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CIO Executive Board

The CIO’s First 100 Days


Accelerating the Onboarding of Transitioning IT Principals
 Understanding Performance Expectations

 Gaining Visibility into Current Performance and Resources

 Executing on Transition Initiatives

© 2005 Corporate Executive Board


CIO Executive Board Staff IT Practice Quantitative and
Managing Director Financial Analysis Group
Shvetank Shah
Director
CIO Executive Board Practice Manager Kevin Acker
Kris van Riper
Corporate Executive Board Analysts
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Marie Elliott Research Associates
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Note to Members Legal Caveat


This project was researched and written to fulfi ll the research requests of several members The CIO Executive Board has worked to ensure the accuracy of the information it provides
of the Corporate Executive Board and as a result may not satisfy the information needs of all to its members. This report relies upon data obtained from many sources, however, and the
member companies. The Corporate Executive Board encourages members who have additional CIO Executive Board cannot guarantee the accuracy of the information or its analysis in all
questions about this topic to contact the Board staff for further discussion. Descriptions or cases. Furthermore, the CIO Executive Board is not engaged in rendering legal, accounting,
viewpoints contained herein regarding organizations profi led in this report do not necessarily or other professional services. Its reports should not be construed as professional advice on
reflect the policies or viewpoints of those organizations. any particular set of facts or circumstances. Members requiring such services are advised to
consult an appropriate professional. Neither the Corporate Executive Board nor its programs
Confidentiality of Findings are responsible for any claims or losses that may arise from a) any errors or omissions in their
This document has been prepared by the Corporate Executive Board for the exclusive use of reports, whether caused by the CIO Executive Board or its sources, or b) reliance upon any
its members. It contains valuable proprietary information belonging to the Corporate Execu- recommendation made by the CIO Executive Board.
tive Board, and each member should make it available only to those employees who require
such access in order to learn from the material provided herein and who undertake not to
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obligation, please return this document and all copies in your possession promptly to the
Corporate Executive Board.
© 2005 Corporate Executive Board. All Rights Reserved. Catalog No.: CIO1387OQD
Table of Contents
Letter from the CIO Executive Board • iv
Introduction: Confronting the Challenging IT Landscape • 1
Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition • 13
Ford: Executive Partnering Program • 16
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design • 23
DuPont: Defining Competencies and Career Paths • 29
Iverson Financial*: Core Competency Rankings by Role • 30
DuPont: Personalized Development Plans • 35
IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs • 37
Seagate Technology: Aligning IT Strategy with Corporate Goals • 39
KeyCorp: Guiding IT Architecture Principles • 42
Schlumberger: Visualizing Project Portfolio Value • 43
Texas Instruments: Ensuring Benefits Capture Across All Projects • 45
IT Strategy Execution: Realizing Operational Objectives • 47
IBM: Legacy System Sunset Project Cards • 49
Merrill Lynch: Revalidating Business Case Assumptions Midcycle • 50
Bowne: Scorecard Rollout • 56
Cemex: Data Collection and Quality Assurance • 57
Corning: Scorecard Review and Revision • 58
Corning: Facilitating Scorecard Adoption • 59
Appendix I: IT Budget Benchmarks • 61
Appendix II: Vendor Management and Outsourcing • 67
Appendix III: Diagnostic Questionnaires • 73
Order Form • 90
In-Person Research Presentations • 93
CIO Executive Board Project Support Desk • 95
* Pseudonym.
iii
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
iv

Letter from the CIO Executive Board


First and foremost, welcome to the CIO Executive Board! As a newly appointed CIO, this may be your first encounter with our services, designed
to provide best practices research and executive education to senior corporate IT leaders across every industry and around the world. Guided
continuously by member feedback, our task is to chronicle the successes and failures of those who pioneer the most innovative and potentially most
pivotal practices in IT strategy and management. We strive to capture that which is of consequence and report back to our members without bias or
commercial intent.

As we look around the corporate suite through the lens and data of our sister programs that serve CFOs, CMOs, CPOs, CTOs, and heads of Sales,
Strategy, HR, and Supply Chain, we are struck by the disproportionately high annual turnover rates among the CIO ranks. Furthermore, the
complexity of the challenges facing today’s CIOs and the criticality of IT as an enabler of business strategy have increased the scrutiny of newly
appointed CIOs, necessitating effective and rapid onboarding. To help member CIOs address this mandate to move quickly up the “learning curve,”
the CIO Executive Board conducted interviews with new and tenured CIOs, spoke with several CIO executive recruiting firms, and scoured trade
press and consulting literature.

The resulting research study, The CIO’s First 100 Days, provides a road map for the growing ranks of recently appointed CIOs to enable effective
onboarding within a new organizational setting. Specifically, as you embark on your first 100 days in seat, we hope this study will provide a toolkit
for achieving the following three objectives: 1) understanding performance expectations, 2) gaining visibility into current performance and
resources, and 3) executing on transition initiatives.

A Note on Peer Networking Opportunities

As always, we welcome your feedback and guidance on this research study. Our staff would be happy to provide additional assistance around any
of the topics or case studies included here through customized research, networking introductions, and presentations of any portion of the materials
to any audience of your choosing.

Thank you for your continued support of the CIO Executive Board.

With our warmest regards,

Shvetank Shah Matthew Grimes Kristin Sherwood Jacob Carney Sujatha Sivakumaran Aalap Shah
Introduction
Confronting the Challenging IT Landscape

© 2005 Corporate Executive Board 1


© 2005 Corporate Executive Board
The CIO’s First 100 Days 2
The Boardroom Perspective
Amid a climate of economic recovery, many industry market leaders are emphasizing key initiatives aimed at top-line growth, relying on their CIOs to
provide the supporting technologies to enable such objectives. These companies remain cautiously optimistic that the CIO will be able to leverage existing
and future investments in information technology to support the underpinning business processes essential for growth. New CIOs, however, report
considerable obstacles during their first 100 days in seat, as they look to maximize IT’s potential.

Growth Strategies of Bellwethers Require Information Technology


Current growth strategies of leading companies…
*
• Reshape portfolio by divesting energy, • Technical • Alter business mix by exiting or reducing • Focus product portfolio • Deliver a high-quality, consistent
chemicals and pigments, pharmaceuticals, leadership presence in application software, hard-disk drive, on 400 leading brands down customer experience by getting
specialty polymers, and fibers and polyester • Services networking hardware, low-end printer, and retail from 1,600 the basics right every time
businesses and acquiring or partnering in acceleration PC segments and increase presence in distributed • Synchronize data with • Build valued relationships
growth areas such as agriculture and nutrition • Customer middleware, nonhardware maintenance services, customer via Transora online by developing a superior
and performance materials focus Intel-based servers, and mobile PCs marketplace understanding of customers’
• Increase share of growth from innovation • Acquisition • Increase revenue in business and technology • Consolidate manufacturing needs and their relationship
and new products of growth consulting services at 150 strategic sites preferences
• Integrate marketing and research functions platforms • Grow aggressively in emerging markets such as • Consolidate around strategic • Deliver integrated banking
more closely • Globalization China, India, Russia, and Brazil partners to increase and wealth management advice
• Globalize R&D and Sourcing • Increase rate of new account growth enterprise purchasing and solutions

Source: DuPont CEO Presentation, Sanford Bernstein Strategic Decisions Conference,


3 June 2004; www.GE.com; IBM Annual Report, 2003; Unilever Annual Report, 2003;
National Australia Bank Group Annual Report, 2003.

…cluster around a handful of key initiatives… …that can be frustrated by a lack of continuity in IT leadership
Key Growth Initiatives at Major Corporations Overcoming the Malaise
Corporate Executive Board Analysis “CIO turnover is one of the telling symptoms of the malaise
1. Business Portfolio Reconfiguration—Acquisitions and Divestitures that makes our IT less effective than its potential….The only
way to compensate for the absence of consistency in policy
and precedent is to put in place leadership in the person
2. Solutions Businesses—Move from Product to Services
of the CIO, who will steer a steady course and be able to
provide the necessary guidance for the IT organization. A
3. Cross-Sales leader can accomplish that only by taking a long-term view.”

4. Geographic Expansion—The Race to China Former CIO


Consumer Packaged Goods
Company
5. Customer-Driven Innovation

* Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del. Source: CIO Executive Board research.
Introduction: Confronting the Challenging IT Landscape 3
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 4

Challenge #1: Evolving Role Definition and Shifting Expectations


IT has experienced dramatic shifts that impact the CIO, who is now viewed as a business technology leader responsible for innovation and inculcating
business objectives into IT. As the CIO forms partnerships with the business, identification of key stakeholders in the “IT value chain” and their varied
perceptions of IT’s strategic role is a crucial step to accomplishing IT objectives. Upon arrival a new CIO must quickly uncover nuanced perceptions of IT
and the dynamic political environment in an effort to influence senior executive leadership.

CIO at a Crossroads
Charged with stewarding the company’s data, the newly appointed
CIO must quickly establish a vision for his or her role

Technology Expert Strategic Business Partner


• Ensures consistent availability and access • Corporate Officer central to strategic
to network resources and operational decisions
• Leads large-scale deployments of new • Proactively provides insights into opportunities
technologies and systems for innovation
• Contributes to corporate energy through • Leverages cross-functional visibility to optimize
process automation business processes
• Minimizes costs to running Infrastructure • Identifies opportunities to reduce costs through
and Applications strategic sourcing and economies of scale

Reshaping the Role


“The continuing focus on transparency is reshaping the role to become Chief Information Officer versus Chief Computer Officer. In the days
of data processing directors, their role was much more focused on running the data center environment….Today, the CIO has become a clear
guardian of the information and is expected to stand for the integrity and validity of the data. Now more than ever, CIOs are being held
accountable for driving the business value…to be involved not only in strategy development but also in business and product innovation.”
Gregor Bailar
CIO
Capital One Financial Corporation

Source: Bansal, Parveen, “Why Does the CIO have So Many Hats?,”
The Banker, 1 December 2003; CIO Executive Board research.
Challenge #2: Misaligned Organizational Design and Competencies
Core business strategies continually shift in response to external market factors. As a result, CIOs looking to organize around core business strategies,
such as attaining lowest-cost producer status, accelerating time-to-market, or becoming more customer centric, find there is no dogmatic “end state.”
A further challenge is building a comprehensive picture of existing IT priorities and resources. Yet, to build a compelling business case for organizational
adjustments, such as revising reporting structures and altering skill requirements, new CIOs must complete a highly objective organizational assessment,
articulating a complete view of existing current strengths and weaknesses.

Organizing for Competitive Advantage


As control over IT spend …new CIOs must reconcile diminishing returns
progressively consolidates at the center… and trade-offs in organizational responsiveness…
Percentage of IT Spend Controlled Centrally by the Group CIO Balancing Efficiency and Responsiveness
High
95%
88%
“Finding the Right Balance”
IT’s
Contribution
50% to Business
Value Efficiency Responsiveness
Improved Scale Contributes Reduced Flexibility Undermines
to Bottom-Line Savings Areas of Competitive Advantage
Low
2002 2004 2006(E) Low Degree of IT Centralization High
n = 45 CIOs. n = 45 CIOs.

…while proactively building and managing the required talent portfolio for improving business–IT partnerships
Importance of IT Staff Skills to Effectively Drive Business Value
Percentage of CIO Respondents
63% 58% 52%
43%
28%
9% 7%
Understanding Communication Management/ Collaboration Intellectual Risk Taking Understanding
of Company Skills Executive Skills Courage of Emerging
Value Drivers Skills Technologies
n = 76 CIOs. Source: CIO Executive Board surveys, 2003, 2005.

Introduction: Confronting the Challenging IT Landscape 5


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 6

Challenge #3: Large Gaps in Business Strategy Participation


Due to the IT executives’ historical focus on project execution, CIOs have struggled to gain a seat at the business strategy–setting table, getting tapped
more frequently for tactical input. As new CIOs strive to make a strategic impact on the business and prove the value of IT investments, their challenge
is compounded by a lack of exposure to existing strategy-setting processes and styles. Furthermore, the IT strategic agenda represents a new CIO’s first
major attempt to expose the executive board to a comprehensive organizational vision, influencing initial perceptions of competence.

No Seat at the Strategy Table


New CIOs desire a more leveraged role in strategic planning
to increase IT’s contribution to enterprise growth initiatives
Technology Solution Life Cycle

Business Strategy Business Opportunity Value


IT Project Execution User Absorption
Formation Identification Measurement

CIO Role in Business Strategy Formation CIO Role in Business Opportunity Identification

100%
2%
100%

34% 29%
49%
Information
68% Resource/None
50% Participant 50%
55% 55%
Leader
51%
30%
11% 16%
0% 0%
Current Ideal Current Ideal
n = 81 CIOs. Source: CIO Executive Board survey, 2005.
Challenge #4: IT Portfolio Risks
Concurrent with the process of aligning IT strategy with corporate objectives, the CIO must ensure successful realization of promises to reduce inefficient
IT maintenance spending and increase value-added IT solutions delivered on time and on budget. Crafting a detailed execution plan is a daunting
task for a new CIO with limited understanding of a firm’s existing IT architecture and ongoing projects’ business cases. A comprehensive execution
agenda, however, helps ensure that the CIO’s first 100 days include successful project delivery, reduced inefficient IT spending, and increased customer
satisfaction.

Risky Business
As development projects get larger and more complex… …on-time, on-budget performance
becomes harder to achieve
Average Project Size
Function Points Rate of Successful Project Delivery
60%
20,000

● 46%

Average Project 32%



Project 10,000 Success 30%
Size Rate
23%
(FPs) ●

11%

2%
0 0% ●
1970 1980 1990 2000 2005 < $750.00 K $3.00–$6.00 M > $10.00 M
$0.75–$3.00 M $6.00–$10.00 M
Size of Project ($)
Source: IFPUG. Source: The Standish Group CHAOS Survey, 2004.

The Bigger They Are


“Anything $5 million and less, we hit those out of the park all day long. We always meet deadlines and, in most cases, get that on or under budget. But the double-
digit guys, we’re at 75%. That’s not bad if you’re playing baseball, but in a culture that’s not really compassionate about defects, it’s not a good batting average.”
VP and Divisional Information Officer
International Automotive Company

Introduction: Confronting the Challenging IT Landscape 7


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 8

Outcome: Disproportionately High Turnover Rates


Previous failures of IT executives to clearly articulate and drive strategic responses to the pressing challenges impacting the corporate technology
organization have contributed to substantially high turnover rates among the CIO ranks. CIO Executive Board survey results indicate a correlated finding
that nearly half of the CIO bench maintains less than three years in role, narrowing the window of opportunity these executives have to positively impact
their businesses.

Growing Pains
Given the scale of the role’s challenges, …and relatively short tenures
the CIO position is plagued by high turnover…
Average CIO Tenure in Role
Average Annual Turnover Rate by Position
34% More Than
Five Years

18%

17% Fewer Than


48% Three Years
12%
34%

Three to
Five Years
CEOs CFOs CIOs
n = 51. n = 51.

Whistling in the Dark


“Given the complexity of the IT terrain, I am little surprised at the rapid turnover rates we have experienced [in the CIO role]….Many of
these individuals bring with them an avid love for technology but fail to adapt to the business challenges of the position. Without this
business perspective to guide the investments of technology, they seemed to be whistling in the dark.”
CEO
Utilities Company

Source: CIO Executive Board survey, 2004; CIO Executive Board research.
Implication: Shorter Time to Move up the Learning Curve
These pressing initiatives complicate the already difficult task of senior executive onboarding by multiplying the chances of onboarding failure
and shrinking the traditional onboarding grace period. To successfully adapt to the position, CIOs must compress the learning curve, moving quickly
to master their portfolio of responsibilities and cement working relationships with key individuals.

Quick and Painless?


Pressures exacerbate traditional drivers of onboarding failure… …while also reducing time to onboard
Drivers of Failure for Newly Appointed Executives Current Versus Historical Grace Period for New CIO Onboarding

Failed to Build New CIOs now have


Partnership with Peers Operating
82% at Full a very short window
and Subordinates
Productivity of time to move up
the learning curve…
Unclear or Confused …whereas
About Role 58% in the past,
Expectations CIOs often had
Stages in the
Starting a six-month
Path to Full to Make
Lacked Requisite Productivity Decisions “honeymoon”
50% period to master
Political Savvy
the challenges
of onboarding.
Failed to Achieve
Two or Three Critical 47% Onboarding
Expected Objectives Completed
1 Day 2 Months 4 Months 6 Months
Took Too Long to Length of Tenure
Learn Job/Role 28%
New CIO Onboarding Trajectory

Lacked Balance Between Historical CIO Onboarding Trajectory


Work and Personal Life 25%

Source: Association of Executive Search Consultants; Centre for Creative Source: Gabarro, John J., “When a New Manager Takes Charge,” Harvard Business Review
Leadership; Kennedy Publications; Manchester Partners International. (May/June 1985); Hoffman, Von, “The Survivalists,” CMO Magazine (September 2004).
Pedal to the Medal
“At the end of 100 days, either I have to execute or be executed. The first 100 days should be spent observing, analyzing, and brainstorming, but after that,
actionable steps and deliverable results should be the key focus for any CIO.”
CIO
Automotive Manufacturer

Source: CIO Executive Board research.


Introduction: Confronting the Challenging IT Landscape 9
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 10

Implication: Shorter Time to Move up the Learning Curve (Continued)


Variations in background and prior professional experience largely define the ease with which executives acclimatize themselves to the CIO role. The CIO
Executive Board has created the following road map to serve as a quick reference guide, outlining the degree of onboarding difficulty relative to several
challenges faced by a new CIO. Each of these challenges is mapped to corresponding chapters and company case profiles that are designed to assist the
CIO through his or her first 100 days.

Bridging the Gap


CIOs face a relative degree of difficulty based on personal background
Degree of Difficulty with Onboarding Challenge

Mandate Understanding Evaluating Current Assessing Staff Establishing an Examining Fiscal


Defining a
the Role and IT Organizational Capabilities and Execution Agenda Requirements
Business-Aligned
Personal Associated Structure and Readiness for for Operational and Vendor
IT Strategy
Background Expectations Performance Change Objectives Relationships

External Hire
with Previous CIO
Experience

Internal
Promotion from
the Technology
Organization

Internal Transfer
from a Business
Role

● High Difficulty ●◗ Medium Difficulty Low Difficulty

Source: CIO Executive Board research.


