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IT Consulting

Dr. Madhuchhanda Das Aundhe

Okaya Infocomm
http://www.okayainfo.com/it-consulting.asp

WIPRO Consulting

WIPRO Consulting

Scenario 1
Company X has submitted a bid for a project to
Specify, develop, and deliver a mobile
operating system. The work was to be done on
a time-and-materials basis, with regular stage
payments.

Scenario 2
Develop a statistical modeling engine for a
credit card company that creates a series of
models by analyzing historical data to predict
customer default. Then these models need to
be deployed, their success and failure tracked
in predictive outcomes, and replaced with
better ones.

Scenario 3
Extract, cleanse, and transform data. Integrate
multiple data sources and use analytics tools
to identify key patterns. Build on reporting by
visualization of data.

Scenario 4
Provide personnel and expertise to operate a
technical installation within the client
organization, which retains ownership of the
facility. Specific activities are:
database administration; creating databases;
midrange system administration; storage and
backup management; and business continuity/
disaster recovery services.
networks operation center services; monitoring
and service assurance; performance management;
and WAN/LAN Management.

Scenario 5
Application Support Services
production database management;
remote application monitoring and support; and
midrange and mainframes application
environment support.

Scenario 6
Business Process Management
an integration of client ERP procurement process
with that of their suppliers to deliver the most
effective automated process management.

Scenario 7
Help company to develop a three-tiered
governance model to provide the basis for a
close partnership with their clients.

Scenario 8
Transition Methodology
an ITIL-mapped transition methodology to deliver
uninterrupted services to clients during transition
phases.

Scenario 9
Service Level Management
a well defined Service Level Management process
ensuring that all operational services and their
performance are measured in a consistent,
professional manner across the infrastructure
operations according to the business
requirements defined by clients.

Scenario 10
Technology Transformation
support and guidance in identifying new IT
systems based on the business strategy;
rationalization and optimization of existing
systems and toolsets; and
implementation of software like HP OpenView,
BMC, IBM Tivoli, and more.

Scenario 11
Set up an
Offshore Development Center (ODC), and
Testing & Quality Assurance Center.

Scenario 12
Strategy formulation, Marketing plan, IT
infrastructure development and building a
website for an e-business retail organization.

Scenario 13

Scenario 14
full-scale systems integration, working as a
prime contractor or systems architect.

Scenario 15
Design and provide training in Project
Management.

IT Consulting
Advisory services to business, public and
other undertakings by independent and
qualified person(s) or organisation who
assists, in an objective and independent
manner, the client organization to identify ICT
problems, analyze such problems,
recommend solutions to these problems and
help when requested in the implementation
of solutions.

IT Consulting - Content
The consultant
identifies ICT problems
analyzes such problems
recommends solutions to these problems and
helps when requested in the implementation of
solutions.

IT Consulting
In consultancy, the client contracts a service,
not necessarily a person.
In consultancy the consultant assists the client
in performing a task. This involves a
knowledge transfer.

Revenue from IT consulting worldwide between 2005 and 2015


(in million U.S. dollars)

Important organisations

EVOLUTION OF IT CONSULTING

1950s-60s
Computer Industry

Computer hardware
and peripherals

Computer intangibles
Computer
software and service

1950s-60s

Computer
Software and
Services Industry

Programming
Services

Processing
Services

Facilities
Management

Teleprocessing

Leasing

Programming Services
Pioneers of computers underestimated the
efforts that would be required for
programming.
3 main sources of programs
users could write it for themselves,
could obtain programs from a computer
manufacturer,
could share programs among themselves (IBMs
SHARE) Fortran and Cobol

Software contractors
Defence Applications like SAGE gave rise to
such organisations.
Defence applications were followed by
business applications like real time reservation
systems of American Airlines called SABRE.

Software contractors
Margins 15%
Business Models of Engineering and
Construction
bidding for and winning contracts
Fixed price or T & M
Critical capabilities economies of scope, cost
estimation, project management.

Domain expertise and Project Management


expertise leading to Advisory offerings

History of IT Consulting
-Stages of Computer Growth

Richard L. Nolan, Managing the computer resource: a stage hypothesis. Communications of the ACM 16 (July 1973)

Programming Services

Martin Campbell Kelly, A History of the Software Industry

Corporate Software Products


Microcomputers IBM360
IBMs unbundling in 1970
Products
ADRs Autoflow (flow charting s/w)
Informatics MARK IV (file management s/w)

Programming Services

Martin Campbell Kelly, A History of the Software Industry

Corporate Software Products


Envisaged to be like the recorded-music
industry.
Business Models of Capital Goods
High marketing costs
Sales support
Computer manufacturers like IBM as role models
Critical capabilities economies of scale,
corporate marketing, quality assurance, and preand after-sale support.

Advisory services around customization and


training.

Mass market products


Word processors, Spreadsheets
Market was of end users. Very different from
Corporate software products.
Business Model
Retail outlets, mail order, advertising
exploitation of scale, mass marketing, and ease of
use.

Advisory services around choice of software


packages.

Programming Services

Martin Campbell Kelly, A History of the Software Industry

Advisory services
Data Processing
Outsourcing and Business Models (e.g. ADP )

Facilities Management
Managed Services and System Integration (e.g.
EDS)

Teleprocessing
Remote Infrastructure Management

1950s and 60s


Introduction of commercially usable computers in the period following
World War II. Mainframe computers were mainly concentrated in
universities and government bureaucracies.
IBM captured nearly 80% of the computer market.
Other Hardware Manufacturers (Burroughs, Univac, Honeywell etc.)
Software applications were user developed.
Advisory services were free.
1956 onwards IBM was barred from IT consulting services by antitrust
regulation.
Accounting and auditing firms like Arthur Andersen came in.
Management Consulting firms were the third group e.g. PA Consulting,
Urwick, Arthur D. Little.
Introduction of the minicomputers in the 1960s.

1960s and 70s


Introduction of the minicomputers
Increased use of computers in companies.
Lots of new software applications financial applications, CRM, Supply
Chain etc.
Outsourcing and offshoring came in due to shortage in the labour market.
Companies changed their ways of using computer technology. From
clerical tasks to aligning processes with business objectives.
Clients looked for consultants with a background in strategy.
IT hardware and software organisations strengthened their services and
diversified into strategy.

1970s and 80s


IBM unbundled hardware and software.
It also built its PC with processor and operating systems from Intel and
Microsoft.
Mass market products came in for data processing etc.
Lots of specialized business applications. The notion of managing IT as a
portfolio of applications came in.
IT Consulting opportunities increased greatly.
General Management Consultants invested in IT outfits.

History
Thus, IT consulting companies consisted of
Technology companies (IBM, EDS etc.)
Accounting and auditing firms (PWHCoopers,
Deloitte Touche, Ernst & Young, KPMG).
Management consulting firms (McKinsey, A.T.
Kearney etc.)

Important organisations

1990s
Introduction of network computing and
internet.
E-business and emergence of a host of
dotcom consultancies.

2000s
IT consulting and outsourcing services became
increasingly standardized.
Rapid commoditization and hence fall in unit
prices.
The dot com bubble burst, rapidly plunging
most of the dot com companies into
bankruptcy and sending IT consulting into a
tailspin, seriously stagnating growth.
Consolidation of the IT consultancy market.

IT Consulting Organisations - Types


Type/Examples

Focus

Systems Integrators or IT Large system implementation and


Service providers
integration projects. Tend to
conduct higher-priced projects,
Accenture,
where they could leverage their
PriceWaterhouseCoopers scale. Individual firms usually
(now a part of IBM), and specialize in either technology or
IBM, CSC.
strategy.

Web design firms

Interactive agencies
Agency.com, Razorfish,
and Modem Media

Misc.
Reinvent themselves by spinning off
separate e-business consulting divisions,
acquiring smaller firms that had e-business
experience, and using aggressive hiring
programs to build Internet capabilities.

An estimated 4,500 firms in this category


Smaller undifferentiated firms that launched specifically for the delivery of
emphasize technical delivery with web-enabled applications. The number now
little focus on business strategy. is considerably lessprobably less than 500
survived to the present.
Enter the industry from
advertising. They tout their
creative design, branding, and
marketing expertise.

To these firms, web-site design and


development was a natural extension of the
services they already offered to their clients.

IT Consulting Organisations - Types


Type/Examples

Focus

Misc.

View web strategy as an extension


of their traditional business
Management consultants
strategy roles. They used their
These companies continue to lead with
powerful brands and high-level
strategy and organization consulting. IT
client relationships to move into
McKinsey, Boston
consulting remains secondary to strategy.
the e-business space, but rarely go
Consulting Group
beyond strategy into actual
application development.
Use a combination of creative and strategic
Pure e-Business Players Their pureness results from
talent to develop e-business strategy and
being new firms formed to provide
messages. Also deliver applications, either
e-business services, with no legacy
by playing a general contractor role or by
Scient, Dimension Data of skills and methods from
using their own development staff. Few of
Holdings
previous eras.
these firms survived.
Offer the equivalent of software
Application Service
rentals. Customizes an application By offloading the difficulties of developing
Providers (ASPs)
package to a particular clients
and operating an e-business, ASPs claimed
needs, and then charges back for it to make it easy for any firm to conduct
Oracle, SAP, and
through an up-front installation
business on the Internet.
Peoplesoft
charge and a monthly fee.

Important organisations

General Management Consulting


vs IT Consulting

Nature of firms
Smaller firms vs bigger firms
Different knowledge and capabilities
Different partners - market research firms vs h/w, s/w
service providers
Nature of services
Shorter projects than IT
Customisation vs Standardisation
Pricing of services: IT Consulting is more amenable to fixed
price contracts

Careers in IT Consulting

Who are the IT Consultants


Technology knowledge
Business knowledge
MBA
General Management Consulting

Key jobs and titles


Analyst/Business Analyst/Systems Analyst/Programmer Analyst/Re
search Associate/Staff Consultant/Associate Consultant
It often includes field research, data analysis, customer and competitor interviews,
client meetings, and heavy duty programming.

Associate /Consultant /Senior Consultant


Within strategy firms, this is the typical port of entry for newly minted MBAs.
Senior consultants often perform research and analysis, formulate
recommendations, and present findings to the client. May also manage teams.

Technology Architects/ Technology Consultants


Technology architects are usually people who have advanced engineering degrees,
at least five years of experience in the IT industry or tech consulting, and some
experience in business (project management is a common background). They are
responsible for the design and development of large-scale technology projects that
require long-term planning and a knowledge of the nitty-gritty details of enterprise
technologies. This is often the starting place for midcareer hires.

Key jobs and titles


Manager/Engagement Manager/ Project
Leader/Associate Principal
Client engagement and project team management

Vice President /Officer/Principal


Relationship Management and Business Developer

Senior Vice President /Partner/Director


Firm Business Strategy and Growth

Types of IT Consulting
Opportunities

Earls model of IT Consulting

Why should we spend scarce


resources on technology

What technology applications shall


we build?

Which technology, which vendor,


which hardware and software

How can the technology and its


implementation best be managed?

