9 Efficiency and Compliance

Structure and innovation meet in a world full of change, where the right processes and choices form the foundation for growth and resilience.

Processes and procedures are the bumpers within which organizations and people operate. They help employees by providing structure, automation, and information. Processes exist at three levels: strategic, tactical, and operational.

1. Strategic

This level relates to the long-term goals and plans of an organization. The strategic level defines the direction in which the organization wants to develop and how technology can contribute to these objectives.

2. Tactical

The tactical level focuses on the medium term and concerns how the strategic plans are translated into concrete projects and initiatives. This involves resource planning, project management, and decisions on which technologies or processes should be implemented to support strategic goals.

3. Operational

At the operational level, it’s about the day-to-day activities and processes necessary to ensure the organization runs smoothly. This level deals with the actual execution of tasks, managing technological systems, and directly supporting primary and secondary processes.

Plans and projects essentially have three variables: time, money, and scope (quality). There are different types of projects and plans:

1. Classic Waterfall Projects

Projects where there is a predefined balance between time, money, and quality (scope). Before starting, we describe what we will deliver, how we will do it, how we will manage it, and where the risks lie. Twenty years ago, ninety percent of digitization projects were approached in this way. Today, that is only about ten percent.

2. Programs differ from projects

They are based on uncertainty and work toward a predetermined goal. For example, by 2026, we want to have sorted our information management. A certain budget is allocated, but room is left for how the project will be organized.

3. Agile and DevOps

Today, digitalization is increasingly based on Agile or DevOps principles. This also applies to us as consultants at QA Consulting. We work in small increments toward results.

The core difference between these types of projects is the degree of uncertainty in time, quality (scope), or money. We increasingly work based on Agile and DevOps principles because in other methods, it often takes too long to see concrete results, and the result often doesn’t match what we had in mind.

At QA Consulting, we also observe that many organizations implement processes without thinking about the desired outcome. We see numerous organizations applying frameworks like ITIL version 4, ASL, and BISL while simultaneously transitioning to Agile or DevOps. For many organizations, such a transition is so ingrained in jargon that the ‘why’ is not considered, nor whether such a transition contributes to the goals or outcomes the organization wants to achieve.

Too Rigid or Too Free Process Design

The result is usually a balance between continuity and agility. Some processes are specifically aimed at improving continuity, while others focus on agility. At QA Consulting, we know that certain processes are key to this balance, particularly those that connect strategy with tactical/operational execution.

We see two approaches to implementation that bring pitfalls: too rigid and too free. With a too-rigid process design, employees no longer actively think about the processes. Too much space and freedom to let people design their own processes leads to everyone applying their own interpretation. Both scenarios are undesirable and unworkable in practice. Successful organizations like ING find a middle ground: rigid systems in which people still retain their freedom.

The World of Tomorrow: Strategy, Strategic Portfolio Management, and Strategic Workforce Management

Strategic portfolio management focuses on preparing organizations for future challenges by making rough estimates of future needs and resources. The strategic plan is periodically adjusted based on a rolling forecast method to stay as accurate as possible in a fast-changing environment.

A critical aspect within strategic portfolio management is the balance between the organization’s different types of activities: run, grow, and transform. A good balance between the three is crucial for sustainable growth and innovation in organizations.

IT investments are categorized under these three activities. The focus is on both maintaining current capabilities and investing in growth and transformation. An external, independent evaluation of these investments helps validate the strategic direction and illuminate external developments, such as regulations and technology. The ideal ratio for many organizations is 70% Run, 23% Grow, and 7% Transform, but this can vary. The balance between these elements ensures that the organization can continuously respond to current needs while leaving space for innovation and adaptation to future requirements.

Strategic portfolio management provides the input for the strategic workforce plan for both the IT organization and the user organization. In addition to these, other strategic processes play a supporting role, such as architecture, data governance, and compliance.

The World of Tomorrow: Portfolio Management, Capacity Management, and Life Cycle Management (LCM)

Portfolio Management

Portfolio management provides a detailed overview of planned projects and their expected impact on operational costs and staffing requirements for the next twelve months. While strategic portfolio management focuses on the long term and involves great uncertainties, portfolio management is focused on what can be accomplished with the people and money available for the next three to twelve months.

