Convention breakers in IT – setting new standards in the search for improvements
"We are frequently asked which European company has, in our opinion, the best-in-class IT," says Dr. Andreas Dietze, Partner in the InfoCom Competence Center at Roland Berger Strategy Consultants. "I don't know one best-in-class company, but there are a couple of companies with IT that breaks the rules, IT that is unique, intelligent and efficient. To identify, collect and analyze these 'convention breakers' – as we call them – represents a new aspect of benchmarking and helps to position one's own IT department or function," he adds.
The IT function has a tough job on its hands in many companies – with high IT budgets on the one hand and a hard-to-measure contribution to company value on the other. Faced with the corresponding pressure to justify their expenditure, CIOs often respond with cost-oriented benchmark comparisons. The idea behind this is simple: if IT costs are approximately in line with the industry average, this will be interpreted as a sign that IT is basically competitive.
Some companies, however, have broken with conventional patterns and are setting new standards in the search for improvements. They have become convention breakers – changing the rules of competition or permanently increasing the degree of automation through the targeted use of information technology. They have introduced more effective IT organization and control models in order to dovetail business with IT more effectively. They have also further optimized their approaches to IT project-portfolio management and IT operations, e.g. by introducing new evaluation methods or industrialized delivery approaches.
Here are three examples from a systematic search for such convention breakers to illustrate how companies have further developed their IT functions.
Following various corruption cases, the importance of comprehensive compliance management has become a key issue for management and supervisory boards in recent years. Corporate executives are wondering how they can protect themselves more effectively and efficiently. Up to now, checks – for example on the legality of transactions – have mostly been carried out manually and randomly. A global high-tech conglomerate is now using modern IT to carry out compliance checks systematically, exhaustively and almost in real time. IT thus becomes an invisible referee for day-to-day business, automatically identifying and warning of risks.
"Outsourcing parts of the IT function is common practice today", says Dirk Möbus, Project Manager in the InfoCom Competence Center at Roland Berger Strategy Consultants. But how should the outsourcing partner's work be remunerated? Up to now, most pricing models have focused on static, agreed IT unit prices that are primarily based on technically oriented service agreements – server availability, user-support accessibility or fault repair times. One market-leading utility pays its IT service providers according to its own business situation. The company and the service provider share the business opportunities and risks: if the company's sales decline, its absolute IT costs also go down as a direct result; if sales pick up, the unit price for IT services falls. IT costs and prices are thus not only variablized, but also directly linked to the company's success.
Within the IT function there is an implicit tug-of-war between the IT employees who support the individual business functions and regions in a kind of key-account management, and those who are responsible for providing services. The latter seek standardization and economies of scale in the IT organization to cost-optimize IT service provision. By contrast, IT support staff represent the interests of business functions and regions, and back the latter's individual wishes and ideas. One European market leader in the energy sector has added an intermediate stage to the IT organization in this context to mediate between these two objectives. For each process – e.g. generation, distribution, trading – there is a domain manager who constructively steers a middle-of-the-road course, always with the interests of the overall company in mind.
It is up to each IT department to develop similar approaches and thereby emphasize its own value to the company. In the search for improvements, convention breakers can be a source of ideas, showing how other IT functions have independently set new standards.
The IT function has a tough job on its hands in many companies – with high IT budgets on the one hand and a hard-to-measure contribution to company value on the other. Faced with the corresponding pressure to justify their expenditure, CIOs often respond with cost-oriented benchmark comparisons. The idea behind this is simple: if IT costs are approximately in line with the industry average, this will be interpreted as a sign that IT is basically competitive.
Some companies, however, have broken with conventional patterns and are setting new standards in the search for improvements. They have become convention breakers – changing the rules of competition or permanently increasing the degree of automation through the targeted use of information technology. They have introduced more effective IT organization and control models in order to dovetail business with IT more effectively. They have also further optimized their approaches to IT project-portfolio management and IT operations, e.g. by introducing new evaluation methods or industrialized delivery approaches.
Here are three examples from a systematic search for such convention breakers to illustrate how companies have further developed their IT functions.
Following various corruption cases, the importance of comprehensive compliance management has become a key issue for management and supervisory boards in recent years. Corporate executives are wondering how they can protect themselves more effectively and efficiently. Up to now, checks – for example on the legality of transactions – have mostly been carried out manually and randomly. A global high-tech conglomerate is now using modern IT to carry out compliance checks systematically, exhaustively and almost in real time. IT thus becomes an invisible referee for day-to-day business, automatically identifying and warning of risks.
"Outsourcing parts of the IT function is common practice today", says Dirk Möbus, Project Manager in the InfoCom Competence Center at Roland Berger Strategy Consultants. But how should the outsourcing partner's work be remunerated? Up to now, most pricing models have focused on static, agreed IT unit prices that are primarily based on technically oriented service agreements – server availability, user-support accessibility or fault repair times. One market-leading utility pays its IT service providers according to its own business situation. The company and the service provider share the business opportunities and risks: if the company's sales decline, its absolute IT costs also go down as a direct result; if sales pick up, the unit price for IT services falls. IT costs and prices are thus not only variablized, but also directly linked to the company's success.
Within the IT function there is an implicit tug-of-war between the IT employees who support the individual business functions and regions in a kind of key-account management, and those who are responsible for providing services. The latter seek standardization and economies of scale in the IT organization to cost-optimize IT service provision. By contrast, IT support staff represent the interests of business functions and regions, and back the latter's individual wishes and ideas. One European market leader in the energy sector has added an intermediate stage to the IT organization in this context to mediate between these two objectives. For each process – e.g. generation, distribution, trading – there is a domain manager who constructively steers a middle-of-the-road course, always with the interests of the overall company in mind.
It is up to each IT department to develop similar approaches and thereby emphasize its own value to the company. In the search for improvements, convention breakers can be a source of ideas, showing how other IT functions have independently set new standards.
Language
English | German
More news
Oil Price Forecast for 2012
In this study, we examined if the 2011 oil price developments changed the top 3 performing... >>
The cross-industry...
At the ISPO Munich 2012, our principal from the Healthcare Competence Center Karsten Neumann, held a... >>
Roland Berger analysis:...
Since its lowest point in the first quarter of 2009, the price of a barrel of crude oil has climbed... >>
New office in Seoul – Roland...
Opening the Seoul Office is another step of Roland Berger's growth in Asia as well as its... >>
Germany's last optimist...
Burkhard Schwenker, Chairman of the Supervisory Board of Roland Berger Strategy Consultants, tells... >>
Germany has been one of the...
In an interview with Süddeutsche Zeitung, Roland Berger - founder and Honorary Chairman of Roland... >>
