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By Tom Groenfeldt
Just about everyone in IT these days talks about alignment, pretty much nonstop. Susan Watson of IBM says her company has actually been doing something about it -- and saving $1 billion in productivity a year for the last couple of years. That’s serious money, even at IBM.
Watson, who spoke at the recent Fusion CEO-CIO Symposium in Madison, Wisc., has one of the longer titles in IT -- VP of radical simplification and process-led enterprise integration, enterprise on demand transformation. Her job is to look at technologies and figure out how to use them to provide business value, and she can point to some considerable successes.
The company put smart analytics in a cloud where anyone in IBM can access it. It now contains over a terabyte of data and, when she checked the night before the conference, 84,000 people in the company were using it.
“By using this data and employing best practices we have been able to reduce our cycle time by 30 percent and attain a 33 percent reduction in component cost,” she explained. IBM has long been an active proponent of asset reuse, but in the last year it tied compensation to reuse and saw a 50 percent improvement, coupled with a 20 percent reduction in defects.
The company’s program is demanding and seeks continuous improvement. In fact, executives are measured on continuous transformation in their organizations.
Watson described transformation as an integration of a business process management (BPM) framework and process alignment. The framework aligns and integrates strategic intent with process operations, and it enabled $369 million of savings in 2009. When her group reviewed the company’s BPM they identified gaps in the process which had to be filled, and they filled them.
Success requires executive engagement on the business side and clear ownership and responsibilities. “Collaboration and shared goals are wonderful, but in the end what we found was we needed to understand whose job it was to deliver X, so we tied specific deliverables around BPM with ownership of deliverables,” said Watson. Key performance indicators were tied to the company’s goals, not IT’s goals, she added.
The company is constantly reviewing its portfolio of applications to determine whether they are delivering value to employees and customers; what they cost to run, maintain, and develop; and whether they are viable and will remain viable. Then the decision is made to invest, sunset them or let them die a natural death.
The goal is to spend 80 percent on strategic and tactical applications and only 20 percent on legacy applications, the inverse of what many companies find in their IT budgets. Developers leave legacy alone except for mandatory or legally required changes. Using a portfolio approach to applications has helped the company save 40 percent on development and maintenance in the last four years and cut the number of applications by 75 percent over 10 years. Consolidating by business process can uncover strange things, like 22 separate invoicing systems. Now IBM has a single enterprise invoicing system.
Watson admitted her push to let some applications die, and to starve others, isn’t universally popular.
“Some applications being starved have caused me to worry about my tires in the parking lot,” she said. She has found architects to be very helpful in evaluating the business value of applications. “Enterprise architects can be the tie between people doing IT day to day and the people in the business who can identify what parts of an application you can actually kill off,” she said.
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