That Do Nothing….

As part of client engagements I am asked to undertake a 70% review of IT financial plans. At this time of year, when many IT leaders are in the midst of putting their budgets together, I thought I’d share some technology misses I have seen within IT budget planning.

Business and IT Alignment
Still an ever present challenge with the budgets is getting the business input and getting IT to consider the impact on the business.

1. What do you need from other departments?

2. What do other departments need from you?

These two simple questions are rarely answered. For large departments each and every function: Service delivery; Architecture; project management should be asking these questions not just from IT functions, also business functions.

In some organisations this seems to be covered through devolved responsibilities to the IT business relationship person. They provide invaluable insight on active engagements, however they do not always consider everything that is needed within a department. E.g. the need for a technical team to be trained on a new update release of software.

Are your teams asking these questions from their stakeholders and are your business partners sharing their demands from you?

Today many companies have legacy systems. It is surprising that when you look at IT financial provision for those systems that some folks look gleefully and say “nothing”. No software licences, they are making a huge saving. This sets alarm bells for me as this shows that the real costs of IT are unknown in the business. Consider the following :

*Server hardware component failure having a disruption on the business which was rectified within three hours, however took one company a full day to recover the backlog of data entry. There was a year on year increase in these failures impacting more customers and….starting to lead to a loss of customers;

*Similarly the cost of replacement parts was increasing year and year.

*An ageing software environment, where 50% of new joiners were leaving within 3 months through lack of training in old software systems, and the gap between technology they learnt at school and what they were being asked to use now. The HR director had something to say about her budget!

*Environmental costs (cooling, electricity, data centre floor space, tape storage. These are sometimes split across many budget holders hiding the true and sometimes alarming costs.

*Grey IT it happens and the cost to IT and other parts of business isn’t about capital IT assets or having SAAS services it is the duplication of data, security issues, and ultimately a future cost to sort out what has evolved.

For those systems you are “doing nothing with” have you really considered the incremental cost?

Strange that each year there are more software licenses purchased and yet the updating of records creates a discrepancy. So often this due diligence and updating of records at the right time can create a significant gap.

Apportioning Finance
The nature of the IT industry is changing and ever increasing. IT leaders are also seeing a need for better financial modelling of the costs within the business. The recent IFIP IP3 report highlights (’> ) the need for better ways of measuring and showing the value of ICT contribution to a business. It highlights the need for value maps aligned to value financing for all IT activities providing four streams of financing:

  • Stay in business
  • sustain
  • industrialise
  • and Innovate

Insurance, protection and Risk
As recent 2015 cases have shown insurance is becoming a bigger factor in corporate decisions’> and′>

Another factor is the additional powers that the Information Commissioners Office have received and a string of fines and court cases throughout 2015 :’> . Time to review the IT Risk register?

So what next?
As you prepare your budgets for 2016:

  • Challenge, challenge, challenge that the “do nothing option” has no consequences on your budget or your fellow directors.
  • take time to review expenditure versus value for the business;
  • Is that risk register reflective of today?
  • As you move to more integrated digital systems, consider how a new digital experience impacts on your IT financing. Are you measuring and allocating finances appropriately?

John Morton is an internationally recognised expert in big data, analytics and disruptive technologies. He helps companies improve decision-making and increase performance using information and Enterprise Architecture disciplines.