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 / Summer 2005 / Issue 39(originally published by Booz & Company)


In Search of Overhead Heroes

Answering these questions required that we change many of our processes. We considered elements as varied as our sourcing of IT products and our management of system capacity. We also modified our organizational structure, supplementing the traditional “functional factory” side of IT, such as applications development and data center management, with a totally new “front office” organization staffed by IT professionals whose job was to understand customer demand.

We added two new front-office positions. Account managers, whose duties are akin to what marketing support staffers do for technology vendors, were assigned to a subset of consumers, selected by geography, business unit, customer segment, or a combination of the three. Today, these account managers understand our consumers’ requirements and explain to them how our products and services can help. The account managers also serve as the main communication channel between the consumer and the functional factory. When a customized application is requested, the account manager is the chief contact between customers and technical designers.

The other position we created was the service offering manager — whose job is similar to that of a product manager for a technology vendor. The service offering manager handles the selection, distribution, and ongoing support tasks for one or more products or services. For example, he or she makes decisions about where the service should be sourced (internally or externally), how it should be distributed and supported, and how performance should be measured.

At first, we were concerned about adding a new layer of staff between our customers and the people they traditionally worked with in the functional factory. Aren’t account managers and service offering managers just another level of bureaucracy?

No, according to the technology vendors we studied. They told us that having customers work directly with functional factory staff was neither good for factory workers (their productivity fell) nor satisfying for customers (they felt misunderstood). More important, the services produced this way didn’t reflect business needs as well as those championed by the IT staff, whose responsibility it was to really know customer needs.

Encouraging Results
Internal surveys tell us that our new management approaches are working. Clients and technology consumers are happier with our services. Over the past three years, our cost-to-serve (total firmwide IT operating costs divided by head count) has been reduced by about a third. And the IT team feels more in control of its role and is pleased with its performance.

We believe we’ve been successful in large part because we didn’t cherry-pick where and when to implement process improvements. We went for total change with an integrated approach. Indeed, we initiated a near-simultaneous assault on seven business areas:

Governance ensures that IT and the firm are going in the same direction, that we have a way to measure progress, and that we can adjust our course. Senior management from business units, geographies, and support functions work with IT in determining the firm’s technology direction.

Strategy and planning articulate business direction and the technology needed to achieve business goals. This process paints a picture of what IT should look like three years, or more, from now and provides a road map for getting there.

Demand management ensures that we can identify the IT services needed to satisfy customer needs and requests. It includes portfolio management (making sure that everyone who should be included in a project budget is included); joint business unit and IT operational planning and budgeting; and a customer representative program, in which IT and business unit managers jointly develop future plans, manage budgets, and ensure that the right services are provided.

Service offering management is our primary reason for being. This consists of consumer identification and segmentation, service planning, sourcing, service production, product delivery, consumer support, and customer satisfaction. It is the place where demand meets supply.

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