Earls model of IT Consulting

IT Strategy Case Study


A national specialty retailer of womens apparel, shoes, and accessories lacked an integrated
system to support product development and production. Its product tracking and decisionmaking information was housed across multiple software packages, custom applications, and
standardized spreadsheets that were manually updated and exchanged among functions and
offices. Simple questionssuch as the number of units at a particular factorycould not be
answered without extensive manual effort. A leading IT consulting firm performed a
comprehensive assessment of current systems and processes and provided a series of

recommendations to position the organization for future growth. System recommendations


included an assessment of potential vendors, an outline of the services provided by each of
those vendors, cost and time estimates, and a detailed project plan. The client expects
operational improvements supported by the new, integrated systems will reduce
administrative costs almost 50 percent, while reducing operating risk and cycle time.

E-Commerce Study
The clientthe direct marketing division of a leading global retailerwas facing rapid growth and
expansion into e-commerce. The division realized its existing technology and processes would not
support this future business; the company needed to select, test, implement, and integrate new

facilities, new business and warehousing systems, and new processes. The client selected an IT
consulting firm to design new facilities with new procedures and technology applications.
Developing new business systems and integrating them with existing warehouse management
systemswas crucial to the clients transition to new operations, so the consulting firm worked

closely with client personnel to ensure that integration was seamless. Collectively, the client and
the consulting firm implemented and integrated the system very quickly, enabling the company to
ship holiday orders on time and compete at industry leading service levels.

The Consulting Organisation


Structure and Processes

Anatomy of a Consulting Firm


Structure

Features of a Consulting Firm


The structure and management of consulting firms is driven primarily by two key
factors:
the degree of customization in the firms work activities and
the extent of face-to-face interaction with the client.

The value of the firm is often embedded less in the firm and more in the
individuals.
The consulting firm, therefore, competes actively in two markets simultaneously:
the output market for its services, and
the input market for its productive resources, the professional workforce.

The challenge often lies in balancing the two.

Leverage structure
The required shape of the organization i.e. the relative mix of juniors, middlelevel staff and seniors.

Finders - usually the most senior level, are responsible for bringing in the business, scoping
and designing the projects, and engaging in the high-level client relations necessary during
the work.
Minders - manage the projects and the team of people working on it.
Grinders - perform the analytical tasks.

If a firm brings in a mix of client work that requires more juniors, and fewer
seniors, than the firm has in place, higher-priced people will end up performing
lower-value tasks (probably at lower fees), and there will be an underutilization
of senior personnel. The firm will make less money than it should be making.
Managing the leverage structure is the key to managing a consulting firm.

Leverage example Guru Associates

Leverage and profitability


The market for the firms services will determine the fees it can
command for a given project.
Its cost of delivery will be determined by the firms ability to deliver
the service.
The project team structure of the firm is an important component of
firm profitability.

Leverage and the People Marketplace


The promotion incentive is directly influenced by two key dimensions:
the normal amount of time spent at each level
the odds of making it (the proportion of juniors promoted)

Higher leverage, lower chances of promotion.

The Client Market Place

Profitability

Structural Trends IT Consulting


Fewer unique problems.
More and more, clients want to be involved in the process.

IT Consulting

Structure axes
Geography
Domain/ Industry
Technology
Business Process
Products

Career development

Need to focus
What happens when an IT Strategy consultant does ERP
implementation?

Summary: The key role of leverage


Mix of projects and the leverage structure / project team structure decides the success of a
Consulting Firm.
Firms project team structure changes over time.
Economies of scope improve leverage structure, hence it may incentivize the same kind of
projects.
However, repetitive engagements cause individual discontent.
So standardization and use of juniors is the key.
However, this may change overall project team structure with significant impacts on the overall
capability of the firm.

The IT Consulting Process

Entry - Activities

Entry - Initial contacts


Consultant contact / Client contact
First meeting

Who to meet?
Who should meet?
Continuity maintained
Preparation

The way forward

Preliminary diagnosis
Period
1-2 days upto 10 days

Data collection
Largely secondary data

Client involvement

Scope and purpose


Records and Information to be made available
Who to meet
Introducing the consultant

Other diagnosis approaches


Problem identification workshop
Self diagnosis by business managers

Terms of reference / RFP


Client generated /
Consultant generated
No RFP

Assignment Planning
Summary of the problem
Phases and timetable
Role definition

Activities
Meetings
Reports
Training and information transfer

Proposal
Sections of the proposal

Presenting the proposal


Clients criteria
Negotiating the proposal
What is not included

The Consulting Contract


Types
Verbal Agreement
Letter of Agreement
Contract
Detailed
Relational
Psychological contract

Entry

Diagnosis Stage Key activities

Diagnosis
Purpose
Restating the problem

Problem analysis
Substance or identity
Organisational and physical location
Problem ownership
Absolute and relative magnitude
Time perspective

Data collection
Quantitative
Existing data
Survey data

Qualitative
Interviews
Observation

Estimates

Data Analysis and Diagnosis Report


Client feedback
When to give feedback?
Who the feedback should be given to?

Form of feedback
Formal / Informal
Presentation / Written report

Diagnosis

Action Planning

Data requirements

Implementation
Gaining ownership and commitment
Ensure quality and accountability
Remaining flexible and adaptable
Encouraging learning and development

Termination
The consultant will be required to submit a final report on the
clients project
Evaluate the results achieved through the desired solution
Evaluate the client consultant relationship

Future business, reference and referrals

Nurse / Pharmacist ?

Consulting engagement

Consulting organization metrics

An IT Consultant Research
Study
by
Shirley Bode and Janice Burn
Edith Cowan University, Australia

IT Consultant and SMEs


In this study IT Consultants are Website design consultants offering a
total electronic commerce solution to potential SME clients.

Research data collection


The data collection method consisted of in-depth interviews with
owners/managers of the SMEs located in both metropolitan and
regional areas. Each of the participants was asked about the process
followed by the organization for engaging the IT Consultant

Choice of Consultant

Findings
None of the case SMEs utilized each of the steps in Gables model
SME #1 completed six steps and partially completed two, and SME #3
completed six steps; the remaining SMEs completed five or less steps.
Only one SME canvassed the market and developed a request for proposal
prior to using the consultant.
Six of the SMEs did not have a formal written contract with their
consultants
SME #1 had negotiated a verbal contract in relation to pricing for the
design of their site. The verbal contract was not adhered to, and when
presented with the final bill, SME #1 stated: that was a real shock,
because I told him from the beginning I had a really strict budget and it was
blown right out.

Findings Contd.
SME #3 had a written contract with their consultant and stated: Yes there was a formal contract;
it included a budget which got blown out, it included a timeframe which didnt work; to be honest
I think the contract was a complete waste of time because nothing in it has been stuck to (SME
#3).
SMEs #1 and #3 had engaged in a process of review with their consultants, whereas the others
had not.

Nine of the SMEs felt that they had been overcharged and did not receive value for
money from their Website design consultants.
SME #2 linked pricing and service provision several times throughout the interview:
if Ive got to constantly be telling them what to do, I think paying $90 an hour is a bit
ludicrous and I dont think I got value for moneybasically I think they charged me
an hourly rate for the work that they did, the fact that they had no ideas of their own
should have been taken into account when billing me.
SME #5 felt that pricing was inflated and service from the consultant inadequate: I
feel we were ripped off, its like buying a bicycle with no wheels.
Interestingly, all SMEs had, or were in the process of, severing the consultant/client
relationship.

Final finding
While, adhering to the process does not ensure Client-Consultant
engagement success;
Not adhering to it surely ensures failure!!!!!

Engagement Success
Prior to consultant engagement, an organization needs to have a clear
idea of their goals and objectives.
There needs to be clear communication of objectives between client
and consultant.
Both parties need to constantly work in collaboration.

Business IT Alignment
Session 5

A model of IT Consulting

Frameworks
Henderson and Venkatraman, IBM Systems Journal, 1993, Strategic
Alignment Model.
Luftman, Communications of AIS, 2001, Assessing Business-IT
Alignment Maturity.
Broadbent and Weill, Sloan Management Review, 1997, Management
by Maxim and Management by Deals.

Strategic Alignment Model


Henderson and Venkatraman, IBM Systems Journal

Strategic Alignment Model


(Henderson and Vekatraman, IBM Systems Journal)

Elements of the model


Business Strategy External
Business scope Product, Market features
Competencies Pricing, Quality etc.
Governance Make vs buy decisions

IT Strategy External
IT scope New technology e.g. imaging, expert systems, mobile/internet
Competencies flexibility, reliability etc.
Governance Alliance, JVs, Outsourcing

Elements of the model


Organisational Internal
Architecture Structure, Roles and responsibilities
Processes business processes and their characteristics
Skills HR, Marketing, Purchase skills

IS Infrastructure Internal
Architecture h/w, s/w, communications
Processes system development, maintenance, monitoring and control
Skills acquisition and training in IS skills

Dominant Alignment Perspectives


Business Strategy as Enabler

Dominant Alignment Perspectives


IT Strategy as Enabler

Strategic Alignment Model


(Henderson and Vekatraman, IBM Systems Journal)

Assessing Business-IT Alignment


Maturity
Luftman, Communications of AIS

Business IT Alignment Maturity Criteria

Level 1

Level 5

Conducting a Strategic Alignment Maturity


Assessment
Conducted by a team of both business and IT executives.

Each of the criteria and levels are assessed using a Likert scale (say 1-5). Using a Delphi
approach helps to converge on the maturity level.
The relative importance of each of the attributes within the criteria may differ among
organisations.
Primary objective of the assessment is to identify specific recommendations to improve
the alignment.

Analyse and prioritise gaps


Specify actions to be taken up.
Choose and evaluate success criteria
Sustain alignment

Management by Maxim
Broadbent and Weill, Sloan Management Review

Business IT Alignment issues


Which services are appropriate for the firm?
Which applications need to be developed?
Which should be implemented as firm wide services and which
should they leave to the business units?
How much should the firm spend on IT?

IT Systems portfolio
(MIT Centre for IS Research) Weill and Broadbent
i.

Infrastructural : firm wide communication network services, large-scale


computing, shared customer databases, firm wide intranet capability.

ii. Transactional : systems that support order processing, inventory control,


bank cash withdrawal, statement production, accounts receivable,
accounts payable, and other transactional processing.
iii. Informational : systems that support management control, decision
making, planning, communication, and accounting, EIS, KM system.

iv. Strategic : e-business portals, mobile applications.

IT Systems

IT System Components

Making IT investment decisions


Management by maxim framework

Components of Strategic Context

Competitive value disciplines / strategies


Operational excellence, under which businesses emphasize efficiency and
reliability, lead the industry in price and convenience, minimize overhead
costs, and streamline the supply chain.
Customer intimacy, with the focus on the cultivation of relationships, lifetime
value to the company, satisfaction of unique needs, customer service and
responsiveness, and customization based on deep customer knowledge.
Product (or service) leadership, with continuing product innovation,
embracing ideas, new solutions to problems, and rapid commercialization.

Strategic Context - Citibank


To pursue growth in the consumer banking area through global expansion and
leveraging information technology more imaginatively and cost-effectively than

competitors. The essence of Citibanking is a relationship-based rather than a


product-driven customer experience, providing a uniformly high quality customer
experience that is readily recognized and valued. "The overriding imperative is

globality," explained Citicorp's senior technology officer, Colin Crook, "so that
wherever you touch us, the experience is consistent. This vision was captured in
the strategic intent to create "any time, anywhere banking" now branded as
"Citibanking.The Citibanking experience is now delivered to 20 million accounts in
41 countries and contributes more than 60 percent of the total consumer business.

