Running IT as a business: Myth or reality

IT as a business

In January this year Bob Lewis posted an article in Infoworld titled “ Run IT as a business — why that’s a train wreck waiting to happen“. In this article, Bob suggests that a lot of current thinking about running IT like a business is misguided and leading CIOs in the wrong direction. This article explores what is ‘Running IT like a business’ and what should a CIO do?

The myth of the internal customer – IT is expected to treat internal departments as customers and deliver them the software or projects that they have asked for. The problem is that customers don’t always know what they want and they are reluctant to commit anything to paper. Even if they do commit something to paper their thinking (and often budgets) demand a “silo” solution which only partially meets the needs of the enterprise. As a result, IT architecture suffers. IT becomes just an order-taker and not a partner.

IT Costs are always too high – Comparing costs of IT services to the external market is always fraught with danger. Why does a corporate laptop cost $2000 when I can buy a laptop from the local store for half of that price? It doesn’t matter that the other would not run corporate applications or the reliability is too low or it does not include software licenses. Similar stories are heard about the network costs, applications and hosting.

Challenge of the charge-back – IT as a business is expected to charge internal customers for its services. Charge-back is a popular mechanism for this. However, charge-back can create unintended behaviours, where departments try to reduce costs by avoiding IT services. I know a department, which stopped using help-desk for password resets due to the cost of the calls. This resulted in major security issues. Rather than figuring out how to reduce the overall costs, departments tend to focus on individual cost reductions.

IT seen as a vendor – Business begins to see IT as a vendor (usually an expensive one). This results in an arms-length relationship between IT and the rest of the business. As a result, trust begins to erode and outsourcing IT begins to look like an attractive proposition.

Bob believes, “The alternatives begin with a radically different model of the relationship between IT and the rest of the business — that IT must be integrated into the heart of the enterprise, and everyone in IT must collaborate as a peer with those in the business who need what they do.”

Is IT ready for the radical model?

Bob’s comments are spot-on! I agree that turning IT into an internal business unit, which conducts business transactions with other departments, is a less than optimal model. So what should a CIO do? For IT to be accepted as a credible internal partner there are a few things IT needs to get right.

  • Is IT managing service right? – When IT fails to deliver basic services and project, it would be impossible to develop any meaningful relationship with business.
  • Is IT managing the budget right? – If IT budgets are not predictable and IT does not understand or manage its costs, IT would not have much credibility in the enterprise.
  • Is IT investment generating value for the business? – IT must be able to demonstrate that its projects and investments support the business strategy and deliver benefits for the business such as, revenue growth, cost reduction, better decisions or reduction in risk.
  • Is IT managing the resources (or capability) right? – IT capabilities consist of people, technology assets, intellectual capital (processes and know-how) as well as relationships (trust and shared ownership). Successful IT groups leverage these capabilities to deliver and sustain competitive advantage for the business.
  • Is IT managing the “business of IT” right? – Managing the business of IT means managing the costs of IT services and projects, managing demand for services, having effective governance processes along with delivering and communicating value.

IT as a businessThe “radical model” moves the focus from managing IT like a business to managing IT for business value. When IT is solely focused on chargeback and internal customer requirements, it is not always working in the best interests of the enterprise as a whole. But it is neither easy nor straightforward to make the transition from the traditional to the new operating model. Martin Curley of Intel uses the business value maturity framework to describe the journey.

Managing IT for Value

There are interrelated challenges of managing IT for business value (or contribution to business success), management of IT budget, IT capability and managing the business of IT.  IT groups gradually move from one maturity level to the next and need different strategies at each level.

Managing the IT budget

The initial challenges are to get a handle on IT costs and budget and apply financial discipline of expense control as well as forecasting to ensur

Managing IT for Value

There are interrelated challenges of managing IT for business value (or contribution to business success), management of IT budget, IT capability and managing the business of IT.  IT groups gradually move from one maturity level to the next and need different strategies at each level.

Managing the IT budget

The initial challenges are to get a handle on IT costs and budget and apply financial discipline of expense control as well as forecasting to ensure that the budget is predictable. Many IT shops cannot forecast half-year or year-end expenses confidently. Executing the strategies for systematic cost reductions (e.g. demand management, SOE, adjusting service levels, BPR etc) is the next level of maturity. Optimising costs by adjusting refresh cycles or managing risk reward trade-offs is the final level of sophistication.

