Situation: Lack of judicious IT spend
The trend has been changing since few years where CIO role is changing from ‘managing’ to ‘governing’. Given the critical link between IT and Business strategy, appreciation of IT Governance as a discipline within organizations is extremely essential to follow the strategy and guiding principals. While cost and risks are important imperatives to take right decisions, alignment of IT initiatives to business objectives is a key challenge. The prime reason for this challenge is high cost of keeping the lights on. Due to high cost on these non-discretionary projects, new initiatives are not taken up or are delayed due to non availability of sufficient funds.
Effective governance helps manage and contain this challenge. It helps decide, which initiatives are key to business so that investment is planned to improve IT value. IT Governance organization and processes help identify areas where cost can be reduced, which risks to be mitigated, what should be the common services, and adequate service level to ensure optimum support.
Orgamizations must assessthe IT Governance maturity in multiple dimensions and use processes and tools for effective IT demand management, service management, Project Portfolio management and Applications Portfolio Management.
Benefits
• Improved RoI through judicious demand management to analyze, prioritize, fund, approve and manage major IT investments (capital and operating expenses)
• Formalized IT oversight and accountability to ensure more effective and ethical management and selection, contract administration and management of sourcing initiatives
• Optimum service levels based on applications and infrastructure criticality to the business leading to better productivity and optimum resources
• Proactive Risk mitigation and management
• Portfolio management for projects and applications
Questions
1. Does IT have processes through which it communicates the value to business?
2. Is IT investment in your organization decided based on business value, an initiative delivers. Is business case developed and agreed between stakeholders for awarding budget to the projects?
3. Is projection for IT resources, infrastructure and competencies available to meet strategic objectives?
4. Does IT and IT related projects often go over budget?
5. Are Service Levels defined based on the applications and infrastructure criticality towards business and tracked for compliance?
Sunday, February 3, 2008
Situation: Duplicate, Obsolete, and Underutilized Applications
Situation: Duplicate, Obsolete, and Underutilized Applications
Interestingly, applications also go through ageing process, reproduce, and also compete with each other. It is often that organization in such a process, possess applications that are underutilized because these do not meet functional needs of business users, develop duplicate functionality due to lack of integration and information architecture, get obsolete due to obsolete technology platform and performance issues and develop duplicates due to non visibility of applications
inventory etc. A timely rationalization is must to identify such applications and decommission those that does not provide differentiated value to business
It is estimated that most of the large organization have at least 20%-25% applications that can be decommissioned through rationalization process.
Benefits:
· Lower cost of support and maintenance
· Optimal utilization of infrastructure and resources
· Standardization
· Leaner portfolio leading to effective APM(Applications Portfolio Management)
Questions to identify improvement areas
1. Does application inventory exist and maintained in the organization?
2. Is applications dependency document available and up to date, to know how information is shared?
3. Has IT gone through the process of portfolio rationalization?
4. Are there applications that business users think are not meeting business needs?
5. Are there applications on legacy and unsupported technology platform?
The challange is multifolds while assessing applications portfolio. Functional fiteness and technical fitness must be looked in view of applications' strategic fitness. Some of the applications that may appear duplicate may contain some niche business rules and compliance aspects that must be retained to secure intellectual property.
Once applications are classified for retiring, the next challange is 'How'. retiring an application might prove difficult than adopting or building a new one as it may contain compliance, legal, customer, suppliers etc. centric data which may need to be referred and retained for a period of time. Pharmaceutical and financial industry applications are such examples.
Interestingly, applications also go through ageing process, reproduce, and also compete with each other. It is often that organization in such a process, possess applications that are underutilized because these do not meet functional needs of business users, develop duplicate functionality due to lack of integration and information architecture, get obsolete due to obsolete technology platform and performance issues and develop duplicates due to non visibility of applications
inventory etc. A timely rationalization is must to identify such applications and decommission those that does not provide differentiated value to businessIt is estimated that most of the large organization have at least 20%-25% applications that can be decommissioned through rationalization process.
