IT Management for the "Aughts"
By: Donna Sandorse, Managing Member, The DCL Group LLC
The turn of the century has brought with it a new austerity. In contrast to the upbeat '80's and the roaring '90's, the '00's (we like to call this so-far-somewhat-joyless decade the "aughts") has been a time of business retrenchment and sharply curtailed spending.
IT Governance"IT governance" is the methodology by which information technology efforts are aligned with the business strategy of a company. A rational framework should be established to determine the most effective ways to spend IT dollars.
When funding for capital expenditures is scare, it is wise for business and IT executives to work together to review projects that are on the drawing board or in the early stages of implementation. This review will allow management to triage their spending based on the business value of the proposed deliverables. Projects that will have a direct impact on the bottom line should be expedited. Unless projects are "non-discretionary" (i.e. required by regulation, avoidance of obsolescence, etc.), they should be justified with cost savings, reduced cycle times, demonstrated customer value or increased income. In all cases, these projects should be in line with overall corporate objectives.
Concrete metrics and financial analyses should be established for making these determinations - with all concerned committed to the outcomes - controlling the cost, time and quality of the deliverable as well as maintaining accountability for the projected benefits. Once established, this methodology should become a blueprint for the "boom times" as well as times of austerity.
IT Financial ControlNow is also the time to take a look at the company's model for "business as usual". Often, there are many ways to cut costs that have little or no negative impact on development - such cost controls can be used to fund the new development that will prepare an institution for the next upswing.
Asset ManagementA comprehensive asset management process generally includes the centralized acquisition of technology equipment; equipment and configuration standards that are actively enforced; a process for establishing, reviewing and updating those standards; the maintenance of an inventory of technology equipment assets throughout the organization; and a process for the regular upgrade/replacement of technology assets. Gartner has noted that "not keeping proper track of distributed computing hardware can increase costs by 7 percent to 10 percent a year."
In many companies, the Y2K efforts laid the ground work for such a process - equipment was inventoried to ensure that it was Y2K compliant. Unfortunately, many companies did not realize the value of having this information available and current --- (and there is a substantial value to it!) --- and they have subsequently let this information become dated.
Centralized procurement of technology assets along with adherence to equipment standards allows for greater flexibility in negotiating price, contract terms and maintenance agreements for equipment. By limiting the vendor and equipment choices, there is a greater opportunity to plan for bulk negotiations (if not outright purchases). The tracking of equipment warranty and maintenance contracts limits expenditures for repairs and service that are, in fact, covered. When outsourcing "break and fix" contracts, there is an improved position for negotiations when a company knows the equipment that it has and has limited the variations of make/model and configuration that exist.
For those in charge of the company's technology, an Asset Management Process allows for greater control over technology decisions and a more proactive response to future business technology needs. When an accurate equipment inventory exists, there is no need to survey the hardware environment at the outset of every project, software upgrade or software implementation to determine if the existing equipment is adequate.
If the asset management process includes both well-considered standards and the regular upgrade or replacement of obsolete equipment, then fewer individual technology projects have to bear the expense of a major equipment upgrade. This not only improves the ability to deliver IT projects, but shortens the lead time to implementation.
From a financial perspective, a comprehensive asset management process provides the ability to track fixed asset depreciation (for purchased equipment) and to dispose of leased equipment on a timely basis. It provides the ability to plan and budget for equipment upgrades and replacements on a regular and controlled basis.
A sound asset management process also enables a company to modify behaviors related to the purchasing of equipment by implementing chargeback and passthrough accounting. Equipment is charged back to the business units in a way that makes each area accountable for its use of both distributed and centralized computing --- centralized control with distributed accountability.
Finally, tracking the physical location of technology assets enables management to ensure that these resources are not sitting fallow - that viable equipment is redeployed in lieu of purchasing additional. Given that many corporations under-utilize their technology assets and over-spend on them, an asset management process is a tool to achieve substantially higher returns on the IT investments they make.
Looking AheadGartner notes that "enterprises must carefully balance the need to save money with the risk of underinvesting in IT so as not to jeopardize their ability to service their customers." It is possible to control IT expenses in such a way as to continue to allow for the funding of new IT investments, so that companies are poised to be the first out of the gate - taking advantage of the economic upturn which is sure to happen (someday).