Impact story

Implementing change in IT to improve cost, service and organizational health

A large regional bank called McKinsey for help reducing IT cost that the new group CIO considered excessive. We partnered with the client to plan and execute a transformation program that would address the cost issue, strengthen IT service delivery, and improve the health of the organization.

Impact

Approach

We quickly found that the CIO was right. The bank’s IT spend significantly exceeded the industry average and was almost double what the bank should be spending. We also found that FTE productivity was low, and only about 40% of IT activities were customer-facing or value-adding. The IT organization was not healthy, scoring in the third quartile of our organizational health survey.

We realized that addressing these issues would require totally transforming IT, not just finding ways to reduce costs. Such sweeping change would require balanced attention to performance and organizational health—to the IT organization’s processes and culture, as well as financial results.

We partnered with the client to plan and execute a transformation program that coupled cost optimization with sustainable improvements in IT service delivery. We supported the implementation of more than 150 initiatives over four years. These initiatives generated bottom-line savings of $180 million; improved delivery by making IT services more available, reliable, and secure; and reduced time to market by making IT operations more agile, flexible, and innovative.

To ensure implementation success and sustainability, we designed and delivered a leadership development program. In off-site workshops and one-on-one sessions, we coached senior executives on such skills as problem-solving and Board communications. We organized site visits to companies with state-of-the-art IT operations like Google and Microsoft.

We coached front-line managers on using the tools needed to sustain transformation success, including lean diagnostics and an annual survey of organizational health. We also coached them on continuous development of their own and their teams’ IT skills.

Taking a train-the-trainer approach to implementing the organizational health changes, we prepared all of the HR business partners to facilitate action-planning sessions.

Today the client owns and sustains all of the operational and cultural changes. Our implementation team continues to support the central transformation office to track initiative progress and find ways to course-correct if efforts stall or veer off-track.

Results

The transformation has had impressive impact on the cost and delivery of IT services. The implementation of agile processes and emphasis on mastering the skills required to execute them have boosted efficiency significantly. Organizational health has improved measurably, as people have seen their ability to have impact on the business by embracing new ways of working. Other companies looking to transform IT visit the client as the client once visited Google. Now in its fourth year, our partnership with the client endures, thanks to the confidence created by our implementation team’s line experience, including tenure as a CIO, capability-building expertise, and willingness to partner for the long haul.

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