Assets and liabilities for IT
Professor Georges Ataya, cgeit, cisa, cism, cissp
Academic Director, Solvay Brussels School for Economics and Management
Managing Partner, ICT Control SA
International Vice President, ISACA
IT: Strategic Liability or Strategic Asset?
Senior Management do not accept
accountability for IT
IT Budget is typically thrown on tactical
initiatives with no significant impact on
Enterprise capabilities
IT Assets are merely isolated systems wired
together to meet the next immediate need.
Georges Ataya
21st May 2010
2
Without Effective Governance
Situation
Results in..
Leads to..
Reluctance to say no to
projects
Too many projects
Project delays
Budget overruns
Lack of Strategic Focus
Business needs not met
Can’t kill projects
Quality of executionBenefits not received
suffers
Increased Complexity
Projects are “sold” on
emotional basis -- not
selected
No strong review process
Overemphasis on
Financial ROI
Sub-optimal use of resources
Finger pointing
Underestimation of
risks and costs
Lack of confidence (in
IT)
Projects not aligned to
strategy
No clear strategic
criteria for selection
3
Source: Fujitsu
Liability scenarios
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Fire the CIO
Throw money on the problem
Cut IT budget Drastically
Outsource the IT problem
Implement a major ERP solution
Georges Ataya
21st May 2010
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Build IT into an Asset
Engineer the Operating model
• Fix what is broken
• Build a sound IT platform
• Exploit the IT Platform
• Processes
• Systems
• Information
Georges Ataya
21st May 2010
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Operational value
Operational
Capability
Developing the business case
Business
Capability
Solution delivery and monitoring
RESOURCES
Business
Outcomes
Technical
Capability
Georges Ataya
21st May 2010
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Projects, Programs, and Portfolios
Portfolio – a suite of business
programmes managed to optimise
overall enterprise value
Portfolio
Management
Programme
Management
Project
Management
Source: ISACA.org
Programme – a structured grouping of
projects designed to produce clearly
identified business value
Project – a structured set of activities
concerned with delivering a defined
capability based on an agreed
schedule and budget
7
IM - The Business Case
2. Alignment
7. Documentation
3. Financial Benefits
6. Optimising
risk & return
1. Fact Sheet
4. Non-fin. Benefits
8. Maintenance
5. Risks
Cost Optimisation
Opportunities and Strategies for Cost Optimisation
INFRASTRUCTURE
HARDWARE
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PROCESS
SOFTWARE
Mainframes
Servers
Desktops
Laptops/PDAs
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Applications
System software
Databases
Desktop software
TELECOMS
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Data (LAN)
Data (WAN)
Voice
Internet
Procurement (AI5)
Warranty and Maintenance
Project Portfolio Management (PO10)
Platform and Product Consolidation
Programme and Project Management
(PO10)
Replacement
Strategy
Platform
Standardisation
Source: IT9Governance Institute
Software
Licensing
In-house and
User Development
Legacy/In-house
Application
Support
Capacity and
Utilisation
Leverage of New
Technologies
Deployment of
Human Capital
IT Recruitment
Staff Retention
Contract/Third-party Service
Management (DS2)
Asset Management (DS9)
Acceptable Use
Policies
IT Management
and Organisation
Financing Policy (PO5)
Budgeting and Cost Monitoring (PO5 and
DS6)
Asset Management
Capacity and
Utilisation
PEOPLE
Use of IT
Contract Staff
Operations and Systems Management
(DS13)
Service Desk and Service Delivery (DS8)
Training and Staff
Development
Architecture types
Georges Ataya
21st May 2010
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Steer the operating model
Define Integration and standardisation needs
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Diversification
Integration
Standardisation
Unification
Georges Ataya
21st May 2010
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The way ahead
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Do
Specify one operating
model for each profit
centre
Drive the choice of the
operating model
Consistently align your
decision making
Align IT management
Identify champions for
the IT platform to build
Georges Ataya
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Don’t
Avoid rocking the boat
Ignore real differences
Underestimate the
tasks
Make a wrong
operating model
decision
Limit the exercise to IT
21st May 2010
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IT Budget : Static view
Budget
IT Budget
time
Implement a new application
Mainenance cost
Project exceeding IT budget
Project downsized to accomodate budget
Maintenance eating up IT budget
Georges Ataya
21st May 2010
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IT Budget: Dynamic view
• IT is the internal supplier of services
• Service catalogue is based on systems assets
• Pricing model for standard Products and services,
including necessary overhead : continuity, security,
help desk, etc.
• Pricing model for specific work including :
– Development of analysis, design, implementation of new
systems and services
– Assistance in selecting external systems and services
– Advisory and feasibility studies
Georges Ataya
21st May 2010
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IT position in the Enterprise
Business Departments
IT Department
IT position in the Enterprise
Demand for IT
services and products
Deliver IT
services and products
IT Department
Business Departments
IT position in the Enterprise
Demand for IT
services and products
Deliver IT
services and products
services and products
IT Department
Business Departments
Cost of services
and products
IT position in the Enterprise
Demand for IT
services and products
Deliver IT
services and products
IT Department
Business Departments
Other Sources
for IT Services
and products
IT Sells services
to other customers
Value transfer
Business Perspective
IT Perspective
+ Value
Technology
Services
- Costs
Cost of
services
Justification
- Costs
+ Recovery
Viability
Develop an idea to a commodity
Georges Ataya
21st May 2010
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Portfolio, program and project management practices
Every investment need not follow:
VENTURE
Clarity of
connection
with desired
business
outcomes
21 Group
Source: META
GROWTH
DISCRETIONARY
ENHANCEMENTS
NON
DISCRETIONARY
CORE
Transform the
Business
Grow the
Business