Managing the IT capability

IT capability is what IT can do for the business. Improving IT capability is about keeping up with the business demands and reducing the gap between demand and IT delivery. The IT capability stages of maturity are:
  • Technology provider – IT as an order-taker who can be counted upon to provide basic technologies and applications that the business requires.
  • Technical experts – IT as providers of technology services. IT is invited to provide technical inputs and expertise. Typically at this stage IT has limited business understanding.
  • Business partners – IT are included in developing business plans and solutions. IT has a good understanding of business and can engage with the business well. IT is proactive and is able to propose innovative solutions. However, the difficulty in going from good service providers to this level should not be under estimated. According to Bob Lewis, innovative CIOs are operating at this level. As Mazda CIO Jim Dimarzio writes in his CIO article, “Being in the room, however, did not automatically equate to involvement.” Jim had to develop the IT capability to effectively engage with the business and contribute to business processes and priorities.
  • Corporate core – IT is considered a core capability and a source of competitive advantage. IT has a track record of innovations that are a major source of competitive advantage.

Managing IT as a business and managing for value

I believe both these strategies are closely related. When IT is run effectively as a business it creates significant value.  The stages of maturity are:

  • Cost centre/cost focus – IT understands and manages the cost of the services well. Cost and quality of service are seen as important. Expenditure is controlled and technology life-cycle costs are considered in investment decisions.
  • Customer /benefits focus – The focus of IT engagement changes from cost to value or business benefits. Formal tools such as business case/Return on Investment (ROI) are used. Services are designed with customers’ needs in mind.
  • Portfolio approach – More sophisticated approaches are used to select investments using portfolio management and value management techniques. IT has effective measures of customer service. Mechanisms such as chargeback are used for fair distribution of IT costs and as a way of changing consumption patterns.
  • Value Centre – The organisation systematically optimises its value using portfolio management, risk trade-off and alignment with strategy. IT demonstrates a different mindset. IT has a strong stakeholder focus and is aligned to organisations’ value drivers where technology is seen as a tool rather than an end.

Conclusion

In closing, I quote Bob’s advice, “Don’t act like a separate business. Do the opposite — be the most internal of internal departments. Become so integrated into the enterprise that nobody would dream of working with anyone else.”

Show me the money!

Introduction

The 2009 Standish research shows that only 32% of IT projects are successful. Which means that the new capability is successfully “installed”. But the sad reality is that in a large number of cases this new capability is not used the way it was intended. Thus only a fraction of the desired benefits (or value) are realised. So when the CEO says, “show me the money” or the value the CIO is often caught short.

There are many reasons for this failure.  There may be a lack of understanding about the true intent for the change. Competing agendas and conflicting priorities may dilute the focus. Then there is resistance from the people affected to adapt new behaviours and processes. A key reason is that organisations tend to put all the rigour and energy in the project “installation” and almost none for the benefits realisation post-installation.

Instead of the “installation” focus, the modern CIO needs to adopt a “realisation” or value mindset. With a realisation focus, CIOs ensure that project success is judged by the value created. This article suggests steps CIOs can take to instil a benefits management focus and show the “money”.

Executive Summary

Organisations are good at figuring out what must be done to address their business challenges and capture the opportunities. IT organisations are getting better at delivering technology capabilities to address these challenges. A lot of energy and capital is invested in developing these technology solutions. The plans appear sound. Why is it then that the outcomes fall significantly short of the original ambitions? In today’s markets, CIOs and other leaders cannot afford to spend large amounts of money and risk their reputation just deploying projects, when the success now depends on their ability to manage the change and actually getting the returns on investment (ROI).

Benefit realization mindset

Figure 1 – Realisation mindset

Getting a sustainable ROI requires carefully managing benefits realisation as well as managing the human aspects of the change. The benefits management process provides the framework for blended investment programs that integrate technological change, organisational change and business process design within a common context.

The purpose of the benefits management plan is to identify and organise all activities such that the promised benefits are achieved. It consists of benefits identification, benefits planning, monitoring, realisation and review. A realisation mindset guides the entire project/ program execution. Surveys show that organisations without well-defined benefits planning processes are significantly worse at getting project ROI.

All major changes require shifts in the way people (staff, suppliers, competitors and customers) think, manage and act. These changes will not just happen by themselves. They must be planned and carefully managed. The bigger the change, the larger is the impact and the disruption and resistance to the change.  If people don’t “buy-in”, the change is likely to fail.  In technology enabled changes there is a tendency to focus on the technology side of the project and under-estimate the human change dimension.

