Getting the most out of the IT assets
currently under CIO control
Using the term “asset” in its broadest connotation of “IT resources at the disposal of the CIO,” any C-level executive must be concerned with the financial performance of those assets.
This is a big concern for companies that have experienced a lot of growth, followed by flat or falling revenues and/or employment; assets that were purchased for growth are now a boat anchor that is dragging down profitability. This often precipitates a draconian reduction in assets that can leave the company unable to compete effectively in the market place.
Or possibly a company has grown by merger or acquisition and needs to look over the entire spectrum of IT assets that came along with the purchase of other companies and rationalize the entire set of resources. That is often overlooked or de-emphasized in a merger or acquisition, and then the IT departments are left to sort it out and make the best of it later. This can seriously erode the supposed process and cost synergies of a merger or acquisition.
This broad topic includes life cycle management of technology and upgrades or technology transitions that are necessary to support the business. Besides the ongoing upgrade of servers and laptops with new versions of operating systems or applications, there are times where a business needs to make radical changes to their IT environment due to disruptive technologies like mobile devices, cloud computing, and social media. These are compelling reasons why an enterprise architect should be a major contributor to planning on this scale.
Given the scope of this subject, an obvious question is where to start with asset management. Well, it is tough to manage anything without having a list of items to manage, so a broad IT inventory is essential to an effective asset management initiative. The next component will be correlating those assets to the regions, business units, business functions, departments, staff, customers, and vendors who use those IT resources. The third component is having good cost information on those resources from financial systems. With those three components, an effective data model can be constructed to inform the business partners of the IT costs being consumed with varying degrees of aggregation. If you add the business drivers that are the levers for your IT costs, you can then derive an IT Total Cost of Ownership model that will help business partners understand how their decisions impact IT costs.
While you are building that TCO model, you will obviously be looking to understand the impact of current IT initiatives on your cost structures and therefore how your TCO model will change in the future. A business system plan should integrate a functional view with a financial view of planned IT changes, depicting the “bubble costs” (i.e. short term costs to code/configure/deploy/upgrade), the ongoing cost structure, and the anticipated business revenue gain from new capabilities or the cost reductions due to lower business expenses or lower long term IT operating costs.