Accelerating the Transition
A road map for successful onboarding
Understanding Performance Gaining Visibility into Current Executing on
Expectations Performance and Resources Transition Initiatives

I. II. III. IV.


Identifying Decision Makers’ Evaluating IT Effectiveness Aligning with Realizing
Perceptions of the IT Value and Optimizing Business Goals and Operational Objectives
Proposition Organizational Design Prioritizing Needs

Legacy System Sunset Project Cards (p. 49)


Executive Partnering
Program (p. 16) IT Competency Aligning IT Strategy with
Diagnostic Tool (p. 26) Corporate Goals (p. 39)
Revalidating Business Case
Assumptions Midcycle (p. 50)
Expectations Profi ling Exercise (p. 17)
Organizational Design Business Unit Alignment Diagnostic Tool
Diagnostic (p. 28) (p. 40)
Project Cycle Time
1
and Cost Reduction (p. 51)
Best-in-Class Learning (p. 19)
Defi ning Competencies
Guiding IT Architecture Principles (p. 42)
and Career Paths (p. 29)
Scorecard Development and
Life-Cycle Management Compendium
2
Visualizing Project Portfolio Value (p. 43) (pp. 54–55)
Core Competency
Rankings by Role (p. 30)

Scorecard Rollout (p. 56)


Ensuring Benefits Capture
Personalized Development Plans (p. 35) Across All Projects (p. 45)

Data Collection and Quality Assurance


(p. 57)

Scorecard Review and Revision (p. 58)


Facilitating Scorecard Adoption (p. 59)
Additional Transitioning Support
IT Budget Benchmarks Vendor Management and Diagnostic Questionnaires Visit Resource Center @ Relevant Published Research
(pp. 61–66) Outsourcing (pp. 67–72) (pp. 73–89) www.cio.executiveboard.com (pp. 90–91)
1
Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
2
Pseudonym.
Introduction: Confronting the Challenging IT Landscape 11
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 12

Accelerating the Transition


A road map for successful onboarding
Understanding Performance Gaining Visibility into Current Executing on
Expectations Performance and Resources Transition Initiatives

I. II. III. IV.


Identifying Decision Makers’ Evaluating IT Effectiveness Aligning with Realizing
Perceptions of the IT Value and Optimizing Business Goals and Operational Objectives
Proposition Organizational Design Prioritizing Needs

Legacy System Sunset Project Cards (p. 49)


Executive Partnering
Program (p. 16) IT Competency Aligning IT Strategy with
Diagnostic Tool (p. 26) Corporate Goals (p. 39)
Revalidating Business Case
Assumptions Midcycle (p. 50)
Expectations Profi ling Exercise (p. 17)
Organizational Design Business Unit Alignment Diagnostic Tool
Diagnostic (p. 28) (p. 40)
Project Cycle Time
1 and Cost Reduction (p. 51)
Best-in-Class Learning (p. 19)
Defi ning Competencies
Guiding IT Architecture Principles (p. 42)
and Career Paths (p. 29)
Scorecard Development and
Life-Cycle Management Compendium
2
Visualizing Project Portfolio Value (p. 43) (pp. 54–55)
Core Competency
Rankings by Role (p. 30)
Scorecard Rollout (p. 56)
Ensuring Benefits Capture
Personalized Development Plans (p. 35) Across All Projects (p. 45)

Data Collection and Quality Assurance


(p. 57)

Scorecard Review and Revision (p. 58)


Facilitating Scorecard Adoption (p. 59)
Additional Transitioning Support
IT Budget Benchmarks Vendor Management and Diagnostic Questionnaires Visit Resource Center @ Relevant Published Research
(pp. 61–66) Outsourcing (pp. 67–72) (pp. 73–89) www.cio.executiveboard.com (pp. 90–91)
1
Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
2
Pseudonym.
Roles and Expectations
Identifying Decision Makers’ Perceptions of the IT Value Proposition

Action Steps
Build Relationships: Understand business challenges and IT’s priorities by networking with business units and internal customers.
Executive Partnering Program (p. 16)
Identify Expectations: Gauge the expected mandates from the senior executive team to develop an appropriate outlook for IT.
Define Discretionary Powers: Address questions that calibrate an employer’s resolve to support IT.
Ascend the Learning Curve: Increase familiarity with the industry, business, and technology to ease transition and achieve rapid results.
Solicit Feedback: Establish formal and informal feedback to shape a CIO’s career trajectory.

© 2005 Corporate Executive Board 13


© 2005 Corporate Executive Board
The CIO’s First 100 Days 14
New CIOs responsible for understanding how the organization functions and supplying technology to optimize the business can derive valuable
information by building strong relationships with key constituencies. In an effort to learn crucial information about business strategies and technology
expectations, CIOs cannot overemphasize the importance of networking and relationship building upon entering the role. These relationships help
influence IT’s strategic vision and immediate priorities, while clarifying role expectations for the CIO.

Building Partnerships
New CIOs gain significant insight into company challenges and corporate
strategic objectives by meeting with all business units and internal customers

Critical Questions

• What are your key issues and strategic objectives


Initial Conversations for the coming year? Two years? Five years?
“During my first month, I spent the largest percentage • What are the critical pain points of your job?
of my time with people within the organization, • What is your department’s relationship with IT?
identifying personalities and relationships. With some What would be an ideal relationship?
of the discussions, I felt like I was driving people crazy
with all of my questions, but I also talked to people • Do you feel comfortable and/or confident
who seemed like they had never been listened to; these approaching IT for support with your strategic
people were hungry to share their issues.” initiatives?
• What are your expectations for IT? Where is IT
CIO currently not meeting your expectations?
Business Services Company
• What are your current IT priorities? How do you
anticipate these priorities changing across the
“What they tell you what they need is often not what next year?
they really need; it’s a CIO’s job to decipher what is • Do you think IT is allocating resources
important to them from a business perspective and use appropriately to both technical and strategic
IT to solve it.” business issues?
CIO • Are you aware of IT’s strategic plan?
Pharmaceutical Company

Source: CIO Executive Board research.

Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition 15
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 16

Executive Partnering Program


In order to rapidly build a solid understanding of the company’s and industry’s strategic issues and challenges (as well as build an internal network), Ford
runs an effective executive partnering program for new senior executives. This two-month program allows the CIO to “shadow” the top executives of
different business units and/or functions one week at a time and, in the process, gain visibility into firm and industry issues as well as the organization’s
informal power structure.

Shadowing Key Strategic Partners


Carefully selected senior team members from across the company…
New Executive Partnerships

President and
Chief Executive Officer

Vice Chairman Vice Chairman Vice President and


and Chief of Staff Chief Financial Officer

Group Vice Group Vice Group Vice Group Vice Chairman and Group Vice President, President, Vice Process
President, President, President, President, CEO, Ford President, Ford of Ford South President, Leadership
Product Manufacturing Purchasing Premier Credit Asia–Pacific Europe, Inc. America Business
Development and Ford of Auto Group Operations Operations and Product
and Quality Mexico and Strategy
Associations
VP, Truck VP, Vehicle VP, Volvo
Vehicle Operations
Center
The new executive’s set of partners is selected to provide broad-based
learning about Ford’s key strategic issues across product lines and operations.

…provide an intensive orientation to a company’s strategic and operational issues


Illustrative Calendar, New Executive
A new executive dedicates up
to 10 hours per day shadowing
September 2004 October 2004
every item on the “partner’s”
agenda, including all staff and Week One “Partner”: Week Five “Partner”:
VP, Business and Product Strategy VP, Truck Vehicle Center
client meetings and is frequently Week Two “Partner”: Week Six “Partner”:
called upon to contribute to Group VP, Product Development and Quality Group VP, Premier Auto Group
meetings and post-session Week Three “Partner”: Week Seven “Partner”:
CEO, Ford Motor Company Group VP, Purchasing and Ford of Mexico
debriefings. Week Four “Partner”: Week Eight “Partner”:
Group VP, Manufacturing Process Leadership Executive
Source: Ford Motor Company; Corporate Strategy
Board research; CIO Executive Board research.
Expectations Profiling Exercise
Striving to affect business performance, new CIOs solicit the understanding of the CFO’s and CEO’s mandate for IT. The tool presented helps identify
each of these expectations. Each executive is encouraged to fill out this form separately and then use the document for further discussion.

Your New Job Description


Gain visibility into expected mandates by networking with the senior executive team

Role of the CIO Description Share of the CIO's Time That Should Be Devoted to Each Role

Own View CFO View CEO View

IT Cost Reduction
The Head of IT
Coordination IT centralization, simplification,
and governance and standards % % %
Value Creation
The Business
Driving business efficiency via
Strategist
process optimization and digitization % % %
Execution Focus
Practical CIO
Practical implementation: “Getting things done” % % %
Chief Technology Technology Futuring
Officer Finding new technology to transform industry % % %
1.
Key Priorities
for the 2.
Coming Year
3.

Source: CIO Executive Board research.

Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition 17
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 18

CIOs occasionally fail due to an overestimation of the discretionary powers ascribed to the position. While the initial impression is that information
technology is the key to success for the corporation, they only realize after assuming the position that they cannot get projects funded or that line
absorption of technology is poor. To this end, the CIO Executive Board asked IT executive recruiters to construct a list of questions for incoming CIOs
seeking to measure a potential employer’s resolve to support IT.

Defining the CIO’s Discretionary Powers


Cultural factors offer subtle cues to define IT’s discretionary power
Industry Dynamics Financial Resources
Q: What drives industry competition: price or functionality? Q: How is the corporation performing financially?
Companies that compete on price are less likely to invest in strategic information Many companies are simply unable to fully fund information technology.
systems. Q: What is the size of the IT budget as a percentage of sales? Has it changed
Q: Is this company an industry leader or follower in terms of business over the past five years?
innovation? The company’s proportional spending on IT is a good indicator of the value of
Companies that lead their industries are more likely to take risks with new advanced technology to the company.
information systems. Q: How are capital-intensive IT projects approved?
Q: How quickly does change occur in this industry? Bottom-up funding implies a more network-intense first 100 days than top-down
Companies that are in rapidly changing industries are more likely to adopt new funding.
technologies and embrace new ways of doing business.

Customer Priorities Senior-Level Commitment


Q: Who are the most important “internal customers” of IT in the company? Q: Do senior executives believe that information technology can (and should)
Manufacturing and logistics indicate cost-saving role for CIO; sales, marketing, and R&D materially affect the company?
suggest a more strategic customer-facing agenda. It is unlikely that IT can prove to be a strategic partner to the corporation without the
Q: Do customers view IT as merely a back-office function or as an enabler support of the company’s senior management team.
to the business? Q: What is the turnover rate among the senior management team?
CIOs that operate as “business technology leaders” collaborate with the business to A high turnover rate might indicate a larger corporate concern. However, if the CIO
create value, extend scope of the franchise, improve operational efficiencies, and reduce position is the only source of executive turnover, it may be difficult for the CIO to
costs. promote his or her agenda or break into the management “club.”
Q: Does the CIO have genuine leadership responsibility for the company’s Q: Is IT mentioned in corporate communications as being critical to the
enterprise security and risk strategy? success of the company?
As a strategic partner, information technology can set and influence budgetary decisions, Public pronouncements set shareholders’ expectations for the corporation and are
policies for end users, and risk management for the company. generally excellent indicators of management’s commitment to information technology.
Source: Korn/Ferry; Russell Reynolds; Spencer Stuart.
Best-in-Class Learning
Although all new CIOs need to learn the intricacies of the business, build relationships with peers, and understand relevant technology, CIOs entering
uncharted industries or businesses face a steeper learning curve and thus need to increase their familiarity with essential technology concepts and terms.

Scaling the Learning Curve


New CIOs use various strategies to clearly understand technology
concepts, industry trends, and business intricacies

Onboarding 101 Reverse Mentoring


“I try to get up to speed in a new industry by doing a lot A new CIO can leverage internal experience
of reading. I work like a dog my first 6 to 12 months, by tasking high-performing individuals
meeting face to face with as many people as possible with creating a targeted learning program.
for 10 or 12 hours a day, both top down and bottom up. A single direct report may serve as a mentor,
Then I expect to take home five or six hours of reading or several key employees can work together
a night.” to create a comprehensive training plan.
CIO As part of this reverse mentoring relationship,
Financial Services Company the mentor is responsible for providing the new
executive with an adequate level of generic knowledge
immediately and a more in-depth knowledge of specific
topics particularly crucial to the business and the goals
Project Support Desk of the function. The mentoring relationship should be
confidential and objective, and it should provide the
The CIO Executive Board offers assistance to new CIOs during this critical new executive with honest and candid feedback.
orientation period. Members can commission short-turnaround custom As part of the relationship, the mentor should provide
research projects from the Project Support Desk (PSD) at no additional cost. the following:
Project Support Desk offerings include the following: Compilation of key readings to supplement
• Industry Watch—Annually published research brief detailing business and specific gaps in executive knowledge
IT trends in select industries
Listing of possible executive education
• Budget Watch—Quarterly summary of spending trends and predictions
courses to address CIO learning
• Key Findings—Research brief to address a specific member need requirements
• Vendor Profiles—Listing of vendors within a specific market space, with
an objective description of product or services and client listing Schedule of networking contacts to build
relationships with key individuals in the
• Networking—Targeted discussion with a peer within the membership to
business and IT
discuss common challenges and lessons learned
To commission a PSD project please visit www.cio.executiveboard.com.
Source: CIO Executive Board research.

Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition 19
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 20
Considering the short time frame in which new CIOs are expected to deliver results, formal and informal feedback from a variety of sources provides
valuable performance insight. Immediate and regular solicitation of feedback can help to propel and direct one’s career trajectory.

Soliciting Relevant Feedback


CIOs seek varied performance feedback…
From Whom Do You Receive Feedback Regarding Your Performance?

80%

65% 67%

55%
49%
41% 43% 41% 41%
39% 37%
Informal
31%
Formal
20% 22%

8% 6%

Board of CEO CFO COO BU Heads Functional External Direct


Directors Heads Stakeholders Reports
n = 51.
…to shape and focus their career trajectories
How Am I Doing?
“It was essential for me to get feedback early on in my tenure. And a lot of it. Most of the time you spend is on relationship building and
feedback; whether it is formal or informal, it is imperative to assess the circumstances of your customers, your team, and your boss. In a
sentence: ‘Your job depends on it.’”
CIO
Automotive Industry

Source: CIO Executive Board survey, 2004; CIO Executive Board research.

Roles and Expectations: Identifying Decision Makers’ Perceptions of the IT Value Proposition 21
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 22

Accelerating the Transition


A road map for successful onboarding
Understanding Performance Gaining Visibility into Current Executing on
Expectations Performance and Resources Transition Initiatives

I. II. III. IV.


Identifying Decision Makers’ Evaluating IT Effectiveness Aligning with Realizing
Perceptions of the IT Value and Optimizing Business Goals and Operational Objectives
Proposition Organizational Design Prioritizing Needs

Legacy System Sunset Project Cards (p. 49)


Executive Partnering
Program (p. 16) IT Competency Aligning IT Strategy with
Diagnostic Tool (p. 26) Corporate Goals (p. 39)
Revalidating Business Case
Assumptions Midcycle (p. 50)
Expectations Profi ling Exercise (p. 17)
Organizational Design Business Unit Alignment Diagnostic Tool
Diagnostic (p. 28) (p. 40)
Project Cycle Time
1 and Cost Reduction (p. 51)
Best-in-Class Learning (p. 19)
Defi ning Competencies
Guiding IT Architecture Principles (p. 42)
and Career Paths (p. 29)
Scorecard Development and
Life-Cycle Management Compendium
2
Visualizing Project Portfolio Value (p. 43) (pp. 54–55)
Core Competency
Rankings by Role (p. 30)
Scorecard Rollout (p. 56)
Ensuring Benefits Capture
Personalized Development Plans (p. 35) Across All Projects (p. 45)

Data Collection and Quality Assurance


(p. 57)

Scorecard Review and Revision (p. 58)


Facilitating Scorecard Adoption (p. 59)
Additional Transitioning Support
IT Budget Benchmarks Vendor Management and Diagnostic Questionnaires Visit Resource Center @ Relevant Published Research
(pp. 61–66) Outsourcing (pp. 67–72) (pp. 73–89) www.cio.executiveboard.com (pp. 90–91)
1
Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
2
Pseudonym.
Organizational Assessment
Evaluating IT Effectiveness and Optimizing Organizational Design
Action Steps
Assess the IT Organization’s Effectiveness: Measure the competencies of the IT organization to identify opportunities for organizational
improvement.
Optimize IT Organizational Design: Assess the effectiveness of the current organizational structure to mitigate competing demands for cost
savings and responsiveness.
Define IT Skill Competencies to Align with Corporate Objectives: Determine core technical and business competencies to enable IT strategy
execution.
1
Defining Competencies and Career Paths (p. 29)
Map Skill Requirements to IT Roles: Develop a comprehensive, uniform list of IT roles and performance expectations to inventory enterprise
resource capabilities and skill gaps among existing IT staff.
2
Core Competency Rankings by Role (p. 30)
Evaluate and Benchmark IT Leadership: Assess the competencies and leadership proficiencies of the IT management team.
Drive Employee Performance and Engagement Through Development: Form individual development plans for staff to target areas of
improvement for underperformers and identify growth opportunities for high-potential employees.
Personalized Development Plans (p. 35)
1
Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
2
Pseudonym.
© 2005 Corporate Executive Board 23
© 2005 Corporate Executive Board
The CIO’s First 100 Days 24
Incoming CIOs should measure the competencies of their IT organizations in order to identify and prioritize IT initiatives. The CIO Executive Board has
compiled a tool—Key Attributes of the World-Class IT Organization—which identifies 25 attributes common to the most highly effective IT organizations,
grouped into eight major areas of IT management. In addition to establishing a comprehensive, high-level view of an IT organization’s competencies, the
Key Attributes diagnostic also serves as a gateway to the CIO Executive Board’s research library by mapping relevant literature to each IT attribute.

Assessing the IT Organization’s Effectiveness


CIOs need a comprehensive framework to support strategic decision making

Strategic Priority Identification


Examine performance gaps relative to
Key Attributes of the World-
attribute importance to set IT strategy
agenda and assign responsibilities for Class IT Organization
short- and long-term opportunities
Recently transitioned CIOs can use the Key Attributes
diagnostic tool as a framework to examine IT challenges.
CIO Executive Board members can use the tool in two
ways:
Attribute CIO Staff Individual Assessment (Online)
Agenda Pressure-Testing
Assess differences in scores between • Members complete an interactive, online diagnostic
senior leadership and key staff (e.g., high- survey.
potential IT managers) to “pressure-test” • Participants receive immediate survey results online
IT priorities and by e-mail, with custom links to relevant research.
Collaborative Group Exercise
• Executives can print the survey and administer it to
the IT leadership team or the entire organization.
CIO • Participants can request a customized report to
Senior-Level Communication benchmark results.
Secure executive support for IT initiatives
by presenting internally assessed If your organization is interested in learning more about
performance gaps alongside benchmark the diagnostic, please visit the CIO Executive Board Web
comparisons from the CIO Executive site at www.cio.executiveboard.com or contact your Account
Board membership Director.
CEO
BU Heads

Order Relevant Published Research: Key Attributes of the World-Class IT Organization (pp. 90–91) Source: CIO Executive Board research.

Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 25


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 26
IT Competency Diagnostic Tool
Key Attributes of the World-Class
IT Organization: A Competency Diagnostic
CIO Executive Board
Attributes of Interest to the CEO/CFO
1 2 3 4 5 6 7 8 9 10
Strategy and Planning Enterprise Architecture Business Case Discipline Portfolio Management Value Demonstration Performance Reporting Risk Management Security Policies Disaster Recovery and Availability Management
We chart IT’s strategic direc- We maintain an architecture We employ a standard business We help the business prioritize We track metrics that We provide regular reports We have created a principled and Standards Business Continuity Planning We ensure the availability of
tion based on the business’s blueprint that clearly links case template for all IT projects using a defined set of demonstrate IT’s contribution tailored by channel and content framework for assessing We have defined and We develop and regularly test systems based on SLAs that
articulated strategies. technology choices to business investments that captures objective, weighted criteria. to the achievement of desired for specific business and IT relative risk and sequence risk communicated a set of enterprise plans to ensure consider business criticality.
capabilities. project life-cycle costs, business outcomes. audiences. mitigation investments enterprise information security continuous support of core
benefits, and risks. accordingly. policies and standards. business processes.
Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Capabilities Embedded Project ROI Enterprise-Level Executive Balanced Scorecard Enterprise Risk Employee Awareness Enterprise-Level Business User-Centric
Alignment Diagnostic Architectural Discipline Contracts Portfolio Prioritization Satisfaction Survey Life-Cycle Management Assessment Campaign Continuity Planning Operational Indicators
11
Life-Cycle Cost Efficiency
We effectively manage assets
across their life cycle to
maximize efficiencies.
25
II. IT Performance Measurement III. Security and Business
Process Digitization I. IT Governance
We employ a standard and Value Demonstration Continuity Planning Performance (Circle below):
methodology to identify
opportunities for business 1 2 3 4 5
process automation and Importance (Circle below):
enhancement. How to Use This Diagnostic 1 2 3 4 5
Performance (Circle below):
Please select the value (1 to 5) that best describes your IT organization using the two IV. Infrastructure Delivery End-to-End Asset
Management
1 2 3 4 5 grading scales provided. The top scale measures performance in each competency
Importance (Circle below):
and the bottom scale measures the importance of each competency.
and Management 12
1 2 3 4 5 Cost Transparency
8
Security Policies
We use unit-level visibility into
Top-Down Business and Standards infrastructure cost drivers to
Process Optimization Competency We have defined and
provide internal customers
communicated a set of
VIII. Business enterprise information security
policies and standards.
with the ability to effectively
manage their demands.
Enablement Performance
Performance (Circle below):
1 2 3
Importance (Circle below):
4 5
Performance (Circle below):
Importance 1 2 3 4 5
1 2 3 4 5
24 Importance (Circle below):
Technology Innovation Scoring Scale 1 2 3 4 5
We proactively scan for and
Performance Importance “User-Friendly” Infrastructure
exploit opportunities to deploy
new technologies in support of 5 = We Are Excellent at This 5 = Critical Product Catalog
the business. 4 = We Are Good at This 4 = High Priority 13
3 = We Are Average at This 3 = Moderate Priority Requirements Definition
2 = We Are Poor at This 2 = Low Priority We create alternative scenarios
Performance (Circle below): of cost versus functionality for
2 3 4 5
1 = We Are Terrible at This 1 = Not a Priority
1 proposed IT projects to
Importance (Circle below): help business sponsors make
1 2 3 4 5 informed scoping choices.
Prototype V. Applications Delivery Performance (Circle below):
Labs
VII. Talent Management VI. Vendor Management and Management 1 2 3 4 5
Importance (Circle below):
1 2 3 4 5
Alternative Cost and
Functionality Scenarios
23 22 21 20 19 18 17 16 15 14
IT-Enabled Collaboration Data and Knowledge Performance Management Leadership Development IT Staff Development Vendor Segmentation Vendor Performance Maintenance Cost Project Management Application Design
We have created a toolkit and Management We closely link compensation We provide high-potential IT We provide IT staff with We segment vendors based on Oversight Containment and Execution We reuse application
a set of communities that allow We provide the business with of senior IT staff to desired staff with customized training transparency into role-specific contract value and strategic We utilize a metrics-based We segment our applications We manage projects using a components and services to
distributed staff to effectively accurate, timely, and required outcomes such as systems and development plans, includ- competency requirements and contribution and allocate scorecard to select and evalu- portfolio based on business value to standard methodology to meet build new functionality and
share information and information. simplification or cost reduction. ing formal training, rotations, opportunities for technical and management resources ate vendors based on standard facilitate legacy system retirement budget, scope, and schedule integrate existing systems.
collaborate. and project-based work. business skills development. accordingly. performance criteria. and prioritize maintenance work. goals.
Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Community One View Architecture Gain-Sharing Personalized Leadership Development Value-Based Vendor Vendor Performance Value-Based Stage-Gated Best-in-Breed
Seeding of the Company Incentive Plan Development Planning Opportunity Brokering Segmentation Scorecard Maintenance Project Execution Component Architecture

Source: CIO Executive Board research.


Diagnostic Questionnaire on p. 75
In order to increase organizational transparency, simplify enterprise architecture, and leverage consolidated skills expertise, CIO Executive Board research
indicates that a growing number of companies are moving toward a centralized IT environment. Organizations have identified targeted IT responsibilities
that are suitable for centralization, including various governance activities and business-facing roles. Though centralization can enable several efficiencies,
CIOs should not overlook the potential corresponding decrease in responsiveness to the business.

Roles of the IT Center


CIOs are migrating management and coordination roles to the center across the IT value chain

Needs Analysis Implementation


and Operations User Absorption
“Building the
Right Things” “Building Things Right” “Capturing Benefits”

Infrastructure Shared Service


Traditional Roles
Enterprise Architecture
of the Center
Sourcing and Vendor Management
IT Strategic Planning
Leadership Development
Security and Risk Management

Demand Management Resource Management


Roles Migrating from • Proactive identification of business needs • Standardization of job descriptions,
Local to Center • Focused business unit relationship management career paths
through SLAs • Matching staff with project assignments
Project Management Oversight • Skills forecasting
• Creation of methodologies, business cases,
templates
IT Portfolio Management
• Definition of portfolio prioritization criteria
and process

Business Process Design Reusable Application Services and Middleware User Readiness
Emerging • Provision of methodologies and tools for business • Development, support, and consulting on reusable • Development of education and training
Central Roles process design application services and middleware to ensure business users understand
Data Architecture how to use new technology
• Standard definitions and formats for shared • Proactive identification of needed
information investments in process change
• Data integrity stewardship Source: CIO Executive Board research.
Order Relevant Published Research: Achieving Responsive Scale (pp. 90–91)

Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 27


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 28

Diagnostic Questionnaire on p. 76
Organizational Design Diagnostic
Transitioning CIOs must also assess the effectiveness of their organizational structure to ensure the appropriate balance of centralized cost efficiencies
and distributed alignment with dynamic business objectives. Recognizing the importance of harmonizing business strategy with organizational structure,
the CIO Executive Board offers the following diagnostic, drawn from analysis of organizational designs at member companies.

Aligning IT Organizational Design with Business Model


Companies weigh a number of business factors in determining the structure of IT
Company is…
Business Model Attribute Closer to Both Closer to
Diverse business unit scale, market Similar business unit scale, market
Business Diversity 0 1 2
environment, or product lines environment, or product lines

Business Strategy Product differentiation and innovation 0 1 2 Lowest-cost provider

Business Portfolio Stability Pursuing divestiture or joint ventures 0 1 2 Stable or pursuing M&A or alliances

Customer facing (e-commerce and channel Primarily back office (finance, HR, and
Role of Technology 0 1 2
enablement) core transactions)

Regulatory Focus Local tax and labor arbitrage 0 1 2 Global compliance

Corporate Culture Local autonomy and entrepreneurship 0 1 2 Top-down management

Subtotal Subtotal = Total Score


Total Score Representative Organizational Models
0–1 Structured Collaboration
2–7 Tiered, Mirrored Central and Regional IT
8–10 IT Shared Service and Competency Centers
11–12 Global IT Linked by Business Liaison
Source: CIO Executive Board research.
Order Relevant Published Research: Charting the Course for Principled IT Centralization (pp. 90–91)
Diagnostic Questionnaire on p. 77

Defining Competencies and Career Paths


To enable IT strategy execution, CIOs should examine their long-term human resources plan. IT organizations place increased value on general business
competencies including finance, procurement, communication, and leadership skills, reflecting a closer alignment with the business. DuPont adopts a
comprehensive strategic competency model to outline the Nine Critical IT Capabilities for the internal organization, detailing specific skills within the
areas of business, technology, and vendor management to support an aggressive outsourcing strategy.

Aligning Competencies with Corporate Objectives


An IT competency model defines nine key skills… …associated with three distinct career paths
Nine Critical IT Competencies DuPont’s IT Job Families

* 1 Business and IT Vision

Core IS Capabilities for Exploiting Information Technology


Business Systems Thinking
Leadership and Informed
1 Leadership Buying are cited as
Integrating IS/IT effort with business purpose and activity.
the most important
Business 2 Business Systems Thinking competencies in an
Skills Envisioning the business process that technology makes possible. General Competencies outsourced environment.
3 Relationship Building
Getting the business constructively engaged in IS/IT issues.
Leadership
4 Architecture Planning
Creating a coherent blueprint for a technical platform that responds Relationship Contract
Technology to current and future business needs.
Skills Building Facilitation
5 Making Technology Work Informed Buying
Rapidly achieving technical progress—by one means or another.
Architecture
6 Informed
InformedBuying
Buying
Managing the IS/IT sourcing strategy that meets the interests Planning
of the business. Making Technology
Work Vendor Development
Vendor 7 Contract
ContractFacilitation
Facilitation
Management Ensuring the success of existing contracts for IS/IT services. 2 Design of IT Architecture
Contract Monitoring
Skills
8 Contract
ContractMonitoring
Monitoring
Protecting the business’s contractual position, current and future.
9 Vendor
VendorDevelopment
Development
3 Delivery of IT Services
Identifying the potential added value of IS/IT service suppliers.

* Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del. Source: DuPont; CIO Executive Board research.
Note: Reprinted from “Core IS Capabilities for Exploiting Information Technology” by David F. Feeny
and Leslie P. Wilcocks, MIT Sloan Management Review, Spring 1998, pp. 9-21, by permission of
publisher. Copyright © 1998 by Massachusetts Institute of Technology. All rights reserved.

Order Relevant Published Research: Strengthening the IT Leadership Bench (pp. 90–91)
Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 29
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 30

Core Competency Rankings by Role


A comprehensive, uniform list of IT roles and performance expectations provides visibility into enterprise resource capabilities as well as potential
skill gaps among existing IT staff. After creating 35 standardized roles across the company, Iverson Financial* scored the competencies of each position
according to four key skills dimensions to express each role’s strategic business impact. For each skills dimension, the roles receive a score on a scale
of 1 to 5, to provide an objective ranking of role expectations for both individual and enterprise-wide talent assessments.

Defining Required Skills and Capabilities *

Iverson Financial* analyzes enterprise roles for alignment with key skills dimensions
Role Competency Rankings List
0ROCESS 0EOPLE
*OB&AMILY 2OLE 4ECHNICAL "USINESS
,EADERSHIP ,EADERSHIP
4ECHNICAL #4/     "USINESS
 s $EEPTECHSKILLS #!/      s 5NDERSTANDANDLEADDEVELOPMENT
s #ANSOLVEDIFlCULTTECHISSUES !PPLICATION-ANAGER     OFBUSINESSPRODUCTS IMPACTOFTRENDS
s "ROADUNDERSTANDINGOFMARKET ANDREGULATORYENVIRONMENT
DIRECTION #ONTINUITY-ANAGER  4"$  4"$
 s 5NDERSTANDANDLEADDEVELOPMENT
s $EEPTECHSKILLS )NFORMATION2ISK-ANAGER     OFBUSINESSPRODUCTS

s #ANSOLVEDIFlCULTTECHISSUES 1UALITY-ANAGER     s &AMILIARWITHSPECIlCAREASONLY
s +NOWLEDGEOFPORTIONOFTECHMARKET 0ROJECT-ANAGER      s 'ENERALPRODUCTKNOWLEDGE
 s 4ECHEXPERIENCEBACKGROUND "USINESS s 5NDERSTANDTHETRENDSOFTHE
2ELATIONSHIP-ANAGER    
s !CTIVESKILLSET -ANAGEMENT MARKETPLACE
s "ROADUNDERSTANDINGOFMARKET )NFRASTRUCTURE$EMAND-ANAGER    
 s 5NDERSTANDSPECIlCBUSINESSPRODUCT
STRATEGICDIRECTION 2ESOURCE-ANAGER     s .OVIEWOFTRENDSOFMARKETPLACE
s !CTIVETECHSKILLS 4ESTING-ANAGER    
 s #ANCODE  s 5NDERSTANDBASIClNANCIALTERMS
&INANCIAL-ANAGER    
s .OVIEWOFBROADERTECHMARKET
"USINESS4ECHNOLOGY-ANAGER2$    
 s "ASICCOMPUTERSKILLS
2ELEASE-ANAGER    
s .OTFAMILIARWITHTECHMARKET
+NOWLEDGE-ANAGER    
4ECHNICAL!NALYST    
!PPLICATION !PPLICATION$EVELOPER 4"$ 4"$ 4"$ 4"$
$EVELOPMENT 2ELEASE!NALYST    
,EADING %DGE4ECHNOLOGY$EVELOPER    
0ROCESS,EADERSHIP 5SABILITY%NGINEER     0EOPLE,EADERSHIP
 s $EVELOPNEWPROCESS "USINESS!RCHITECT      s -ANAGELARGESTRATEGICACTIVITIES
s 0ROVIDECHANGEVISION !PPLICATION!RCHITECT     s $EVELOPSTRATEGICPLAN
3YSTEMS
 s $EVELOPSTRATEGICSTRUCTUREFRAMEWORK %NGINEERING 4ECHNICAL!RCHITECT      s -ANAGEMULTIPLETEAMS
IE MITIGATERISKS
"USINESS4ECHNOLOGY!RCHITECT2$    
 s $EVELOPTACTICALMETHODOLOGIES  s -ANAGEINDIVIDUALTEAMS
IE IMPLEMENTANDMANAGERISKS )NFORMATION!RCHITECT    
s %NHANCEMAINTAINPROCESS "USINESS!NALYST      s )NDEPENDENTCONTRIBUTORWITH
OCCASIONALTEAMLEADERSHIP
 s %NHANCEMAINTAINPROCESS "USINESS3YSTEMS 0-/!NALYST     RESPONSIBILITIES
&INANCIAL!NALYST    
 s %XECUTEPROCESS  s 3ELF LED
3TRESS4ESTING    
1UALITY!SSURANCE 1!4ESTER    
-ETHODOLOGY!NALYST    
$ATA3ECURITY2ISK )NFORMATION2ISK!NALYST    
-ANAGEMENT #ONTINUITY!NALYST 4"$ 4"$ 4"$ 4"$
$ATABASE!DMINISTRATOR    
$ATA-ANAGEMENT
$ATABASE$EVELOPER    
3OURCE )VERSON&INANCIAL!PPLICATIONS

0SEUDONYM .ETWORK )NFRASTRUCTURE$EMAND!NALYST    
%XECUTIVE#OUNCILRESEARCH
* Pseudonym. %NGINEERING Source: Iverson Financial; Applications
Executive Council research.
Recent CIO Executive Board data suggest that CIOs should invest in the development and retention of a strong leadership to most effectively drive
employee discretionary effort. Compensation, by contrast, has only one-fifth the effect on employee effort as that of manager quality.

Investment in Management Leadership to


Build the High-Performance Workforce
Manager quality is five times more impactful than compensation
Average Impact of Management Strategies on Discretionary Effort

20%
19%

15%

Change in
Discretionary 9%
Effort

4%

Direct Manager Organizational Day-to-Day Work Learning and Compensation


Characteristics Culture Traits Characteristics Development Strategies
Opportunity

n = 3,564. Source: Corporate Leadership Council research; CIO Executive Board research.

Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 31


© 2005 Corporate Executive Board
n = 800.
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characteristics of effective leadership at their company and level.


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Order Relevant Published Research: Strengthening the IT Leadership Bench (pp. 90–91)
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important attributes for effective IT leadership as ranked by IT staff in managerial positions.

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Leadership Characteristic Importance Scores

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Focus investment on the most important leadership characteristics

ON O M E
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What Leadership Characteristics Do
IT Leaders Consider Most Important?

TIN
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current management team. To assist new CIOs in understanding the most valuable leadership characteristics, the graph below presents the most

EN
T
/
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INA
L
Because strong leadership is imperative to a successful IT organization, new CIOs must evaluate the competencies and leadership styles of the function’s

Survey; CIO Executive Board research.


The CIO’s First 100 Days

Source: Corporate Leadership Council Leadership


32
Acknowledging the importance of strong leadership, new CIOs are tasked with maintaining or developing a robust IT leadership pipeline to ensure
continued organizational improvement and success. To help new CIOs provide staff with the most effective development opportunities, the graph below
plots 17 common development activities according to importance.

What Development Activities Do


IT Leaders Consider Most Important?
“Feedback and Relationship” is the most important category of development activity
Distribution of Importance Scores for Development Activities Among IT Leaders*

Feedback and Relationship Activities Experience-Based Activities Education-Based Activities


Mean = 6.8 Mean = 5.7 Mean = 5.0

10.0
8.6 Average Importance or Higher
8.0
Below Average Importance
6.9 6.6 6.4 6.2 5.9 = Mean
5.9 5.6 5.9 Importance
5.5 5.4 5.2 5.1 4.9 for All
5.0 4.8 4.8 Activities
4.4

0.0
n h ity ss as es ss es ts ts s ills s
Pla ac rse rse

s
or
s

ine tri or
ck

or re ine ss Sk

se
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t s n e p p u u

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en

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en ut Bu al ou Bu sin Re Re Co es Co
ed

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aM

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th

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ut tio
wi

lin

ills
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ith

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e at o ur W P
Cr Am T
n = 800.
* Importance scores derived from conjoint analysis, measuring the relative Source: Corporate Leadership Council Leadership
importance leaders place on each activity for its development of leadership skills. survey; CIO Executive Board research.

Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 33


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 34
Personalized Development Plans
Newly appointed CIOs facilitate the formation of individual development plans for staff to target areas of improvement for underperformers and identify
growth opportunities for high-potential employees. In the uncertain environment following a change in leadership, development plans also shift employee
focus toward future opportunities within the organization. DuPont’s customized development planning tools enable employees to gauge their proficiency
in required competencies for a current or desired role and generate development plans that include development priorities, a recommended learning
regimen, and suggested completion dates.

*
Fostering Motivation Through Development
Online self-assessment of competency …generates individualized development plans
gaps and training activity preferences… that form a “baseline” for career-path guidance
Online Competency Self-Assessment IT Staff Personalized Development Plan
Illustrative Illustrative
Competency Self-Assessment My Development Plan
Staff: Scott Carney Direct Manager: Robin Price
Relationship Building Title: Global IT Alliance Director Next Review Date: November 2003
Proficient Competency Assessment
Education Project Target
Opportunity Opportunity Completion Date
Need development; add to development plan
DuPont 101
Development Preferences Need
Leadership development
Corporate Strategy 11/30/03
Development assignment or project Course

Mentoring Making
✓ 12/31/04
Course or seminar Technology Work
Related courses for this capability (clicking this link
will open course description in a new window) Specialty
Need
Informed Buying development
Chemicals 10/31/03
Executive Program in Corporate Strategy E-Procurement
Related Development Opportunities Architecture

Attend executive seminar Planning Opportunity
on corporate strategy completion
Business Systems Need Supply Chain date
Thinking development E-Learning Module
Next Performance Review Date
Attend executive
Relationship Need
11 30 03 seminar on 8/30/03
Building development
corporate
Save Clear Changes

Employee development “Best-mix” recommendations of


priorities classroom and experiential development

* Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del. Source: DuPont; CIO Executive Board research.

