A recent Gartner study found that companies spend only one-third of their IT budgets on strategic projects, with the majority being spent on sustaining activities. This situation often stems from a combination of factors: limited visibility into all project work; sporadic alignment with business goals; inadequate project prioritization and minimal executive sponsorship. To transform itself into a strategic organization, IT must gain visibility into and control over the myriad operations under its purview-projects, applications, assets and service requests.
To make this strategic change, IT organizations need a new focus on:
- Increasing the return on both current and new IT investments
- Utilize technology and IT best practices to help increase value to shareholders and stakeholders
IT Governance: The First Step to IT Transformation
There are now tools available to bring visibility, planning, analysis, and informed decision making into IT operations. IT governance solutions, such as project portfolio management (PPM) and application portfolio management (APM), deliver these critical management capabilities. IT governance places the needs of the business front and center, providing the context within which every project can be weighed and assessed. In the process, it can help transform IT from a reactive or defensive entity to a proactive organization that supports change and drives business innovation.
Project Portfolio Management solutions continuously and automatically evaluate each IT project, from initial request though complete delivery, providing all stakeholders with current, consistent, business-focused metrics on costs and business benefits. Through capabilities such as project scoring, project request management, resource management and project prioritization, CIOs can rebalance spending as the status of projects, and the needs of the business change.
Application Portfolio Management solutions provide the ability to automatically inventory and manage all applications, along with pre-defined metrics. APM enables informed decision-making that helps retire or replace applications that do not provide value to the business, and keep applications that do provide value. Through capabilities such as service request management, application management, application portfolio management, and resource management, APM gives IT the information and control it needs to reduce the high cost of sustaining applications and instead invest in more strategic ones.
Reducing the Costs of Sustaining Operations
IT governance solutions enable the efficiencies and visibility necessary to get more out of IT investments and budgets, helping to reduce the resources spent on sustaining operations. With IT management and governance solutions, IT can monitor and optimize projects and applications, and provide time and expense tracking, resource management, and many other capabilities that enable lower costs and better decision making. Through automatic and continuous evaluation and prioritization, IT will have the visibility it needs to evaluate projects and applications based on mutually agreed goals that align with the business. Unnecessary or outdated projects and applications can be eliminated, freeing resources for more strategic work.
For example, we worked with a major Texas manufacturer helping them to categorize and optimize all of their inbound IT project requests, and to prioritize these project requests based on their value to the business goals. With an IT governance solution, they were able to accurately identify and effectively manage the strategic IT project work, versus the sustaining work. The solution helped them quantify the business' demand for IT projects, understand the status of the resources they had available, and work with the business to make sure they were focusing on the right projects.
Helping Deliver Strategic Value and Revenue
Once the costs of sustaining operations have been reduced, IT then has the resources and time to work with the business to identify projects that create advantage and generate revenue. Information governance helps manage both sustaining and strategic operations through capabilities such as time and expense tracking, resource allocation, and more-ensuring that resources continue to be allocated in a beneficial balance. IT now has the flexibility and agility necessary to respond quickly transforming them from a "cost center" to a "value center."
Kevin Kern is President and CEO of Innotas, a provider of Cloud-based solutions for IT Management that delivers a seamless way to manage resources, applications, and projects across all IT.