Making IT investment decisions


Management by maxim framework

Maxims
A series of short, sharp strategic statements
Statements that indicate a practical course of conduct to be chosen.
Business maxims express the shared focus of the business in
actionable terms and identify which activities must be centrally
coordinated.

Maxims, derived from the firm's strategic context, capture the future
concerns of the firm as a whole.

Articulating Business Maxims


Business maxims can express the
competitive stance of the firm;
the extent to which the firm coordinates the business units (such as
autonomy of business units, or cross-selling; synergies; and sharing of
resources);
implications for the management of information and information
technology.

Strategic Context - Citibank


To pursue growth in the consumer banking area through global expansion and
leveraging information technology more imaginatively and cost-effectively than

competitors. The essence of Citibanking is a relationship-based rather than a


product-driven customer experience, providing a uniformly high quality customer
experience that is readily recognized and valued. "The overriding imperative is
globality," explained Citicorp's senior technology officer, Colin Crook, "so that
wherever you touch us, the experience is consistent. This vision was captured in
the strategic intent to create "any time, anywhere banking" now branded as
"Citibanking.The Citibanking experience is now delivered to 20 million accounts in
41 countries and contributes more than 60 percent of the total consumer business.

Citibank Business Maxims


Develop deep and long-term relationships with customers, with a uniform customer experience
that is readily recognized and valued.
Provide all the information needed to service any customer from any service point.
Provide a seamless and consistent level of service from market to market, region to region.

Achieve the highest level of global integration of products and services driving economies of scale
through shared best practice.
Maintain professional staff of the highest caliber, whose outlook and orientation are global.
Ensure substantial and sustainable growth in emerging markets.

Sample Business Maxims


Cost Focus
Price products/services at lowest cost.
Drive economies of scale through shared best practice.

Value Differentiation as Perceived by Customer

Meet client expectations for quality at reasonable cost.


Make the customer's product selection as easy as possible.
Provide all information needed to service any client from one service point
Capture the electronic delivery channel to the customer.
Establish strong customer relationship with superior customer service.
Provide client service that helps customers reach their potential.
Develop customer partnerships based on long-term relationships.
Develop customer partnerships on a worldwide basis.

Sample Business Maxims


Growth

Expand aggressively into underdeveloped and emerging markets.


Establish international reach and presence as one business.
Grow internationally to meet the needs of customers who are expanding.
Target growth through specific product and customer niches.

Human Resources

Create an environment that maximizes intellectual productivity.


Maintain a high level of professional and technical expertise.
Identify and facilitate the movement of talented people.
Develop win/win relationship with key suppliers.

Sample Business Maxims


Flexibility and Agility

Be flexible to respond to new markets.


Grow in cross-selling capabilities.
Develop new products and services rapidly.
Foster ability to deploy resources for new products quickly and judiciously.
Foster ability to detect and respond to subtle shifts in the marketplace.
Achieve fastest time to market with new products and services.

Management Orientation
Leverage synergies throughout the firm.
Innovate continuously through new product development.
Create management culture of information sharing (to maintain or generate new business).
Create capacity to manufacture in any location for a particular order.

Making IT investment decisions


Management by maxim framework

Identifying IT Maxims
Describes how a firm needs to
Maintain common information technology architectures across the firm, including
policies and standards.
Access, use, and standardize different types of data (financial, product,
customer).
Connect and share data sources across different parts of the firm.
Electronically process transactions
Connect, share, and structure information and deploy IT across the firm.
Connect and share data sources across the extended enterprise (customers,
suppliers, regulators, partners).
Identify appropriate measures for assessing the business value of information
technology.

Categories of IT Maxims
Expectations for IT investment in the firm

To reduce costs / To improve customer service levels / To aid innovation

Data access and use

Centralised / Decentralised

Communications capabilities and services

Availability of large number of applications / High bandwidth applications like


videoconferencing /
External communications may connect with customers in the future

Architecture and Standards approach


Firmwide / Location specific

Linked Sample Business and IT Maxims


Sample Business Maxims

Sample IT Maxims

Provide all the information to service the client from


any service point.

All customer service representatives must have access


to a complete database of customer relationship with
the firm.

Drive economies of scale through shared services.

Centrally coordinate purchasing of IT from major


vendors to minimize cost and ensure consistency.

Capture the electronic delivery channel to customers.

External communications connects with customers.

Be able to detect and respond to subtle shifts in the


market place.

Centrally co-ordinated information flow.

Management culture of information sharing to


generate new business.

The usefulness of data must be recognized beyond


where it is collected.

Able to develop resources for new products quickly


and judiciously.

System architecture must provide a foundation and


flexibility to do so.

Business-Unit Synergies and IT Maxims


A high level of customer overlap across business units provides opportunities to cross-sell
products and implies the need for common customer profiles and databases.
Where there is a high degree of overlap in suppliers, synergies and cost savings could be derived
from a coordinated approach to systems reaching beyond the enterprise, such as links to
suppliers by electronic data interchange (EDI) or by Internet.
The extent of shared value disciplines indicates the level of firmwide infrastructure capabilities.
If business units share the same predominant value discipline (such as product leadership), a
larger number of infrastructure services can be shared across the firm. If business units compete
on different value disciplines, a smaller investment in firmwide infrastructure is appropriate, with
more extensive tailored capability in the business units.
In some firms, different business units have different competitive bases. This difference reduces
the efficacy of shared services, leading to lower investments in information technology at the
firmwide level and higher investments in the business units.

Value Disciplines and IT Implications

(Copyright CSC Index), and M. Treacy and F. Wiersema, The Discipline of Market Leaders, 1995.

Strategy vs Systems

Multiple Business Units

Citibanks IT Maxim
Customer information must be kept in a consistent form and be accessible to
both the customer and staff any time and anywhere the customer interacts with
Citibank.
A consistent architecture for hardware, software, communications, data, and
work flow is critical to the bank as the basis for the shared infrastructure and
shared services to provide the capability for the uniform customer experience.
Customer entry points to the bank (ATMs, branches, phone services, personal
computer access) must provide a consistent interface throughout the world.

Our network must enable our customers and our businesses easy access to a
wide range of applications essential to the delivery of customer-friendly banking.

Johnson & Johnson


For most of its history, Johnson & Johnson has been managed as a group of
autonomous businesses. The firm has more than 80,000 employees and
168 operating companies located in more than 50 countries around the
world, selling products in more than 150 countries.
Johnson & Johnson's decentralized operating structure provided its
operating companies with a great deal of autonomy. In the early 1990s, the
impact of changes in the health care industry was being realized.
Customers were becoming larger, with global reach themselves, and, in
some countries, were forming buying groups to increase their power in the
supply chain. Johnson & Johnson needed to streamline its business
worldwide to make the sorganization more cost-effective and to respond to
changes in its business environment.

Johnson & Johnson

Types of IT Systems
"None" view - No firmwide infrastructure needs
Utility view - Infrastructure investments based primarily on cost
savings
Dependent view - Some investments to meet specific business
strategies
Enabling view - Extensive investments indicating a long-term need
for future flexibility and for information technology as a key
component of an iterative strategizing process.

Making IT investment decisions


Management by maxim framework

Management by Deals

Management by Deals - Features


Requirements are defined by the immediate and more parochial needs of each of the
businesses.
In the deal-making process, information technology managers talk with business-unit
managers, often as part of an annual planning cycle.
The aim is to understand the business units' information technology needs based on
current business strategies. After making the rounds of all the business units,
information technology managers make firmwide infrastructure recommendations
based on the aggregation of the business units' needs.
Costs are estimated, and the information technology manager goes back to each
business unit with a proposal. Negotiations follow, trading costs off against
infrastructure services, and a deal is struck, with the business units.

Management by Deals - Features


Deals often means that powerful, successful, and rich business units are far better served by the
information technology infrastructures. In several firms, we found that small, but growing business units
often complained about the lack of suitable infrastructure provided centrally by information technology
management. Typical examples were the treasury units in banks and the exploration units in mining or
resource firms.
In firms taking a deal-making route, we observed that one of three views of infrastructure emerges:
None, utility, or dependent. No firm took an enabling view of infrastructure through the deal process,
and few had a dependent view.

Making IT investment decisions


Management by maxim framework

Drivers of Deal-making Process

IT Portfolio Management

IT Portfolio
The information technology portfolio of an organization is its entire
investment in information technology, including all the people
dedicated to providing information technology services, whether
centralized, decentralized, distributed, or outsourced.
The investments include all computers, telecommunications
networks, data, software, training, programmers, support
personnel, point-of-sale systems, databases, and local area
networks, point-of-sale devices, image-processing systems,
personal computers, scanners, databases, Internet home pages,
system software, and applications software.

IT Portfolio decisions
The objective of information technology investments is to provide
business value in two related ways:
to successfully implement current strategies and to
use the technology to enable new strategies.

The IT investment portfolio is a strong, business-oriented lens.


The information technology investment portfolio approach is based
on the approach to managing financial portfolios by balancing risk
and return.

Linking Strategy to IT Portfolio investments


Weill and Broadbent

Define the firm-wide strategic intent and business objectives

Understand the strategic context of the firm. This context defines the focus of the technology
investments
Corporate strategy: operational excellence, customer focus, innovation
IT focus: Cost reduction, defined by strategy, strategy enabler

Develop IT objectives matched to the corporate strategic objectives


Develop an appropriate portfolio of e-business and IT investments to support the strategic
business objectives
Make risk and return (ROI) tradeoffs on investments
Use other Business Value frameworks

Update as necessary

Requires a continual dialogue of cross functional executives and technology managers

IT Portfolio Management
Key Activities
Do an organization-wise IT Audit.

Develop a Portfolio of IT Systems.

Business Value frameworks


Financial

Business Value
Financial Value Measures
Return on Investment
Real Options Value
Total Cost of Ownership

Non-financial Value Measures


Multicriteria approach or Information Economics
Strategy framework
Portfolio management

Return on Investment

ROI analysis for e-business investments


(Project 1) will have new revenue (or cost-saving) benefits of $5
million (M) each year for the next 5 years
(Project 2) will have benefits of $11 M at the end of the first and
second years, and nothing after that.
If we only have enough capital to fund one project, which of these ebusiness projects is worth funding?

RoI Analysis

Time Value of money


Discounting the cash flows
PV = A1/(1 + r ) + A2/(1 + r )2 + A3/(1 + r )3+ + An/(1 + r )n.

Obtaining the net present value (NPV):


NPV = PV I.
I = Initial Investment costs

Hence
where the costs of the project C0, C1, C2, C3, . . . , Cn have been subtracted from the cash benefits
A1, A2, A3, . . . , An in the corresponding time periods 1, 2, 3, . . . , n.

ROI for project decision


Profitability Index = Net Present Value / Investment

ROI for project decision

IRR > Discount rate or WACC

The payback period, or payback, is the time it takes for the project to recoup the initial investment.