Another important process is capacity management. It involves assessing the current state of technical and personnel capacity and forecasting how the next twelve months will look if nothing changes. Lastly, Life Cycle Management addresses when hardware and software need to be replaced. The result of these three processes together ensures that an organization knows what to expect in the coming three to twelve months and the impact it will have. All three processes have a rolling forecast, which is adjusted every three months based on the latest insights.

Life Cycle Management

Life Cycle Management (LCM) is more than just an issue of portfolio management. Many technologies today already have an end date known as “end of life” or “end of support.” Both are significant risks for organizations. End of life means the product or service is no longer supported, while end of support means the product still works, but you must handle problems on your own. No support. Most suppliers indicate how long a system or product will remain valid. LCM indicates when action needs to be taken, ideally long before the expiration date.

Capacity Management

Capacity management concerns the personnel and infrastructure capacity (compute, storage) required to manage and develop applications. It provides insight into used capacity versus allocated capacity, team composition, personnel developments, and expected changes (incoming, internal transfers, and exits).

Capacity management also acts as a bridging process between the world of tomorrow and that of yesterday and today. Based on trends, it offers insight into what capacity looks like. Many organizations forget to clean up and invest in time. Too often, we see organizations that only take action when they exceed the critical threshold of 90 or 95% of storage and processing capacity. That last ten percent is necessary to absorb growth in the coming months before new capacity becomes available. Unfortunately, expanding capacity is not as simple as buying a new laptop. You must begin well in advance. You don’t want to refill the car’s tank when there’s only a few kilometers of fuel left.

This is also true for personnel: very few organizations realize in time that the capacity in the organization is exhausted. When acute problems arise, priorities are suddenly set, but often those priorities lead to decisions that hurt in the long run. For example, maintenance or LCM is postponed, user requests are prioritized over technological innovations, and ensuring continuity becomes more important than agility. This is called the displacement effect, which has significant long-term impacts. If an organization delays maintenance or technological renewal long enough, it incurs what is called technical debt. Once in this situation, it is often a vicious circle of increasing debt.

The World of Yesterday and Today: Service Management and Production

In a rapidly digitizing world, it remains essential to connect the foundations of yesterday and today’s operational realities with future ambitions. This connection is achieved through service management and operational production, processes that ensure daily operations and the maintenance of existing systems and services. Service management focuses on managing current services, while production focuses on implementing smaller changes that add immediate value to the organization.

Service Management

This management process focuses on managing current services and monitoring disruptions, issues, and the overall availability of services. It provides customers with insights into cost drivers and enables them to make effective decisions. Service managers play a crucial role in translating these insights into production and capacity management while systematically considering the Life Cycle Management of applications and infrastructure. Risks and opportunities are discussed, with a strong focus on proactive security measures, forming the foundation of an agile organization.

Production

This function focuses on realizing both the priorities set by portfolio management and the smaller changes requested from service management. Agile organizations have significant capacity to implement these adjustments using both Agile and traditional methods. For long-running programs, program management remains an important aspect, with some organizations using the term ‘Pr-AGILE’ to manage programs that contribute to both current and future strategic goals.

These processes are essential for ensuring stability and providing consistent service to customers while continuously introducing new technologies and improvements. By emphasizing the management of existing capabilities and resources, these processes ensure that the organization meets today’s demands and remains flexible for future challenges.

What Have We Learned at QA Consulting?

Processes themselves do not solve much. It’s about what comes out of them and what you, as an organization, do with it. We often ask an organization about the desired outcomes, and then there’s often silence. Most organizations don’t look much further than a year ahead, and incidents often seem to happen to them. Simple examples include replacing a laptop when it breaks instead of when it is written off. When we get a list of equipment, we first look at which equipment is three years old or older (replacement needs to be planned now) and which is five years old or older (usually needs to be replaced). Of course, there are exceptions, but most IT equipment needs to be replaced after five years.

More often, we encounter situations where organizations have no such insight at all. They may have processes, but they’re not effectively applied, or people work around them. Even more problematic is the tendency to ignore problems. All these situations occur. Organizations are not unique in this regard. People also tend to postpone car, house, or device maintenance. It’s only when it breaks down that they realize postponing it leads to problems.