Balancing IT performance and IT cost

During the next three years IT directors will need to make the most of shrinking budgets, while delivering ever improving levels...

During the next three years IT directors will need to make the most of shrinking budgets, while delivering ever improving levels of service. Projects need to be prioritised both within the IT department and through a risk/reward portfolio management approach.

IT directors should aim to maintain an appropriate mix of projects, balancing complexity and technical resources alongside the value to be gained by the business. The selection of new projects, the benefits they deliver and associated risks to essential services are key elements for consideration.

Recent Meta Group research indicates that advanced IT organisations focus on six key areas designed to improve operational capability, move from high to continuous availability, and consolidate IT assets across the enterprise. These are:

  • Establish an asset management centre of excellence. The management and justification of IT budgets will hinge on end-to-end financial management. It is essential to establish a unified asset management centre of excellence

  • Prepare a tested disaster recovery/business continuity plan. During the next 12 to 18 months, economic and political pressures will bring unprecedented transparency in most organisations' disaster recovery and business continuity capabilities. As senior executives carry out risk assessments and drive these plans, IT directors must formalise and test processes and technologies. Ideally this should be undertaken in the next six months

  • Consolidate servers, storage and infrastructure. Through to 2004, the worldwide shortage of IT skills, the improvements in technology delivery and the need for cost savings will force organisations to look at consolidation but IT directors must balance this with the need to deliver key business benefits and improvements in service delivery

  • Carry out operations process mapping. IT operational groups are fundamental to delivering improvements in systems and articulating service delivery to end-users. Over the next four years, IT operations will need to evolve into centres of excellence. The steps of process mapping and alignment are complex and should be started now

  • Establish a rapid response team. During the next five years, rapid integration of new technology will become a critical measure of success. Organisations must establish rapid response teams that understand the operational issues (production acceptance, change management etc) and work effectively with architecture and infrastructure groups

  • Consolidate e-business applications and databases. Adding Web technologies to existing databases involves software re-engineering alongside significant changes to key business processes. These projects can be complex, requiring both advanced IT and business skills. IT directors should start the initial phase of mapping out and prioritising as soon as possible since they often play a critical role in a company's business strategy.

As IT directors consider the mix of projects to best manage their resources and deliver business value, they must be sensitive to the varying time frames and levels of complexity of different projects. This will be achieved by integrating strategic business drivers (eg growth, new markets) and budgetary cycles (eg annual IT budgets). This will lead to more mature allocation of resources.

The role of the IT director has never been so complex, so demanding and so critical to the success of the business. In addition to juggling many IT projects, the IT director must take on the roles of financier, negotiator and diplomat while keeping a eye on the technology itself.

Rakesh Kumar is a senior analyst at Meta Group

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