We hear a lot about (and maybe have interacted with) Project Management Offices (PMOs), and possibly about Service Management Offices (SMOs), but IT Business Management Office (ITBMO) sounds like a new buzz word in today’s modern IT business taxonomy. PMOs typically focus on the management and governance of IT projects, while SMOs are responsible for the governance and management of IT services and the processes to ensure effective service delivery. ITBMOs, however, go beyond this to the next IT business maturity level to address business and finance partnership with IT to help IT organizations transform into services-based, business-oriented, and value-focused organizations.
Have you ever asked yourself of how you can make your CFO happy? How you can support your corporate financial goals and aspects of a balanced scorecard? How you respond to “IT is always expensive” perception? Have you thought of challenges related to quantifying value your consumers get of IT services? Are you challenged to view IT costs by services you deliver? Or even budgeting and forecasting by IT services? Can you tell on the spot what your unit cost of a service is? What about demand driven IT? Do you feel that you are always over capacity with low utilization of services? What about leveraging marketing power to promote your IT services? How you can commoditize and brand your IT services? And many other questions and thoughts that keep CIOs awake at night.
(I can hear you thinking)
We have been hearing about “transformation” and “running IT like a business” quite frequently nowadays. As a matter of fact, these are becoming overused terms without real meaning of what they actually imply. Imagine that you are the CEO of a new wood furniture manufacturing business. Obviously, the main functions that you could initially think about are Product Management (who turns logs into useful products), Sales and Marketing (who promotes and sells to consumers), and Finance (who manages the financial aspect of the organization). The question is: why can’t we apply the same discipline to IT organizations? Similar to Product Management, IT organizations deliver services, and therefore we have Service Management and Service Owners/Managers. We are only missing two things here to run IT like a Business: a strong service-based financial operating model and the Services Sales/Marketing sense to help promote and consume IT services in the best valuable manner to consumers.
This is what the ITBMO brings to the table: a stronger partnership between IT, Business, and Finance to accelerate transforming your organization into a business-oriented, service-based, and value-focused one. Initially, you can think of the ITBMO as a virtual group or committee that has champions from various IT/Business functions. This virtual team paints the IT business vision and defines its mission on how to run IT like a business to deliver more value to business in the most economical way.
As shown in figure 1, the ITBMO supports 6 functions/towers to ensure stronger partnership throughout the IT service and project management lifecycle. These are:
- Service Management Office (SMO): the entity (or any similar) within an organization responsible for the delivery and management of IT services. This includes the pure ITSM process management and ownership and delivery along with the ongoing management of IT services.
- Project Management Office (PMO): the entity responsible for project management and governance
- IT Finance: the function that takes care of the financial aspect of IT, which could be part of IT or Finance. This typically includes IT budgeting, accounting, pricing and cost optimization.
- Services Sales & Marketing: a new (or maybe existing) function that will be improved and strengthened as part of the ITBMO establishment.
- Business/IT Alignment: any existing functionality (such as Customer Relationship Managers or Account Managers) that ensures ongoing alignment between IT and Business.
- Governance, Risk, and Compliance (GRC): the function (or multiple functions) responsible for organizational change, developing IT policy and governance strategy, IT risk evaluation and mitigation and compliance.
A champion from each function (could be multiple champions based on the organization scale and size) contributes to the core operations of the ITBMO to achieve the value-focused vision. The ITBMO runs in consultative and supporting mode, but depending on the IT organization’s authority, decision making process and power, and delegation factors, the ITBMO could be an authoritative entity within the organization.
Figure 2 shows the six steps required to standup a successful ITBMO within your organization:
- Develop Vision/Mission: thinking of why you need an ITBMO in the first place is your first step. What is the challenge you are trying to overcome or opportunity you want to introduce? Thinking collectively in a short/long term vision and drafting a mission statement of what this ITBMO actually does are your foundational steps towards a value-focused organization.
- Build and Position the Organizational Structure: figure out what roles are needed and who needs to be onboard and whether this is a virtual team of representatives or dedicated and how it fits the organizational structure and reporting lines
- Develop Process Interactions: fully understand your existing processes interactions within the functions that will be supported by the ITBMO, and figure out where you want the ITBMO to help, support, and interject to accelerate value realization
- Develop RACI Chart: translate your discovered process interactions and help areas expected into a roles and responsibilities chart (i.e. RACI). This will expose the areas of improvement and will help build a short and long term improvement roadmap across all supported functions to achieve the desired vision.
- Establish Value Measures and KPIs: quantifying IT value is one of the challenging tasks IT management confronts. This step defines a very high level value measurement framework or methodology along with the success factors and measures that a CIO or CFO can judge the success of ITBMO thru. VMware vRealize Business is the technology that will be used as a platform to define those value measures and KPIs and help making informed decisions.
- Build ITBMO Ongoing Operations: build your ITBMO ongoing operations guide by identifying which RACI responsibilities will be performed
So, you might now be thinking about the value an ITBMO can bring into your organization and how you could best leverage such a powerful business unity:
- Establish business horizon within your IT and implement a model to help run IT like a business
- Ensure tighter partnership between IT, business, and finance. This partnership is key to IT success like any other business.
- Enable your organization explore more improvement opportunities and build a maturity improvement roadmap to run IT like a business
- Help accelerate your transformation journey not just to a trusted service provider, but to a strategic business partner
- Create new virtual business roles within your organization and help accelerate this transformation journey
- Help your IT organization make better and strategic use of VMware vRealize Business to drive the cost optimization and value realization strategy and goals
- Empower your IT to deliver on the desired quality, at the right cost by creating tighter alignment and accountability between IT, Business, and Finance
- Elevate and strategize your IT conversations with service consumers, stakeholders, and executives to support IT and business transformation journeys
And if you’re heading to VMworld, don’t miss this session (OPT 5075) on Tuesday 9/1 at 5:30pm!
While many smart IT organizations have started their transformation journey to service-oriented and consumer-centric providers, there are still some key gaps that need to be addressed to ensure the effectiveness and efficiency of this transformation and therefore to yield the expected value. These gaps are related to the IT financial operating model and how modernized it is to cope with technology & cloud evolution along with the business speed. The IT Business Management Office (ITBMO) is revolutionizing the way IT leaders demonstrate business value to the enterprise. The ITBMO could be a virtual committee to ensure stronger partnership between IT, Business and Finance together to drive an organization towards faster value realization and maturation. Khalid Hakim, global IT operations, financial and business management architect, and Jason Nienaber, IT Business Management Director at VMware will shed light on this new business practice using VMware vRealize Business to move your IT organization to the next level in maturity and position it as a strategic partner to your business consumers and line of businesses.
Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.