Organizational Assessment: Evaluating IT Effectiveness and Optimizing Organizational Design 35


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 36

Accelerating the Transition


A road map for successful onboarding
Understanding Performance Gaining Visibility into Current Executing on
Expectations Performance and Resources Transition Initiatives

I. II. III. IV.


Identifying Decision Makers’ Evaluating IT Effectiveness Aligning with Realizing
Perceptions of the IT Value and Optimizing Business Goals and Operational Objectives
Proposition Organizational Design Prioritizing Needs

Legacy System Sunset Project Cards (p. 49)


Executive Partnering
Program (p. 16) IT Competency Aligning IT Strategy with
Diagnostic Tool (p. 26) Corporate Goals (p. 39)
Revalidating Business Case
Assumptions Midcycle (p. 50)
Expectations Profi ling Exercise (p. 17)
Organizational Design Business Unit Alignment Diagnostic Tool (p.
Diagnostic (p. 28) 40)
Project Cycle Time
1 and Cost Reduction (p. 51)
Best-in-Class Learning (p. 19)
Defi ning Competencies
Guiding IT Architecture Principles (p. 42)
and Career Paths (p. 29)
Scorecard Development and
Life-Cycle Management Compendium
2
Visualizing Project Portfolio Value (p. 43) (pp. 54–55)
Core Competency
Rankings by Role (p. 30)
Scorecard Rollout (p. 56)

Personalized Development Plans (p. 35)

Data Collection and Quality Assurance


Ensuring Benefits Capture (p. 57)
Across All Projects (p. 45)

Scorecard Review and Revision (p. 58)


Facilitating Scorecard Adoption (p. 59)
Additional Transitioning Support
IT Budget Benchmarks Vendor Management and Diagnostic Questionnaires Visit Resource Center @ Relevant Published Research
(pp. 61–66) Outsourcing (pp. 67–72) (pp. 73–89) www.cio.executiveboard.com (pp. 90–91)
1
Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
2
Pseudonym.
IT Strategy Setting
Aligning with Business Goals and Prioritizing Needs
Action Steps
Align IT Strategy with Corporate Goals: Create an IT strategic plan to support overall business objectives and drive value through IT.
Aligning IT Strategy with Corporate Goals (p. 39)
Align IT Strategy with Business Unit Goals: Understand business unit needs and perceptions to enable responsive IT service.
Evaluate IT Architecture and Architectural Management Strategies: Ensure architecture can support future IT investments.
Guiding IT Architecture Principles (p. 42)
Establish Governance Structure Around Future IT Investments: Establish an objective prioritization framework to ensure transparency
around IT resource allocation.
Visualizing Project Portfolio Value (p. 43)
Ensure Maximum User Absorption: Incorporate change-management strategies during project implementation to ensure maximum end-
user adoption of IT projects.
Ensuring Benefits Capture Across All Projects (p. 45)

© 2005 Corporate Executive Board 37


© 2005 Corporate Executive Board
The CIO’s First 100 Days 38
Aligning IT Strategy with Corporate Goals Diagnostic Questionnaire on p. 79
Seagate Technology establishes a goal alignment workshop and a formal cascade process to more effectively translate corporate objectives into functional
and operational goals. The company creates cascaded functional goals to directly reflect strategic corporate objectives and establishes more granular
project metrics to track progress against those objectives.

Cascading Goals from CEO to Staff


Highest-level corporate objectives align directly with IT executives’ annual goals
Seagate Corporate Objectives
Illustrative
1. Growth/Profitability 2. Technology and Time-to-Market 3. Customer Quality 4. On Time Delivery 5. People
Design and implement best-in-class Lead our industry in developing and Develop best-in-class Achieve on time Cultivate a diverse, high-performing team that
processes that drive revenue growth executing critical technologies to be first products to meet customer’s delivery to customer attracts, develops, recognizes, and retains the
and reduce costs to market quality expectations request best people

Aligned CIO Goal


Illustrative
Back Forward Stop Refresh ! !
Address:

Functional Goal Goal Description Measures


Launch a product and • Develop and execute product-centric data warehouse Q2: Design in place and approval to proceed confirmed
process data warehouse • Transition from multiple independent decision-support databases and tools to a single system Q2: Begin streaming data to the new data warehouse
for Seagate • Begin moving decision-support features from execution systems into the new system Q4: Strategy in place for execution systems

CIO Goal Alignment Dashboard


Back Forward Stop Refresh ! !
Address:

CIO priorities
link clearly to Current Goals Browse by Employee: CIO
those of IT My Goals and Tasks: Launch a product and process data warehouse for Seagate
direct reports. Title Aligned To Due Date Status Updated
Develop infrastructure strategy for EDW VP, Infrastructure 30 Jun 04 On Track 30 Apr 04
Assess application strategy for future expansion of EDW VP, Applications 30 Jun 04 On Track 14 Mar 04
Arrows indicate Create legacy systems integration strategy for EDW VP, Enterprise Systems 30 Jun 04 Issues 10 Mar 04
the presence of
Improve data quality Senior Data Manager 30 Jun 04 Issues 20 Apr 04
downward- and
upward-aligned Director, Business
Formulate new EDW business processes 30 Jun 04 On Track 09 Jan 04
goals. Process Management

Visit IT Strategic Planning Resource Center at www.cio.executiveboard.com Source: Seagate Technology; CIO Executive Board research.

IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs 39


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 40

Business Unit Alignment Diagnostic Tool


To align IT strategy with corporate goals, IT must clearly understand business needs and perceptions. The IT–Business Alignment Diagnostic is a survey-
based exercise that enables CIO Executive Board members to identify which attributes of IT process and service delivery are of top priority to business
partners and IT staff. An aggregate analysis of more than 1,850 survey responses from 28 companies identified common IT attributes where recurring
gaps exist between importance and effectiveness ratings.

Properly Aligning IT with Business Units


The CIO Executive Board tool reveals six …and provides an opportunity for
general areas of top priority to the business… members to obtain custom results
Business Partner Importance Versus Business Partner Effectiveness Gap
IT–Business Alignment Diagnostic
6.25

Key Strength High Priority


To help recently transitioned CIOs understand business
Availability Management
●● Business Continuity Planning expectations, the CIO Executive Board is pleased to offer
Business Functionality
● the IT–Business Alignment Diagnostic to CIOs as part of
● Responsiveness your membership.

Technical Skills ● Data and Knowledge
End-User Support ● Management What You Will Do
Strategy and Planning ●
● • Identify appropriate business partner and IT staff to
● Security Technology Provisioning Project Delivery complete Web-based survey
● ● Business Case
Risk ● Skills Adaptation Achievement
Business Liaison● Project Skills● Management What You Will Receive
Business Partner 5.25 ●
Importance ● Business Skills • Detailed customized report identifying high-priority
● Financial Impact
Requirements Definition areas to increase business alignment
● ● Vendor Alignment ● Technology Innovation

Leadership Skills
Members Leverage the Diagnostic To
Business Case Discipline ●● ● User Training • Focus strategic planning efforts for IT
● Communication Average Gap
● Cost Transparency
• Create a more informed dialogue between IT and
Prioritization Discipline ● ● Average
System Adoption Importance business partners
• Tailor IT service delivery to better reflect the needs
● Value Demonstration
of the business
Opportunistic
Low ROI If your organization is interested in learning more about the
Improvement
4.25 diagnostic or in reserving a spot for the current quarter,
0.2 0.4 0.6 0.8 1.0 1 .2 1.4 1.6 please contact your Account Director.
Effectiveness Gap
(Business Partner Importance–Business Partner Effectiveness)

n = 1,850 business partner respondents from 28 companies. Source: CIO Executive Board IT–Business Alignment Diagnostic Database.
For each attribute, IT’s self-assessment of performance is higher than the corresponding business partner rating. In the chart below, the columns represent
the average attribute effectiveness ratings of business partners, while the dots represent the average attribute effectiveness ratings of IT staff. Among
attributes, the largest gaps exist in the Business Enablement and Project Design and Execution categories.

IT Overestimates Its Effectiveness


Disconnect in perceptions highlights poor communication between IT and the business
Average Effectiveness by Attribute
Business Partners Versus IT Staff
Business Project Design Service Delivery Talent Management
Enablement and Execution Governance and Management and Development Security/Reliability
IT Average: 4.98 IT Average: 4.89 IT Average: 4.83 IT Average: 5.14 IT Average: 5.00 IT Average: 5.28
BP* Average: 4.26 BP Average: 4.25 BP Average: 4.26 BP Average: 4.61 BP Average: 4.51 BP Average: 4.95
Gap: 0.72 Gap: 0.63 Gap: 0.57 Gap: 0.53 Gap: 0.49 Gap: 0.33
Highly
Effective 7.00

5.85
5.52 5.47

5.16 5.25 ● ●
5.31 5.21 5.20 5.13
● 5.15 5.16
4.87 ● ● 4.83 4.92
5.09
4.96 ● ● ● 4.96 4.99 4.97 ● ●
4.87 4.85 ● ● 4.79 ● 4.81 ● ● 5.19
4.71

● ● ● ● 4.67 ● 4.70 4.77
● ● 4.61 ● ●
● 4.84 4.82 4.82 ● 4.82 5.07 5.04
4.59 4.27 4.60 4.63
Effectiveness 4.40 4.32 4.41
● 4.40 4.42 4.48
4.28 4.26 4.28
Score 4.07 4.12 4.14 4.24 4.04
4.24 4.24 4.19
3.98 3.95

Highly
Ineffective 1.00
n t y c y nt nt y
ion e r line ion e n
t
i n e i o n i ng io n a c o n
t t s
i ng o r es ing ls ls ls ls n t y g t
t io a li n e e
i p l i c a t la n n t r a t I m p L ia is k il k il k il k il t io e n i t in
m e cu r l a n n e m
en
o v a t i o n pa r e ge m g n m fi n i t e l i v s ci p o p t ve m s c i s i o n u p p i ve n r a i n a l S c t S ss S ip S pt a g e g
li e D D A i d i n
D m u n d P o n ci a l e s s s v S s T ic je e h a S y P na
I n n nc a ns a na A s D ct e ch
ie r o e r on se r hn Pr o usin d e r s s Ad an
a
it a
l o g y ss Fu t Tr e M dor e n t r o j e C a s s te m e A a t ion o m y a e m i na n us i n g y P - Us Res p U Tec B ea k ill k M
t inu i t y M
o ine o ed Ve s g n m P s y a s i z C te e g D F B l o n d L S i s n i l
n s S t R o
ch u s C wl ir e e C
ior
i ra
St Va
lu no E C ila b
Te B o qu sin ss Pr ch ss a
Kn Re Bu s ine Te s i ne Av
d B u u
an B
ta
n = 3,063. Da IT Effectiveness Rating

* BP = Business Partner. Business Partners’ Effectiveness Rating


Source: CIO Executive Board IT–Business Alignment Diagnostic Database.

Order Relevant Published Research: Calibrating the Partnership (pp. 90–91)

IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs 41


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 42

Guiding IT Architecture Principles


Before addressing enterprise goals through IT investments, new CIOs must first evaluate the organization’s IT architecture and architectural management
strategies. KeyCorp’s principles reflect a single overarching theme: the simplification of the technology environment as a means to an end—the creation
of a standard enterprise applications architecture and infrastructure. The net effect of these principles is to link simplicity with better, faster, cheaper IT
performance. Every resource allocation decision made by KeyCorp’s Key Technology Services group invokes the filter of these eight guiding architecture
principles.

Laying a Solid Foundation


KeyCorp elevates simplicity to a strategic goal
KeyCorp’s 2001 IT Architecture Framework
Representative Overview

Focus on Platform Focus on Life Cycle


Sigma 1 Use of technology for 5 Enterprise TCO
δ cycle-time reduction perspective
(particularly
with applications)

2 Embrace of open standards 6 Systems simplification,


and nonproprietary code reduction,
approaches and retirement

3 Proactive management, 7 Minimal package


high scalability, and security * customization

MRO
B2B Infrastructure N-Tier Middleware eCRM Database
Sales
4 Standard applications 8 Culture of reuse
and infrastructure
Web
Content
Marketplace ERP
Business Logic
Messaging

Security

Store
Legacy

EDI/XML Warehouse
Supplier Hub
Fulfillment

Campaign Management
Strategic Customer Data Marts
Knowledge Management Call Center

* The CIO Executive Board does not endorse or recommend technology vendors. The technologies listed here Source: KeyCorp; CIO Executive Board research.
are for illustrative purposes only and do not necessarily represent the technologies used by profiled companies.

Order Relevant Published Research: Case Studies in Enterprise Architecture Mitigation (pp. 90–91)
Visualizing Project Portfolio Value Diagnostic Questionnaire on p. 81
To ensure objective alignment of future IT spending with stated corporate and business unit objectives, new CIOs must establish a transparent
prioritization framework by which they evaluate project proposals. Schlumberger segments its IT projects into four “asset classes,” each with a unique
goal and target spending allocation, to guide the budgeting process. By quantifying both financial and strategic project benefits through project sponsor
questionnaires tailored to each of the four asset classes, Schlumberger creates a holistic view of each project’s impact on the organization.

Responsive IT Portfolio Prioritization


To enable portfolio prioritization, Schlumberger creates an …and estimates the strategic, nonfinancial value
IT project portfolio with principled project categories… of projects based around the following categories
Schlumberger “Asset Classes” and Target Allocations Asset Class-Specific Value Drivers
Representative

Confer
Confercompetitive
competitive
advantage,
advantage,e.g.,
e.g.,incubating
incubating Innovation Business Opportunity
new Realize
Realizemeasurable
measurable
newplatforms
platforms,ororresponses
responses business • Reusability across BUs • ROI
totocompetitors’
competitors’offerings.
offerings businessbenefi
benefitsts
(revenue generation • Speed of technology adoption • Potential increase in market share
(revenue generation
or • Competitive advantage potential • Potential to attract new customers
orcost
costsavings).
savings) • Enhancement of reputation as or facilitate new market entry
technology leader • Simplification of end-user workflow
Business • Fit with long-term corporate • Improvement in speed and quality
Innovation Opportunity strategy of decision making
Optimize
Optimizethe theuse
use of 25% 25% • Fit with short-term corporate
ofexisting
existingITITassets
assetsand strategy
and reduce
reduce IT costs.
IT costs Ensure
Legal orlegal
or regulatory
regulatory Infrastructure Mandatory
Infrastructure compliance.
compliance
Application • Cost per user
40% • ROI • Deployment velocity
• Reusability across BUs • Ease of use by end user
• End-user satisfaction and urgency • Ease of deployment
• Functionality versus technology • Impact on network bandwidth
Mandatory life span and support resources
10% Network
• ROI
• Reusability across BUs
• Improvement to network
bandwidth, reliability, security, or
performance

Visit Portfolio Management Resource Center at www.cio.executiveboard.com Source: Schlumberger Ltd.; CIO Executive Board research.

IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs 43


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 44
Ensuring Benefits Capture Across All Projects
Responsible for ensuring that all IT projects achieve full business case realization and maximum end-user adoption, new CIOs must institute a defined
approach for ongoing communication with all project stakeholders. Texas Instruments addresses this challenge by assigning a business readiness rating for
each project and accurately describing the engagement scope and communication level with sponsors, in addition to end-user training processes according
to the rating.

Increasing User Absorption


Level of business readiness support aligned to end-user impact
Business Readiness Life Cycle

Net Unrealized
Appreciation Scenario #2:
????? Sum Distribtution

Business Business Readiness 1 2 3


Readiness Rating Resources Engagement Scope Communications Plan Training Protocol
• Conduct a deep stakeholder • Conduct frequent in-person meetings • Train power users to conduct
analysis cataloging all affected with steering teams to update them adoption sessions for all
staff on the progress and risk of the project end users
High • Dedicate full-time resource • Inform end users about project status • Develop and run training
Full-time business readiness to project and related disruptions through targeted classes for end users
lead dedicated to project e-mail updates and newsletters
• Identify project owners • Deliver routine progress reports • Design an online training
and immediate end users to steering committee module for all affected
end users
Medium Part-time involvement
in project
• Consult with business sponsors • Deliver a detailed checklist to project • Deliver adoption instructions
and selected users on an manager containing communications to end users via e-mail
informal basis guidelines for status and risk reporting • Support and monitor training
Low to stakeholders and selected users
Informal advisory role

Stakeholder E-Mail Updates End-User Training Modules


Segmentation Analysis
Business Unit Liaison Subject-Matter Experts
To: All Staff SAP
From: CIO
ring

g
aison
ct

eerin
eerin

ginee
ager

onta
es

IT Li
Rol

Engin
Man

What You
gC

Engin

g En
ess–
ketin
ning

agin

ess

Sample Deliverables Re: SAP Upgrade


ign
Busin

Proc
Pack
Plan

Mar

Des

Tasks
Rolling Quarterly Forecast S C R I I Responsibility Assignment Key

Procure Subcontracting Capacity


Transition Support
Setup and Implementation
A

S
R

R
I
R
A
S
C
Responsible
Approver
Support
Consultant
Accountable in Status Reviews
Veto Power
Team Members
Acknowledged Expert
Need to Know
I Informed Nonparticipant
Device Setup R S

Starts R

Execution R I I S S S

Ship R C A

Source: Texas Instruments; CIO Executive Board research.