Calculating ROI for an e-business project (Web portal for


a mid-sized electronics firm)
Assumptions:
Discount Rate (WACC)

12%

Tax Rate

35%

Customers in Year 0
Transactions in Year 1
Average order size in Year 1
COGS as a % of sales price

1700
141000
$258
70%

Average order size annual growth rate

3%

No of transactions annual growth rate

3%

Base Case
Average processing costper order

$30

With Web Portal


Initial cost

$5,000,000

Ongoing maintenance cost each year

$1,000,000

Jump in total transactions in Year 1


No transactiona anuual growth rate
Avg Web processing cost per transaction
Average processing cost per order
% transactions with web portal

20,000
10%
$3
$16.50
50%

Calculating RoI for an e-business Project (web


portal for a mid-sized electronics firm)

Major assumptions
The increased transactions as a result of the web portal.
The fraction of customers migrating to the web portal.
Reduced transaction cost with web portal.
The cost of the project.

Risk and Uncertainty


Expected Value of IRR = Best Case + 4*Most Likely Case + Worst Case
----------------------------------------------------------6

Sensitivity Analysis

Monte Carlo Simulation


More than 2 parameters e.g. increase in transactions, percentage of
total customer migration, and project cost.

Risk factors project and technology


1. Lack of top management commitment to the project
2. Failure to gain user commitment
3. Misunderstanding the requirements
4. Lack of adequate user involvement
5. Failure to manage user expectations
6. Changing scope/objectives
7. Lack of required knowledge/skills in the project personnel
8. Lack of frozen requirements
9. Introduction of new technology
10. Insufficient/inappropriate staffing
11. Conflict between user departments

Review of RoI Analysis


1. What are the main assumptions in the model?
2. Was there a business discovery to define the assumptions?
3. Are all the major uncertainties and risks adequately accounted for?
4. Are the assumptions realistic and are they expressed as a range of possible inputs?
5. Is the calculated IRR expressed as a range with an expected value and approximate probabilities?
6. Is there a sensitivity analysis and how is it interpreted?
7. What is the downside risk (worst case) and is there a plan to mitigate this risk?
8. Will the project have senior management and end user support, are the requirements well
defined, and will an experienced project manager run the project?
9. What is the strategic value of the project to the firm in addition to the benefits incorporated in
the model?
10. How important are other factors, such as soft benefits, that were not included in the analysis?
11. Does the project contain any option value that should be factored into the decision?

RoI as a decision index


ROI is very widely used to justify IT investments, particularly for new
projects. Although there is still the problem of predicting the future, ROI
provides a good way to compare the financial value of very different
projects and also provides hurdles, through the payback period and IRR,
that quickly cut off further, costly consideration of some projects.
One practical problem with the use of ROI is that organizations often have
good systems established for making their investment decisions using ROI
but may have weak systems for monitoring the actual ROI achieved.
Does not take care of additional pay-offs in the future.

Real options value


Just as a call (or put) option confers the right, but not the obligation to buy (or
sell) a given stock at some future date, a real option provides the right but not
the obligation to acquire or dispose of some real world asset in the future.
In both cases, the value of the option comes from the flexibility to decide
whether to exercise the option depending on future conditions. This flexibility
means that option holders can participate in the upside of the investment, but
limit their losses to the cost of acquiring the option.
Since uncertainty about benefits increases the range of the potential upside
outcomes but not the downside (which is capped at zero), greater uncertainty
increases the value of flexibility and thus the value of the option.

Real Option Value


What is the option value of a technology project?
An e-business or IT project has option value if, as a result of the project, the firm has the
opportunity to implement additional projects in the future, and these projects would not
have been possible without the initial project investment. Option value can be an
important component of added value and is especially important for infrastructure
investments.
For example, an enterprise data warehouse (EDW) is a very large IT infrastructure
investment that, from a RoI perspective, may be difficult to justify. However, once this
infrastructure is put in place, the firm can leverage it for a variety of potential
applications: Analytic CRM, improved supply chain management (SCM), and improved
demand chain management (DCM) are a few of these applications. Hence, implementing
the EDW is equivalent to buying options for CRM, improved SCM, improved DCM, and a
variety of other strategic initiatives.
Analytic methods exist for calculating financial option values which are being extended
to IT projects. Qualitatively at least, the option value of a technology project should be
considered when making an investment decision.

Total Cost of Ownership


Seeks to capture the full cost of an IT asset from initial purchase through
implementation and operation to maintenance and end of life costs.
Although this is a cost-based approach which does not equate to value, it can be
useful for measuring IT value because it allows comparison of alternative
implementations.
By including such considerations as training costs, security costs, scalability costs,
and the costs of reliability deficiencies, TCO can incorporate perspectives that are
not purely financial.

A limitation of TCO is that it involves predicting future costs.

Business Value frameworks


Non financial measures

Information Economics framework

Information Economics - steps


Form a committee of evaluators
Obtain consensus on benefit criteria and risk factors
Quantify the importance of benefits and risks on a relative scale (by
assigning weights)
Estimate the scores on a scale of zero to five
Multiply each estimate by the weight.
Sum the numbers.

Portfolio Application Model

Information Economics as a decision method


The problem with this approach is that it relies entirely on consensus
of subjective opinions.

Strategy framework - Balanced Scorecard


Kaplan & Norton, HBR
1. How do stakeholders see us? - financial scorecard
2. How do customers see us? - customer scorecard
3. What should we excel at? - internal operations business scorecard
4. Can we continue to improve and create value? - the innovation and
learning scorecard.

Balanced Scorecard Organisational level

Balanced Scorecard IT Project / HRIS

Scorecard framework IT Portfolio

Balanced Scorecard measures at an IT project


level

Advantages
The balanced scorecard forces management to take a broad view on
ICT investments.
Many different evaluation techniques can be integrated into the
framework. The financial scorecard can, for example, contain the ROI,
NPV etc.

The framework can be used for the feasibility evaluation and also for
the follow up and ex-post evaluation.

Disadvantages
This needs substantially more input from the top management than
does any other technique. Traditional techniques can be designed and
overseen by finance or operations teams.

There are no generic IT measures that fit all organizations. Metrics


must fit a specific organizations goals, activities and customer base.

IT Systems portfolio
(MIT Centre for IS Research) Weill and Broadbent
i.

Infrastructural : firm wide communication network services, large-scale


computing, shared customer databases, firm wide intranet capability.

ii. Transactional : systems that support order processing, inventory control,


bank cash withdrawal, statement production, accounts receivable,
accounts payable, and other transactional processing.
iii. Informational : systems that support management control, decision
making, planning, communication, and accounting, EIS, KM system.
iv. Strategic : e-business portals, mobile applications.

Strategy vs Systems

Multiple Business Units

Portfolio

Risk Return characteristics

IT Portfolio in different industries

MDCM (A and B)
Atkins has hired you as a consultant for his task at hand.
You should help Atkins define the Strategic Context, the Business
Maxims (goals) matched to this strategy, and the related high-level IT
Objectives.
Also help Atkins prepare a recommendation for MDCM Corporate
Board. Prepare necessary scorecards and use the Portfolio Application
Model Matrix to back your recommendation.
Also provide the approximate sequence for executing the initiatives
after factoring in the dependencies.

Structure of the Case Write-up


1.
2.
3.
4.
5.

Executive Summary
Problem Statement
Methodology and Frameworks
Data Analysis
Recommendations

Wherever relevant, please put down all assumptions explicitly. Also lay
down the process steps adopted for arriving at the recommendations.

MDCM Case write-ups

Service Level Agreements

IT Services Management

Service Level Management


Goal
To maintain and improve IT Service quality through a constant cycle of agreeing,
monitoring and reporting to meet the customers objectives.
Definition
Service Level Agreement (SLA) is a written agreement with the customer.
Operational Level Agreement (OLA) is an agreement between two internal areas.
Underpinning Contracts (UCs) is a written agreement with suppliers.

Service Level Management


Service Level Management (SLM) is the disciplined, proactive
methodology and procedures used to ensure that adequate levels of
service are delivered to all IT users in accordance with business
priorities and at acceptable cost.
Effective SLM requires the IT organization to thoroughly understand
each service it provides, including the relative priority and business
importance of each.

DEFINITION OF THE SLA


Service Level Agreements (SLA) is:
a legal contract that specifies the contractual deliverables, terms
and conditions between the service provider and the end-user.
a formal, legally binding, statement of expectations and
obligations between a service provider and its customers.

Structure of SLA
Parties to the Agreement
Term
Scope

Service Level Objectives


Non-performance Penalty (monetary & non-monetary)
Optional services
Exclusions
Reporting
Administration
Reviews, Revisions, Approvals

Need for SLAs

A communication tool
An expectations-managing mechanism
A conflict reduction tool
An objective process for gauging service effectiveness
A living document

What it is not
A mandate
A unilateral decision making
A quick fix
A financial and technical contract

SLA Formulation Process

Pit-Shell framework for SLA design,


Trienekens at al, 2004
Pit: Every user need can be traced back to
an IT Object e.g. a software application, a
hardware component of an information
system, and/or an infrastructural network
component.
Shell: A set of service processes carried
out by the service provider to establish or
improve the agreed quality of the serviced
IT object e.g. business processes, quality
processes.

Service IT Objects

SLA Sample Metrics

SLA sample metrics

SLA Management Process

Effort in SLA development

SLA DOMAINS

NETWORK SLA
HOSTING SLA
APPLICATION SLA

SUPPORT SERVICE SLA

Nemmadi
Nemmadi was an e-governance project initiated in 2004 by the
government of the state of Karnataka. Aimed at improving the
transparency, accountability and efficiency of the government
administration at the village level, it was an ambitious project conceived to
offer digital services to rural citizens across 800 hoblis (cluster of villages) in
the state. The services included issue of certificates of several kinds, which
entitled the citizens belonging to economically and socially backward
sections of the society to avail of benefits and concessions under various
government schemes.
Telecentres were facilities/kiosks that offered government services (from
the application for a service to its final delivery) to citizens using internet
technology.

Services provided
Services issuing status certificates, which deal with the status of existence
of the citizen. For example, Residence certificate, Caste certificates for
different categories, Widow certificate, and Birth certificate and Death
certificates
Services issuing income certificates, which deal with level of income of
households. These consisted of Income certificate, Unemployment
certificate, Widow pension, Physically handicapped pension.
Services issuing land-related certificates, which deal with the ownership
and cultivation of land. These consisted of No tenancy certificate, Landless
certificate, Land holding certificate, Rights Tenancy & Crops certificate
(RTC), Mutations.

IT Architecture of Nemmadi

Public Private Partnership


The E-governance deptt, Govt of Karnataka floated a RFP from private
sector organizations to set up all the telecentres across the state.
Several companies, including large software companies (e.g., Tata
Consultancy Services, Sify Technologies) responded with their
proposals.
The deal was bagged, by a consortium of three organizations 3i
Infotech, Comat Technologies and N-Logue Communications set up
in 2006.

Public Private Partnership


The initial investment of Rs 300 million had come from the
consortium and the state government, with 3i Infotech bearing
almost 90% of the cost. This amount was intended to cover the costs
of all equipment, connectivity, VSAT operations, real estate leasing,
power, UPS and peripherals.
Comat Technologies was responsible for all the operational aspects of
Nemmadi. It began the roll-out of telecentres in November 2007.
Hughes Communications was also involved for providing VSAT
connectivity. This was the first time that the PPP model was being
used in a project of this kind.

Nemmadi outcome
No Nemmadi at these centers, was how a popular Bangalore
newspaper described Karnataka governments high-profile egovernance initiative called Nemmadi.
Nemmadi means peace of mind in Kannada, the local language
spoken in the state of Karnataka.

