I recently read the cover story in the January 24 issue of Compterworld magazine titled, “What CFOs want from IT”. The focus of the article was the increased scrutiny on “any kind of spending” caused by a “stagnant economy” and the message several CFO’s would “most like to get through to their top technologists.”
My immediate thought was the message was simply going to be, “lower cost.” Fortunately, the article offered much more specific and astute recommendations. Unfortunately, these recommendations continue to support my contention that Project and Portfolio Management (PPM) processes are woefully inadequate in many enterprises today. Let’s look at their recommendations.
Say Goodbye to Bells and Whistles
This recommendation is based on the view that the “age-old battle between cost and functionality is being won by cost.” They quote a CFO who says:
“I’m not suggesting that there wouldn’t have been a financial analysis (in the past), but the focus then would have been more on functionality and on (the software’s) tie-in to other applications. That might have overridden the financial consideration.”
How could functionality, or anything for that matter (other than compliance mandates), override financial consideration? That question is rhetorical because I have my own answer. Functionality can override financial consideration when the financial consideration is simply “cost.” This harkens back to a post I wrote called “Cost vs. Value” http://bit.ly/g3cDVc . Cost becomes the only aspect of financial consideration when an organization lacks the governance to determine value. With the appropriate investment management (PPM) and service management governance, an organization has the capability to determine the value of functionality. Once the potential value is understood cost data is simply used to determine if the investment is worth pursuing.
Play With the Toys You Already Have
One CFO mentions how she wants to make sure that the company is making full use of its current resources before buying more hardware or software. I have doubts this company has the robust application portfolio and project and portfolio management in place to provide this ability on a day-to-day basis. (See my post on “Understanding the Value of our Systems” http://bit.ly/gOlgsH.)
Also, take a look at any of the MIT CISR Research on the topic of “reusable digitized platforms” from Peter Weill and Jeanne Ross. In my post describing their theory of “IT Savvy” http://bit.ly/9kgNNy, I note how their research shows a “higher return on assets from technology sharing (ROAs 30% above industry median) and higher revenue growth (three percentage points higher than their industry median).”
Know What the Business Needs Now
This recommendation notes:
“Being aware of the company’s business strategy is always a priority for IT managers, but in tough times it’s imperative for IT to be up to date and ready to help with corporate changes on an almost daily basis.”
Every organization with the critical governance process of Integrated Business and IT Strategic Planning feeding directly into the equally critical governance process of PPM does have awareness of the company’s business strategy on a daily basis. In fact, they would not dream of making a single decision without it.
Show Me an ROI That I Can Trust
Sound PPM not only provides ROI data, it provides the loopback mechanism (through benefits realization and post-investment decision review) to constantly improve enterprise ability to estimate the potential value of investments. PPM also provides the means to thoroughly identify and manage the risk associated with each investment which is also cited in this recommendation.
Emphasize Short-term Benefits…
This recommendation did not necessarily indicate a potential PPM deficiency in the organization of the CFO who suggested it. With that said, responding to enterprise need to pursue business information technology investments capable of short-term and medium-term returns is ridiculously simple with sound PPM. The response is little more than adjusting some very basic investment decision-making criteria used by the executives governing the decisions.
…But Don’t Abandon Long-term Investments
This recommendation was the most encouraging because it illustrated the sage realization of the benefit “to continue proposing projects that will help the company reach its long-term goals.” But it too showed a potential lack of high-performing PPM in this quote:
“I don’t think there’s a function that doesn’t feel that the IT systems are absolutely essential to their performance. So we give them what’s needed. They just have to show there’s a good return.”
The “they” this CFO spoke of was IT. I would bet dollars-to-doughnuts this organization not only lacks sound PPM (which by definition “shows there’s a good return” on investments), it is yet another example of the rampant and discouraging perception that technology investment decisions are made by IT. “They” would not be viewed as the makers of those decisions if this enterprise had the PPM in place to effectively enable the business and IT to govern those decisions-together.
Though each of the recommendations in Computerworld’s cover story provide great advice to IT, these CFO’s could have accomplished each of these pursuits by simply instructing their enterprises to establish sound PPM.
Steve Romero, IT Governance Evangelist
Article source: CA ITGovernance Blog