Order Relevant Published Research: Achieving Responsive Scale (pp. 90–91)

IT Strategy Setting: Aligning with Business Goals and Prioritizing Needs 45


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 46

Accelerating the Transition


A road map for successful onboarding
Understanding Performance Gaining Visibility into Current Executing on
Expectations Performance and Resources Transition Initiatives

I. II. III. IV.


Identifying Decision Makers’ Evaluating IT Effectiveness Aligning with Realizing
Perceptions of the IT Value and Optimizing Business Goals and Operational Objectives
Proposition Organizational Design Prioritizing Needs

Legacy System Sunset Project Cards (p. 49)


Executive Partnering
Program (p. 16) IT Competency Aligning IT Strategy with
Diagnostic Tool (p. 26) Corporate Goals (p. 39)
Revalidating Business Case
Assumptions Midcycle (p. 50)
Expectations Profi ling Exercise (p. 17)
Organizational Design Business Unit Alignment Diagnostic Tool
Diagnostic (p. 28) (p. 40)
Project Cycle Time
1 and Cost Reduction (p. 51)
Best-in-Class Learning (p. 19)
Defi ning Competencies
Guiding IT Architecture Principles (p. 42)
and Career Paths (p. 29)
Scorecard Development and
Life-Cycle Management Compendium
2
Visualizing Project Portfolio Value (p. 43) (pp. 54–55)
Core Competency
Rankings by Role (p. 30)
Scorecard Rollout (p. 56)
Ensuring Benefits Capture
Personalized Development Plans (p. 35) Across All Projects (p. 45)

Data Collection and Quality Assurance


(p. 57)

Scorecard Review and Revision (p. 58)


Facilitating Scorecard Adoption (p. 59)
Additional Transitioning Support
IT Budget Benchmarks Vendor Management and Diagnostic Questionnaires Visit Resource Center @ Relevant Published Research
(pp. 61–66) Outsourcing (pp. 67–72) (pp. 73–89) www.cio.executiveboard.com (pp. 90–91)
1
Registered trademark of E.I. du Pont de Nemours and Company, Wilmington, Del.
2
Pseudonym.
IT Strategy Execution
Realizing Operational Objectives
Action Steps
Simplify Existing Systems Portfolio: Establish a set of methodologies to reduce duplicate/obsolete systems, thereby cutting maintenance
costs.
Legacy System Sunset Project Cards (p. 49)

Review Project Risks: Develop a detailed project-assessment framework to mitigate risks and prevent ROI degradation.
Revalidating Business Case Assumptions Midcycle (p. 50)

Decrease Project Cycle Time: Develop a set of disciplined implementation strategies to reduce costs and compress cycle time of large-scale IT
projects.
Ensure Continuity with Direct Reports: Engage directors of Infrastructure and Applications, diagnosing their current operational objectives.
Measure Strategy Execution: Establish performance metrics to gauge the performance of IT and track the progress of strategic initiatives.
Scorecard Rollout (p. 56)
Data Collection and Quality Assurance (p. 57)
Scorecard Review and Revision (p. 58)
Facilitating Scorecard Adoption (p. 59)

© 2005 Corporate Executive Board 47


© 2005 Corporate Executive Board
The CIO’s First 100 Days 48
Legacy System Sunset Project Cards
IT budgetary pressures coupled with complex systems architectures require new CIOs to reduce rising maintenance spending through systematic
rationalization of the existing legacy portfolios. IBM, for instance, developed a set of strategies that allowed it to reduce maintenance spending and divert
the funds to more strategic, value-added activities. As part of IBM’s annual strategic planning cycle, business process IT heads determine a sunset target
for each application and enforce timely retirement of all obsolete, redundant legacy systems.

Principled Rationalization
Cost–benefit analysis of applications produces sunsetting target and project plans…
Sunset Target-Setting Session Sunset Project Plan
Illustrative

BU IT Strategic Sunset Project Plans


Plan 2000
Corporate ❏ Testing Application
CIO Staff #3
Sunset
Target ❏ Procurement
BU IT BP IT 12% Application #4–10
Head Head ❏ Intranet
Application #2
BU and BP IT heads and corporate CIO representative review
application portfolio as part of strategic planning cycle
to identify applications for sunsetting Review yields individual BU sunset targets and application
sunset project plans; assigned to project managers
…while a dedicated team monitors BU performance against commitments
Sunset Progress–Tracking Team Monthly CIO Report Card on Sunset Progress
Illustrative
Sunset Results
BU 1 BU 2
Retired 4% 0%
BU 1 April BU 2 April
➤ Savings $100,000 $0 ➤
Two CIO staff members track
compliance with application Transparency of performance
sunset targets Ahead of Schedule
against sunset targets incents Below Schedule
BU IT heads to retire systems
expeditiously Source: IBM Corporation; CIO Executive Board research.

Order Relevant Published Research: Institutionalizing IT Cost Efficiency (pp. 90–91)

IT Strategy Execution: Realizing Operational Objectives 49


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 50

Revalidating Business Case Assumptions Midcyle Diagnostic Questionnaire on p. 83


As IT’s credibility correlates directly with project success rates, many new CIOs are required to build their reputations by delivering on detailed midcycle
project—a potentially daunting task if initial business case assumptions lack support. New CIOs, therefore, can use risk as a means of continuously
revisiting those business case assumptions to ensure project success. Progressive organizations such as Merrill Lynch employ cross-functional governance
teams that oversee progress on large projects every quarter and provide an independent assessment of project risks.

Midcycle Project Risk Review


Projects over $2.5 M require reviews to determine ongoing funding…
Quarterly Project Review Process at Merrill Lynch

1a Benefits Contract 1b Risk Reassessment 2 Distressed Project 3a Recommitment


Affirmation Review of Project Funds Unused project
Project Sponsor Contract
Costs
Costs Benefits
Risk GO FIX funds returned
Initial Forecast

FY 2004 Budget
Adjustment
$1.2 M $3.5 M

($3.5 M) S.C.O.R.E. to the business


Current Estimate

Signature
$1.0 M

Tom Kovack
$3.7 M

Craig Reist
1–5 3b Proactive Termination
Sponsor IT Project Manager

• Revisit projects KILL


• Sponsor recommits to ROI highlighted as high risk

…relying on detailed risk-assessment criteria


Risk Ratings Scale Definitions
Very High Risk High Risk Moderate Risk Low Risk Very Low Risk
1 2 3 4 5
Scope Numerous scope changes (> 30%) Major increases in scope Scope changes with 5%–10% Consistent history of small Minimal scope changes
S Management impact project (functionality, (10%–30%); major functionality impact on costs changes to scope < 5% of costs
schedule, or cost) changes
Clarity of Business benefits unquantified and Major areas of benefits quantified Most benefits quantified but little Most benefits quantified; medium Most benefits quantified;
C Business
Benefits
not verifiable but not verifiable confidence in benefits capture confidence in benefits capture high degree of confidence
in benefits capture

On-Time Delays > 40% of lead time for Delays 20%–40% of lead time for Delays 10%–20% of lead time for Delays < 10% of lead time for On-time delivery
O Delivery major deliverables major deliverables major deliverables major deliverables
Remaining on Costs > 20% higher than planned Costs 15%–20% higher than Costs 5%–15% higher than Costs up to 5% higher than On-budget delivery
R Project Budget planned planned planned
Engagement Initiative not project owners’ Initiative not project owners’ Initiative not project owners’ Initiative primary responsibility Full-time business
E of Business
Leaders
primary responsibility; sporadic primary responsibility; leadership primary responsibility; steering of operations, IT, and business operations and IT owners;
business attendance at steering team attends majority of steering committee meeting attendance owners; 75%–100% attendance 100% attendance at
committee meetings committee meetings high (75%–100%) at steering committee meetings steering committee
(< 50%) (50%–75%) meetings

Visit IT Management Implementation Tools at www.cio.executiveboard.com


Source: Merrill Lynch; CIO Executive Board research.
Project Cycle Time and Cost Reduction
One of the challenges commonly cited by new CIOs is determining the tactical levers that they can use to improve cycle time and contain costs of ongoing
large IT projects, such as ERP implementation. Project-management exemplars increase project throughput by defining a set of execution strategies that
focus on priorities such as project-team efficiency, quality assurance, and business process change management across the stages of a project’s life cycle.

On Time and on Budget


Disciplined implementation strategies during the project life cycle provide improved cycle time

1 Invest in a business case around the value of unified business processes.

2 Physically relocate members of the core process team to have them work together.

3 Middle management backing is the hardest and most crucial support to get. Make this
a priority of local area teams.
6 7 Cost Savings
5
4 Quantify the seven critical cost drivers: 1) number of customizations, 2) complexity of legacy 4
systems environment, 3) number of interfaces, 4) participation level of sponsors, Cycle Compression
5) language and country versions, 6) number of users, and 7) forms and reports. 3 8
5 Identify the ways business processes are interconnected, on an enterprise level, to manage
downstream effects of process change. 2 9
6 Test a day in the life of a system using production data.
7 Test integrated complete business cycles (semimonthly payroll, monthly reporting) 10
and transaction-based cycles (sales orders). 1
Launch and
Planning and Installation
Move people around proactively, prior to go-live, to reflect the new workload distribution Ongoing
8 Architecture and Test
from new processes. Support
9 Addressing the user’s grasp of new (and sophisticated) concepts should be the key change Stage of Life Cycle
management focus.
10 Build sustainable power user cohort with substantial influence over training and utilization Typical Life Cycle
enhancement to “step up” in the go-live environment and mitigate any productivity
disruptions. Improved Life Cycle

Source: Applications Executive Council research.


Visit Project Execution Resource Center at www.cio.executiveboard.com

IT Strategy Execution: Realizing Operational Objectives 51


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 52

As new CIOs move forward with IT project plans, they must take inventory of the infrastructure function’s current systems and project pipeline to ensure
the function’s resources and capabilities will fulfill the revised agenda. The Infrastructure Executive Council, a sister program to the CIO Executive
Board, provided the following checklist for the new CIO as a means of engaging the head of Infrastructure and uncovering infrastructure objectives and
effectiveness.

Competency Diagnostic:
Assessing Your Infrastructure Organization
1A 1B 1C 2A 2B 2C 2D 2E 3A 3B
Business Linkage Applications Alignment Global Coordination Performance Reporting Business Focused Resource Allocation Infrastructure Performance Incentives Supplier Consolidation Vendor Segmentation
Our efforts are highly Our processes ensure transfer We manage globally We distribute concise, Reporting We actively use performance Systems Monitoring We motivate all levels Our supplier strategy is to We segment vendors based on
integrated into business of applications development distributed functional actionable performance We define performance reports to inform fact-based Our automated performance of infrastructure staff reduce the total number defined criteria and allocate
processes and activities, knowledge to optimize the infrastructure with common reports to IT and business metrics in business terms that decisions that optimize the monitoring systems enable through formal and informal of vendors with whom we vendor management resources
making us a valued business production environment and goals and methodologies. audiences on a timely, periodic serve as a shared decision- cost-performance trade-off. us to quickly and effectively mechanisms to continuously contract, minimizing the accordingly.
partner. vice versa. basis. making platform between identify potential problems. improve service delivery and number of relationships we
infrastructure and the business. efficiency. manage.
Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

3C
Risk Monitoring
1. Cross-Functional Alignment 2. Performance Measurement and Management We actively monitor risks
in the supply base to avoid
potential interruption in
service delivery.

3. Strategic Supplier Management


Using This Diagnostic Tool
For each objective select the values that best reflect your organization using the Performance (Circle below):
two scales below. For the performance scale, rate the standard to which your 1 2 3 4 5
organization currently performs an activity. For importance, indicate your view of Importance (Circle below):
the importance of an activity in overall infrastructure performance and in customer 1 2 3 4 5
value creation.
6D 3D
Prioritization Sourcing
We investigate and secure
Gain-Sharing
Our project prioritization Objective opportunities to leverage We align suppliers’ incentives
vendor efficiencies for
framework is based on optimal scale and scope, both
with our own long-term goals
comprehensive, fact-based internally and externally through formal contract
criteria and anticipates mechanisms.
6. Architectural Governance and Standards

operational costs before Performance


Performance (Circle below):
1 2 3 4 5
deploying capital. Importance (Circle below):
Importance 1 2 3 4 5
Performance (Circle below): Performance (Circle below):
1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Grading Scale Importance (Circle below):
1 2 3 4 5 Performance Importance 1 2 3 4 5

5 = We are excellent at this 5 = Critical


6C 4A
Security Architecture 4 = We are good at this 4 = High Priority Cost Transparency
We perform risk audits We maintain visibility into
across internal and external 3 = We are average at this 3 = Priority unit-cost for infrastructure
constituencies to identify services to understand
gaps and prioritize security
2 = We are poor at this 2 = Low Priority our cost drivers and
investments. 1 = We are terrible at this 1 = My Eyes Glaze Over identify potential efficiency
improvements.
Performance (Circle below): Performance (Circle below):
1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Importance (Circle below):
1 2 3 4 5 5. Infrastructure Operations and Service Delivery 4. Cost-Efficient Service Delivery 1 2 3 4 5

6B 6A 5E 5D 5C 5B 5A 4D 4C 4B
Emerging Technology Architectural Strategy Continuity Management Availability Management Change Management Automation Process Discipline Sourcing Asset Management Demand Management
Strategy Our architectural principles We develop and regularly test We set and manage the Our institutionalized change We continuously explore We ensure enterprise-wide We investigate and secure We track and manage We manage user demand
We use a consistent decision provide flexibility while disaster recovery plans that availability requirements of and configuration processes and exploit opportunities use of repeatable, best-in-class opportunities to leverage hardware and software effectively to control total
framework to continuously promoting standardization to ensure continuous support of IT systems based on business minimize change-related to automate manual processes to promote high vendor efficiencies for assets deployed across the consumption volume.
and proactively evaluate minimize cost and complexity. core business processes. criticality. problems and business user infrastructure processes. quality service delivery. optimal scale and scope, both enterprise.
the adoption of emerging disruption. internally and externally.
technologies.
Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

Order Relevant Published Research: Emerging Management Strategies for IT Infrastructure (pp. 90–91) Source: Infrastructure Executive Council research.
In addition to diagnosing the infrastructure function, new CIOs must reach out to applications heads to uncover the function’s current objectives and
limitations and begin long-range planning. The Applications Executive Council, a sister program to the CIO Executive Board, has provided the following
diagnostic for the new CIO as a means for engaging applications executives early on in the CIO’s first 100 days.

Competency Diagnostic:
Assessing Your Applications Organization
1 2 3 4 5 6 7 8 9 10
Organizational Business Case Discipline Portfolio Management Business Partnership Stakeholder Involvement Requirements Customer Satisfaction Architectural Strategy Infrastructure Alignment Emerging
Responsiveness We employ a standard business Our project prioritization Our staff are highly integrated We stress early stakeholder Prioritization We denominate customer Our architectural principles We closely coordinate with Technology Strategy
We are organized to effectively case template for all Applications framework is based on into business processes, placing involvement in the SDLC, We evaluate and prioritize satisfaction in terms of senior provide flexibility while promoting Infrastructure colleagues to build We use a consistent decision
drive top-down mandates and investments that captures project comprehensive, fact-based us at the forefront of business monitor business sponsor software functionality through a executive perceptions of value simplification and reuse to infrastructure compatibility into framework to continuously and
center-enabled standardization life-cycle costs, benefits, and risks criteria and revisited with enough process redesign and making us a commitment at every stage gate, cascading analysis that quantifies created across the portfolio, not minimize cost and complexity. applications and control change in proactively evaluate adoption of
while remaining agile and and hardwires benefits into the frequency to ensure optimal valued business partner. and have dedicated teams to impact on business processes and just sponsor satisfaction with the production environment. emerging technologies.
responsive to business needs. budget of the business. deployment of capital. amplify business productivity and life-cycle costs. individual projects.
utilization of applications.
Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

11
Project Effort Estimation
We make accurate and justifiable
project effort estimates, informed
I. Governance II. Business Stewardship III. Technology by consistent applications sizing
criteria.
and Prioritization and Systems Strategy
Performance (Circle below):
1 2 3 4 5
How to Use This Diagnostic Importance (Circle below):

25 Please select the value (1 to 5) that best describes your Applications organization 1 2 3 4 5
Staff Development using the two grading scales provided. The top scale measures performance in each 12
We have a career path competency, and the bottom scale measures the importance of each competency.
framework that provides our staff Developer Productivity
8
with visibility into competency Architectural Strategy
We have an objective and
requirements, opportunities Competency
Our architectural principles
provide flexibility while robust measure of developer
for technical and business skills promoting simplification and
productivity.
reuse to minimize cost and
development, and mentoring to complexity
advance their careers. Performance (Circle below):

Performance (Circle below):


Performance 1 2 3
Importance (Circle below):
4 5 IV. Project Management
Importance 1 2 3 4 5
1 2 3 4 5 Performance (Circle below):
Importance (Circle below): 1 2 3 4 5
Scoring Scale
1 2 3 4 5 Importance (Circle below):
VII. Talent Performance Importance 1 2 3 4 5
5 = We are excellent at this 5 = Critical
24
Performance
Management 4 = We are good at this 4 = High Priority 13
Management 3 = We are average at this 3 = Moderate Priority Project Execution
We closely link compensation 2 = We are poor at this 2 = Low Priority We manage the SDLC using
of senior Applications staff 1 = We are terrible at this 1 = Not a Priority actionable performance metrics
to desired outcomes such as and project management
business value and customer methodologies that enable us to
satisfaction. meet budget, scope, and schedule
V. Applications Development goals.
Performance (Circle below):
VI. Sourcing Strategy and Maintenance Performance (Circle below):
1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Importance (Circle below):
1 2 3 4 5 1 2 3 4 5

23 22 21 20 19 18 17 16 15 14
Scope Volatility Vendor Resource Scalability Outsourcing Framework Systems Retirement Deployment Quality Assurance Coding Standards Automation Risk Management
We manage scope change Competition We are able to supplement our We evaluate externalization We use a detailed road map for We have a configuration We follow a documented We establish coding standards We make full use of IDEs, version We have a comprehensive risk-
control via the embedding of We engineer cost efficiency internal staff by scaling skilled decisions based on a cohesive systems retirement, which clearly management and release plan quality control process to and enforce them to ensure that control, code generation, and management process that allows
objective renegotiation triggers by active competition across external resources up or down enterprise skills map which ranks demarcates areas to invest in with clearly assigned tasks, discover defects and limit their our developers produce code integrated project management us to audit and track project risks
in contracts and by transparent multiple vendors to maximize at will to meet dynamic business role criticality and hedges against and selectively eliminates legacy responsibilities, and contingency occurrence. that is clear, structured, and easily tools to automate the applications (including risks to the business
visualizations of cost–functionality transparency regarding “market demand. dissipation of business knowledge. systems over time. plans. understood and maintained by development and enhancement case) throughout the SDLC.
trade-offs. pricing”. other developers. process.

Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below): Performance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below): Importance (Circle below):
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

Order Relevant Published Research: Key Developments in the Applications Function (pp. 90–91) Source: Applications Executive Council research.

IT Strategy Execution: Realizing Operational Objectives 53


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 54

Scorecard Development and Life-Cycle Management Compendium Diagnostic Questionnaire on p. 85


In order to gauge IT’s performance and track the progress of operational objectives against strategic initiatives, new CIOs need to establish appropriate IT
performance metrics. The CIO Executive Board offers the following key differentiations between dashboards and scorecards. Although both dashboards
and balanced scorecards measure IT performance, the tools differ fundamentally across several key dimensions. As dashboards primarily monitor
operational indicators, scorecards reflect business priorities as dictated during IT strategy planning.

Differentiating Dashboards and Scorecards


Migrating from “in-the-moment” operational oversight to influencing strategic management decisions
IT Operational Dashboards IT Balanced Scorecards

Operational—Real-time performance Analytical—Trend analysis and tracking


Purpose
tracking and alerting of strategy execution

Access generally limited to IT Executive-level audience, both within


Audience
management IT and the business

Operational performance data about


Metrics Tracked Performance against organizational goals
a particular system or process

Data Collection Automated data collection, in many Portions of required data collected,
Process cases integrated into monitored systems aggregated manually

Frequency At set intervals (quarterly, annually, etc.), with


Continuous
of Data Update individual metrics updated at differing frequencies
Back Forward Stop Refresh !
Address:

Sample Metrics
Sample Metrics
• Percentage of projects
• Web server uptime delivering new business
• SAP availability functionality
• Help-desk first-call • Global desktop availability
resolution rate • Percentage of applications
meeting security standards

Source: CIO Executive Board research.


