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Butler Group: The effectiveness of IT investments is a very significant factor in the ability of IT to provide value
(M2 PressWIRE Via Acquire Media NewsEdge)
RDATE:11032009
The effectiveness of IT investments is a very significant factor in the
ability of IT to provide value The current economic situation can be
viewed as an opportunity to become smarter in the way technology is
utilised, especially by better utilising existing IT assets London, 11
March, 2009 - Whilst economic pressures have put the spotlight on
short-term IT cost savings, according to a new report by Europe's
leading IT research and advisory organisation, Butler Group, of even
greater significance is the longer-term emphasis on the strategic
management of IT costs, as well as getting value from existing and new
IT investments. Titled "Managing Costs in IT Report - Maximising the
Value of IT Assets and Budgets", the report identifies that for IT
management there is a continual balancing act between cost, quality,
and risk. Cutting costs too deeply could impact service quality or open
up the organisation to unacceptable risks. It should also be remembered
that customer satisfaction remains an important business imperative. An
area that has long been undervalued within the IT function is risk
management, and this too, in Butler Group's view, should start to move
higher up the agenda.
To provide this transparency and accountability many enterprises are
turning to governance as an important mechanism for controlling the
organisation Butler Group recommends the deployment of IT governance
which should be used in conjunction with the corporate governance
initiative and employed not just for compliance and management reasons,
but also for providing a framework for measuring and controlling IT
costs.
"It is not a question of how much is invested in computer systems but
the effectiveness of the spending. Most organisations have very little
visibility into IT performance", says Mark Blowers, Enterprise
Architectures Practice Director and co-author of the study. "This needs
to change - due in no small part to the growing compliance and
regulatory pressures, which entail IT management having the wherewithal
to prove the department is being run effectively and offering value. To
provide this transparency and accountability many enterprises are
turning to governance as an important mechanism for controlling the
organisation.
"The effectiveness of IT investments is a very significant factor in
the ability of IT to provide value. Organisations must establish a
clear IT service model against which costs can be allocated and
performance monitored, including establishing a baseline for both these
attributes. Most importantly, this measurement should then be linked to
business activity, which enables rational decisions on IT cost
management to be taken and understood in the context of business
operations and objectives."
Organisations will need to be selective
and initially opt for those initiatives that will achieve the best
returns in the shortest time period IT projects should not be viewed
in isolation but looked at holistically as one element for improving
the effectiveness of the whole organisation. What has been found to
work well is incorporating IT projects as part of organisation-wide
initiatives, where the IT element is an enabler rather than the main
driver. A good Portfolio Management solution helps an organisation
select the right blend and balance of IT investment, as it is critical
that those projects are selected that make the best use of both limited
financial and human resources, and which provide the maximum value.
Doing the right things is just as important as doing things right.
"Organisations are no longer willing to make speculative investments in
information systems without a clear understanding of the costs and
measurement of the benefits. Today, a new air of realism demands that
cost efficiencies must be derived from existing systems, that costs
must be firmly controlled, and that new projects must add value", says
Blowers.
"When considering the opportunity for IT cost savings, it is important
to appreciate there is no 'one-size-fits-all' solution. Organisations
will need to be selective and initially opt for those initiatives that
will achieve the best returns in the shortest time period. However, IT
cost reduction should be gained through a systematic and holistic
approach, as well as being integral to existing IT processes and
management, in order to ensure that the best value is being achieved
from the organisation's IT investments."
Providing an IT capability
is one thing: operating, maintaining, and managing it cost-effectively
through its whole lifecycle is another In order to provide the
required levels of transparency IT management must put in place the
foundations of well-managed IT assets and capabilities, comprising
infrastructure, processes, and skills, along with the use of
automation, which form very important enablers for successful
cost-control processes. Ad hoc manual methods based on spreadsheets are
no longer an acceptable or a practicable solution; especially as data
quality for accurate and comprehensive IT reporting is now crucial. In
order to reach the required level of consistency the use of an
architectural approach and the deployment of an integrated toolset and
common repository must be an area of focus, as is the setting up of
feedback loops and dashboards.
Once a service is in the live environment the facility to track its
performance and behaviour is an important capability. The highest costs
are incurred once a service is deployed in the live environment.
Reducing problems in this phase can bring considerable benefits to the
overall life-cycle costs. From the very beginnings of IT there have
been silos of one kind or another in the technology infrastructure, and
also in the functions and people aspects of the organisation. Within
IT, better harmonisation of the application development and deployment
areas can help the IT function become much more agile and
cost-effective. The IT department must grasp the thorny issue of
chargeback: whilst the expectation is that in many instances no cash
actually exchanges hands, how can the user perceive value when IT
services are provided for 'free'? Blowers concludes:
"Both energy and operational efficiency are becoming more significant
as organisations seek to lower power consumption and minimise the
impact upon the environment. Migrating IT hardware from older,
less-powerful infrastructure onto a modern, energy-efficient,
high-performance resource pool can help to reduce operational costs."
The objective of Butler Group's report 'Managing Costs in IT Report -
Maximising the Value of IT Assets and Budgets', is to look at all
aspects of costs as they relate to IT, and to help IT management draw
up a coherent response that meets both enterprise and stakeholder
requirements. The Report is aimed at CIOs, IT managers, and other
senior IT decision makers, and reviews all aspects of IT cost
management.
Mark Blowers is Enterprise Architectures Practice Director with Butler
Group and co-author of the Report.
About Butler Group
Butler Group(www.butlergroup.com) is Europe's leading independent IT
Research and Advisory organisation. Its mission is to ensure that its
clients are the most comprehensively informed IT and business managers
on current, emerging, and future technology matters, and their impact
on business - in short, "Analysis without compromise". Butler Group has
established an enviable reputation for the impartiality and
incisiveness of its research and opinions. This is evidenced by a
client base encompassing over 40% of the top 100 companies in each of
Butler Group's key markets.
CONTACT: Krishna Rao, Datamonitor, London
Tel: +44 (0)20 7675 7271
e-mail: prbutlergroup@datamonitor.com
email: krao@datamonitor.com
Branton Morataya, Datamonitor, New York
Tel: +1 312 416 3854
e-mail: bmorataya@datamonitor.com
Denis Mason, Datamonitor, Sydney
Tel: +61 2 8705 6903
e-mail: dmason@datamonitor.com
Butler Group
WWW: http://www.butlergroup.com
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provided within M2 PressWIRE. Data supplied by named party/parties.
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http://www.presswire.net on the world wide web. Inquiries to
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Copyright ? 2009 M2 Communications Ltd.
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