Eye on the Prize
A growing number of organisations are evaluating their it investments with a more discerning eye, treating technology assets and projects more like financial portfolios, and some companies using the portfolio management model are seeing a real bottom-line impact. (For a comprehensive look at the IT portfolio management model, see "Mix IT Up", February CIO.) Take BearingPoint client Merrill Lynch, which saved between $US25 million and $US30 million over a single year by slowing down or stopping planned initiatives and redirecting project funding faster and more effectively than it used to.
As reported in Computerworld last August, Merrill Lynch's asset management business in the UK ended up deferring two software development projects - one to develop a tool to help separate stock trades in investor portfolios and the other to create software for integrating market data about shifts in bond prices - once it discovered the firm's US asset management group had similar projects under way. That decision alone probably saved Merrill Lynch more than $US3 million in redundant development costs.
Another BearingPoint client, JP Morgan Chase, had used the IT portfolio approach in its three-year push to consolidate a series of global WANs left over from previous mergers, thereby generating "substantial" IT cost savings.
Gardner says the starting point for organisations lacking the kind of strong IT governance and discipline that can ensure IT-business alignment is to ensure the IT area has total transparency. Everyone in the organisation - but particularly the board - needs to know what IT is spending and the value being derived from that spend (see "Getting the Big Guns on Side", page 82). "At the board level, that gives them an ability to understand when projects start to go bad," he says. "With those early warning systems they can avoid some of the catastrophic examples of what happens when projects go really bad and fail. I think that's probably the most important critical starting point - transparency."
What follows here then, is a rough seven-step guide to the BearingPoint approach to achieving such transparency.
1. Clarify the Strategy
Gardner says whatever the rhetoric, the first thing which typically stands out about the clients who seek his help is their lack of a clear IT strategy and vision. Sure, most of them have a technology-driven IT strategy, he says. What's surprising is how many large and prominent organisations - both in Australia and internationally - do not have a business-driven IT strategy.
How does an organisation know if it has a business-driven strategy? Gardner says a good starting point is to ask the heads of business to articulate their IT strategy.
"If you find that they can't, or if you find that they articulate an understanding of strategy that's inconsistent across the organisation, that's usually a symptom of not having a very clear business-driven technology strategy," he says. "And usually if you look at the strategic planning process, there's not an explicit part of the strategic planning process that calls for the development and articulation of a business-driven IT vision and strategy. It's a gap in most strategy planning processes.
"And so the default is that IT will come up with a strategy just so that they have a strategy, and there'll be an architected strategy as part of that, but that's not necessarily well understood or consistent with the direction of the business. And without that clarity, then you don't have the melding of the minds between the business heads and the IT heads, and that really is one of the critical starting points, we find."
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