CIO’s agenda for Integrated Business, IT & CRM Capability - Part 1

Dears

One of the main tasks of today's chief information officers (CIOs) is to get their IT department into the position of being an internal adviser to help their business create and sustain innovation cost-effectively through creation and deployment of new information management capabilities. Using IT to innovate in the business is becoming very important in virtually every business sector. The focus today is more on the enterprise's IT capabilities and how these can be exploited for business benefit, rather than on underlying system considerations.

So what capabilities are required to make IT a business innovator?

The most severe problem is failure to integrate business and IT. Poorly defined processes, organizations, and governance rules and structures are the main causes of this. Other issues are more specific to IT, including the heterogeneous technologies, lack of architecture, or application landscapes that undermine an integrated approach. It is the CIO's task to build the primary capabilities that help to overcome

Capabilities : IT as the service provider for business

The various research results show that IT is an important enabler of CRM. To meet the requirements of the business, the IT services group must consider itself as a service provider. To act as a service provider requires both a clear description of the service offerings and a reasonable pricing of that service offering. The service offering description is a service catalogue with service packages, which include single service elements with service-level agreements and corresponding prices for each service package. This offering must be accompanied by IT processes for providing the service package to the agreed service level, for communicating the selection catalogue to the business divisions, and for administering and modernizing the catalogue. Further, the IT service divisions should be able to support the business divisions in calculating the business case (see below) for an appropriate IT service package in each situation.

Business divisions and users need help in specifying and checking the offerings of the IT services group. If the offerings do not meet the requirements, the business can reject the offering and use another service provider. Here, the conflict between localized budgets and objectives versus the need for shared infrastructure for cost reduction and operational resilience can become apparent.It is important that business managers understand at least the critical success factors for IT project involvement. This can help to ensure that change programmes run as seamlessly as possible, with responsibilities correctly allocated. Those programmes proving to be most successful share a common governance system, rather than creating a blame culture between business and IT.

Process-oriented application development and integration of IT systems

CRM systems exist to support business processes. Today's application selection and development methodologies allow excellent mapping of business process requirements and design to application selection and customization. Depending on the kind of new systems to be selected and customized or created, different techniques can be used. The focus may be on connecting existing process elements or on implementation of new process elements, or entire new processes. Too often the focus is only on adding new elements, when it can be far more effective (for ROI) to replicate or scale up existing implementations, or integrate existing capabilities to create closed-loop operational control.

Where a pre-developed application is selected and customized, much of this component work is already structured and provided by the application vendor, so the customization process can then focus on closing any gaps. Over-customization (for example, making the new application fit very closely with existing business processes) should be avoided, as this delays implementation and reduces ROI. It may also be more effective to customize (beyond the essential gaps) once the application has been deployed and experienced. Some packages are so functionally extensive that customization may be simply to restrict function use, at least in the early stages of implementation. Companies have been concerned that having paid once for the function, they are paying again to disable it while delaying implementation and ROI from wider deployment.

CRM Experts suggests that experience from package implementation reviews shows that programme risk appears to increase dramatically with the degree of 'package customization' attempted. It appears to be wise to execute a rapid and lightly customized implementation first, which partially links the package into the existing business processes. Few code changes are made to the package and limited interfaces are implemented between the package and existing operational systems. Additions and adjustments are made to the business processes over time to better match the optimal business process support of the package and its interfaces to other systems within the organization. This approach is not initially popular with business units or end-users and demands board-level support for ruthless prioritization and control of user requirements. However it has proven to be most effective in achieving business success and ROI.

Ability to develop a business case for each new IT project

In calculation of the business case three parts are normally considered. First, the scope of cost and value are defined. The following layers for the scope discussion can be identified:

• Operations cost avoidance (eg improved efficiency in internal IT operations).
• Development cost avoidance (eg by using standardized architectural patterns and components, or shared infrastructure).
• Improved IT process efficiency (eg through usage of simplified data maintenance).
• Business process efficiency potential (eg through fewer processes, replicated processes, by improved focus on customer segments through better data quality).

Second, the financial calculation method must be selected. Net present value seems to be the favoured option here, although various forms of this calculation are available. Businesses are increasingly implementing standardized methods and models for assessing project value in a comparative manner.

Third, each business case calculation needs data. This requires transparent information on current costs. Normally, IT infrastructure costs for hardware and software are well known. If not, comparable industry values can be used. It is harder to calculate the costs of implementing particular software packages; usually these costs have to be estimated.

Too frequently risk management does not form an integral part of the IT business case. It is always easier to make a theoretical calculation and to spend money than to ensure that ROI is achieved! Many of the factors that affect the ROI outcome are external to the project or company. They need to be identified and evaluated as potential risks to project and payback success, allowing relevant risk mitigation actions to be implemented where appropriate.

Let see the next part with some more information on IT Strategy,Integration and Collaborative Enablers.

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