Keeping track of the “money”– Benefits Management Process

A benefits management plan is a critical tool for focussing the mind on the value.. It has five stages.

  • Benefit Identification is about clarity around the intent of the change. Benefits identification determines project scope.  The sponsors must be clear about what beneficial outcomes (or value) they want to obtain. Where the benefits will occur? When? Who will receive these? Who is responsible for the delivery of benefits? How the project outcomes link to the value?

Figure 2  – Benefits Management Process

  • Benefits planning stage covers all steps needed to leverage the project outcomes to realise the desired value. (E.g. The project may deliver new technology capability, people need to be trained, new processes and structures may need to be implemented, product/ service features need to be changed, new marketing programs may need to be devised.) In planning evaluate the organisation’s capability to execute and capacity to absorb the change. Also consider the various risks and capability to govern and support the change.
  • Benefits Monitoring covers many stages of the technology development / implementation process. It ensures that the benefits are not diminished during the project life cycle.
  • Benefits realisation should be performed from the time changes begin to be implemented right through to routine operations stage. It would indicate if more actions are necessary to realise the benefit or whether further benefits are achievable.
  • Benefits review captures on lessons learned.

Ten success factors for realising the value

  1. Active Sponsor – Effective management requires a single leader who is visibly committed to success and accountable for realising the benefits. Major changes need senior level executive leadership. Active leadership means selling ideas repeatedly and being there to overcome obstacles.  The sponsor should be accountable.
  2. Clear Intent – There must be clarity about the reasons for the change. What “pain” this initiative will address? How well do key people share the intent?  Is it aligned to the strategy? What would success look like? Is the “price to be paid (dollars, political, organisational)” justified? A lack of clear and shared intent at the beginning would invariably result in a weak or failed initiative.
  3. Business Case – There are many examples of weak business cases that have just sufficient funding for the technology solution. All the post implementation activities and resources are assumed to come from the “business as usual” budget. Without adequate funding and resources for change management in the business case, benefits realisation would be suboptimal.
  4. Full life-cycle governance  – In business changes are to be expected.  The business case will change when the circumstances change. At agreed project stages or upon discovering major variations, both the costs and benefits should be reassessed. If project costs are higher, ask if is it still viable? Should more benefits be found? Should the scope be reduced? Remember that the business benefits are the reason for the project and not technology installation.
  5. People – People are the greatest variable in a change. Systems are at times easier to change than people. Benefits realisation will depend on transforming the way people think and operate. Don’t underestimate the difficulties employees will have in learning to work with new systems that require new skills and new ways of thinking. Take the views of affected people into account early. Try and understand reasons for their resistance and develop action plans to address these. Align consequences and rewards with benefit realisation.
  6. Capacity for change – Do you really know your organisation’s capacity for change? Do you have executives who have a track record of leading the change? Are there are too many changes going on in the organisation? Be truthful with yourselves about what the capacity for change is and what is realistic and then plan accordingly.
  7. Relevant measurement – Measurements must clearly demonstrate how investments contribute to the beneficial outcomes. They must support decisions regarding progressive allocation of funding and resources via agreed “stage-gates”. Secondly, measurements help adjust the benefits path to changing environments. Techniques such as “results-chain” would help choose the right measurements.
  8. Clear accountability – Assign clear ownership to each of the measurable outcomes including project milestones and outcome measures.
  9. Independent governance – Importance of independent governance cannot be overstated. Investment governance board should ideally also monitor benefits realisation. This creates transparency around investment and the returns on investment, provides due diligence on the change initiative and holds sponsors accountable for the benefits. It also helps create peer pressure and reinforces good governance. Experience suggests leaving the entire governance to the sponsor alone is a mistake. Sponsors are known to downplay mistakes and to overstate success.
  10. Value Management Office (VMO) – A VMO serves two purposes; first it provides expert advice and tools to the sponsors for assessing value (validating business cases). Secondly, it helps monitor program progress, and provides rigorous value assessments to the investment governance board. A VMO, like a Project management office, would promote consistency in the approach as well as promoting transparency via reporting.

Benefits management is process is applicable to all initiatives and not just for technology. But changing the organisations mindset from installation to realisation is neither a quick nor an easy process. It requires an ongoing commitment from the top. This mindset enables a big picture view of capital investments and enhances ROI.

For more information on how to create a realisation mindset in your organisation please contact the author.

