Cxo Advisor customer value proposition 2013 update

CXO Advisor

Advise – Innovate – Change

Three strategic questionsIs your business suffering from legacy induced

inertia?

Is your business keeping up with market developments?

How can you be more responsive or disruptive

in the market?

We will save you 20 – 30 % of your IT cost over 3 – 5 years…

We do 3 things : - Advise Deeply experienced team Backed by Ovum in Africa – IT Finance strength Business – IT Transformation Model

Innovate Return on Business Agility Rapid Innovation with Outsystems Business Model Innovation – Saas-it.net

Change Liberate legacy - Adaptivity Business Process as a Service – Procurement, IT Finance, Portfolio Governance as a Service

Maintenance

Innovation

Why “as a Service” for innovation

Internal Systems

Hardware

Middleware

Application

Business Process

Scope of Activities IT budget/Effort

≈

Hardware

Middleware

Application

Business Process

Scope of Activities IT budget/Effort

Innovation

Internally Managed

IaaS&

HaaS

Maintenance

Vendor Management

InnovationInternally Managed

PaaS&

IaaS&

HaaS

Maintenance

Vendor Management

Innovation

Internally Managed

SaaS&

PaaS&

IaaS&

HaaS

Maintenance

Vendor Management

≈BPaaS

& SaaS

&PaaS

&IaaS

&HaaS

Liberate your legacy…

SHARED SERVICES MODEL SOURCES

Porters Value Chain – Michael Porter – Harvard Business SchoolWhat Business Really Wants from IT – Terry White

Reinventing the IT department – Terry WhiteSpeed up the mess – Terry White

What IT really does – Terry White

IT without fuss

76%

Improve business results

22%

Information leadership

2%

Technology delivery

IT without fuss

20%

Improve business results

60%

Information leadership

20%

What the CEO wants

… Agile Business - IT Transformation

How we see the world: The three ‘roles’ in business

Shared and support services

Core businessStrategy

LeadershipInnovation

Given Porter’s value chain, there are three ‘roles’ of business Core business (not systems) Shared services / business and customer support Strategy, leadership, innovation – the ‘glue’ that holds it all together

What should we

do?

How should we

do it?

Getting it done!

StrategyLeadershipInnovation

Provide the glue: “How do we service

our customers?”

Your Customer

One golden thread

Sales revenue vs. cost

How we see the world: There is only one “C”

Core business

The people who pay for your products and services The people who use your services again and, refer others to you and, have choices and ultimately

pay your salaryThe Customer needs cross functional, organisation wide alignment

Gain Customers

(Sales & marketing)

Process orders

Manufacture / Deliver services

Distribute Collect Payment

Shared and support services

Finance and AdministrationHuman Resources

Information TechnologySupply Chain

Legal & Governance

Support the core business in serving

customers

How we see the world: Business momentumBased on your rate of sales / against your cost burn rate Sales Costs Geography Staff Legacy

All of these have their own cycle times Decisions which ignore cycle times tend to fail

Shared and support services Core business


Business momentum

Current sales rate/ cost burn

The business engine

The business drivers of agility



Business momentum

Deliver

Fix

Improve

Service

Differentiate

Core business engine

Value delivery engine

Support engine

Looming Threat

Change Strategy

Change Environment

New products, markets, channels

New, improved processes

Service business growth

Regulation, mandates

New CxO, value propositionsFix support engine

Training, upgrades

New, improved processes

Cloud, outsource, BPaas



Business momentum

Deliver

Fix

Improve

Service

Differentiate

Sustainability Risk

Strategic Risk

Tactical RiskUncertainty

Operational Risk

BTL activity drives cost

ATL activity drives revenue

Are we doing the right things?



Business momentum

Deliver

Fix

Improve

Service

Differentiate

RiskCostPoA

Sustainability Risk

RiskCost efficiency

Time

RiskNPV/Time

BTL- PBPCVA

PBPCVAPoA

Strategic Risk

ROI = Breakeven?Benefits realisation

Baseline

ROI > IRR

ROI = IRR + >40% **

Hit rate >70%PoA

Time < 2yrs

Hit rate > 50%PoA

Horizon 1-3 yrs

Hit rate > 30%PoA

Horizon – 1-20 yrs


Historical CVAOngoing Benefits

TCO

Current CVAOngoing Benefits

Current Performance

Planned CVAPlanned Benefits

Planned Performance

Risk ToleranceOperational

Risk

Can we measure them?

Financial Cost view



Business momentum

Deliver

Fix

Improve

Service

Differentiate

Sustainability Risk

Strategic Risk


Operational Risk

Typically total fixed cost

Typically Capex or New Services Contract

Typically total variable cost

Financial Performance view



Business momentum

Deliver

Fix

Improve

Service

Differentiate

Sustainability Risk

Strategic Risk


Operational Risk Cost of sales

Production Costs

Return on Capital Employed / ROASales / Total Revenue

Net cash flow / working capitalCash Value added

The 3RM is used at every stage

15

Formulate Strategy

StrategicPlan

Prioritise planned

Initiatives

Resource planned

Initiatives

Execute and track

Run the Business

Strategic inputs

Innovation

Research & Advisory

Trends

Business strategic inputs

Where do we want to be?

