Utilities, like other industrial sectors, have a mixed record when it comes to IT investment projects. Despite the best intentions, IT investments can end up late, over budget or, in the end, not fit for the intended purpose. Getting an IT investment wrong is inevitably an expensive experience, not only in terms of wasted investment, but in lost revenues, missed opportunities and wasted management time. Utility CIOs in high-performing businesses know the importance of keeping IT tightly integrated into the utility's business plan. Gone is the "shopping trolley" approach, where executives handpick hardware, applications and systems, opting for "flavour of the month" technology. IT investment needs to be integrated and holistic. It also needs to recognise that IT is a technology business but it is also a people business. One utility CIO said recently: "Fixing the technology is hard, but changing what 2,000 IT employees do is terrifying." This means that utilities need to create high-performance IT organisations by changing what people do, helping them perform the right processes more efficiently and effectively. To do this they need to be supported and sustained by the right organisational structure, committed leadership and the necessary knowledge resources. Some IT initiatives in utilities have floundered because of incomplete vision and limited scope. Companies talk about workforce change, but in fact most IT investment tends to be in technology consolidation and development. Accenture has honed a CIO agenda to help. It has also undertaken extensive research into IT investment and created a framework for IT investment called the "5 I's." To Top The CIO Agenda
When it comes to optimising IT investment, utility CIOs need to ask four big questions: - How can I identify new and existing technologies that will enable me to achieve my overall business strategy?
- How can I reduce my utility's technology costs?
- How can I minimise the risks I know are associated with it?
- And how can I manage my utility's technology solutions to maximise the company's return on investment?
By addressing these questions, a utility CIO can go forward to create an organisation where IT architecture and infrastructure provide a solid foundation for sustainable growth, where IT systems and delivery capabilities are strong enough and flexible enough to respond to constantly evolving organisational needs driven by market developments. Accenture's research — IT investment for high performance
Accenture has just completed the first phase of a global research project examining the drivers for performance and management of IT. While most utility executives know how much IT costs, few can measure how that technology performs. The focus of this research is to understand how IT executives believe technology should be managed, as opposed to how they believe it is currently managed. More than 300 CIOs around the world were interviewed for the project. Questions have been organised by the five key disciplines known as the 5 I's: innovation, integration, industrialisation, information and infrastructure. These five disciplines represent the core areas that IT executives can use to view their IT investments, with the goal of reaching a level of mastery, and high-level results, in each. The findings provide a road map for turning IT investments into catalysts for real performance enhancement, rather than just cost reduction. A true indicator of the value of IT and its role in helping organisations perform at higher levels can then be established. The research found that high performing IT organisations differ from average and low performers in a number of ways. High performers are more aggressive adopters of new technology, spend more time building and less time fixing systems, manage to significantly more performance metrics and drive more online transactions in customer, supplier and employee interactions. Where is the spending on IT going? Accenture has found that the greatest spending was in running systems, with high performing businesses at 30 percent, just slightly less than the 32 percent spent in low-performing businesses. However, the biggest discrepancy between the two types of businesses was in fixing systems—only 5 percent in high-performing businesses, compared to 16 percent in low-performing businesses. As well as managing with more performance metrics, high performers utilise a more rigorous structured decision-making process and drive significantly higher online utilisation levels. To Top The 5 I's
The research looked at the 5 I's and businesses attitudes toward them. This framework acknowledges that in the future, mastering IT will be key and that while the potential to drive technology-powered growth is there now, an integrated and disciplined approach to improve technology performance is needed. Innovation
Innovation ranges from replacing technology with better technology, to business productivity innovation, to strategy-enabling innovations. The innovation path ranges from doing nothing, to reading and monitoring, to proof of concept, to introducing a pilot, to committing the business. The majority of respondents in the Accenture survey (55 percent) said they would follow the market when it came to technology innovation. Forty percent said they would be early adopters and just 5 percent said they would lead the market in technology innovation. High-performance IT organisations are more likely to lead the market or at least be early adopters. Industrialisation
Industrialisation ranges from better-managed labour costs, to predictable and repeatable processes, to a cycle-time focused delivery. This means adopting a predictable and repeatable approach to IT investment. In this context high-performing IT organisations are much more likely to have access to key performance metrics. These are: - Rank order of applications by technical and business fit.
- Root causes of execution delays on projects.
- How a business is leveraging scarce skills in the organisation.
- Productivity differences between people in the organisation.
- Amount of time people spend working on projects with unclear requirements.
- Total IT spend in the entire organization on hardware and software.
- Post-mortem reviews of projects.
- Amount of time people spend in delays waiting for business direction.
To Top Integration Integration ranges from point integration solutions to enterprise integration to cross-enterprise service-oriented architecture. CIOs say the most important benefit from their enterprise systems is better decision making and improved productivity. The survey ranks the importance of benefits from integrated enterprise systems. Better management decision-making came top with respondents at 79 percent. Next came improved employee productivity at 75 percent. Improved financial management scored 74 percent and improved customer service and retention, 70 percent. Ease of expansion and growth and increased flexibility ranked at 68 percent, while whole increased revenue and faster, more accurate transactions each scored 63 percent. Infrastructure
Infrastructure ranges from consolidation and standardisation, to internal on-request management to dynamically provisioned and externally secure assets. Infrastructure and security priorities focus primarily on consolidation and standardisation. In the survey, consolidation and standardisation of server computing scored highest as a "high priority" with CIOs at 71 percent, followed by consolidation and standardisation of employee computing devices at 62 percent and consolidation and standardisation of wide area networks at 51 percent. To Top Information
Information ranges from transaction data efficiency to business intelligence to real-time insight. Performance gaps in information management suggest a desire for more analytic capabilities and stronger data management policies. This category examined how well knowledge workers and managers can directly analyse and use data to support their work, and their ability to manage data quality and enforce data standards across a secure environment. The survey showed that CIOs ranked accuracy of data, secure access to information and enterprise data warehousing as "very important." Conclusion
The survey supports the view that performance, not cost, must be the IT endgame. This means adopting a "performance-first" strategy. Speed, efficiency and quality are actually more valuable than cost. Organizations that adopt the industrialisation lessons learned in the manufacturing sector will come to realise that global delivery is about rethinking production, not just lowering cost. Supplier networks must be seen as assets, not liabilities. Partnerships and outsourcing must be used to tap newer tools, processes and skills, not just for cost relief. Collaborative partnerships should be built with IT suppliers, with contractually shared incentives incorporated. And suppliers and partners should be selected on the basis of technical, cultural and financial compatibility. In other words, successful IT transformation is not a codeword for aggressive cost-cutting. It is a step-change that touches the entire IT value chain. Contacts
Paul.R.Daugherty
+1 917 452 8279
Richard.Warner
+44 207 844 3663
URL: www.accenture.com/utilities5 To Top |