custom and “one of a kind” Explicitly determine quality and quantity levelsExplicitly determine quality and quantity levels

Cumulative savings on the supply and demand sides > $7M over 3 years.

Three prerequisites

1.1. Something to “sell”Something to “sell”

2.2. At an associated “price”At an associated “price”

3.3. In a simulated market environmentIn a simulated market environment

You don’t need to get there all at once!

Service Catalog

A key resource management process of an A key resource management process of an internal marketplaceinternal marketplace

Clarifies customer expectations and IT Clarifies customer expectations and IT commitmentscommitments

Describes service offeringsDescribes service offerings Associates costs (no free lunch!)Associates costs (no free lunch!)

Services define “units of economic exchange” in the internal marketplace.

What’s the “unit of economic exchange” in today’s environment?

Historical Expectations

Mandates

Dedicated Staff & Budget

Allocated Resources

Foot Stomping

Tomorrow…Defined Services

“The Boss Said So!”

V=B/C

Benefits of Services Approach

That’s crazy!

Do less with less!Do less with less!

By choice rather than by chance.

Your budget is not your budget; you’re holding customer $ on account.

The amount in each wedge defines a customer’s “spending power”

That’s crazy!

Enterprise Good…Enterprise Good…

… …is Bad!is Bad!

In the end, self-interest trumps!

You’re holding customer $ on account.

Investments

Enterprise Good

FY 2011/12Hardware Maintenance $x,xxx,xxx

Software Maintenance $x,xxx,xxx

Expenses $x,xxx,xxx

Consulting $x,xxx,xxx

Software Acquisitions $xxx,xxx

Equipment Acquisitions $x,xxx,xxx

Net Total $xx,xxx,xxx

Traditional IT budget discussions…

V=B/C ???

Illustrative Services FY 2011/12Workplace Support $x,xxx,xxx

Standard desktopEnhanced laptopVirtual desktop

Collaboration Services $x,xxx,xxxemailExtended storageHandheld devices

Business Systems Development & Maintenance $x,xxx,xxxPayroll MaintenancePayroll UpgradePayroll Enhanced Availability

Professional & Consulting Services $x,xxx,xxxBusiness AnalysisPolicies & Research

Client Services $x,xxx,xxxInvestment “Capital” $x,xxx,xxx

Enterprise Good $x,xxx,xxx

Basis for informed IT decision-making

Speaking of “the Cloud”…

Usage-based Billing

Service Standardization

Two Essential Characteristics

Accomplishment Highlights

Strategic alignment Strategic alignment business partnership business partnership Financial transparencyFinancial transparency More balanced expectationsMore balanced expectations Improved reputationImproved reputation Support for architecture & standardsSupport for architecture & standards Organizational realignmentOrganizational realignment Value - the business pitches the IT budgetValue - the business pitches the IT budget Infrastructure modernizationInfrastructure modernization Adopting characteristics of a true “shared service”Adopting characteristics of a true “shared service”

In “business within a business” terms, we’re growing market share and increasing customer satisfaction.

Contact

Kevin G. Belden

Deputy Comptroller & CIO

Office of the State Comptroller

110 State Street – 13th Floor

Albany NY 12236

kbelden@osc.state.ny.us

518-486-4349