By Kamal Bhadada, President, Communications, Media and Information Services, Tata Consultancy Services
Businesses of all sizes, across all industries and in all geographies are facing a pace of change faster than anything they are likely to have experienced before. They also face a trio of pressing corporate needs – increase revenue, reduce costs and provide superlative customer experience.
These companies’ boards and investors don’t want to hear changing times as an excuse. They are quizzing technology leadership about what value they are receiving from the technology investments being made. The job of leadership is to ensure the organization is in the best possible shape to respond rapidly. That is a challenge – particularly if the operating model was developed in less volatile, and less demanding times.
A program of Operating Model Transformation (OMT) can put an organization in a much stronger position to both react and be more proactive to stay ahead of the change curve.
We believe OMT is a must-have for technology organizations to pivot from capability-delivery toward business value. It can turn IT from a cost center to a value enabler, while ensuring business and technology alignment, transforming cost structures, and driving business agility. This article explains why OMT is essential to improve customer experience and efficiency, what is needed to achieve it and how it can deliver value.
Creating ‘Value for Work’ – delivering measurable iterative improvements to propel the business forward
Markets, regulations, and customer expectations are changing all the time. The competitive landscape is now in a continuous state of flux and the pace is only going to increase in the years to come.
Digital disruptors from Airbnb to Uber have redefined the very idea of customer experience. It is fast, frictionless and sometimes even fun. But human nature means that once people grow accustomed to something new and impressive it quickly loses some of its glitz and glamour – yesterday’s ground-breaking development is tomorrow’s hygiene factor.
The majority of IT functions have been built around rigorous, standardized processes. But today’s environment requires a differentiated model. Lengthy project timescales are no longer fit for purpose. Enterprises can become trapped by IT processes rather than enabled by them, so that the tail ends up wagging the dog. All too easily, a business can find it is held hostage to doing things in a certain way, because that is the way the system is designed. The result is reflected in a poorer customer experience, friction between business and technology and misaligned IT spend.
A business that isn’t able to develop new services and get them into customers’ hands rapidly risks looking off-the-pace and out-of-touch. Especially when there are new digital native market entrants whose whole proposition is based on responding quickly to requirements.
As best practice, every part of a business needs to earn its keep. To ensure technology delivers value to your business, you need to rethink your operating model. The right reconfiguration of your operations can bring about some very real and very immediate financial benefits as well as improve customer experience. Not least of which is that you can shift some of your IT spend from operational expenditure to capital expenditure, which can be depreciated, offering a quick win for the bottom line.
Iterative holistic change calls for support and commitment
Successful OMT is not about fixing point solutions. It’s about a holistic wellbeing that ensures elasticity to market needs. In a rapidly evolving marketplace, there is a need for TechOps organizations to transform the way they service business stakeholders, in the following ways:
- Reimagine your customer experience. Keep re-examining the full end-to-end customer journey – factoring in your ecosystem partners as well. That journey will keep changing, so you need to identify the most valuable touchpoints and ensure they are adequately supported to garner the maximum value. You will also want to make changes to processes to inject as much agility and flexibility as you can – you want to be able to respond at the first sign of an opportunity, maybe even create one.
- Align demand and capabilities across your organization to get more value from your IT spend. That calls for ensuring KPI synergies – your IT function should be measured on the extent to which it is supporting the business KPIs. Our experience shows many companies hold their own teams and partners to service level agreements (SLAs) which really don’t have business impact. The result is the “watermelon effect” of service quality: while IT SLAs are green, business sees red. Seek out any areas that are in receipt of resources and investment, but which are not yielding high results. Cost transformation of IT organization should be focused on realizing outcomes in terms of spend, business benefits, and payback. The need for transparency becomes paramount as it forces accountability.
- Streamline the flow of information, requests, and service delivery throughout the business. The elimination of silos and bottlenecks is paramount. One of the sharpest tools you may have at your disposal here is machine learning and analytics. Opting for a machine-first approach to handling basic information processing or dealing with simple queries can free up resources while improving service levels – a rare and genuine win-win.
Continuous improvement and long-term benefits
We have found OMT can deliver clearly measurable benefits, such as:
- ~30% improved velocity of product delivery
- ~35% reduction in wasteful demand and an improvement in the alignment of IT to business needs
- ~40% savings in total cost of ownership
- ~95% on time delivery aligned towards meeting business needs resulting in increased customer experience
We have also seen significant improvement in transparency between piloted business KPIs and technology KPIs.
At every stage on the journey towards OMT, there needs to be constant innovation: creating a virtuous circle of iterative transformation that is measured, tracked and tweaked wherever needed, all aligned to toward delivering an enjoyable and fruitful customer journey.
For example, adopting agile principles such as Minimum Viable Product completion will get new services into the market faster. It will also allow you to respond to customer feedback and make rapid changes and updates that reflect demand. You should also look to go cloud-first or even cloud-only across your infrastructure. This can get you away from the deadweight of any inflexible legacy systems.
Conclusion: How to carry out OMT in four (not so simple) steps
Achieving the transformation of your IT organization is multi-dimensional, necessitating shifts across structures, processes, systems, talent and ways of working, too. This four-step Value 4 Work methodology unlocks the benefits OMT can bring to any organization.
1. Ensure your technology remains FIT to deliver business needs
This enables you to optimize the cost of technology and product.
2. Create an AGILE ENTERPRISE so you become more responsive across the organization
This will introduce flexibility and drive better business and tech ops alignment.
3. Develop a MACHINE FIRST service delivery model
Artificial intelligence and machine learning make fantastic first-line-of-service tools, meaning you can free up capital and people, and also invest in the growth areas that matter most. Remember – smart machines enable smarter people.
4. Move towards PRODUCT CENTRICITY in your Technology function
This will establish transparency and linearity to scale up, as well as down, when needed. This also necessitates demand aligned rationalized roles.
OMT is not straightforward but it should not be viewed only in terms of its challenges. It is the chance to make evolve your entire organization and revolutionize your capacity to create, identify and profit from new opportunities. You will be driving change yourself, before you are forced to adapt to changes driven from the outside.