Towards better IT governance

Introduction

As both business and public sector organisations are becoming increasingly dependent on IT, there is growing recognition that governance of IT is an essential part of the corporate governance. Governance is about who makes the decisions? How they are made and who is accountable for what? While the need for IT governance is accepted, implementing effective IT governance continues to be a challenge.

Many C-level executives still consider IT to be too complex, technical and difficult to govern. IT governance still is perceived as a CIO issue. Alignment between IT and business strategy as well as between IT and business governance remains weak.

This article demystifies the IT governance and provides practical ideas for improvement.

Four “ares” of governance

Governance is about ensuring that the organizations resources are used the right way to create value while managing IT risks. The Val-IT framework from IT Governance institute helps address these challenges. The four “Ares’ are the core of Val-IT framework. This is a sound framework which helps organisations ensure IT efforts are aligned and IT continues to deliver value.

Four "R"s of IT Governance

  1. Are we doing the right things? To quote Peter Drucker: “There is nothing so useless as doing efficiently that which should not be done at all”. This is the question about should we be doing something at all. It ensures strategic alignment between business and IT. Is what we are trying to do fit with the organisations vision and strategy? Is it consistent with the business principles?
  2. Are we doing them the right way? This is the question about architecture and standards. Is what we are doing conform to the architecture and processes?
  3. Are we getting it done well? This is the question about the execution. Do we have the disciplined delivery and change management processes? Do we have the right skilled re sources and are we managing them well? How does our performance measure up to others? Are we effectively managing risks?
  4. Are we getting the benefits? This is a question about realising value from investments in IT /projects.  Are we clear about the benefits? Do we have metrics? Is the accountability for the benefits clearly defined?

These four questions cover the core of Governance, which are Strategic alignment, IT value delivery, IT Risk management, Performance management, and IT Resource Management. When managers at all levels address these questions, IT governance will become part of the culture.

IT Governance Models

There is no one size fits all model for IT governance.  Three common models are based on three decision-making styles within organizations. These are: Centralised, Federated or Decentralised.

 

IT Governance models

Figure 2 – IT Decision making models

  • In the centralised model efficiency and cost control is emphasised over business unit responsiveness. There is greater focus on standards, synergies and economies of scale.
  • In a BU centric (decentralised) model there is greater business ownership and responsiveness but integration and synergies suffer, resulting in likely higher costs.
  • The federated model tries to combine the best features of these two. In the federated model common applications and infrastructure resources are pooled while business units control BU specific applications.

Here are some commonly used IT Governance forums. The above models influence the scope and membership of the IT governance forums.
Business Leadership Council / Executive committee – This is the top-level committee that makes enterprise-wide decisions including approving IT strategic plan and controlling major investments (including projects). Sometimes Ex-co may delegate the IT decisions to IT Council or IT Steering committee. This usually consists of key business executives, CFO and CIO.  They would consider IT policy and investment decisions more deeply than the Ex-co.
IT Leadership council – This group consists of most senior IT leaders across the enterprise.  They focus on decisions such as IT policy, IT Architectures and IT infrastructure.  This is a critical forum in Federated and decentralised models.
IT Architecture Council consisting of key IT and some business leaders who would oversee development of architecture standards, recommend them for endorsement by the Leadership council. This group may also monitor compliance with the architecture standards.
Business-IT relationship managers – These managers bridge the gap between IT and business units and act as two-way communication channel to address and resolve any gaps.

Characteristics of good IT governance

  • IT investments and decisions are assessed in a manner similar to business investments and IT is managed as a strategic asset. This means there is top management participation in key IT decisions. There is board oversight of IT investments and executives are held accountable for realising benefits.
  • IT is essential part of corporate planning and strategic planning. IT understands the business dynamics and contributes to the development of business strategy, which is interlinked to IT strategy. IT and business work together to identify opportunities.
  • Top IT risks are considered within the enterprise risk management framework. Risks such as data protection, IT security and business continuity receive periodic board oversight.
  • IT performance is regularly measured and compared with peers and best practice.
  • How decisions are made and why, is well understood and outcomes are clearly and formally communicated to the stakeholders. Formal exception processes are established and promote transparency as well as allowing organisational learning.

Steps to better governance

Improving governance in organizations is a strategic change process. There is no silver bullet. Governance is not just a new process but it also needs a new mindset and behaviours at senior levels of both IT and business. The established power centres within organizations do not always welcome greater transparency and accountability. Experience suggests that strong support from CEO and CIO and gradual increase in governance maturity usually works better than constant tinkering.