Benefits:
· Lower cost of support and maintenance
· Optimal utilization of infrastructure and resources
· Standardization
· Leaner portfolio leading to effective APM(Applications Portfolio Management)
Questions to identify improvement areas
1. Does application inventory exist and maintained in the organization?
2. Is applications dependency document available and up to date, to know how information is shared?
3. Has IT gone through the process of portfolio rationalization?
4. Are there applications that business users think are not meeting business needs?
5. Are there applications on legacy and unsupported technology platform?
The challange is multifolds while assessing applications portfolio. Functional fiteness and technical fitness must be looked in view of applications' strategic fitness. Some of the applications that may appear duplicate may contain some niche business rules and compliance aspects that must be retained to secure intellectual property.
Once applications are classified for retiring, the next challange is 'How'. retiring an application might prove difficult than adopting or building a new one as it may contain compliance, legal, customer, suppliers etc. centric data which may need to be referred and retained for a period of time. Pharmaceutical and financial industry applications are such examples.
IT Integration post M&A
Business Situation: Impact of Mergers & Acquisitions
Organizations who go though acquisitions often find it challenging to integrate IT primarily due to two reasons;
· Absence of the tested and formal approach leading to ad-hoc and tactical initiatives
· Size of the integration activity leading to resource crunch and defocused support
Merged entities struggle with issues of high cost of ownership. This is primarily due to duplicate, underutilized and disintegrated applications, with disintegrated data, along with unclear processes. Supporting and maintaining IT becomes expensive which results in lesser budget available for improving the IT (Discretionary spend). A formal approach goes a long way to ensure new merged IT takes the shape based on business integration synergy of entities such as customers, supplier, products, employees etc.
Organization must follow through formal IT integration approaches that can help contain these integration challanges such as retiring duplicate systems, rationalize applications an dinfratsructure, validating IT strategy, Integraing through SOA and putting the right IT governance for successful IT integration and sustainance.
Integration Benefits
· Lower and optimized cost on Non-Discretionary projects
· Rationalization of IT assets resulting in leaner portfolio
· Common key processes resulting in standardization
· Optimum utilization and availability of resources for important activities
· Avoid duplicate investments through cross utilizing available applications, s/w licenses and infrastructure
Questions that must be asked to identify improvement areas
1. Has IT organization gone through formal exercise of identifying business touch points that will have impact on IT?
2. Business focus shifts on new goals after M&A. Has IT already studies and analyzed new business strategy that can be used as reevaluating IT strategy for united organization?
3. Has IT evaluated if it would like to integrate IT or run it as two separate organizations?
4. Is there a need for common processes and hence need for standardizing the applications identified? If yes, has any IT undertaken application portfolio assessment exercise to identify applications that must continue and applications that must retire?
5. Is common support framework (including shared IT services) and service levels identified for effective governance of support?
6. Web/Internet sites are window to customers, suppliers and partners. Has IT prepared plan to merge and rationalize these site? Similarly, intranet sites provide common view inside the organization for effectively communication. Is there any plan to consolidate them?
Answering these questions may help organiztion assess the need. For more information and help, write : dkpr1611@gmail.com
Organizations who go though acquisitions often find it challenging to integrate IT primarily due to two reasons;
· Absence of the tested and formal approach leading to ad-hoc and tactical initiatives
· Size of the integration activity leading to resource crunch and defocused support
Merged entities struggle with issues of high cost of ownership. This is primarily due to duplicate, underutilized and disintegrated applications, with disintegrated data, along with unclear processes. Supporting and maintaining IT becomes expensive which results in lesser budget available for improving the IT (Discretionary spend). A formal approach goes a long way to ensure new merged IT takes the shape based on business integration synergy of entities such as customers, supplier, products, employees etc.
Organization must follow through formal IT integration approaches that can help contain these integration challanges such as retiring duplicate systems, rationalize applications an dinfratsructure, validating IT strategy, Integraing through SOA and putting the right IT governance for successful IT integration and sustainance.
Integration Benefits
· Lower and optimized cost on Non-Discretionary projects
· Rationalization of IT assets resulting in leaner portfolio
· Common key processes resulting in standardization
· Optimum utilization and availability of resources for important activities
· Avoid duplicate investments through cross utilizing available applications, s/w licenses and infrastructure
Questions that must be asked to identify improvement areas
1. Has IT organization gone through formal exercise of identifying business touch points that will have impact on IT?
2. Business focus shifts on new goals after M&A. Has IT already studies and analyzed new business strategy that can be used as reevaluating IT strategy for united organization?