SLAs - Setting up telecentres


The e-Governance Department had specified SLAs regarding
number of telecentres to be set up in a month
number of taluk back-offices to be set up in a month
staffing of the telecentres
there were also stipulations for number of women and handicapped operators to
be hired.
Comat Technologies had to pay penalties, based on prefixed rates, per day of
delay in the targets of roll-out
Rs 5000 per day for taluk back-offices
Rs 1000 per day for telecentres.
Rs 50,000 per person for not fulfilling staffing norms.
In all these cases, after an allowance period, the penalty charges were doubled.

SLAs - Operations of telecentres


The SLAs with respect to operations consisted of those relating to
(i) front-end at the telecentre
uptime of telecentre devices
operator attendance and
payment of user fees

(ii) back-end at the taluk back-office

cycle time of the back-office operator for generating office note


exchange of data between telecentre and SDC.

The main hurdles in adhering to the front-end SLAs were

power failure and internet connectivity affected the uptime of devices.


attrition amongst telecentre operators and unavailability of data entry skills.

A penalty was charged for

uptime falling short of 95%.


operator attendance below 95%. - Rs 200 per man-day shortage in attendance
Rs 10 per document that took more than 2 days for data entry.

Nemmadi - Operations of telecentres


Remittance of user fees collected at the telecentres also posed a
challenge. The cash collected by telecentre operators had to be
deposited in the bank within 2.5 days. More than 60% of the
telecentres did not have banks within 15 kms, and it took the
telecentre operator half a day to do this job. The operator, while
depositing the cash collected, missed the mandatory hourly ping
(one of the SLAs on operator attendance) and had to pay penalty for
the same.

Nemmadi - Service Level Management


The e-Governance Department very strictly enforced penalties. The
penalty charges were further enhanced after an allowance period.
Sanjay Chauhan (CEO, Comat Technologies) said,
Despite our bringing the matter to their notice, the e-governance department
continued to hold on to the SLAs in the request for proposal. We should have
been given some leeway in SLA formulation. It should have been a consultative
and flexible process rather than a rigid one like it was. Looking at this mammoth
project and its nature, the government should have relooked at the SLAs from
time to time. We were jammed. Penalty meter was running, and the
government was not accessible at all for any discussion.

Nemmadi - Service Level Management


Collections from Nemmadi were handled by DEDCS. As per the
agreement, whatever proceeds the telecentre operator collected had
to be deposited within 2.5 days in a special account created for this
purpose. Ms. Latha, Asst. Director, DEDCS, said,
We monitored every transaction and the total amount. At the end of the month
we reconciled and there were so many SLAs. Penalty was levied on the basis of
attendance. The operators attendance was recorded bio-metrically. If the
money collected was not deposited on time, interest was levied. There was
software to calculate the penalty per telecentre.

Nemmadi - SLA Problems


Negotiation problems

RFP based

No agreement on the
terms

Efforts vs. Outcomes

Rollout of telecentres

Device uptime;
Telecentre operator
present

Certificate issue?

Unclear service specification

On what basis were


the rollout numbers
or the 95% level
arrived at?

Operator available
95% of the time. 95%
of a
day/week/month?

Payment of user
fees in 2.5 days
calculate 2.5days in
the current batch or
next batch.

Incomplete service
specification

Power outage

Floods affecting
telecentres

Incomplete cost management

To increase operator
attendance or device
uptime, there will be
costs incurred.

Who will bear the


costs?

Dead-end SLA

Penalty as an
outcome

Exit Clauses

Not clearly laid out

SLA design - Nemmadi


maturation

Availability
Service objects
Issue of certificate
(S/W application)
Telecentre devices
State Data Centre
State WAN
Issue of certificate
Service processes
User Support
Enter data
Certify data
Update data
Issue certificate
Security
Maintenance

Performance

maturation

Functionality

Capacity

SLA Problems
Specification of effort vs specification of results

we will respond in minimum x hours vis--vis we will ensure you x certificate issue

Unclear service specifications

Network availability of 98% - what does it mean? How is 98% availability different from 99%?

Incomplete service specifications

Security control and disaster prevention

Insufficient cost management

Dead end SLA documents

The role of facilitator


An independent consultant with SLA expertise who can objectively
facilitate the development process.

Successful SLAs
Attainable
Measurable (user response time vs device uptime)
Understandable (packet collisions; dropped packets)
Mutually acceptable
Meaningful (CPU utilization)
Controllable (power outages)
Affordable

Redressal
Litigation
Alternative Dispute Resolution

Ethical issues in IT Consulting

Unethical Behavior in Consulting


1. Because the consultant wants to have a good relationship with the client, the
consultant quickly adopts the clients perspective on all issues and does not
voice any disagreement with the client, thereby colluding with the client.
2. Because the consultant offered guidance or advice that was well beyond
their expertise, the clients organization implemented action plans that
were destructive to the organization.
3. Because the consultant did not conduct enough discovery (or diagnosis) to
further examine the clients reported issue, the clients organization
implemented action plans that were incomplete or destructive to the
organization.
4. Because the consultant wanted the client to promptly do as the consultant
advised, the consultant pushed their point of view well beyond what the
evidence of the discovery process revealed in the clients organization.

Unethical Behavior in Consulting


5. Because the client wanted the consultant to come to the same conclusion
about the issue as the client, the client somehow did not tell the whole story
to the consultant who, in turn, made the wrong recommendations based on
inadequate information.
6. Because the client wanted to further help the consultant, the client did not
terminate the current consulting project when the outcomes (that were
specified in the projects work plan) are achieved.
7. Because the consultant wanted to help the overall community, the consultant
told investors information that the client believed was being held in confidence
between the consultant and client.
8. When the consultant learned about a particular new model or technique, for
example, in evaluation, he or she tried to convince the client of an issue with
the clients products or services in order to create an opportunity to apply that
new learning.

Ethical opinion
Profit-making cuts ethical limits:
to carry on consulting when useless,
to accept a job without a specific competence threshold,
to suggest a standard solution (with a low cost for the consultant) when the
situation needs a specific approach,
to subordinate the judgment to the client wishes,
to suggest solutions that need longer to be implemented,
to present new problems as relevant,
to subordinate judgment to external (third party) interests,
to use information or specific knowledge about a client to serve another
(competing) client,
to abandon a client for a (stronger and more profitable) competitor.

Ethical opinion
Strategy cuts ethical limits:
to transform the client in a guinea pig without provisions (consultant can have
theoretical competence but not sufficient experience),
to accept new clients when the capacity is fully engaged, especially if it is a big
client,
to serve clients in competition,
to promise more than what can actually be done.

Subjectivity cuts ethical limits:


to get emotionally involved and forget the objectivity,
to overstate the presence and the contents.

Ethical Relationships
Fully ethical practices in which consultant and client are ethical,
Limited ethical practices (only perfect duties) in which the client is not
totally ethical.

Request for Proposal

REQUEST FOR PROPOSAL


BACKGROUND
BIDDING PROCESS
GENERAL CONTRACT CONDITIONS
SCOPE OF WORK
PROPOSAL FORMATS
ANNEXURES

Background of the problem


Organisational issues
Technical issues

Bidding Process

Getting the RFP


Validity of Proposals
Right to accept or reject proposals
Clarifications and amendments of RFP
Earnest Money Deposit
Pre-bid meeting
Process for Selection
Preparation of Proposal
Submission of Proposal
Evaluation criteria
Award of Contract

Eligibility criteria
Proposals will not be evaluated if the Proponents current or past corporate or
other interests may, in the Banks opinion, give rise to a conflict of interest in
connection with this project. Only proposals that comply with all the
requirements of this RFP will be considered.

Evaluation criteria

Evaluation criteria
Technical Proposal (TS a minimum of 70)

Commercial Proposal

Commercial Score of Bidder (CS) = (PC of L1/PC of the Bidder) X 100 % (rounded off
to 2 decimal places)

Final Evaluation

Final Score = TS*0.7 + CS*0.3

Evaluation Criteria

Evaluation criteria (Package selection)


1. Vendor Qualifications
2. Implementation Strategy
3. Licensing and Maintenance Fees
4. Required System Features
5. Desired System Features

Evaluation criteria (Vendor selection)


1. Experience in Saas-based solution
2. Experience in projects of similar size and scope
3. Experience in similar services to municipalities
4. Response to Technical scope of services
5. Overall impression of proposal

Evaluation criteria
Overall value; i.e. cost versus benefit to SIA Group of companies
Point-by-point responses in a compliance table as specified in Section 4 Part 5
Compliance to the Scope of Work
Compliance to Service Level Agreements
Adherence to policies, processes and guidelines
Support Model and Strategies
Governance model
Resource commitment
Long-term strategy for business value
Value added services
Flexibility and adaptability to technology, business and process changes
Technical Expertise
Prior experience

General Contract Conditions

Standards of Performance
Consultant Personnel
Applicable Law
Intellectual Property Rights
Governing Language
Bank Guarantee
Prices
Terms of Payment
Subcontracting
Performance Assessment
Termination of Contract
Resolution of disputes

Standards of Performance
This RFP is for selection of the Consultants for execution of the assignments under the RFP
from time to time. If during execution of the contract, following problems are found, then a
penalty of 1% of the Contract value per week (subject to maximum of 20%) may be
imposed by the Department, which will be the part of the RFP:
a) Quality of deliverable is not up to the mark, (till the quality is improved to the required
extent).
b) Delays in deliverables.
c) Not assigning adequate resources in time.
d) Not deploying resources on a dedicated basis, when required.
e) Assigning resources that do not meet the departments requirements.
f) Inadequate interaction with the department.
g) The work is either not complete or not completed satisfactorily as per the approved
time schedule or the quality of deliverable.

Proposal Content
1. Cover Letter
2. Questionnaire (if any)
3. Vendor Personnel
4. Vendor Qualifications
5. Understanding of Engagement
Required System Features
Desired System Features

6. Proposed Solution Description


7. Work Plan
8. References
9. Licensing and Maintenance Fees
10. Sample Contract

Proposal format

Note
"Consultant" to be appointed shall not bid later on for being appointed
as System Integrator for CBS . The successful bidder, who would be
appointed as Consultant for the CBS Project, shall not participate in the
bid that may be sought later for being appointed as System Integrator
for providing and implementing the CBS for the Bank.

IT Governance

IT Governance
Specifying decision rights and accountability framework to encourage
desirable behavior in the use of IT.
Who is responsible for IT investment activities?
Who provides input into IT investment activities?
What controls are in place to ensure IT investment activities are carried out
positively?

Governance determines who makes the decisions.


Management is the process of making and implementing decisions.

IT Governance and Corporate Governance


questions

IT Governance Elements

IT Governance Elements

IT Governance Frameworks
Nolan and Mc Farlan - The IT Strategic Impact Grid
Weill and Cross - Governance Assessment Framework

Feeney Wilcocks - LSE


COBIT ISACA (Information System Audit and Control Association)

The IT Strategic Impact Grid

IT Strategic Impact Grid Governance questions

Weill and Ross Governance


Assessment Framework
Source: MIT Sloan Center for Information Systems Research (CISR).

Weill and Ross Governance Assessment


Framework
IT Decisions Domains: What are the key IT decision areas?
IT Governance Archetypes: Who governs the decision domains and
how is it organized? Who decides or has input, and how?
Implementation Mechanisms: How are the decision and input
structures formed and put in place?

