This multi-billion dollar, global corporation’s IT department ran very efficiently - less than 0.4% of revenue for total IT budget. They have three business units that make 3 different but similar consumer packaged goods products. The IT organization, in the best current practice, was customer focused, and treated each of these business units as customers, providing excellent service to each, tightly integrated into their specific needs.
 
Sounds like nirvana - highly efficient, highly focused, excellent service tailored to the business unit’s needs, and “customer’s” were very happy.
 
However, the executive management team was having difficulty understanding where their IT budget was going - even with the spend being a fraction of many of their competitors. In addition, the company had had stagnant growth for many years.
 
Our principal consultant took on the challenge of clearly conveying where the money was going, and maybe finding opportunities for improvements. The following situations were quickly identified
 
  1. The company had a common real customer base for each of their three business units.
  2. What IT considered as customers, are really not - they are, instead, an integral part of the value chain. Treating them as a customer optimized the set of interaction values for the wrong reason, resulting in delivery that was not in line with true enterprise business need.
  3. No consolidated reporting was available without some painful data manipulation.
  4. They were using 3 different ERP systems, on 3 different platforms, running 3 different operating systems, with 3 different databases, with 3 different data models, none of which integrated cleanly with enterprise systems, including accounting - great for each of the business units, as the systems were highly tailored to their individual methods of doing business.
  5. None of the common logistics opportunities were apparent, due to lack of common visibility across business units.
 
Far more important than any other factor was one single discovery. In meeting with the executive team, we worked out what the company principles - the core decision values that govern the behavior of the organization. These values were aligned to different logical parts of the organization, identifying how IT should behave in delivery interactions with these logical parts.
 
For IT’s relationship with the business units, the executive team identified that a business voice - prudent financial management - should be the prioritized value driving those interactions, not the customer voice. As these 2 voices are diametrically opposed, this transaction would be a major disruption to business, but one that was justified. Now the implications of their new behavior - prudent financial management - was minimum diversity, maximum manageability, common data and reporting, etc.
 
The outcomes were amazing. Although the business units initially resisted the resultant changes, the company eventually went through the major transitions required. The IT department had their budget bumped UP 50%, as the executive team now knew the business value that was possible, and end customers had access to consolidated logistics information, affording a better customer experience. Over the next 3 transition years, the company grew by over 25%. As a part of this growth, they bought a smaller competitor, an exercise that they had painfully accomplished with another acquisition a few years before. This time, the acquisition went smoothly, as they had clear direction as to the behavior regarding integrating this new operation. Operational efficiencies improved, and the IT organization was able to provide vastly improved services to ALL their users, not just the business units, as running the major business unit work was far more efficient. Internal business function IT support improved, and company ancillary operations across the board were better served.
 
More than any other factor, the newly aligned behavioral direction afforded major cultural change, with decisions made up and down the chain of command, broadly supported, and little conflict throughout the organization, as people now clearly understood and executed against EXECUTIVE INTENT.
Case Study - Making Change Happen
A
Company
2004-6 © KPJ Squared, Inc.