Whats important?

Are we achieving what we should be?

APPROACH

Change at the speed of Business

Cost / savings flow

17 CXO Advisor © Client distribution only

Run the engine

Budg

et

ITWF IBR IL

Strengthen IT

Strengthen Engine Meaning Attention

Results in change of momentum line costs

Momentum line

Todays decisions drive subsequent spend profiles


Each subsequent period shows the effects of activities from the previous period• High spend in IBR in year 1 results in higher Ops engine costs in year 2• High spend in “Strengthen the engine” in year 2 should result in lower Ops engine costs in

year 3

Momentum line

Momentum line

Momentum line

Year 1

Year 3

Year 2

Comparisons can be revealing


• Portfolio to budget Y0• Year to year• Between divisions• Between countries• Between organisations

Organisation 1

Organisation 2

Both spend the same…Which is better according to this benchmark?

CXOA D V I S O R

Right of Way TM – Portfolio PrioritisationPrioritisationpain points

• How do you compare apples with monkeys?

• Noise & politics define priorities?

• What about regulatory compliance projects?

• Everything MUST have a positive ROI

• Are your initiatives aligned with your strategy?

• What about the real value from the initiative?

• How do dependencies play out in prioritisation?

• What about marginal projects, that just must be done?

• What about innovation – how do you put a value to it?

Right of Way TM

benefits• Fixes the

prioritisation problem

• Prioriisation aligned with your strategic objectives

• Rigourous & fair prioritisation

• ROI is not the only criterion – focus on value to your organisation

• Has the right discussion around project right of way

• What should we do, & why?

• What should we delay & why?

• What value will we derive?

• Develops scenarios around different priorities

• What benefits will we focus on?

• Clarifies understanding!

The steps to portfolio prioritisation successUsing the Right of WayT M processes & tools

Decide on utility factors from strategic intent

Weight 3RM classes utility, according to investment

policy

Fast, profitable, innovative, customer focused

Project 1

Project 2

Project 3

12 3

Classify projects & define utility contribution per project

Proioritise projects by strategically

aligned utility scores

Project 1

Project 2

Project 3

95

56

74 Proj

ect 1

Proj

ect 3

Proj

ect 2

Project …

Project …

Step 5

Step 3

Step 4

Step 1 Step 2

Score projects by contribution, utility & class

95

Do these

Don’t do these

CXOA D V I S O R

Performancepain points

Benchmarkingbenefits

Performance and cost benchmarking

• Our legacy is draining our budget

• Maintenance uses up to 80% of our resources

• The drivers of our cost are unclear

• We have too much inertia and bureaucracy

• We are unable to innovate internally

• We seem to keep digging the same hole

• The balanced scorecard doesn't tell us if we’re missing something – it tends to be a lag indicator of performance

• Follows 80/20 rule – focus on important performance issues

• De-politicises performance

• Clear definition of lead/lag drivers and appropriate response to each

• Extract value from current processes / systems

• All measures within 3RM paradigm – aligned to business strategy, resourcing, communication models

The steps in indexing, base-lining and benchmarking

Understand lead / lag measures, focus areas, levers of performance and index

them

Step 2

Benchmark only where focus will produce results

Step 3

Know what the definition of performance is for each business

driver

Step 1

Execute value realisation plansStep 4

Legacy value

Core value

unlock

3RM© - ROA engagement model


Baseline current agility & innovation

Analyse drivers, resources and plan

Show agile improvement opportunities

Develop continuous innovation roadmap

Our Principals

Transaction Advisory Business improvementIT Financial ManagementIT Business AlignmentCIO and Financial Industry exprience

Expert in Cloud enablementCloud business models Cloud market dynamics Vendor transformation Ex-CIO/CTO of 20 000 strong ICT company

Worldwide recognition of ICT management thinkingExpert in IT Finance Author of three books on IT managementWorked with IVI developing maturity frameworks for IT Value

SaaS-it advises Microsoft, Nokia and others on Cloud go-to-market propositionsDeep experience in Telecoms and ICTProfound insights into customer focused strategies

Extensive experience Mergers, Acquisitions and operational restructuresHeld executive positions for global Information Technology and Telecommunications companies.Established CXO Advisor

Craig Terblanche Gerhardt van Wyngaardt Kim Andersen Terry White Anders Trolle-Schultz

Our partnersAdvise www.ovum.com CXO Advisor is backed by Ovum in Africa

Innovate www.Outsystems.com CXO Advisor is an OutPartner

Change www.Adaptivity.com CXO Advisor is a reseller and consulting partner

http://www.ovum.com/

http://www.Outsystems.com/

http://www.Adaptivity.com/

THANK YOU

www.cxo-advisor.co.za

[email protected]

http://www.cxo-advisor.co.za/

Cxo Advisor customer value proposition 2013 update

Business

Transcript of Cxo Advisor customer value proposition 2013 update