Here are ten steps for improving IT Governance:

  1. Visible and active top management commitment is absolutely critical for the success of any governance initiative. Governance is a disciplined approach. There must be consequences for all the executives for non-compliance.
  2. Treat governance as a change program requiring resources and commitment. It must have visible benefits for it to be considered successful. Also, consider organization’s culture, resources available and capacity for change. Establish credible goals, measure and communicate the benefits.
    If the IT is struggling to deliver reliable service, or have a poor track record of customer service or project delivery; focus the governance efforts for addressing these burning issues rather than going for the lofty goals of strategy alignment and such.
  3. Use recognised frameworks for the governance initiative. There are a number of frameworks like COBIT, ITIL and others. If service management were an issue using ITIL framework would be ideal.  Use knowledgeable experts to help establish a realistic program.
  4. Transparency of decision making and reporting gives governance its potency. Transparency whether it be business cases, standards compliance or project health reports create trust and creates peer pressure to address issues identified or to question unusual decisions.
  5. Create a formal process for handling exceptions. Then report on percent of exceptions and key reasons for these. May be the standard it inappropriate or the enforcement is poor. Openly discuss and address.
  6. Encourage peer group consensus at each governance tier and avoid escalations to higher levels. This will build trust and sense of compromise within the framework of good governance.
  7. Where possible align with the corporate governance mechanisms. Most companies would have risk management, investment management, and crisis or business continuity management mechanisms. Align IT with this where possible. This would accelerate the implementation as well as give it instant credibility. Seek input from internal or external Audit staff in design of the governance framework.
  8. Educate senior management on benefits of IT governance as well as on new technologies and challenges so that they can participate in an informed manner in key technology related decisions. Lack of technological knowledge should not be an excuse for executives not to participate in key technology investment decisions.
  9. Build accountability for benefits realisation in the business case itself. This will encourage active interest in delivery governance.
  10. Avoid clogging the IT steering committee or EX-co with technical or architectural details. Address the technical details at a technical forum and report only on compliance or non-compliance/ risk to the top team. The top team can then focus on ‘is this the right thing to be doing (or investing in)’ rather than ‘how’.

If you want to discuss steps to improve IT governance in your organisations contact me.

Take control of your IT costs

Introduction

These days there is increasing pressure on the IT group to contain costs. Being a smart manager, you have already negotiated reduced rates with your suppliers, cut headcount, tightened travel / entertainment expenditure but the organisation still needs to find more savings. While resources are cut, the demand from business for IT services continues to grow unabated.

As organisations begin to exhaust the supply side cost reduction opportunities, controlling consumption and demand offer the next level of cost savings.  Organisations have achieved additional long-term savings of 10-20% by managing consumption on top of the supply side savings.

Executive Summary

The challenge of managing costs means that the IT group must look for cost savings beyond the supply side costs controlled within the IT department. Demand Management aims to control consumption of resources by helping the business managers understand how their decisions drive costs, and how IT can help find ways to optimise demand on IT resources.

  • As IT has become an part of business, demand for IT services and resources, continues to grow. Requests for business process changes, enhancements and procurement of new technologies and e-commerce means the demand for services continues to increase unabated despite business cycles.
  • The demand for IT resources appears to be poorly controlled. Most organisations don’t appear to have the right information on the total demand nor credible costs. Appropriate information and incentives for the business to cut the demand do not exist. Two common reasons are:
    • Inadequate IT cost transparency
    • Inadequate responsibility on business heads to control consumption
    • While most organisations have processes to control the demand for the new projects; in areas such as applications support, infrastructure operations and help-desks, such controls are hard to find.
    • Even when there are controls on the discretionary project initiation, once underway, there is limited control and almost no incentive to stop the distressed or wayward projects.


IT Demand management

Figure 1 – IT demand management

While there are many benefits, demand management is also more difficult because, according to Forrester Research, it is not just about assessing the business appetite. For effective demand management IT has to put in place processes and people who can understand the business needs and strategies; and then begin a meaningful dialogue on cost and performance tradeoffs. Demand management requires an ongoing focus. It thrives with a continuous improvement approach. Reducing IT supply costs has many one-off activities and is usually quicker. Increasing the scale helps bring the unit costs down. While demand management is a longer-term initiative, it can offer much larger savings beyond what is achievable by the scale alone. Once managers understand what they are paying for their focus quickly changes. When organisations become wise consumers of IT resources, they begin to have robust control over projects and capital investments. There is a reduction in the redundant applications and reduced maintenance. Hence there is more money available for the strategic initiatives. There is also the benefit of also improving IT’s credibility as responsible managers.

