Information technology leaders around the country are facing budget challenges, and with an increasingly precarious global economy these challenges are likely to become even more acute. In addition to being budget conscious, IT leaders must also preserve capability and organisational competitive agility, and this demands a focused plan.
In most organisations there are three types of IT applications investment.
First there are the major strategic programs, which characteristically are multi-year investments with multiple projects within the program of work. They should be delivering significant competitive and/or operational advantage to the organisation and already be managed within a formal framework, often extending to board reporting and formal risk management. They will probably be focused on a combination of a variety of benefits - cost savings, cost reductions or cost avoidance and revenue growth as well as some competitive elements - such as improving customer service. They might also serve to reduce operational or regulatory risk.
Second are the non-strategic projects - adding or evolving the functionality or the configuration of an existing investment. These projects are typically business case positive within two years and should be running through a governance process today. These projects are usually assessed within the same benefit categories.
Finally, there is good old-fashioned application maintenance - covering everything from "break/fix" through to preventative maintenance, software upgrades and minor enhancements.
Then it is useful to class the projects by their benefit category. Next - review the business cases of the major strategic programs and the non-strategic projects and explicitly evaluate the planning assumptions that have been made for each of them.
Changing business conditions can radically affect a business case. Sometimes changing conditions can strengthen a business case - so resources need to be moved to accelerate the business outcome. If the programs no longer make economic sense, they should be mothballed.
Analysis might reveal that some programs just need to continue - either due to a contractual obligation, or because an upgrade is required for regulatory or risk profile reasons.
In tough times, the usual strategy with these investments is to lengthen the project investment horizon and do a smaller level of investment across a longer period of time.
Chief information officers should conduct a risk review across the revised portfolio to ensure it is not impossible to deliver.
Application maintenance needs tougher treatment. Inevitably, it is these projects that add change (and thus cost) into the environment without the corresponding payback to the business. The focus in this area should be to perform break/fix and mandatory and/or regulatory changes only.
Finally, retaining fiscal control is critical so there are some golden rules: no IT investment unless the appropriate governance body has authorised the spending and the initiative supports the business strategy and IT architectural direction of the organisation.
Watch out for the build up of "shadow" IT projects and "skunk works". These add to uncontrolled costs, duplication of effort and can confuse providers, staff and customers alike.
Fiona Balfour has been chief information officer for Qantas and Telstra, and is now an independent business and technology consultant.
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