Order Relevant Published Research: IT Balanced Scorecards (pp. 90–91)
Scorecard Development and Life-Cycle Management Compendium (Continued) Diagnostic Questionnaire on p. 86
To ensure utility and support user adoption, executives should select optimal metrics to reflect business priorities and tailor reports to the needs of the
specific audience. Based on the CIO Executive Board’s review of IT balanced scorecards collected from corporate exemplars, incoming CIOs should
consider the following six key attributes when designing an IT balanced scorecard.

Structural Attributes of the IT Balanced Scorecard Ideal


Six design principles of world-class IT balanced scorecards

1 Simplicity of Presentation 4 Clearly Defined Metrics


• Single page of key performance • Each metric has a clear definition,
categories and metrics agreed on by IT and the business
• Nontechnical language for easy • Companion scorecard document
consumption by business sponsors outlines metric definitions,
• Limited number of metrics (10 to 20) assumptions, and collection
methods

2 Informed by Goals of Annual Plan 5 Drill-Down Capability and Metric Context


• Categories and metrics directly • Scorecard allows for drill down
linked to strategies articulated in into more granular data underlying
annual IT strategic plan metrics
• Provides insight into ongoing • Metrics annotated with source
progress of strategy execution by information and contextual
tracking performance against goals explanation of variance or trends

3 Broad Senior-Level Ownership 6 Links to Individual Compensation


• Representative cross-section • Achievement of balanced scorecard
of senior IT and business leaders targets linked to individual
involved in scorecard creation compensation of IT leadership team
and metrics selection $
• Scorecard results are regularly
reviewed by CIO and IT and
business management
Source: CIO Executive Board research.

IT Strategy Execution: Realizing Operational Objectives 55


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 56

Scorecard Rollout
Transitioning CIOs should view the use of IT balanced scorecards as an ongoing process rather than a discrete event. To ensure that the IT balanced
scorecard is a useful decision-making tool, exemplars regularly refresh the scorecard to 1) maintain its alignment with IT strategy, 2) take steps to help
ensure the timeliness and accuracy of scorecard data, and 3) facilitate scorecard adoption by codifying data collection roles and responsibilities and
creating template and incentives to encourage scorecard use. Bowne’s balanced scorecard implementation, part of a corporate-wide scorecard initiative,
involves seven key steps.

The IT Balanced Scorecard Life Cycle


Scorecard rollout: Bowne creates a “closed-loop” IT balanced scorecard process

1. Kick Off Training for IT Staff Bowne’s IT Balanced Scorecard Adoption Process 7. Scorecard Review and Revision
Illustrative

Process Costs
• Balanced Scorecard 101 for divisional and
functional senior managers • CIO, CTO, and corporate officers review
Initial consulting fees scorecard every six months
• Initial strategy alignment and metrics
selection exercise • Metrics revisited annually by CTO-led group
$10,000 license fee for
software and $3,500 per year
2. Ongoing Strategy Mapping maintenance and support costs 6. Data Collection and Quality Assurance

120 person-days per year for


ongoing process management

• Data collection frequency varies by metric


based on cost of collection, the corporate
• Annual IT strategy devolved from corporate financial reporting cycle, and volatility of the
strategy business climate

3. Metrics Selection 4. Metrics Definition 5. Assigning Metric Ownership


Metric Brainstorming
Metric
Brainstorming
¸

• Team of CTO and direct reports creates list • CTO-led team creates standard definitions
of metrics for all metrics, defines measurement • Owners assigned to each metric are
• List refined by using analysis of each potential technique and data collection processes, and responsible for scorecard completion
metric’s strengths and weaknesses outlines initiatives that must be completed to • Owners report to CTO and their bonuses
• Final approval by CIO allow tracking of metrics are linked to their scorecard-related duties
Source: Bowne; CIO Executive Board research.
Data Collection and Quality Assurance
While establishing and continually updating categories and metrics are critical for the success of an IT balanced scorecard, those metrics are useless if the
underlying data are outdated or inaccurate. Exemplars define a clear collection process, designating an owner for each metric, and in some cases basing a
portion of the owner’s compensation on timely, accurate delivery of data. To help ensure scorecard data are aggregated in a timely, accurate fashion from
across its distributed operations, Cemex’s IT organization developed an eight-step process for scorecard data collection.

Routinizing Scorecard Data Aggregation


Cemex’s IT organization clearly defines roles and data collection process to ensure timely, accurate scorecard data
Cemex’s IT Balanced Scorecard Data Collection Process
Illustrative
1 Data Request 2 Data Collection 3 Data Proofing

• Collection coordinator receives data from regional


• Collection coordinator (a direct report to director • Four regional collection agents coordinate with local collection agent and conducts initial accuracy check
level) requests data from regional collection agents metric experts to collect requested data • In case of data inaccuracies, data are sent back to
local metric experts for verification

4 Data Verification
Quarterly Scorecard Presentation Where the Going Gets Tough
8
“It is easy to defi ne a great model
on paper for a balanced scorecard.
However, a consistent and reliable
process for data collection and analysis
• IT’s balanced scorecard is presented to CIO and IT is key in order to make it work.”
management quarterly by objective owners • Local metric experts verify data and communicate
• After presentation, scorecard is made available to IT Sergio J. Escobedo them back to collection coordinator
IT Planning, Cemex
department

7 Scorecard Creation 6 Data Analysis 5 Data Finalization

• Collection coordinator aggregates data and populates • Objective owner receives and analyzes data for • Collection coordinator receives final data and passes
balanced scorecard template assigned objective them to objective owner

Source: Cemex; CIO Executive Board research.

IT Strategy Execution: Realizing Operational Objectives 57


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 58

Scorecard Review and Revision


While offering a snapshot of IT’s current performance, the IT balanced scorecard can also help CIOs and business decision makers track IT performance
over time. This requires a sustained commitment by IT management, including the review of the scorecard on an ongoing basis to align scorecard metrics
with changing business goals and strategies, and the creation of a process to help drive adoption of the scorecard to all levels of the IT organization. To
maintain the continued viability of its IT balanced scorecard, Corning adapts it to keep pace with shifting business and IT strategies through an annual
series of three senior IT leader meetings.

Ensuring Continued Scorecard


Comparability and Relevance
Corning adjusts its IT strategy and metrics to respond to the changing business environment…
Objectives and Metrics for Financial Performance Category of Corning’s IT Balanced Scorecard
2000–2003
As corporate business strategies change in …metrics that are retained in the scorecard change …and new metrics are added
response to external economic factors… weighting based on changing business priorities… to reflect new demands on IT.

2000 2001 2002 2003


Objective Maximize the value of dollars invested Complete, commit to, and communicate a Today’s reality—conserve cash, return Support the company’s strategy at a
in IT comprehensive IT strategy for identified organization to profitability, protect the future significantly lower cost
Metrics • Contribution to business cost • Identified business/functional units have an IT • Performance to spending • Meet commitments for worldwide
and revenue objectives (100) strategy (125) targets (90) IT cost (150)
• Percentage core service offerings • Contributions to business profit objectives • Strengthen IT strategies (160) • Updated and integrate unit IT
at benchmark (50) (75) strategies (100)
• Percentage IT spend in application • Percentage IT planned spending in application
development (50) development (50)
• Variance to global IT budget (50)

…while migrating from lagging to leading measures at the level of individual metrics
Operational Performance Metrics of Corning’s IT Balanced Scorecard
2000–2003
Metrics focus on performance of systems Forward-looking operational expectations Measures of customer feedback are added Metrics focus on pre-deployment systems
that have already been deployed. are added to existing metrics. to proactively improve service offering. planning to avoid potential future problems.

2000 2001 2002 2003


Operational • Application availability (100) • Application availability (100) • Percentage of service commitments • Strengthen and expand
Performance • Percentage core infrastructure • Percentage core infrastructure offerings achieving met (150) processes to plan and
Metrics offerings achieving commitments commitments (75) • Implement customer feedback coordinate work (250)
(100) • IT expectations established for Corning employees (75) process and system (100)

Source: Corning; CIO Executive Board research.


Facilitating Scorecard Adoption
Corning ensures a sustainable IT balanced scorecard by creating a customizable template and linking scorecard use to individual compensation, thus
driving scorecard adoption throughout all levels of the IT organization. The corporate scorecard’s four categories are evenly weighted for purposes of
incentive compensation, and while each functional or business unit–based IT organization must use the corporate-standard balanced scorecard template,
they are free to alter the category weightings as they see fit to determine their functional or business unit–level incentive payouts.

Making the Scorecard Relevant to All of IT


To facilitate scorecard adoption, Corning creates …and makes a substantial portion of bonus compensation
a tiered system of customizable scorecards contingent on achievement of scorecard goals
for each functional and business unit IT group…
2003 Scorecard Performance “Odometer” for Talent Management
Enterprise-Level IT Illustrative
Balanced Scorecard Enterprise-level IT
scorecard is fed by Talent Management
Financial Performance 25% functional and business Objective: Effectively transition the workforce to new model Max. = 100 miles
unit IT scorecards.
Project Performance 25% By the end of February 2002, each unit CIO and the IT shared Clearly defined
services leader will have a transition plan for their employees. performance
Operational Performance 25%
targets are
Talent Management 25% The corporate All units meet their plan, some late 60 miles linked with value
scorecard weights all All unit meet their plan 80 miles to individual.
categories equally.
All units meet their plan, some early 100 miles

These measures will be confirmed by a random survey


Infrastructure Services Display Technologies of employees taken Q2, Q3, and Q4
Scorecard Scorecard
Financial Performance 30% Financial Performance 25% Objective: Meet employees’ learning plans Max. = 150 miles

Project Performance 30% Project Performance 35%


Each unit CIO will count the total number of learning plan items Bonus
on 2003 Learning Plans and measure achievement of those compensation
plans. All will use the following definitions of success: of 200 IT
Operational Performance 20% Operational Performance 15%
a. 88% of learning plan items met 90 miles employees is
Talent Management 20% Talent Management 25% dependent to
b. 94% of learning plan items met 120 miles varying degrees
c. 100% of learning plan items met 150 miles
on “odometer
A set of core metrics Business units mileage” of
is required at business and functions use corporate
unit/functional level, corporate template balanced
but units/functions sbut can weight scorecard.
Total Actual/Possible 230/250 miles
can add supplemental each category as
metrics. they see fit.
Source: Corning; CIO Executive Board research.
IT Strategy Execution: Realizing Operational Objectives 59
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 60
Appendix I
IT Budget Benchmarks

Recent IT Spending Trends (p. 63)


IT Spending by Industry (p. 64)
IT Budget Allocations (p. 65)
Cost-Containment Checklists (p. 66)

© 2005 Corporate Executive Board 61


© 2005 Corporate Executive Board
The CIO’s First 100 Days 62
CIOs in transition are charged with directly supporting the corporate growth strategy—aspirations to increase top-line revenue while driving down
operational costs. As CIOs increase control over IT spend and architecture, newly appointed senior IT executives must very quickly uncover the inner
workings of the typically complex IT budget to ensure responsible investment and cost-cutting decisions. By reviewing industry benchmarking data on IT
budgets, new CIOs can obtain a quick gauge on industry spending priorities.

Recent IT Spending Trends


Percentage of IT Spend Controlled Centrally by the Group CIO 2003–2005 Increase in IT Spending
Percentage of Growth from Previous Year

95% 4.25%
88%
3.00%
2.50%
50%

2002 2004 2006(E)


2006 2003 2004 2005
= 45 CIOs. = 225 CIOs.

Innovative Technologies Driving Increases in 2005 IT spending


Percentage of Respondents Who Intend to Increase Spend on Each Technology
49%
38%
32% 28% 27% 27% 25% 22% 19%

Wireless Workforce Storage Corporate Blade Voice RFID Unified Web Services/
Collaboration Tools Virtualization Performance/ Servers Over
over IP Technologies Messaging Component
Business Intelligence Architecture for
Applications
= 225 CIOs.
Source: Author unknown, “InformationWeek 500,” InformationWeek (20 September 2004); Togut, David
and Evan Bloomberg, “Morgan Stanley CIO Survey Series: Release 5.0,” Morgan Stanley Equity
Research (15 December 2004); CIO Executive Board survey, 2003.

Appendix I: IT Budget Benchmarks 63


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 64

IT Spending by Industry
2004 IT Spending by Industry 2004 IT Spending per FTE by Industry
As a Percentage of Revenue In Thousands of U.S. Dollars

Banking & Financial Services 9% Banking & Financial Services $44.6


Biotech & Pharmaceuticals 6% Insurance $28.0
Telecommunications 5% Biotech & Pharmaceuticals $21.6
Information Technology 4% Energy & Utilities $15.9
Consulting & Business Services 4% Telecommunications $13.6
Media & Entertainment 3% Chemical $7.9
Logistics & Transportation 3% Distribution $7.5
Insurance 3% Automotive $7.3
Health Care & Medical 3% Electronics $6.3
Electronics 3% Information Technology $6.2
Retail: Speciality 2% Health Care & Medical $5.8
Manufacturing 2% Media & Entertainment $5.5
Hospitality & Travel 2% Retail: Speciality $4.8
Energy & Utilities 2% Manufacturing $4.7
Consumer Goods 2% Consumer Goods $4.6
Chemicals 2% Logistics & Transportation $4.3
Automotive 2% Construction & Energineering $4.0
Retail: General 1% Retail: General $3.2
Metals & Natural Resources 1% Metals & Natural Resources $2.7
Distribution 1% Hospitality & Travel $1.4
Construction & Energineering 1% Consulting & Business Services $1.0
Overall 3% Overall $9.6
= 500 companies. = 500 companies.

Source: Author unknown, “InformationWeek 500,” InformationWeek


(20 September 2004); CIO Executive Board research.
IT Budget Allocations
2003–2004 IT Budget Categories 2004 IT Budget Allocations by Industry
As a Percentage of IT Budget As a Percentage of Total IT Budget

Industry Salaries Apps Hardware Services Other R&D


Automotive 32% 18% 16% 19% 12% 3%
33% Banking & Financial Services 30% 22% 18% 15% 13% 2%
Salaries
Salaries and& Benefi
Benefits
ts
32% Biotech & Pharmaceuticals 34% 10% 10% 24% 16% 6%
Chemicals 28% 17% 20% 18% 14% 3%
20% Construction & Engineering 34% 21% 18% 13% 9% 5%
Applications
21% Consulting & Business Services 31% 23% 15% 11% 17% 3%
Consumer Goods 37% 19% 14% 14% 14% 2%
16% Distribution 44% 15% 17% 7% 14% 3%
New
New Product
Product and& Technology
Purchases, e.g
Purchases, e.g.,Hadrware
Hardware Electronics 35% 22% 14% 13% 13% 3%
16%
Energy & Utilities 36% 17% 15% 18% 12% 2%
Health Care & Medical 31% 21% 19% 14% 11% 4%
IT Consulting and
15%
IT Consulting & Outsourcing
Outsourcing
Hospitality & Travel 36% 19% 15% 15% 11% 4%
14%
Information Technology 33% 20% 19% 13% 11% 4%
Insurance 39% 20% 13% 12% 13% 3%
13%
Other Logistics & Transportation 31% 22% 16% 13% 15% 3%
13% Manufacturing 36% 18% 17% 13% 13% 3%
Media & Entertainment 28% 21% 13% 15% 21% 2%
3% Metals & Natural Resources 36% 21% 16% 10% 15% 2%
R&D 2004
3% Retail: General 27% 22% 21% 12% 11% 7%
2003
Retail: Speciality 30% 23% 23% 11% 10% 3%
Telecommunications 27% 25% 13% 22% 11% 2%
= 500 companies.

Source: Author unknown, “InformationWeek 500,” InformationWeek


(20 September 2004); CIO Executive Board research.

Appendix I: IT Budget Benchmarks 65


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 66

Recognizing that the nature and magnitude of cost-savings opportunity will vary greatly depending on the circumstances and cost structure of each
organization, the Infrastructure Executive Council and the Applications Executive Council sought to provide the new CIO with a structured list of cost-
savings tactics that cover the primary expenditures in the infrastructure and applications functions. These checklists can be used by the CIO in his/her
first 100 days to engage direct reports in identifying cost-cutting opportunities.

Cost-Containment Checklist
Taxonomy of Infrastructure Cost-Containment Activities

Budget Item Capital Expenses Operating Expenses


Eighty percent
Cost-Savings Lever End-User Computing Data Centers Network and Telecom Internal Staff Leases and Licenses External Services Basic Services
Twenty percent of overall
Platform Standardization, infrastructure
of overall Commoditization, and Consolidation
Supply Levers

infrastructure budget*
Process Standardization
budget* Technology-Driven Efficiencies
Vendor Management
Strategic Sourcing
Usage Visibility
Demand
Levers

Needs-Based Segmentation
Procurement Controls

Taxonomy of Applications Cost-Containment Activities*

Nondiscretionary Discretionary
Budget Item Forty percent
New Development of overall
Administration/ End-User Applications Mandatory
Cost-Savings Lever Enhancement and Vendor Management
Overhead Support Maintenance Compliance applications
Sixty percent Testing/QA
of overall Process Standardization budget*
Supply Levers

applications Strategic Sourcing


budget* Systems Retirement
IT Asset Management
Chargebacks
Demand Levers

Portfolio Prioritization
Demand Forecasting
Project/Resource Planning
Needs-Based Segmentation

* Using survey data collected by the Corporate Executive Board and other research organizations, Source: Infrastructure Executive Council research;
this checklist illustrates a prototypical IT budget. While substantial variations exist among IT budgets, Application Executive Council research.
the IT budget breakdown provides a useful framework for baseline comparison and prioritization.
Appendix II
Vendor Management and Outsourcing
Coordinate Asset-Management and Vendor-Management Strategies: Practice asset management to control IT costs, maximize the use
of existing IT equipment, and improve the maintenance of IT assets.
End-to-End Asset Management (p. 69)
Establish Prioritized Vendor-Management Program: Define segmentation practices and vendor oversight processes to maximize negotiation
leverage and minimize ongoing coordination costs.
Value-Based Vendor Segmentation (p. 70)
Monitor Vendor Performance: Define objective performance metrics to ensure continuous vendor improvement.
Metrics-Based Performance Scorecards (p. 71)
Evaluate Sourcing Strategy: Determine the benefits and risks for externalizing work.

* Global Sourcing Feasibility Matrix (p. 72)

* Pseudonym.

© 2005 Corporate Executive Board 67


© 2005 Corporate Executive Board
The CIO’s First 100 Days 68
End-to-End Asset Management Diagnostic Questionnaire on p. 88
As most large organizations find themselves with a legacy of decentralized purchasing, new CIOs grapple with identifying effective asset-management
practices to control IT costs, maximizing the use of existing IT equipment and improving the maintenance of IT assets. Wyeth addresses this issue
by maintaining an enterprise portal that provides a real-time view of the firm’s asset inventory, assisting with IT–asset procurement decisions.

