Managing IT as a Business
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Managing Organizations in the 21st Century
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Organizations must become more agile,
transparent, and innovative.
There is great pressure to increase efficiencies
and productivity to reduce cost while improving
customer value.
Organizational visibility and governance is more
important than ever.
Business as usual won’t cut it! The dramatic
economic and global pressures have placed
extreme pressure on organizations to accelerate
these changes.
Managing IT as a Business
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Managing Organizations in the 21st Century
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Common Organizational Challenges
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Do More with Less – Productivity, Cost Reduction
Need for Innovation
Revenue and Expense Pressures
Transparency
Be Smarter
Increase Service Value
Collaboration – Internally & Externally
Variable Cost Structure
Managing IT as Business
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Managing Organizations in the 21st Century
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Common Organizational Requirements
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Visibility into the Organization
Control – Metrics & Process to Manage
Optimization – Continuous Improvement
Transformational Change
Leverage the Power of IT to Enable the Change
Managing IT as a Business
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The Importance of IT / Business Alignment
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Why is it so difficult?
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Most IT plans do not indicate the business value and
what strategic or tactical organizational benefit that the
organization is trying to achieve.
The CIO must report the IT value and guide other
executives on achieving and reporting the contribution of
the investment on the other executives goals.
The CIO must have the ability to relate IT investments
into business value. Art Jahnke
Managing IT as a Business
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The Importance of IT / Business Alignment
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Software Project Disasters
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The 1995 Chaos Report was a landmark survey made by
the Standish Group. This report is the study of IT project
failure and is widely cited when IT project failures are
being discussed
The respondents to the Standish Group survey were IT
executive managers.
The total sample size was 365 respondents representing
8,380 applications.
Managing IT as Business
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The Importance of IT / Business Alignment
Findings - The Standish Group research showed:
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a staggering 31.1% of projects would be cancelled before
they ever get completed.
52.7% of projects will cost over 189% of their original
estimates.
The Standish Group estimated that in 1995 American
companies would spend $81 billion for cancelled software
projects and an additional $59 billion for software projects
that would be completed, but exceeded their original time
estimates and projects, with only 42% of the originallyproposed features and functions.
Managing IT as a Business
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2009 Chaos Report -“This year's results … highest failure
rate in over a decade”
Projects
33%
44%
24%
Succeeded
Challenged
Failed
CHAOS Summary 2009 - Standish Group
Managing IT as a Business
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A Review of the IT Environment
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The Challenge : How to Leverage New
Technology to be more Innovative?
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Financial Pressures to cut spending
Legacy Computer Systems
78% of IT Dollars spent to “Run the Trains”
Human Capital Challenges
Non Alignment between IT & Stakeholder
Requirements
Managing IT as a Business
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A Review of the IT Environment
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Legacy Systems
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Run on Mainframe Technologies
Senior Programmers Close to Retirement
Work not Generally Documented
Operating Systems Expensive
Not Agile or Client Centric
Difficult to Integrate with Newer Technology
Managing IT as a Business
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A Review of the IT Environment
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Legacy Systems
 Recent research reports indicate that
integration is increasingly becoming the focus
for many businesses.
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Top IT experts conclude that 78 percent of an
IT budget is spent just managing existing
system and software infrastructures
Managing IT as a Business
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A Review of the IT Environment
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Legacy Systems
 This is bad news for any organization looking to
reduce IT costs.
 78 percent of your IT budget is spent
maintaining existing systems, withless money
for IT innovation and for alignment with
business processes.
 Psychologically, IT managers have more of a
stake in keeping current systems running,
rather than looking for better ways to manage
technology.
Managing IT as a Business
“Do it right”
Assets of the Company Efficiency
“Do the right thing”
Strategic Vision Effectiveness
IT Consulting
Services
Construction Management
Services
“Plan”
“Build”
Corporate Direction
and Strategy
Application Services
Tracer
Desktop Services
“Run”
IT
Strategy
Core
K
K
K
K
Migrate the IT investment $
and/or resources to the
high pay-off areas to the
business.
Business
Enable Change
Information Technology
K = Knowledge Workers
Increase levels of
productivity – Run/Build
Managing IT as a Business
Why Metrics are Important
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Business Goals - Define and Track Progress
View Support Costs by Application/Program
Enables Capacity Planning
Conduct Periodic Customer Reviews
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Based on Facts