3. Has IT evaluated if it would like to integrate IT or run it as two separate organizations?
4. Is there a need for common processes and hence need for standardizing the applications identified? If yes, has any IT undertaken application portfolio assessment exercise to identify applications that must continue and applications that must retire?
5. Is common support framework (including shared IT services) and service levels identified for effective governance of support?
6. Web/Internet sites are window to customers, suppliers and partners. Has IT prepared plan to merge and rationalize these site? Similarly, intranet sites provide common view inside the organization for effectively communication. Is there any plan to consolidate them?
Answering these questions may help organiztion assess the need. For more information and help, write : dkpr1611@gmail.com
Wednesday, December 27, 2006
How much IT is right?
IT Spend is one of the most discussed topics among corporates and IT organizations today. It had been a fashion to boast IT spend figures before the IT bubble burst when it was presented in a manner to show the speed and attitude of organizations. Not anymore. The speed, attitude, one-upmanship is replaced with accountability. Corporations today expect an IT organization to be accountable to the business.
Hence, two key questions posing challenges to top IT executives are:
- What should be the optimal level of IT spending for the organization?
- How can IT be a transformation agent to deliver maximum value against investments?
Sometimes the discussion is around how optimized an organization’s IT Spend is; on other occasions the IT spend is compared and benchmarked to understand the degree to which an organization is IT savvy. However everyone is grappling with one question - “How much IT is right”. The answer can be as simple as comparing it with available benchmarks or it could be as difficult as computing it bottoms up. Unfortunately, there is no single and simple answer.
What in your opinion could be the right answer for this and how important it is for CIO to estimate what IT Spend should be communicate and targetted for the organization?
What in your opinion could be the right answer for this and how important it is for CIO to estimate what IT Spend should be communicate and targetted for the organization?
Monday, December 25, 2006
Do you ignore "Value" while outsourcing?
It is not a new story that CIOs are under pressure to reduce cost. However does that mean in the rush to reduce the cost, IT's contribution have become less important? Absolutely not. In fact, business is looking towards IT not only to enable the business functions but also grow up to become a transformational agent.
To reduce cost, one of the most favoured and proven method taken is outsourcing. Outsourcing has become a reality and is not a matter of choice anymore. To be competitive, CIO must have an outsourcing strategy is place.
Risk comes second in taking CIO's atention. While CIOs have mandate to reduce cost, they are to mitigate the risks well to avoid any unfortunate impact on business. Service Provides have also put in place the means to help organizations mitigate such risks.
However the issues is with the third key element, that is, Value. While organizations, in the rush to offshore and make IT staff lean, are often left helpless when it comes to taking new initiatives. Service Providers in an attempt to provide most cost effective deals, also do not develop bandwidth to provide support in new strategic initiatives. This realization while comes little late, it strucks hard. I call this "Two Years Itch". After 2 years when benefits of offshoring are realized, its time for CIO to take next big step. And this is the time when reality hits hard when CIO in desparate need to provide IT's new contribution, finds very thin internal as well service providers' support.
I have been party to one of the review where client organizations, despite being fairly satisfied with the services being delivered, kept on blaming the service provide for not being able to provide any value.
I wondered, if it was a limitation of outsourcing as a concept or outsourcing as a contract. I would say it is outsourcing contract. CIO's in order to sign the most cost effective deals, often ignore the need to have best deal. A best deal must have "Value" component in it. Service Providers cannot suddently start delivering value. They have their own challanges such as timely delivery, meeting SLA, high utilization and profitability.
Service Providers must be treated as partners while signing such an agreement. Apart from delivery and engagament competence, service provide must put transformational competence on the table as well. And most importantly, put a structure in place which will continuously look for new improvement area to keep IT optimized for cost, risks and value.
Will such deals be most cost effective? May be not to begine with, however spending additional five percent might go a long way and in fact improve the ROI by putting transformational gains as deliverables.
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