A Real-Time View
Wyeth follows a comprehensive, cross-functional process to optimize asset life cycles
2 Redeployment 5 Tagging and Delivery

30420 9127
1 BU Request

!
Existing equipment is reassigned by IT Item tagged, delivered, and databases
Back Forward Stop Refresh

Address:

Operations updated

3 Procurement
Desktop Standards
PO
Deskpro EN 866
$810, Available

Desktop Inventory
Warehoused

Purchase order issued for standard


items not in inventory
In Use
4a New Standard Development 4b Enterprise Negotiation

Sales

BU manager reviews IT asset database MRO


B2B Infrastructure N-Tier Middleware eCRM Database

Content
Web

for item availability and standards Marketplace ERP


Business Logic
Messaging

Security

Store
Legacy

EDI/XML Warehouse
Supplier Hub
Fulfillment

Campaign Management
Strategic Customer Data Marts
Knowledge Management Call Center

Gaps in architecture prompts due New standard used as basis for enterprise
diligence for new standard deal

Order Relevant Published Research: Strategic Vendor Management and Outsourcing (pp. 90–91)
Source: Wyeth; CIO Executive Board research.

Appendix II: Vendor Management and Outsourcing 69


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 70

Value-Based Vendor Segmentation


Increased reliance on externally provided IT products and services has led to a consequent rise in vendor-based dependency risks. New CIOs are therefore
responsible for overseeing a multisourcing environment, defining practices and processes to maximize the organization’s negotiation leverage and
minimizing ongoing coordination costs. Exemplars such as Corning have launched a strategic vendor-management program to segment vendors and
monitor their performance. Corning identifies a subset of suppliers for activist management based on contract size and availability of substitutes.

Maximize Your Leverage


Corning differentiates vendors by value and closely …managing vendor underperformance based
monitors the performance of its largest contracts… on difficulty of finding alternative suppliers
IT Vendor Segmentation Matrix
Illustrative Underperforming
Specialty Vendors

Decentralized Specialty Sourcing Enterprise Specialty Sourcing tive


Correc lan
and Vendor Management Action
P

• Local contracting • Large-scale purchases


Frank Wang
• Example: PC support of customized goods
High Education
for Beijing office and services
Must propose performance
Experience
• Example: Systems Back Forward Stop Refresh ! improvements
Address:

integration consultants
IT Vendor
Performance Review*
Difficulty
of Vendor Qualysis Superior
Replacement
Decentralized Commodity Sourcing Enterprise Commodity Sourcing Infostat Acceptable

• One-off purchases • Large-scale purchases Linnogy Probationary


Underperforming
• Example: Palm PDAs of undifferentiated Commodity Vendors
goods and services
Low
• Example: PC hardware
and wireless services D
I NATE
TERM

Replacements identified
Low High and contracts terminated
Total Contract Value by Vendor
* All vendor names are fictional and for illustrative purposes only. Source: Corning; CIO Executive Board research.
Metrics-Based Performance Scorecards
FedEx monitors the vendor performance using a semiannual scorecard of standard evaluation criteria. The scorecards facilitate clear performance
metrics, with both objective and subjective metrics. The IT Sourcing Group force-ranks vendors by category and publishes the rankings to the corporate
procurement intranet site. Results from the scorecards are also incorporated into future contract negotiations.

What Gets Measured Gets Done


FedEx uses a semiannual scorecard to evaluate vendors… …based on objective criteria
Strategic Sourcing Scorecard 1 = Poor 4 = Excellent
and documented incidents…
Quality of Vendor Personnel
Flexibility—Ability to react to changes 1 2 3 4
Training—Independence and thoroughness 1 2 3 4 Explanation Form
Post-Sales Support—Responsiveness to post-sales needs 1 2 3 4 Flexibility = 1, Poor
Rewards ability to Innovation Contributions
share cost-savings On 10, 17, and 28
ideas Frequency of continuous improvement suggestions 1 2 3 4 March, Vivient was
unable to make
Resulting savings from continuous improvement suggestions 1 2 3 4
requested changes
Share of savings given to FedEx 1 2 3 4 and still deliver
Price Competitiveness on time.
Relative prices versus comparable vendors 1 2 3 4
Service Quality
Objective criteria Complaints per Product Invoice Accuracy …ranking their scores to identify underperformers
create indisputable < 1% 100–99%
justification for 1–3% 98–94% IT Vendor Performance Ranking
scores 4–6% 93–88% Illustrative
> 6% < 88%
On Time Delivery Cycle Time Improvement Back Forward Stop Refresh ! !
Address:

100–90% > 50%


Web Site Designer’s Performance Report
89–80% 30–49%
79–70% 10–29% Vendor* Score Rank
< 70% < 10%
Hyperient 450 Platinum
Operational Efficiency
DataCom 400 Gold
Mean Time Before Failure Warranty Claims per Lot
2 x planned rate 0–2% InfoQuest 350 Silver
1 x planned rate 3–5% Xilinex 300 Bronze Requires
Met plan 6–10%
Vivient 250 Unacceptable corrective
Less than planned rate > 10% action plan
* All vendor names are fictional and for illustrative purposes only. Source: FedEx; CIO Executive Board research.
Appendix II: Vendor Management and Outsourcing 71
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 72

Global Sourcing Feasibility Matrix


After building an enterprise competency model to identify needed skills, CIOs must determine the most cost-efficient and effective source for talent.
Iverson Financial’s* role-based sourcing strategy provides a powerful alternative to the traditional applications-focused decision criteria used at many
organizations. Iverson built the offshore program as a component of a new holistic skills master plan to ensure that offshore goals support overall business
and HR strategy.

Choosing a Sourcing Strategy *

A global sourcing feasibility matrix aligns specific roles to business need


Externalization Suitability Framework
-ODEOF#OLLABORATION
#ONSTANT#OLLABORATION &REQUENT#OLLABORATION /CCASIONAL#OLLABORATION
0ROXIMITY&REQUENTVIRTUALCOLLABORATION 0ROXIMITY&REQUENTVIRTUALCOLLABORATION
0ROXIMITY#ONSTANTCOLLABORATIONWITH
SOMEFACE TO FACECOLLABORATIONWITH VERYMINIMALFACE TO FACECOLLABORATION
BUSINESSREQUIREDFORSERVICEDELIVERY
3TRATEGIC)MPACT BUSINESSREQUIREDFORSERVICEDELIVERY WITHBUSINESSREQUIREDFORSERVICEDELIVERY
ONTHE"USINESS )MPLICATION2OLEMUSTBECOLOCATEDOR
)MPLICATION2OLEMAYBEOUTSIDEOF
)MPLICATION2OLEMAYBESEVERALTIMEZONES
COMMUTINGDISTANCEOFBUSINESS MUSTBE
WITHINCOMMUTINGDISTANCEOFBUSINESS AWAYFROMTHEBUSINESS
WITHINTHREETIMEZONESORLESS
$RIVES"USINESS/BJECTIVES %XTERNALIZATION
)NPUTTO"USINESS/BJECTIVES)NTEGRALTOREALIZING #4/ 4ECHNOLOGY0ROGRAM-ANAGER !PPLICATION-ANAGER "USINESS4ECH-GR2$
0OTENTIAL
)4STRATEGY POSSESSESSUBSTANTIALINSTITUTIONAL
PROPRIETARYKNOWLEDGE "USINESS!RCHITECT 0ROJECT-ANAGER !PPLICATION!RCHITECT 2ELEASE-ANAGER $IFlCULTTO
/UTSOURCE
&INANCE-ANAGER 2ELATIONSHIP-ANAGER )NFORMATION2ISK-ANAGER )NFORMATION!RCHITECT
)MPLICATION2OLESHOULDREMAINPRIMARILYINTERNAL
n)NSOURCE
#ONTINUITY-ANAGER

)NmUENCES"USINESS/BJECTIVES
)NPUTTO"USINESS/BJECTIVES#ONTRIBUTESTOREALIZING "USINESS!NALYST )NFRASTRUCTURE$EMAND-GR 2ESOURCE-ANAGER $"! ,EADING %DGE4ECH$EVELOPER
)4STRATEGY POSSESSESSUBSTANTIALINSTITUTIONAL
PROPRIETARYKNOWLEDGE )NFRASTRUCTURE$EMAND!NALYST #ONTINUITY!NALYST 2ELEASE!NALYST

$ATABASE$ESIGNER-ODELER 4ECHNICAL!RCHITECT
)MPLICATION2OLEMAYBEEXTERNALIZEDTOSOMEDEGREE
&INANCIAL!NALYST )NFORMATION2ISK!NALYST -AY"E!BLE
TO/UTSOURCE
-ETHODOLOGY!NALYST "USINESS4ECH!RCH2$
n)NSOURCE
0-/!NALYST 5SABILITY%NGINEER

1!4ESTER +NOWLEDGE-ANAGER

1UALITY-ANAGER 4ESTING-ANAGER

)MPLEMENTS"USINESS/BJECTIVES
)NPUTTO"USINESS/BJECTIVES%XECUTESON)4STRATEGY !PPLICATIONS$EVELOPER 3TRESS4ESTER
0OSSIBLETO
POSSESSESLIMITEDBUSINESSKNOWLEDGE /UTSOURCE
4ECHNICAL!NALYST
)MPLICATION2OLEMAYBEEXTERNALIZEDTOAHIGHDEGREE n)NSOURCE

/FFSHORE0OTENTIAL #ANNOT/FFSHORE -AY"E0OSSIBLETO/FFSHORE 0OSSIBLETO/FFSHORE

* Pseudonym. Source: Iverson Financial; Applications Executive Council research.


Appendix III
Diagnostic Questionnaires

Balancing Flexibility with Efficiency (p. 75) Disciplines for Enabling ROI Transparency
and Accountability (pp. 83–84)
Benchmarking Organizational Preparedness for
IT Centralization (p. 76) Assessing the Need for an IT Balanced Scorecard (p. 85)
Strengthening the IT Leadership Bench (pp. 77–78) Designing and Maintaining a World-Class IT
Balanced Scorecard (pp. 86–87)
Assessing Organizational Planning Capabilities (pp. 79–80)
Enabling Strategic Management of External Suppliers (pp. 88–89)
Creating an Agile IT Organization (pp. 81–82)

© 2005 Corporate Executive Board 73


© 2005 Corporate Executive Board
The CIO’s First 100 Days 74
Balancing Flexibility with Efficiency
The CIO Executive Board offers the following diagnostic questions to help its member CIOs improve central IT’s alignment with business
partners while maintaining operational efficiency across the IT value chain.
Needs Analysis Yes No User Absorption Yes No
1. Does the IT organization play a role in “managing demand” 8. Does IT have formal methodologies to assess and mitigate
for IT investments by collaborating with business partners to risks to user adoption in the earliest stages of the project life
identify potential needs and project opportunities? cycle?
2. Does the CIO have credible senior IT “liaisons” who can 9. Does IT have formal roles to determine necessary change-
collaborate with business partners to develop solution management investments needed for small and medium
alternatives and maximize ROI for new projects? projects (not simply large enterprise system rollouts)?
3. Is IT actively involved in the process of documenting and 10. Does IT segment user populations and create targeted
optimizing business processes across the enterprise? communications and engagement strategies accordingly to
ensure absorption
of new functionality?
Implementation and Operations
4. Has the organization created cross-enterprise standards to
promote systems integration and development asset reusability
Organizational Design
across business units? 11. Are the structure and role of central IT designed
to capture scale efficiencies while maintaining an
5. Are there formal processes in the project management life cycle
acceptable level of responsiveness to local/business needs?
to identify and facilitate opportunities for development asset
reuse? 12. Are the structure and role of central IT aligned with core
business objectives, such as M&A growth, accelerated
6. Does IT employ virtual teams to encourage horizontal
product rollout, or end-to-end
collaboration across geographically dispersed IT staff?
process integration?
7. Has IT created local management positions
to maximize the effectiveness and professional development
of IT staff in remote locations?
Total “Yes”

Diagnostic Scores
Number of
Assessment
“Yes” Answers
9–12 IT Has Achieved a Balance of Scale and Responsiveness to the Business
5–8 Progress Is Needed to Balance Organizational Scale and Responsiveness
0–4 IT Should Revisit Its Organizational Structure to Improve Responsiveness

Appendix III: Diagnostic Questionnaires 75


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 76

Benchmarking Organizational Preparedness for IT Centralization


The CIO Executive Board offers the following diagnostic questionnaire to help its member CIOs design, win support, and manage migration
toward a more centralized IT organization.

Optimizing the Balance Between Central and Local Yes No Managing Stakeholder Transition Yes No
1. Does the company have a clear view of all existing business unit 9. Has IT mapped clear transition steps designed
IT spend and resources? to build IT staff loyalty to the organization?

2. Does the company use objective criteria around skill and scale 10. Has the CIO personally communicated the benefits and costs
requirements to determine which IT activities are best delivered of centralization to IT staff?
locally, centrally, and externally?
11. Does IT assign to each business unit a liaison who has sufficient
3. Are business unit managers involved in the design and role business context to support business unit technology strategy
definition of central IT? and the seniority and credibility
to manage demand?

Winning Business Support for Centralization 12. Has IT baselined performance and user satisfaction prior
to centralization to use as a benchmark for the centralized
4. Does IT employ a dedicated communications professional organization?
to help win support for IT consolidation?

5. Has IT identified and segmented potential champions Total “Yes”


and resisters to centralization?

6. Has the CIO clearly communicated the costs, benefits,


and risks of centralization to business unit peers?

7. Has IT developed a campaign plan that maps key messages


to specific constituencies and events related to centralization?

8. Has IT clearly communicated its centralization agenda Diagnostic Scores


to vendors? Number of
Assessment
“Yes” Answers
10–12 IT Is Well Prepared for Transition
6–9 Significant Gaps in IT Preparedness for Transition
0–5 IT Is Ill Prepared for Transition, Serious Risk of Failure
Strengthening the IT Leadership Bench
The following questions are intended to facilitate discussion between senior IT, line IT, and HR decision makers about the IT organization’s
efforts to create a continuous pipeline of business-focused IT leaders.

Transparent Development Road Maps Yes No Yes No


1. Has the IT organization conducted a formal skills assessment 8. Does the IT organization communicate competency
and forecasting exercise to identify the most critical staff requirements and available career-management resources
leadership characteristics? to IT staff across multiple channels?
2. Has the IT organization identified the development activities 9. Does the IT organization provide insight into the skills and
most effective at closing skills gaps? experience of existing IT leaders through face-to-face or
3. Has the IT organization recalibrated the allocation “virtual” mentoring?
of resources toward activities with the highest yield 10. Does the IT organization create personalized development
in leadership and skills development? plans for at least a subset of all IT staff?
11. Does the IT organization provide staff with a suite of self-
Personalized Leadership Development Planning service developmental planning tools to alleviate managers’
administrative burden and drive employee ownership of career-
4. Has the IT organization formally defined a key set pathing activities?
of competencies that will be critical to employee and
organizational success? 12. Does the IT organization conduct regular employee
segmentation exercises to prescribe development strategy
5. Has the organization integrated the IT and corporate at the individual level and gauge overall IT bench strength?
competency models to provide staff with a comprehensive
set of required skills and behaviors? 13. Does the IT organization help high-potential leaders strengthen
business relationships and build peer networks by assigning
6. Has the organization linked competencies and levels of them to cross-functional teams tasked with enterprise-level
maturity to specific IT job titles to provide staff transparency assignments?
into the competencies that are required for each?
14. Does the IT organization instill organizational and company
7. Has the organization linked competencies and job titles process knowledge via rotational assignments through IT groups
to recommended development curricula that are best suited serving various lines of business?
to build required competencies?

Subtotal “Yes”

Appendix III: Diagnostic Questionnaires 77


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 78

Strengthening the IT Leadership Bench (Continued)


Development Opportunity Brokering Yes No Yes No
15. Does the IT organization utilize flexible staffing protocols 18. Does the IT organization maintain an employee skills inventory
to reduce the “lag time” between classroom-based training to track individual and organizational skills gaps?
and experiential work, driving on-the-job reinforcement 19. Does the IT organization maintain a project skills database
of key skills? to provide a holistic view of experiential development
16. Does the IT organization task-specialize employee career opportunities?
management to balance skills development with effective 20. Does the IT organization identify “best fit” development
project execution? opportunities that remediate employee skills gaps while
17. Does the organization employ customized training modules ensuring successful project delivery?
with company-specific case studies to build a “common
vocabulary” around subjects such as IT architecture, project
and business case methodologies, and key business processes?

Subtotal “Yes”

Total “Yes”

Diagnostic Scores
Number of
Assessment
“Yes” Answers
15–20 Leadership Development Exemplar
8–14 Progressive Leadership Development Practitioner
0–7 Baseline Leadership Development Capability
Assessing Organizational Planning Capabilities
The CIO Executive Board offers the following diagnostic questionnaires to help its member CIOs assess organizational planning capabilities.

Expanding Planning Inputs Yes No Educating Business Decision Makers Yes No


1. Do we systematically require senior thinkers at strategic vendors 5. Do we provide senior executives and business unit leaders with
to critique our IT strategic planning assumptions? experiential learning activities prior to funding discussions?
2. Do we have early-warning systems for line customers and 6. Do we have a network of contacts at frontier academic and
infrastructure managers of changes in vendor product strategy commercial research organizations who can host off-site
that may affect existing technology services and capabilities? learning experiences for senior executives?
3. Do we have ongoing staff resources and planning activities 7. Is the CIO perceived internally as an “educator” rather than
devoted to exploring the impact of emerging technologies a “salesperson” for emerging technology investments?
on industry structure?
4. Do we systematically consult with organizations in the
company’s value chain web to identify opportunities for
collaborative IT strategic planning, standards-setting,
and infrastructure investments? Subtotal “Yes” _______

Appendix III: Diagnostic Questionnaires 79


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 80

Assessing Organizational Planning Capabilities (Continued)


Hardwiring Strategic Alignment Yes No Multichannel Broadcasting Yes No
8. Do we set objective criteria for evaluating the importance 17. Does the CIO make regular presentations of IT strategy
and effectiveness of individual IT projects? to line managers and end users?
9. Do we have an objective basis for reprioritizing projects based 18. Are at least 75% of employees able to name the key
on changes in external market conditions? IT strategic initiatives going on in the corporation?
10. Have we separated reprioritization of internal or supply chain 19. Does the IT department produce annual reports, newsletters,
IT projects from customer-facing projects? and intranet banner ad campaigns recording the evolution
and accomplishments of its IT strategy?
11. Do we reprioritize internal projects at least quarterly and
customer-facing projects at least monthly? 20. Does the company maintain an IT strategy intranet site that
monitors strategic assumptions and provides useful information
12. Can we promise less than a one-week lag between to line customers regarding competitors’ IT capabilities and
communication of changes in senior executive strategic changes in consumer use of IT?
priorities, reprioritization of the IT queue, and reassignment
of IT staff and funding resources?
13. Is the governing body responsible for project reprioritization
separate from the body responsible for resource allocation? Subtotal “Yes” _______
14. Is at least 25–50% of the discretionary IT budget unassigned Total “Yes” _______
to accommodate unanticipated additions to the IT queue?
15. Is the IT portfolio completely free from projects that do not
directly map to current strategic opportunities?
16. Is the focus of discretionary IT spending proportional
to the most current corporate strategic priorities?