What decisions must be made?

Delta Airlines - Architecture

Metlife Architecture

Infrastructure decisions

System Architecture - Infrastructure

System Architecture

Architecture - Business Applications

Framework for IT Governance Decisions

IT Governance Archetypes for Decision Rights

Framework for IT Governance Decisions

Types of Duopoly Bicycle wheel or T-shaped

How enterprises govern IT

Case Du Pont
IT Principles

Input

Decision

IT Architecture

IT Infrastructure

Input

Decision

Input

Decision

Arch
team

IT Leaders

Compe IT Leaders
tency
Center

Business
Application

Input

Decision

IT Investment

Input

Decision

Senior
execs,
Business
Leaders

Corp IT,
Business
Leaders

Business
Monarchy
IT
Monarchy

Feudal

Busin
ess
unit

Business
Leaders

Federal

Duopoly

Senior
Execs,
Corp IT

Senior
Execs,
Corp IT

Case Development Bank of Singapore


IT Principles
Input
Business
Monarchy

Decisio
n

IT Architecture
Input

Decision

IT Infrastructure

Business Application

Input

Input

Decisio
n

Corp.
Office

Decision

IT Investment
Input

Corp.
Office

IT
Monarchy

Arch.
Office

Project
Council,
Corp.
Office

CIO IT
CIO IT
Leaders Leaders

Feudal
Federal

Duopoly

Biz
Leaders
Biz
Process
Owners
Biz
leaders,
IT
leaders

Biz
leaders
IT
leaders

Decision

Biz
leaders,
IT
leaders

Mechanisms for Implementing IT Governance


Decision-making Structures
Alignment processes

IT investment approval process


Architecture Exception Process: Business case for the threshold request
SLAs
Chargeback
Project tracking
Business value from IT

Communication Approaches

Senior Management Announcements


Formal Committees
CIO Office

Implementation of
Decision Making Structures
Business Monarchy
Executive Committees
CEO works with a small team of top executives to ensure that IT aligns with corporate
objectives.
CEO directs the CIO.
A subset of the senior management team focuses on IT issues (IT Policy Board with a few
Executive Board members)
CIO is a part of the executive committee.

Federal
Senior Executive team drew members from all business units - desire for shared data and
IT infrastructures.

Decision Making Structures


IT Monarchy

IT Leadership Teams

IT functional heads (operations, architecture, applications, and so on).


CIOs of business units.
IT vice presidents from all business units and functions.

Architecture committees

Tech experts defining standards and granting exceptions.


Advise the IT leadership team on architectural issues.
Some times a governance decision making body.

Duopoly

IT Councils with Joint Business/IT Membership


Process organisations
Business IT Relationship Managers

Weill and Ross methodology


Use the table framework to examine and document the 'current state' (the
existing situation).
Define the desired objectives and the associated behavior.

Determine what IT governance needs to be in place to attain desired


objectives and behavior.
Identify IT principles for governance including metrics, roles, responsibility and
accountability.

Start making the transition from the 'current' to the 'desired' state.

Feeney and Wilcocks Nine Core IS Capabilities

COBIT (Control Objectives for Information and


related Technology)
COBIT is regarded as the world's leading IT governance and control framework.
Originally created by ISACA (Information Systems Audit and Control Association),
COBIT is now the responsibility of the ITGI (IT Governance Institute), Illinois.
It defines a set of generic processes for the management of IT. It defines each
process together with process inputs and outputs, key process-activities, process
objectives, performance measures and an elementary maturity model.
It provides a set of recommended best practices for governance and control
process of information systems and technology with the essence of aligning IT
with business.

How to assess IT Governance

IT Governance Maturity Model


0. Non-existent
Governance is predominantly centralised within the IT organisation, and IT budgets and decisions
are made centrally. Business unit input is informal and done on a project basis. In some cases, a
steering committee may be in place to help make resource decisions.
1. Initial /Ad Hoc
Governance is difficult to initiate and the central IT organisation and business units may even have
an adversarial relationship. The organisation is trying to increase trust between IT and the
business and there are normally periodic joint meetings to review operational issues and new
projects. Upper management is involved only when there are major problems or successes.
2. Repeatable but Intuitive
An IT steering committee has begun to formalise and establish its roles and responsibilities. There
is a draft governance charter (e.g., participants, roles, responsibilities, delegated powers, retained
powers, shared resources and policy). Small and pilot governance projects are initiated to see
what works and what does not. General guidelines are emerging for standards and architecture
that make sense for the enterprise and a dialogue has started to sell the reasons for their need in
the enterprise.

IT Governance Maturity Model


3. Defined Process
The IT steering committee is formalised and operational, with defined participation and
responsibilities agreed to by all stakeholders. The governance charter and policy is also formalised
and documented. The governance organization beyond the IT steering committee is established
and staffed.
4. Managed and Measurable
There is a fully operational governance structure that addresses a consistent architecture for reengineering and interoperation of business processes across the enterprise, and ensures
competition for enterprise resources and ongoing incremental investments in the IT infrastructure.
IT is not solely an IT organisational responsibility but is shared with the business units.
5. Optimised

The governance concept and structure forms the core of the enterprise IT governing body including
provisions for amending the structure for changes in enterprise strategy, organisation or new
technologies

SA Water - Questions
As a consultant help Johnston to evaluate Business-IT alignment and
IT Governance at SA Water.
What recommendations do you have for SA Water?

Outsourcing Perspectives

Outsourcing
SHORE
ON

OFF

OUT

SOURCE

IN

ASSETS OWNED BY THE COMPANY ASSETS OWNED BY SUBSIDIARY


PRODUCTION AT DOMESTIC BASE
PRODUCTION OVERSEAS
EXCLUSIVE
IN HOUSE

CAPTIVE

ASSETS OWNED BY THE VENDOR


PRODUCTION AT DOMESTIC BASE
VENDOR SERVING OTHERS

ASSETS OWNED BY THE VENDOR


PRODUCTION OVERSEAS
VENDOR SERVING OTHERS

ONSHORE

INDEPENDENT SERVICE PROVIDER

IT outsourcing arrangements
Stage 1

Stage 2

Stage 3

Stage 4

Company
market

Business
units

Company
market

IT
market

IT

INHOUSE
Internal IT
projects

CAPTIVE
Offshore

IT gains market
orientation

INDEPENDENT
SERVICE PROVIDER
Market
Orientation
and free choice

Transaction Cost
Total cost = Production cost + Transaction cost
Production cost = cost of capital, labour,
material

Transaction cost = costs of monitoring,


controlling, and managing transactions.

Transaction Cost
Total cost = Production cost + Transaction cost

Transaction cost = Co-ordination cost +


Operations risk +
Opportunism risk

Transaction Costs
Exante:
Search costs: cost of searching for providers of the product
/ service.
Selection costs: cost of selecting a specific vendor.
Bargaining costs: costs incurred in agreeing on an
acceptable price.

Exposte:
Enforcement costs: costs of measuring compliance, costs of
enforcing the contract etc.
Costs of coordinating work: this includes costs of managing
the vendor.

Transaction Cost Theory


The three key transaction characteristics are
(1) asset specificity
(2) frequency of transactions
(3) uncertainty

Asset Specificity
Asset specificity refers to the degree to
which the investments necessary for a
transaction are specific to that particular
transaction.
Such a situation can lead to dependencies
between buyers and suppliers.
The transaction partner who invests in
specialized assets is vulnerable to
opportunism and will consequently make
special efforts to protect investments.

Frequency of transactions
TCE asserts that the frequency of transactions
influences both transaction and production
costs.
Firms have an incentive to internalize
production with increasing transaction
frequency

Uncertainty
Uncertainty, can come from different sources
environmental variability: such as technological
uncertainty, deals with the difficulty to foresee
and anticipate. (bounded rationality)
behavioural uncertainty : it is based on the threat
of opportunism and refers to the difficulty of
monitoring and evaluating the behaviour and
performance of the transaction partner. (small
number of suppliers)

Sourcing Strategies
Asset Specificity
Frequency

Non-specific

Mixed

Idiosyncratic

Occasional

Outsource
(with standard
contract)

Outsource
(with detailed
contract)

Outsource
(with detailed
contract)

Recurrent

Outsource
(with standard
contract)

Outsource
(with relational
contract)

Insource

Mapping Contract Types


Sl. No.

Contracts

Types

Vendors standard contract e.g. rate card

Standard

Detailed contracts with contingencies,


Detailed
measures of performance, service levels and
penalties for non-performance

Short contracts with no detailed clauses

Relational

Mapping Transaction Types Frequency


Sl. No.

Activities

Transaction Types

Systems development

Occasional

Systems maintenance

Recurrent

Systems support

Recurrent / Occasional

Data Center operations

Recurrent

Analyst training

Recurrent

User training

Recurrent

Mapping Transaction Types Asset Specificity


Sl. No.

Activities

Specificity

Data Centre operations / Support


commodity

Non-specific

Applications development / Requiring


specialised skills or knowledge

Idiosyncratic

Total out/insourcing / Non-specific and


customised

Mixed-recurrent

Propositions of TCE
When production and transaction costs are
considered, outsourcing is more efficient than
insourcing for all transactions except:
(a) recurrent-idiosyncratic transactions; or
(b) asset-specific transactions with a high degree
of uncertainty; or
(c) transactions with a small number of
suppliers.

Agency Cost Theory


A contract under which one or more persons (principals)
engage another person(the agent) to perform some service
on their behalf which involves delegating some decision
making authority to the agent.
Focus of Agency theory is on determining the most efficient
contract between principal and agent.
Behaviour based contract & Outcome based contract.

Agency Cost theory


Risk averse principal is more likely to sign outcome based contracts.
Outcome measurability

Risk averse agent is more likely to sign behavior based contracts.


When the principal has information to verify agent behavior
Task programmability
Length of agency relationship is more likely to lead to behavior based
contracts.

When the outcome is uncertain, the principal and agent are more
likely to sign behavior based contracts.

Agency Cost theory

However,
Outsourcing is not an Economic Decision
alone!!!
Hence,

Resource Based View of the firm.

Resource Based View of the firm


The view conceptualises the firm as a bundle
of resources/capabilities. It is these resources,
and the way that they are combined, that
make firms different from one another and in
turn allow a firm to deliver products and
services in the market.

Resources leading to Competitive


Advantage
Resources need to be:
Valuable
Rare
Difficult to imitate
Non-substitutable by other resources

Resource Based View of the Firm


Assertions:
Resources and capabilities possessed by competing firms may
differ (Resource heterogeneity)
These differences may be long lasting (Resource immobility)

Conditions for resources being a


competitive advantage
Given resource heterogeneity and immobility and
satisfaction of the requirements of value, rareness,
imperfect immitability and non-substitutability, firms
resources can be a source of competitive advantage.

Resources can be exploited by means of contracts, and this


perspective helps in deciding about which activities to
outsource and which to perform in-house.
In order to fully exploit a firms existing resources and
capabilities and to develop competitive advantage, the
external acquisition of complementary resources and
capabilities may be necessary.

Resource based view

Resource Dependence Theory


Focuses on the external environment of a firm
i.e. external elements control of some
resources which the organization needs.
The organisations dependence on any other
organisation is determined by the importance
of the resource to the organization, the
number of potential suppliers, and the cost of
switching suppliers.

