Whitepaper
Planning IT from demand to budget
IT Planning Challenges
Today’s IT planners face tremendous challenges.
Requests for services frequently exceed the ability to deliver, compounding substantial applications backlogs. Opportunities to outsource and offshore tasks, and to deploy powerful yet disruptive technologies like web services, are prompting comprehensive reappraisals of the technical landscape. New regulations are also compelling large IT Organizations (ITOs) to clearly document complex relationships between financial reporting processes and IT infrastructure.
Any breach can have dire consequences.
These issues are exacerbating a fundamental IT planning challenge – to balance the proportions of the IT budget that support operations and innovation.
In the 1990’s ITOs had enough money to invest at least 30% of the budget in innovation while supporting the installed infrastructure. By 2001, recession had necessitated widespread cost reductions, which ITOs achieved by cancelling investments in innovation, as operating costs are not easy to reduce. Operations costs swallowed up over 80% of many IT budgets, thereby preventing investments to transform the infrastructure and reduce costs in the longer term. But as IT budgets rebound the problem continues, because investments one year incur operational expenses the next, on the order of 20% per annum. Best practices suggest that a 40:60 ratio of innovation costs and operating costs can be achieved by prioritizing the IT investment portfolio to meet strategic goals while eliminating project redundancies, and ensuring that, wherever possible, new projects support the reduction of long term costs. For example, systems consolidation and standardization of the architecture can reduce operations costs by 10%.
How is the IT planning challenge resolved today?
With difficulty! IT planning takes place in a rapidly changing business environment and involves an overwhelming volume of data – hundreds of applications and many thousands of artefacts in multiple locations.
Complex interdependencies between distributed specialists, critical business processes, IT support services and the underlying technical infrastructure can be significantly disrupted by isolated actions and incidents.
Many organizations struggle to meet the IT planning challenge with MS Office tools. Subject Matter Experts own fragments of technical information while organizational and functional data is maintained in ad hoc databases which lack the GUI and visualization tools needed to show relationships between data classes (business, technical and financial information). In this context, a transparent and accurate window to the as-is landscape is the essential starting point for every IT project and planning exercise.
Conventional portfolio management tools
IT executives are turning to portfolio management practices and tools to demand returns on IT investments in terms of income, savings, strategic value and customer satisfaction. Portfolio management tools and processes are sufficiently “project-property” independent to be deployed across any project portfolio, including IT. Implementation typically delivers savings by identifying skill and resource dependencies across multiple projects, balancing project value and risk, making it easier to kill a project, and improving business/IT communications. A reduction in new investments of 15% – 20% can be achieved when portfolio management techniques are introduced in the IT organization, as 20%-30% of all projects deliver little or no business value.
Despite these reductions in the new investment budget, conventional portfolio management tools neglect technical aspects of IT projects, which greatly affect their implementation and successful deployment. IT projects are interdependent, they are easily disrupted by new technologies and their costs can be very difficult to allocate. Seemingly prudent short term decisions to approve IT projects can result in unforeseen, long term impacts on the enterprise architecture, and tremendous costs. For example, while the business case and skills/resource dependencies associated with outsourcing decisions may be clear, neglect of architectural dependencies may have highly detrimental consequences.
Conventional enterprise architecture tools
ITOs are also purchasing stand-alone tools that help technical specialists manage IT dependencies in an increasingly complex technical landscape.
Enterprise architecture tools are used to facilitate specialist viewpoints for a specific architecture, adapt the strategic target architecture to suit local geographic and reporting requirements, and trace dependencies between artefacts. Most point solutions provide modeling capabilities and a repository where models can be stored and linked.
Enterprise architecture tools are primarily used to document and publish a comprehensive view of the as-is and target landscape. The dependencies, costs, and disruptions they analyze and reveal are rarely considered outside the technical arena and are typically bypassed in the portfolio management process.
As a consequence, vital information is withheld from the investment process.