Diagnostic Scores
15–20 Highly Aligned and Responsive IT Planning
10–14 Somewhat Aligned and Responsive Planning
5–9 Constrained to Resource Calendars
0–4 Inflexible, Unaligned Planning
Creating an Agile IT Organization
The following questions are intended to facilitate discussion between senior IT, line IT, and corporate business decision makers about the corporation’s
progress toward creating an IT organization that is responsive to the business’s evolving needs.

Responsive IT Portfolio Prioritization Yes No Yes No


1. Has the IT organization developed an enterprise-standard 8. Does the IT organization provide regular (monthly or more
business case template, including a set of standard cost and frequent) reports on the status of critical project metrics, such
benefit assumptions, to facilitate comparison of projects across as project scope, schedule, and cost?
all business units/regions/functions?
9. Has the IT organization segmented the IT project portfolio,
2. Does the business case require an estimation of total project costs, creating categories of projects with like business drivers and
moving beyond initial purchase and implementation expenses to differentiating the metrics used to assess the value of
encompass future support, maintenance, and retirement costs? projects in each?

3. Is the IT organization able to provide prioritization decision 10. Does the IT organization conduct a comprehensive project
makers with detailed IT budget information, including the risk assessment, including project interdependencies and
“keep-the-lights-on” costs of IT operations and the costs of technological and organizational risks?
ongoing project work?
11. Does the IT organization supplement sponsor-generated
4. Has the IT organization created a dedicated project-management business cases for major projects with a portfolio category–
office to oversee the implementation of a standard project- specific estimate of each project’s strategic value, including
management methodology and coordinate the collection and alignment with short- and long-term business strategy,
consolidation of project data? reusability, and simplification of end-user workflow?

5. Does the project-management office manage the IT project 12. Does the company audit IT projects for business case
portfolio in addition to disseminating project-management realization—comparing actual costs and business results
expertise? with the original estimates included in the project proposal—
to identify the root causes of variance and improve the accuracy
6. Has the IT organization identified a subset of all projects, either of future estimates?
on the basis of project cost, project size, or project impact across
organizational silos, that will be subjected to greater project 13. Are prioritization decisions made by a steering committee
and portfolio management scrutiny? or board that includes senior-level representatives from IT
and all affected business constituencies?
7. Has the IT organization created a set of weighted project criteria
to allow the objective comparison of projects with divergent 14. Has the IT organization consciously calibrated the frequency
business cases? of prioritization activities to the pace of change in the
company’s business environment?
Subtotal “Yes” _______
Appendix III: Diagnostic Questionnaires 81
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 82

Creating an Agile IT Organization (Continued)


Rapid Resource Redeployment Yes No Yes No
15. Has the IT organization created an enterprise-wide IT skills 19. Has the IT organization created a mechanism, e.g., a funding
directory to facilitate rapid identification of staff pool, to fund off-cycle project demand in response to changing
and skills in the event project priorities change? business strategies?

16. Has the IT organization put into place a flexible staffing 20. Has the IT organization developed a set of weighted, objective
mechanism, e.g., a staffing pool, to facilitate rapid redeployment criteria to facilitate the dispersal of funds from this pool?
of staff toward new projects when priorities shift?
21. Are projects that receive funding through this mechanism
17. Has the IT organization put into place a dedicated group of subject to strict project-management discipline, including
resource managers to ensure the continued career development time-boxed project deliverables, project accounting, and process
of staff who reside in the staffing pool? compliance audits?

18. Does the IT organization maintain standing relationships 22. Has the IT function put into place a project life-cycle process,
with a small set of strategic vendors in order to quickly source included stage-gated funding for major projects and clear
necessary staff and skills if they are not available within the criteria for project cancellation at each life-cycle stage?
company?

Subtotal “Yes” _______


Total “Yes” _______

Diagnostic Scores
Number of
Assessment
“Yes” Answers
16–22 Agility Exemplar
11–15 Maturing IT Agility
7–10 Nascent IT Agility
1–6 Unresponsive IT Organization
Disciplines for Enabling ROI Transparency and Accountability
The CIO Executive Board offers the following diagnostic questionnaires to help its member CIOs assess the disciplines for enabling ROI transparency
and accountability.

Perfecting Large Project Execution Yes No “Rightsizing” Applications Maintenance Costs Yes No
Full Life-Cycle Cost Estimation Alternative Cost/Functionality Scenarios
1. Do all IT projects above a given cost threshold follow a standard 10. Does the IT organization proactively provide the business
business case justification process that includes estimates of all with IT project cost/functionality scenarios to help it choose
project life-cycle costs and benefits? between project alternatives?
2. Does the company regularly revisit the business case Legacy Maintenance Cost-Reduction Campaigns
assumptions of large ongoing IT projects and require business
sponsors to attest to their continued validity across the project 11. Has the IT organization conducted an applications inventory
development cycle? to determine potential opportunities for retiring redundant
legacy systems?
Project Sponsor ROI Contracts 12. Do project budgets for new systems development take into
3. Do we incorporate business case assumptions of large IT account the costs of replacing redundant systems slated for
projects into the budgets, performance targets, and bonus retirement?
incentives of their business sponsors? 13. Are maintenance resources prioritized based on an application’s
4. Are project business sponsors empowered and encouraged business value, revenue impact, and geographic scope?
to proactively terminate projects for which there no longer
remains a sound business case? Objective Risk Segmentation for Applications Outsourcing
Ongoing Risk Scoring for Large Projects 14. Has the organization explored opportunities to reduce
5. Does the IT organization use objective criteria to periodically maintenance expenses by shifting labor-intensive commodity
assess risks facing large IT projects to provide early warning maintenance work to lower-cost geographies?
for threats to benefits realization? 15. Has the IT organization sequenced its outsourcing strategy to
6. Do we have a mechanism for flagging the risks to IT projects focus its initial efforts on the lowest-risk applications while it
arising from low engagement of business sponsors? develops offshore management capabilities?

7. Do we have a mechanism for identifying the risks to IT projects 16. Has the company developed objective criteria to assess the risks
arising from lack of clarity in the definition of business and feasibility of outsourcing candidates?
requirements?

Continuous Improvement Through Postmortem Assessments


8. Does the IT organization conduct post-implementation reviews
measuring IT project execution success?
9. Are lessons from those IT project post-implementation reviews
codified in a central “lessons-learned” database to improve future
estimate accuracy and process execution? Subtotal “Yes”

Appendix III: Diagnostic Questionnaires 83


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 84

Disciplines for Enabling ROI Transparency


and Accountability (Continued)
Achieving Infrastructure Cost Transparency Yes No Yes No
Customer-Focused IT Product Catalogs Collaborative Consumption Reviews
17. Are we able to calculate the unit costs of infrastructure 20.Has the organization created dedicated infrastructure “product
products delivered so as to determine how consumption managers” who help define and manage unit products to
behaviors drive total costs? optimize consumption and spending levels?
18. Does the IT organization conduct periodic benchmarking 21. Do IT representatives regularly meet with business unit
of costs in order to determine competitive market prices for management to spotlight variances in IT consumption and cost
its services? trends to identify potential avenues for optimization?
19. Do we have an IT product and service catalog that provides
end users with plain-English descriptions of specific IT services
and their cost drivers?

Subtotal “Yes”

Total “Yes”

Diagnostic Scores
Number of
Assessment
“Yes” Answers
15–21 Culture of Continuous Cost Improvement
7–14 Developing Ethic of Cost Efficiency
0–7 Uncoordinated Approach to Cost Efficiency
Assessing the Need for an IT Balanced Scorecard
The following questions are intended to assist CIOs in diagnosing whether an IT balanced scorecard would be a useful addition to their
current IT performance-management framework. Yes No
Yes No
1. Can I clearly articulate the link between IT operational 6. Can I easily compare the performance of my IT function
and project activities and the organization’s stated strategic to that of industry competitors or companies with similar
business goals? geographic dispersion or scale?

2. Is there a process or mechanism in place to track the impact 7. Do IT performance-management meetings focus almost
on service levels and satisfaction of ongoing cost-efficiency solely on discussions of metric comparability and validity
efforts? rather than on making resource allocation decisions?

3. Can I describe the performance of the IT function in a 8. Do I have a sufficient understanding of the progress and
concise, nontechnical, business-friendly fashion? status of ongoing IT project work to allow for corrective
action if major projects are at risk for scope creep, budget
4. Can I effectively communicate the value that IT creates for overruns, or schedule delays?
the business?

5. Can I communicate a holistic perspective of IT performance


consistently across various geographies and business units?

Total “No” _______

Diagnostic Scores
If four or more “No” answers, then adoption of an IT balanced scorecard
may facilitate IT performance management at your organization.

Appendix III: Diagnostic Questionnaires 85


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 86

Designing and Maintaining a World-Class IT Balanced Scorecard


To assist member companies in the initial design and implementation of IT balanced scorecards, as well as the reevaluation of existing scorecards,
the CIO Executive Board has created the following diagnostic questionnaire.

Structuring the Scorecard Yes No Selecting Scorecard Metrics Yes No


1. Does the IT balanced scorecard fit onto a single page 8. Do financial metrics move beyond simple reporting of total IT
(or screen)? spend to help decision makers reallocate IT funding between
functional areas, business units, and portfolio categories?
2. Are the IT balanced scorecard’s metrics devolved from the goals
articulated in the IT strategic plan? 9. Are operational metrics aggregated to provide decision makers
with a “user’s perspective” of IT performance?
3. Are these metrics expressed in nontechnical language, allowing
business decision makers to easily understand IT performance? 10. Does the balanced scorecard’s project performance category
include an assessment of compliance with enterprise architecture
goals and contribution to corporate business strategies?
Selecting Scorecard Categories
11. Do measures of customer satisfaction incorporate both end-user
4. Does the IT balanced scorecard supplement financial and executive perspectives on IT performance?
and operational metrics with categories that track project
performance, user satisfaction, and talent management?
12. Do talent-management metrics focus on gauging staff
satisfaction, external reputation of the IT organization,
5. Does the IT balanced scorecard also include categories and other organizational attributes likely to make the company
for information security? a destination for high-potential IT talent?

6. Does the scorecard outline target levels for each metric 13. Does the balanced scorecard build awareness of information
that have been agreed upon by both senior IT and business security issues by providing senior decision makers with an
leadership? assessment of the organization’s vulnerability?

7. Are scorecard categories, metrics, and weightings revisited 14. Are metrics designed to track IT’s contribution to major
on an annual cycle to ensure continued relevance to changing enterprise initiatives aggregated in a single scorecard category,
business needs? allowing business sponsors to quickly assess IT’s level of support?

Subtotal “Yes” _______


Designing and Maintaining a World-Class
IT Balanced Scorecard (Continued)
Ensuring Data Accuracy and Relevance Yes No Facilitating Management Decision Making Yes No
15. Do all metrics have clear, well-documented definitions, 21. Have business decision makers, metrics owners, and IT leaders
agreed upon by senior IT and business leadership? received training on the basic concepts and uses of balanced
scorecards?
16. Does each IT balanced scorecard metric have a defined
collection frequency (e.g., monthly, quarterly, annually) 22.Is the IT balanced scorecard reviewed on a regular basis
based on the volatility of the business strategy it helps enable? by IT and business executives senior enough to make decisions
based on scorecard information?
17. Have all scorecard metrics been assigned to a metric owner
whose compensation is based on his or her timely delivery
of required data?

18. Is data accuracy verified by local metrics experts before data


are published to the scorecard?

19. Does the IT balanced scorecard provide readers with the ability
to drill down into the data underlying scorecard metrics?

20. Does the IT balanced scorecard provide readers with context


for changes in performance (for example, historical reference
data, external benchmarks, or metric owner comments)?

Subtotal “Yes” _______

Diagnostic Scores Total “Yes” _______


Number of
Assessment
“Yes” Answers
17–22 Balanced Scorecard Exemplar
9–16 Developing IT Balanced Scorecard Competency
1–8 IT Balanced Scorecard Novice

Appendix III: Diagnostic Questionnaires 87


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 88

Enabling Strategic Management of External Suppliers


The CIO Executive Board offers the following diagnostic questionnaires to help its member CIOs assess the strategic management of external suppliers.

Part 1. Vendor Management Yes No Yes No


Centralized Strategic Sourcing
1. Does the company have a centralized procurement 8. Does the company have processes in place to ensure that
and vendor-management team capable of creating enterprise- the asset inventory remains current and reflects changes
wide contracts to take advantage of purchasing and volume- for Install, Move, Add, or Change of systems?
based discounts?
9. Does the company use the asset inventory to track the
2. Does the centralized procurement utility handle at least 70% total cost of ownership of assets over their life cycle
of purchasing volume? (including maintenance and integration) to inform
decisions about retirement and replacement?
3. Has the company identified a subset of its largest vendors as
“preferred” providers that together represent at least 60% 10. Does the company have the capability to identify and
of enterprise-wide procurement spending? redeploy existing assets when a purchase request could
be fulfi lled out of existing inventory?
4. Does the company have an intranet to communicate
procurement information to internal buyers such Vendor Solvency Scanning
as contracting processes and approved technology standards?
11. Are staff dedicated to performing ongoing due diligence (after
Standardized Contracting Templates the RFP process is finished) on vendors’ continued solvency to
provide early-warning signs of potential financial distress?
5. Has the company created standardized contract templates
including a list of terms and risk-mitigation clauses that it 12. Does the company use this information to engage in
consistently tries to incorporate into all of its contracts? “opportunistic renegotiation” with solvent vendors
facing short-term financial pressure?
6. Do at least 75% of deals rely on these standardized
templates? 13. Does the company have a process in place to “watchlist” at-risk
vendors and develop proactive contingency plans and identify
End-to-End Asset Management alternative providers?
7. Has the company inventoried and incorporated all
of its existing IT assets into a central database (including Value-Based Vendor Segmentation
items such as servers, desktops, printers, cell phones, 14. Has the company established objective criteria to determine
software licenses, etc.)? which vendors are “strategic” based on measures of contract
value or switching costs?
15. Does the company attempt to segment its vendor base
to focus ongoing relationship-management resources
on vendors that provide the most strategic value?

Subtotal “Yes” _______


Enabling Strategic Management of External Suppliers (Continued)
Yes No Yes No
Metrics-Based Performance Scorecards Utility-Based Pricing Structures
16. Has the company established predetermined metrics 23. Is the outsourcing contract denominated in terms of
and service levels against which supplier performance unit-based prices that can be externally benchmarked,
will be assessed on a regular schedule? allowing continued comparison with competitive market
prices?
17. Do business unit and field representatives provide
regular feedback on vendor performance against these 24. Does the outsourcing contract stipulate that total fees will
measures to ensure that service quality is consistent fluctuate to directly reflect the unit volume of services
and transparent across the organization? consumed?
18. Are the results of this “scorecard” communicated Activist Oversight and Issue Resolution
internally to buyers and externally to vendors to create a
competitive internal market and direct future spending toward 25. Has the company created a dedicated team for vendor
the top performers? governance and performance management?
26. Are these relationship managers’ incentives tied to maximizing
the outsourcer’s performance and minimizing relationship
Part 2. Outsourcing Relationships disputes?
Reverse-Engineering Negotiation Targets 27. When outsourcers underperform, do predetermined escalation
19. Has the company outlined clear cost-savings targets with procedures exist to correct that performance?
which to measure the success or failure of an outsourcing deal?
Closed-Loop Performance Improvement
20. Has the company retained standards setting and capabilities 28. Has the company identified a subset of key service-level
that provide competitive advantage? agreements to monitor on a monthly basis?
21. Has the company achieved internal cost transparency 29. Does underperformance against one of these indicators launch
of its current IT cost structure and spending drivers prior a corrective action plan to solve underlying problems?
to consideration of an outsourcing partnership?
30. Are recommended performance improvements hardwired
22. Does the company evaluate outsourcing bids based on into the vendor’s de facto SLAs?
informed negotiation targets by reverse-engineering
actual supplier costs and comparing them with in-house
alternatives? Subtotal “Yes” _______

Diagnostic Scores Total “Yes” _______


Number of
Assessment
“Yes” Answers
21–30 Sourcing Management Exemplar
11–20 Sourcing Management Leader
1–10 Sourcing Management Laggard

Appendix III: Diagnostic Questionnaires 89


© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 90

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In-Person Research Presentations
An in-person research briefing is an interactive session that members can use to spark internal discussion and debate around strategic issues
the CIO Executive Board has researched. A senior research director will travel to a member’s location to present and discuss research findings
that are most relevant to member issues and challenges. This in-person research briefing service allows member CIOs to share CIO Executive
Board case studies, practices, and insights with their staff and larger audiences within their organization.

Frequently Requested Presentations


1. Structural IT Cost Efficiency: What tools and processes are CIOs 6. Aligning IT with Corporate Strategy—Case Studies in Enterprise
using to achieve structural IT cost efficiency? Architecture Migration: How are premier companies creating self-
funding IT architectures that mirror and advance corporate strategy?
2. Strategic Vendor Management: How are pioneering organizations
managing IT vendor performance to maximize value and flexibility? 7. IT-Enabled Collaboration: What are the most effective uses of
IT-enabled collaboration? How are exemplars deploying these tools
3. Responsive IT Portfolio Prioritization: How are leading companies
to ensure efficiency and maximize collaboration?
structuring and reprioritizing IT portfolios to ensure continued
alignment with changing business strategies? 8. Deploying Enterprise Portals: What are the functional capabilities and
IT requirements of “world-class” portals and enterprise information
4. End-to-End Data Visibility: What technical and organizational
systems?
innovations are exemplars using to enable end-to-end data
visibility? 9. IT Strategic Planning Excellence: What are the leading practices
for aligning corporate and IT priorities?
5. Rapid Resource Redeployment: How are CIOs enabling rapid
resource redeployment in response to changing priorities? 10. Customer Relationship Management: How are exemplars rescoping
CRM initiatives for high-impact management of internal and
external customers?

Common Formats
Formal Research Facilitated Research Interactive Working One-to-One
Presentation Discussion Session Briefing

Photo Credits: Digital Imagery® copyright 1999 PhotoDisc, Inc.


In-Person Research Presentations 93
© 2005 Corporate Executive Board
© 2005 Corporate Executive Board
The CIO’s First 100 Days 94
CIO Executive Board Project Support Desk
Custom research for strategic IT staff, available (free) for the asking

As a complement to our ongoing research, members are encouraged to take advantage of the Project Support Desk. A free resource to assist
senior IT staff with “work in the moment,” the Project Support Desk offers fast-turnaround research for business case preparation, strategic
planning exercises, and budgeting. Members describe their project goals and time constraints and then decide what combination of literature
search, fact retrieval, and networking contacts best suits their needs. In keeping with the CIO Executive Board’s charter, the Project Support
Desk does not conduct competitive research, benchmarking, or vendor assessments.

What are job descriptions


and career paths for “IT
Centers of Excellence?”
IT HR

What are the features


of world-class, IT finance–
reporting intranet sites? Project
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CIO Executive Board Project Support Desk 95


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