Successful demand management needs a high level of cost transparency from IT in a form and language that is understandable by the business customers. Some form of charge-back / user-pays mechanism too is necessary to create the right incentives. Care should be taken that the charges don’t create unintended consequences such as maverick buying. Benchmarking charge back costs with external providers ensures that they are reasonable.

Some organisations believe outsourcing of IT services and the resulting cost transparency will drive demand management. But the reality can be quite different.  First, the service provider is looking to increase revenue and reduced consumption is against their interest. Secondly, there is very little collaboration between the business and the service provider to optimise costs and increase value. In fact, we have seen one business asking staff not to call help desk to cut charge back but with a possible reduction in the productivity.  Care has to be taken to avoid such unintended consequences.


Tips for successfully managing business demand and consumption

There are three drivers of IT costs. Namely, the demand caused by the business changes, the demand (often unrecognised) resulting from the past business changes/ decisions and the business driven consumption of IT services. Here are a few tips to address each of these three.

Demand created by the business changes

  1. Business case discipline: Question whether the business change will deliver value greater than the costs. Establish a project / investment governance board with business.  Apply the filters of business case, strategy alignment, ease of implementation and risk assessment to weed out low value/ high-risk proposals and to prioritise high value changes. Select only the promising ideas for further detailed analysis. Ensure ongoing support costs are included in the business case.
  2. Revisit business cases: The project scope and risks change over the project life cycle. Reassessing the business case and risk /benefits at critical life-cycle points helps find unviable projects early. Reduce scope, look for increased benefits or stop projects that don’t pass the hurdle.
  3. 80-20 solutions: Avoid gold-plated solutions and always demand alternative solutions that would meet business needs. If 80% functionality can be provided with 20% costs, very good justification is required to go for the 100% solution. Leverage and reuse the functionality already provided by existing applications.
  4. Pilots and trials: Using trials and pilots instead of a full-blown project is a low-cost way to confirm new ideas. It is also easier to end a pilot than a big project.
  5. Benefits realisation: Hold sponsors accountable for the realisation of project benefits. Seek help from CFO/ finance department to make sure that the benefits are tracked and are built into the future budgets. Check if the IT department has fully realised benefits from it’s own past investments.
  6. Realign maintenance: Focus maintenance dollars on high value/ strategic business applications while cutting the budget for changes to others. Eliminate duplicate applications.

Demand (unrecognised) created by the past business changes

  1. Outdated features and applications: Work with the business users to rationalise outdated product/ features that add cost and complexity but little value. Analyse the applications portfolio to find and cut duplicate or obsolete applications thus reducing complexity and the support costs.
  2. Shared Services: Duplicate applications and services increase complexity and cut agility. Consider a shared services function to end the duplicated IT services and functions across business lines.  Virtualization would allow sharing servers for different applications.
  3. Standardisation: Past decisions may have resulted in greater variety of hardware, operating systems and divisional applications, which significantly increase the complexity, need multiple skill-sets to support and add costs.  Aim to standardise and simplify the environment.

Optimise business consumption of IT resources

  1. Adjust service levels: Rewrite service levels based on real business process support requirements. E.g. credit card authorisation within 5 seconds, Order processing completed by 8PM.  Discuss trade-offs between costs and service levels. E.g. 7 / 24 support vs. a lower cost weekday only support.
  2. Business friendly IT service costing: Help the business users understand the cost of IT services and what they can do to optimise the use. Define the service in business terms and use business friendly usage metrics such as ‘number of days’ retention for email, rather than MB. Create ‘service catalogues’ with information about the service; it’s costs and tactics for optimising use. Provide reports to the business on usage and costs.
  3. Realise the savings: As business adjusts IT consumption, IT department needs to adjust related resources and expenses to make sure the resultant savings are realised. Changes to contracts and staffing arrangements may be required to realise the savings.
  4. IT Asset management: Many businesses have unused equipment (PCs, printers, data links, software tools and servers) for which costs are being incurred. Work with business to reclaim/ recycle the surplus equipment and cut costs.  “Sweat existing assets” before acquiring new ones.
  5. Account managers as “buyers”: Use IT savvy “account managers” as “buyers” of IT service and place them within business units. Task them to find ways to rationalise demand and remove duplication.  These “buyers” must have strong knowledge of the business and IT processes to be effective.

For a detailed discussion and/or information on how you can start demand management in your organisation please contact the author.