Vendors Outsourcing Process Model

Perspectives of outsourcing
Perspective

Theoretical Frameworks

Primary Research Question

Economic

Transaction Cost
Economics
Agency theory

Whether to outsource and


how to contract

Strategic

Resource Based View

What to outsource

Social Perspective

Social capital
Social exchange

How to maintain relationships

Vermont Teddy Bear


Bob decides to outsource IT at VTB. Help him
arrive at decisions Whether he should outsource or not?
Whether partial outsourcing or total outsourcing?
How should he go about doing it?

Emerging Trends

Hype Cycle for Emerging Technologies


Source: Gartner, 2015

Influential technologies
1.
2.
3.
4.
5.
6.
7.
8.

Analytics Content / Predictive/ Social


Machine Learning
3D Printing
Cloud Computing
Internet of Things
Wearables
Payment Systems NFCs / Cryptocurrencies
Data Science

Six Business Era Models in the Digital Business


Development Path
Stage 1: Analog
Stage 2: Web
Stage 3: E-Business
Stage 4: Digital Marketing
Stage 5: Digital Business
Stage 6: Autonomous

Impact of emerging technologies


Digital Marketing (Stage 4): It sees the emergence of the Nexus of Forces (mobile, social,
cloud and information). Enterprises at this stage grapple with tapping into buyer
influence to grow their business.
Data Science; Prescriptive Analytics; Big Data; In-Memory DBMS; Content Analytics;
Hybrid Cloud Computing; Gamification; Augmented Reality; Cloud Computing; NFC; Virtual
Reality; Gesture Control; In-Memory Analytics; Activity Streams; Speech Recognition.
Digital Business (Stage 5): focuses on the convergence of people, business and things.
The Internet of Things and the concept of blurring the physical and virtual worlds are
strong concepts in this stage.
Digital Security; Smart Workspace; Connected Home; Speech-to-Speech Translation;
Internet of Things; Cryptocurrencies; Wearable User Interfaces; Consumer 3D Printing;
Health Monitoring.
Autonomous (Stage 6): This stage is defined by an enterprise's ability to leverage
technologies that provide humanlike or human-replacing capabilities .
Virtual Personal Assistants; Human Augmentation; Brain-Computer Interface; Quantum
Computing; Smart Robots; Biochips; Smart Advisors; Autonomous Vehicles; NaturalLanguage Question Answering.

Emerging Technologies and


Business Organizations

Trend - Increased Customer Involvement


Self-service

Personalisation
Experience sharing
Co-creation

TESCO Virtual Sub Way Store

Nike - Personalisation

Clorox Engaging customers for product ideas

Unilever Engaging customers for promotional activities


In 2010 Unilever caused an uproar in the
advertising industry by severing its long
term relationship with agency Lowe and
Partners. Instead of the traditional form of
devising an advertising campaign, Unilever
opted to run a crowdsourcing competition
in search for a new campaign.

Unilever are no strangers to cocreation having employed eYeka,


the leading provider of co-creation
services, working for an assortment
of Unilever brands including Lux,
Lipton, and Cornetto.

The Unilever and eYeka partnership is a world-first because of its strategic nature
and ambition. This is a strong signal that confirms that crowdsourcing is being
recognised as a business accelerator. We have long advocated turning to
consumers for ideas and content with consumers as a source of competitive
advantage so we are thrilled to partner with Unilever to bring this approach to a
new scale. - Franois Ptavy, Chief Executive Officer, eYeka

Ofwat: Engaging customer for pricing


The Aim:
Ensure water and sewerage sectors in England and Wales provide customers
with good quality and efficient services at a fair price.

The Problem:
What is the right Price?
Services are provided by monopoly industries.
Customers demand Want a voice on all issues that affect their bill.

The Traditional Approach:


Identify Strategic needs based on which a business plan is formulated.
The business plan determines the price determination of services.

The New Solution:


Customer Engagement to create a mutually agreeable business plan.

Helps industry identify priority services that the customer value.


Helps customers understand the technical complexities of the business.
Provide a service that is valued by the customers at a price perceived fair by them.

Trend: Opening Innovation to Stakeholders

Opening across Value Chain:


R&D (Ecomagination, IdeaConnection,)

Idea Sourcing(Dell IdeaStorm, Fiat Mio)


Branding and Marketing (Volkswagen Canada)
Design (Fluevog Open Shoe Design)

GE: Open Innovation


GE

Launched an open innovation challenge that fits its ecomagination (clean energy)
theme.
Committed $100mn of its own money to launch companies in the space of clean
energy.
Partnered with VCs to accelerate the development and deployment.
Involved participants, independent experts from the technology and business domain
along with teams from GE and VCs to evaluate the ideas in terms of the idea and
business potential.
75,000 people participated in the process either through submitting ideas themselves
or commenting on the submissions of others.
23 ventures were funded with roughly $140mn committed of the $200mn pledged.

IdeaConnection: R&D

Fiat Mio: Idea Sourcing

Fluevog: Design

Trend: New Business Models


New forms of engagement: Vendors and customers as Partners (Quirky)
New Intermediaries for multichannel delivery, new payment methods
(Airtel Money).

Quirky: New Partnership models

Airtel Money: New Payment Methods


Easy, instantaneous, convenient payments to friends and family in various parts of the country.

Sending money to a different location or state when you do not know the
recipients bank account number can be quiet a challenge!
A mobile number acts as a mobile money account, thus facilitating
money transfer without knowing the bank account number of a
recipient.
Provides instantaneous transfers, as opposed to slower means like using
money orders or friends and family and other informal means.
Increases convenience as it reduces travel time if sender physically travels
to the recipients location.
Brings potential informal money transfer into mainstream money transfer
channels.
Increases reach of the organization, as it can capture transactions that
were so far considered difficult to conduct through formal payment
channels.
Uses USSD technology to ensure availability of service across a variety of

Mobility

Trend: Responsive Supply Chains


Supply Chain Flexibility

Supply Chain Collaboration


Process Automation

Food Ink restaurant: 3D printing

P&G: Responsive Supply Chain


What they did:

P&G introduces technology based inventory models to optimize each stage of the supply chain.
Uses mulitechelon inventory optimization software to minimize inventory costs across the endto-end complex supply chain..
Improved end-to-end visibility of information/ inventory/demand.
Created a Supply Chains Environment Sustainablity Scorecard to asses upstream impact of
supply chain.
Assess and help supplier sustainability issues, draw on innovative ideas.

Created a responsive supply chain by improving end-to-end visibility, began to produce and
supply products based on customer demand.

Benefits:

2
4

Enhanced the quality and efficiency of supply chain


Improve ability to innovate
Reduce overall operating costs
Achieved $1 billion in bottom-line operational savings from reductions in energy, water, waste
and CO2 at its own facilities over the past ten years.

Trend: Launching and Utilizing Open Data


Freely available data from the Indian Government is an important national

resource, serving as fuel for entrepreneurship, innovation, scientific


discovery, and other public benefits. (data.gov.in/)
New intermediaries and business models emerging to take advantage of open data.

BillGuard: Open Data


What they did:
Leverages the Consumer Financial Protection Bureaus new
credit card complaint database.
It helps customers find deceptive, erroneous, and fraudulent
charges on users credit card and debit card bills, to allow
them to monitor and resolve unwanted grey charges.

Benefits:

Alerts consumers whenever a charge on their bill has been


reported by others as fraudulent and then assists them in
getting their money back.

Open Data - examples


iTriage is a startup that has utilized downloadable information from the
Department of Health and Human Services (HHS) about the location and
characteristics of health care providers to fuel a mobile application that
has helped 8 million people find the best local doctors and hospitals that
meet their needsliterally saving lives. Founded by an emergency room
doctor, iTriage has hired 90 people.

OPower leverages government data on energy usage, weather, and the


energy efficiency of appliances to help customers get personalized advice
on how to save on their energy bills. Employing over 200 people, OPower
has helped residential customers save more than 1.4 terawatt hours of
energy (enough to power all of the homes in a small city for a year) and
over $165 million on their energy bills.

Members of the Ecosystem

Enterprise

IT Consulting imperatives

Consulting Imperatives: Open Innovation


IP strategy for open innovation
Develop and deploy transparency strategy

Deploying Partner collaboration platforms


Develop and deploy more integrated cross enterprise collaboration tools.
Develop a unified view of partner

Consulting Imperatives: New Partnership


Models
Partner Management and Digitisation

Formulate and monitor new kinds of partnership and co-creation engagements (IT services)
Support new forms of e-sourcing (e-market sites, e-reverse auctioning)

Visibility across partners in the ecosystem

Business Process and Data Integration across organisations.


Unified view of partner.

Security and Privacy

Develop transparency strategy

Deploying Partner collaboration platforms

Develop and deploy more integrated cross enterprise collaboration tools.


Develop a unified view of partner

Consulting Imperatives: Responsive Supply


Chains
Digitise supply chains
Develop systems and processes for enabling business processes across organizations
in the supply chain.

Design and build a holistic collaborative supply chain network platform.


Integrate systems across suppliers.
Standardise data and processes throughout the supply chain.
Automate inter-organizational processes.

Enable adoption of data governance best practices.

Establish processes and team to ensure sustained and effective data governance
Transparency strategy

Consulting Imperatives: Launching and


Utilizing Open Data
Data Analytics - Scanning environment for data and develop ideas.
Data Governance.
Security / Privacy.

IT Consulting Emerging areas


Open Innovation

IT Consulting Emerging Areas


Transparency Strategy Software, Process, Information

IT Consulting Emerging Areas


Integration of Systems
Analysing and visualization of data to obtain insights

DBMS-based, structured content - RDBMS & data warehousing, ETL & OLAP, Dashboards & scorecards,
Data mining & statistical analysis.
Web-based, unstructured content - Information retrieval and extraction, Opinion mining, Question
answering, Web analytics and web intelligence, Social media analytics, Social network analysis, Spatialtemporal analysis.

Mobile and sensor-based content - Location-aware analysis, Person-centered analysis, Context-relevant


analysis, Mobile visualization & HCI.

Data Governance

Summary - Emerging Trends in


Consulting

Emerging trends in business organisations


During the last decade, the business infrastructure has become digital
with increased interconnections among products, processes, and
services.
Digital technologies (viewed as combinations of information,
computing, communication, and connectivity technologies) are
fundamentally transforming business strategies, business processes,
firm capabilities, products and services, and key interfirm
relationships in extended business networks.

Digital Business Strategy


Scope:
Digital Business Strategy Extends the Scope Beyond Firm Boundaries and
Supply Chains to Dynamic Ecosystems That Cross Traditional Industry
Boundaries

Scale:
Rapid Digital Scale Up/Down as Strategic Dynamic Capability (Cloud model)
Network Effects Within Multisided Platforms Create Rapid Scale Potential
(Google with Android)
Scale Through Alliances and Partnerships (Aggregators like Bookmyshow,
Makemytrip)

Digital Business Strategy


Speed
Speed of Product Launches
Speed of Decision Making
Speed of Network Formation and Adaptation

Sources of Value Creation and Capture


Increased Value from Information
Value Creation from Multisided Business Models
Value Capture through Coordinated Business Models in Networks

Empowering Business Ecosystem


Providing engagement platforms for
innovation and co-creation.

