uGovernIT

A Practical Approach for IT Governance

Five Rules of Thumb to help us Manage IT

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Lance Mooneys CartoonAs CIOs we are used to leveraging our experience and creating a cheat sheet (aka rules of thumb) to manage IT.  When IT was focused on costs, a few of the common measures were:

  • IT Benchmarks:    Our goal was always to be lower than others in our industry, particularly so if we reported to a CFO;  and if we were higher, we justified it by showing other indicators such as higher quality, customer satisfaction etc.
  • Adherence to Project Budget: We targeted actual versus planned consumption of financial and personnel resources to be within x% (we felt good if we were within 10%).
  •  Gaps in Process Automation: We kept the number of identified gaps to be minimal in the core business areas.  We were very good in creating new projects to cover these gaps.
  • Number of Planned New Services: Our goal was that the percentage of new services correlate with the allocated budget. We really did not care how many new services we created as long as they correlated with the IT budgets.
  • Duration of Service Interruptions: We maintained the average duration of service interruptions to be just a few and the impact mitigated in less than an hour.
  • Customer Satisfaction: We used a Likert scale to get responses and if we got within 25% of the top, we felt we had done a good enough job, and if we were within 10% of the top, we were bragging about it in CIO events.

All of these are important, but they do not help us keep the seat at the table.  As we shift our focus from managing cost to creating value for the Enterprise, what are the new “rules of thumb”?

  1. Spend at least 20% on Innovation: If you are spending less than  20% of your IT budget on projects that bring innovation and increased value to the enterprise, you are not likely to get traction at the leadership table.  This generally means that you should be spending less than 50% of the IT budget in maintaining your core IT systems to meet your business needs. Not that this includes applications (licensing, support, changes, etc.) and the infrastructure (data center, network, voice/multimedia and user devices).  If you are spending more, you are likely not leveraging the current technology (Cloud, Mobile Computing, SaaS, etc).  This also implies that managing IT should cost less than 10% of your IT expenditures.  This includes all management costs including the cost of the office of the CIO, PMO, tools you use for service desk, project management, reporting, etc. This implies you have a hands-on management team and are leveraging modern IT management tools – not legacy and onerous IT Governance practices.
  2. Spend at least 20% on shared services:  Build efficiency by sharing services.  Many services are found in more than one part of the organization or group. CIOs recognize this as an opportunity and have funded the development and implementation of shared services.   The services are delivered based on defined measures (KPIs, cost, quality etc.).  Examples of shared services are salesforce automation, employee on-boarding, business project request, adjudication and execution, financial reporting, content management, compliance and other core business activities that are typically not part of an ERP.
  3. Discretionary Projects Should Have an ROI:   Today, the businesses expect you to treat IT as an investment.  What is the return you are providing to the enterprise?  If you carefully observe the proposed metric, there is no specific ROI value I have proposed.  These depend on the type of project.  As a CIO, you should be very proud if you are thinking about ROI. The very fact that you are providing an ROI puts you in a different category of CIOs.
  4. Work Backlog Should be Less than 6 to 9 Months: The business units always wants more IT than you have resources available.    Good CIOs recognize that if you have a very huge backlog, you will be constantly prioritizing and triaging business project requests.  This leads to political friction.  You can minimize it by reducing the backlog.
  5. Most Projects Should be Less Than 6 Months in Duration:  This is probably the most difficult to achieve.  There may be a few that are necessarily longer term, but your goal should be that longer projects should be an exception – not the rule!  Businesses are fickle – they change their needs constantly.  Shorter projects help avoid costly mistakes.  Breaking up complex projects into smaller ones (each one having their own value proposition) is the best way to mitigate IT risk.  In fact in our tool, we have crafted a special 6 Month Project Methodology that combines agile and traditional waterfall models into a nimble yet managed project request and delivery process.

Written by Subbu Murthy

October 11, 2015 at 1:49 pm

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