Author: Filippo Vitiello
Today most companies are seeking solutions for a big challenge that can be summarised in a sentence: “doing more with less”. The specific meaning of this concept may depend on the type of organization. In the IT sector, “more” represents the need to increase the business value and also the volume of the provided solutions and services. On the other end, “less” implies: needing less resources and less time to respond and fulfil the market and customers’ demand.
This problem can be faced through several initiatives, acting on three general issues: the demand management, the efficiency and the effectiveness of the delivery process, and the resource management. Pursuing the process improvement, by adopting best in class models like the CMMI, does play a synergic effect among all these initiatives and can be a key factor for succeeding the challenge. “Doing more, with less”
Let us consider an IT organization and, in order to focus our discussion, let us examine the Software
Application Development and Maintenance services (ADM) also called Application Management
Services (AMS). These software activities are mostly delivered to internal Client organizations (that constitute a captive market for the IT organization) but may be also delivered to external Customers when the IT organization offers services also on the open market.
The solutions and the services provided are very important for the Clients (said the “Business” in the following) since they are needed not only to support the execution of business process but also to enable improvements in the business processes’ performance. To understand how IT can better serve the Business, let us give a look at what work an IT AMS organization usually does and how the budget is used.
Here is a qualitative chart of the IT spending for the different services provided and their value for the
method park Software AG
Process Improvement and the Business Challenges
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For the Business only the top of this “pillars” (New Solutions and partially the Enhancements) can represent a real added (business) value. All the other activities are of course necessary and important but, they represent just a cost of operations: they do not add business value.
For these reasons, year after year, the Business expects IT to lessen the costs and to increase the volume of high value services. Simple cost cutting decision will not solve the problem since they will turn into volume reductions for the services provided. This challenge requires one to make structural changes to achieve more efficiency and more effectiveness.
The three improvement levers
Structural changes are usually acting on three levers here below shortly described:
1. Improve demand management (“Doing the right things”)
2. Reduce unit costs (“Doing things cheaper”)
3. Improve delivery efficiency and effectiveness (“Doing things right”)
The first lever is about ensuring that “the right things” are done. This implies to establish a robust control on the requests coming from the Business in order to deliver just what is really necessary and important for the Business. This means avoiding the processing of requests that have not prioritized by the Business and that may be incoherent each other or not aligned with the business goals. This means also to discipline who is authorized to generate requests and to have the IT organization working just on authorized work.
The second lever includes all the initiatives that can be taken “to do things cheaper”, that is to lower the unitary costs of resources (particularly the cost of work effort). For example decisions like utilizing cheaper external suppliers or, and even more, global resources to perform a part (or the most of) the delivery activities may produce tremendous cost savings. Due to the higher complexity of a distributed