The same level of value analysis

The same level of control
Value
Assessment
Cost Benefit
Analysis
Impact Analysis
Non-Discretionary Costs
Degrees of
freedom to
allocate
funds
Discretionary Investments
Portfolio Categorisation
Run the
Business
Little Analysis
Developing and monitoring
business cases
 Why the business case?
 Understanding of what you plan to achieve; how



you are going to manage it and who is
accountable
Basis for comparison and choice
Recording all that needs to be tracked (cost,
risks, benefits, etc.)
Maintain clarity on what you are doing
2. Alignment
7. Documentation
3. Financial
Benefits
6. Optimising
risk & return
1. Fact Sheet
4. Non-financial
Benefits
5. Risks
22 Consulting, Information Paradox by John Thorp
Source: Fujitsu
8. Maintenance
Complete, Comparable and
Operational Business Cases
Resultsfocused
programmes
INITIATIVE
Clear
understanding
of outcomes
Full scope of effort—
All necessary IT and
business initiatives,
including change
management
Clear
accountabilities
Relevant
measurement
Source: The Results Chain™, Fujitsu
INITIATIVE
23
DRAFT
ASSUMPTION
CONTRIBUTION
OUTCOME
23
We don’t learn from our past
ROI as expected in the Business Case
Expected Benefits
Budgeted ROI =
€ 114 - € 100 m
€ 100 m
= + 14%
Expected Budget
Actual ROI allowing for typical solution delivery performance
Functionality
achieved -16%
Approximately two years delay. so
benefits discounted at 12% After
Tax Rate
Expected ROI = 14%
Time 
2
1
114
m
x
84
%
x
1.12 - € 100 m x 124 %
Actual ROI = €
€ 100 m x 124 %
Budget Overrun
+24%
Actual ROI
after corrections SDP
ROI= -38%
= - 38%
Cumulative cash flow (€)
Questions
Contact:
Georges Ataya
georges@ataya.net
Ataya.eu
Solvay.edu/itgov
Ictcontrol.eu
Georges Ataya
21st May 2010
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Running IT as a business
Case study: Solvay SA
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400+ sales and production
More than 50 countries
29,000 employees
CIO: Stefan Vanhelleputte
300 people, hosted in 17 Solvay
Solvay subsidiaries
• Consolidated budget, own P & L
• Annual billing : more than 100 M€
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21st May 2010
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Georges Ataya
21st May 2010
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Shared services supporting independent
business
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Case study: Procter & Gamble
170 year-old consumer prodcts company
180 countries
250 brands
5 000 000 000 consumers
Three global units
– Beauty and health
– Household care
– Gilette
Georges Ataya
21st May 2010
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Global Business Services
• Headed by the CIO
• « Provide building blocks to the marketing units to
reduce their time to market globally»
• Two categories of services:
– Employee services and solutions
– Business services and solutions
• Catalogue of services listing
– Costs
– Mandatory or optional
Georges Ataya
21st May 2010
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Way to go
• Create new services by adding new layers to
the platform of standard services
• Encourage use of shared solution:
– Garantee 10%-30% cost reduction when adopting
new shared solution
– Annual reduction of unit price
• Supported by sophisticated IT financial
management and governance
Standardisation
• Create a synergy among autonomous
businesses
Diversity
Georges Ataya
21st May 2010
Unification
Integration
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Harmonising Process and Data
• Case Study: Swiss Reinsurance Company
• Founded in 1863
• Largest and most diversified reinsurance company:
Property, casualty, life and health
• 30 countries and 10,000 employees
• Distributed client base : variations on core
operations (contract admin and asset management)
Georges Ataya
21st May 2010
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Global model
• New operating model to meeting the needs of global
customers with three components
– Core business processes
• Twenty high level core processes
– Common business systems
• Standardised 80% of processes and related applications
– Integrated information capabilities
• Shared and globally defined data
Georges Ataya
21st May 2010
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Global View
• Global picture on assets at any time from:
– Accounting value
– Market value
• Compare profitability over the globe on a real time
basis
Georges Ataya
21st May 2010
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Questions
Contact:
Georges Ataya
georges@ataya.net
Ataya.eu
Solvay.edu/itgov
Ictcontrol.eu
Georges Ataya
21st May 2010
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