Customers and Partners in


Open Innovation
Responsive Supply Chains
Launching and Utilizing Open
Data
New Intermediaries for:
multichannel delivery,
new payment systems,
and global partnerships

The CIO needs to


enable the business
ecosystem, which has
become a more
complex community of
organizations
transacting across
distributed, adaptive,
open, social, technical
systems.

Integrating business systems of


customers, suppliers, and partners.
Facilitating end-to-end data
visibility.

Building active defense/security


systems.
Factoring for transparency, scalability,
and constant evolution of systems.

4
1

IT Management Concerns

Business & IT Trends Institute Report, 2015

IT CONSULTING GUEST LECTURE

July 2016

AGENDA
Session I

RFP Introduction
Lifecycle of RFP
Structure of RFP
Response format
Evaluating response
Typical Issues & Challenges

Session II

IT Strategy
IT Governance
IT Portfolio Management
Consulting Skills

SESSION - I

Request For Proposal (RFP)

RFP AN INTRODUCTION
Understanding RFI, RFQ & RFP
RFI I know what I want to solve my problem, but just need some information
RFQ I know what I want to solve my problem, but I need vendors to bid for the service (specifically price, payment
terms, and may include service quality aspects as well)

RFP I know I have a problem, but there could be multiple ways to solve it and hence need potential vendors to
explain how they would help me

RFP in IT Consulting (Sample use cases)


IT Outsourcing partner
Software product selection
Cloud solution provider selection

LIFECYCLE OF RFP
Develop

Define problem
statement
Chart out the scope of
required service
Determine evaluation
criteria
Develop milestones &
timelines

Release

Shortlist vendors
Release the RFP to
respondents
Provide additional
clarity if required
Confirm the interest to
response
Receive responses

Evaluate

Award &
Finalize

Invite respondents for


discussions

Coordinate due
diligence if required

Evaluate the
responses

Work with the


potential vendor and
finalize contract terms

Shortlist the potential


vendor

Award the contract &


monitor the progress

STRUCTURE OF RFP
Section Header
Summary / Overview

Section Description
Brief summary of what is present in the RFP

RFP Guidelines

High level guidelines about timelines, responses, general rules, sub-contract etc.

Contract terms

Legal terms, jurisdiction etc.

Purpose & Objectives

Organization Background

Service Scope & Guidelines


Timelines
Evaluation Criteria
Response format

Key purpose of this RFP. This section will contain the details about the clients
problem, the kind of solution they look for, the type of services they require from
vendors etc.
Details about the organization such their structure or existing landscape etc. that will
help the respondents to understand the request better
Details about all the components of the service requested in the RFP. This section will
provide the detailed scope and the requirements to be satisfied by the vendors
solutions
Detailed timelines along with all the milestones associated with the RFP
Parameters based on which the responses will be evaluated
A sample format that can be used by the respondents to respond

STRUCTURE OF RFP SAMPLE

RESPONSE FORMAT
Section Header
Vendor Profile
Understanding of the
requirements
Proposed solution approach
Case studies
Exclusions
Proposed timelines

Commercials

Appendix
Supporting documents

Section Description
Brief overview of vendors offerings and capabilities
Clear articulation of in-scope, out-of scope services/products as understood by the
vendor. All the assumptions are also stated to avoid ambiguity
Detailed description of the solution proposed by the vendor to meet the requirements
stated in the RFP by client
Sample case studies showcasing vendors experience in serving clients in similar
business as the one stated in RFP
Part of the services/product specifications that will not form a part of the solution
approach
Detailed timelines along with all the milestones associated with the solution approach
Details on the pricing of the product/services with all the cost elements in terms of one
time installation cost, manpower cost, license charges, recurring development,
maintenance and support charges. Service terms and conditions are also stated
explicitly in this section
Details on the topics covered in brief in the preceding sections of the response
Additional documents, references or other materials used during creation of solution
approach

RESPONSE FORMAT SAMPLE

EVALUATING RESPONSE
Responses to RFP are evaluated based on evaluation criteria decided by the sponsors. Following are
some of the attributes based on which responses from vendors could be evaluated
Functional fit

Technical fit

Cost

Vendor profile

Evaluation of the extent to which the vendors solutions/offerings are able to meet the stated requirements
Extent to which the proposal meets stated warranty requirements

A measure of technical attributes of the solution such as underlying platform, integration capabilities, security,
architecture, system scalability etc.

Estimation of Total cost of the solutions/services based on cost elements such as one-time cost, licensing fees,
annual fees, consulting fees etc.

A measure of product vendors financial stability, intellectual capital, experience in serving similar clients, ability to
support implementation and maintenance of their solution, availability of customer references etc.

EVALUATION SCORECARD SAMPLE

TYPICAL ISSUES & CHALLENGES


Some of the typical challenges we face at the various stages of RFC are as follows:

Develop

Ambiguous statement of
problem and
requirements
Water tight specifications
limiting any out-of-box
solution (in case of
products)

Release

Inviting non-serious
vendors

Evaluate

Evaluating on price alone

Failing to address the


initial concerns of the
vendors

Missing the
regulatory/legal
restrictions on working
with a vendor

Missing the timelines for


various RFP stages

Lack of clarity to handle


any change in scope

Award &
Finalize

Ambiguous exit clause in


the final proposal
Absence of robust
governance process to
monitor the performance
Mistakes in the response
brought into notice by
vendors after the contract
is awarded

SESSION - II

IT Strategy Consulting

IT STRATEGY
IT Strategy
How should IT support the delivery of the business strategy?
How do we configure our resources to deliver?

Business Strategy
Where should we compete (markets, segments,
products etc.)?

Corporate Strategy
What business should we be in?

IT STRATEGY EXAMPLE I
Translating business priorities/objectives of an financial services company
Business Objectives

Business Capability

To become a bank
that is most preferred
by the customers in
South India

Ability to provide
online facilities for
customers to perform
banking operations
such as Opening a
Fixed deposit,
recurring deposit etc.

IT Capability
Online platform that
has multiple portals
and links to address
customer requests

IT Project
Develop an in-house
application with a
Java front end and
Oracle database all
hosted in Linux
servers

IT STRATEGY EXAMPLE II
Translating business priorities/objectives of a fashion retailer
Business Objectives

Business Capability

To deliver superior
customer shopping
experience through
all the channels of
interaction

An intuitive platform
that offers rich
features to aid the
customers while
shopping

IT Capability

IT Project

Mobile application
that displays the
catalog of products
along with customer
reviews and
discounts for bundled
products

Develop a mobile
application with a
HTML5 front end that
interacts with multiple
databases at the back
end with a fast
response time

IT STRATEGY EXAMPLE III


Translating business priorities/objectives of a global manufacturing firm
Business Objectives

Business Capability

To enhance global
operational efficiency
and reduce the
operational expenses
by 10%

Clear visibility into the


shop floor operations
and the ability to track
inventory, WIP &
finished goods

IT Capability
A standardized ERP
package that is
centrally deployed,
that can provide the
necessary metrics to
monitor operations

IT Project
Perform an
assessment of the
manufacturing
business process and
execute a ERP
vendor selection
exercise

IT Strategy is all about defining the roadmap for the clients IT function to align their IT with
their business objectives

IT STRATEGY - SAMPLE DELIVERABLE

IT GOVERNANCE
IT Governance has many facets to it. Depending on the clients need and problem, the solution varies.
IT Governance

IT Supply
governance

IT Demand
governance

Focuses on how IT should do what


it does

Focuses on what IT should work


on

Ensures that IT organization


operates in an effective and efficient
fashion

Ensures Effective evaluation,


prioritization & funding of IT demand
(investments)

Primarily a CIOs responsibility

Managed by business together with


CIOs

Domains: IT Service Management,


IT Organization, Operating model,
Business Continuity

Domains: IT Performance
Management, Portfolio
Management, Strategic alignment

IT GOVERNANCE SAMPLE DELIVERABLE

IT PORTFOLIO MANAGEMENT
What is IT Portfolio?
IT Portfolio represents a snapshot of the IT projects and programs that are linked to the strategic goals and objectives of the
organization

Objective of Managing IT Portfolio:


Maximizing value (tangible and intangible) of IT Investments in alignment with Business & IT Strategy of an organization

How does managing IT portfolio help?


IT Portfolio management provides the mechanisms and structures to help improve the use of scarce resources to deliver the
portfolio of investment and strive to achieve most possible realized value from this investment

IT PORTFOLIO MANAGEMENT
Here are some of the key factors that drive portfolio management decisions:
Nature of the project: Enabler or Business Critical

Project benefits: Ranges from financial


benefits to Strategic benefits

Project Category: Grows business or


Innovates business

Investment
decisions

Risk of execution: High or Low risk of causing


disturbance to the existing business processes

Resource requirements: Complex or


easy to get required resources

Interdependency: Isolated business process or one that can impact several other
processes or applications

IT PORTFOLIO MANAGEMENT SAMPLE


DELIVERABLE

CONSULTING SKILLS
Following are some of the key skills and techniques that anyone will require to execute a consulting
assignment

Presentation skills

Story
boarding

Core
Consulting
Skills

Generating &
Validating
hypothesis

Interviewing
Skills

INTERVIEWING SKILLS
Interviewing is one of the key aspects of any consulting engagement. How we conduct interviews is of
utmost importance
How do you prepare before the
interview?

How do you open an interview?

How do you keep the momentum


during the interview?

How do you close an interview?

How do you follow-up after an


interview?

GENERATING & VALIDATING HYPOTHESIS


A Sample Problem statement:
There were huge number of escalations on the help desk tickets that were assigned to the finance department

Initial hypothesis:
Finance department didnt have the right amount of staff to support the resolution of help desk tickets
Supporting hypothesis:

The resolution SLA & response SLA were constantly breached for many of the help desk tickets assigned to Finance
department
There was no formal handover of applications turned over to Finance department when there is a production release

Analysis required to prove/disprove the hypothesis

Review the tickets resolved by Finance department and identify the number of tickets that breached SLA
Analyze the handover process that takes place between development & support teams

STORY BOARDING
What is the need for story boarding?
How we communicate our message and the structure we use will either help to transfer our ideas and message clearly to the
audience or leave them utterly confused.
The purpose and benefits of a storyboard are:
To structure and prioritize key messages
Support the messages with trustworthy information
Determine how you want to pitch the story
Ensure the presentation is client centric whats in it for me? (WIIFM)

STORY BOARDING
Factors that can influence your STORY:

OBJECTIVE

Do you want to inform or persuade?


Do you want to propose a strategy?
Do you want to give a demo?

CONTENT

Is it formal / informal?
Do you have less time or more?
Is it a workshop session or a one-to-one discussion?

AUDIENCE

Are the audience neutral or hostile?


Are the audience technical or more focused on business?

PRESENTATION SKILLS
What makes an impactful presentation?

Proper Eye Contact

Appropriate Facial Expression

Taking a pause when required

Listening to questions from audience

Answering to the point

Being mindful of the time

PRESENTATION SKILLS
PREPARE

Agree on content
Allocate sections/slides to SMEs
Consolidate materials
Review flow & content

EVALUATE

Seek feedback
Identify areas of improvement
Reflect & improve

PRACTICE

Rehearse
Work on body language
Stress on key messages

THANK YOU