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Optimizing the IT Portfolio is Not Just About Taking a Simple Inventory

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Optimiser le portefeuille du système d’information ne se résume pas à en faire un simple inventaire.

The reason for this complexity is largely due to changes companies have been through over the years: mergers and acquisitions, internationalization and globalization, development of new business processes to be more competitive.

IT departments have been affected by these changes, and they must now maintain an increasing number of applications, often redundant or heterogeneous, with additional difficulty related to globalization. While some local communities manage between 200 and 300 applications, it is common for large companies to maintain between 3,000 and 5,000 applications, and even tens of thousands.

Complexity has dramatically increased maintenance costs, while IT managers no longer have the time and resources to undertake new projects and support innovation. In a survey conducted by Forrester in 2013, IT leaders at 3,700 companies found that they spent 72 percent of their budgets on replacing or expanding capacity and supporting ongoing operations and maintenance.[1]

Consequently, rationalization projects have begun to emerge in the past few years. They not only aim to reduce maintenance costs, but also to increase visibility of IT systems. This transparency allows applications and infrastructure to evolve, and to gain "agility", while meeting the growing needs of changing business and the integration of new applications, such as cloud.

Because of lack of time, resources or long-term strategies, some companies tend to limit their rationalization projects to a simple inventory. Certainly, inventory helps increase visibility, but benefits are limited. In some cases, it can even go as far as abandoning the project because IT managers are unable to quantify the return of an inventory project.

Although not sufficient, inventory remains a necessary first step.

Inventory consists of populating a database through, for example, the automated detection of network components. The purpose of this collection is to rate various IT assets in terms of business value, costs, and risks such as obsolescence or compliance. Indeed, a router does not have the same function, the same cost, and does not present the same risk as a customer relationship management (CRM) application.

When inventory comes from a simple CMDB - Configuration Management Database – which describes objects from a technical standpoint, objects are not prioritized and significant efforts are needed to make more-informed decisions for rationalizing the IT landscape. On the other hand, if the collection is based on pre-established criteria for optimization, chances of success increase tenfold. The project manager will make sure to specify how information is collected, what information is needed and the timeline. This comprehensive inventory phase, based on pre-established criteria, should be especially well framed to make it as short as possible.

To succeed, the target database should be specifically designed to fit evaluation criteria, and should be flexible enough to adapt criteria to real life situations. Then, the step of assessing collected IT assets will naturally lead to IT transformation plans (withdrawal, migration, shift to SaaS model, etc.) based on costs, risks and business value. Companies will make informed decisions about applications and technologies to retire or maintain, and effectively transform their IT assets. This is usually the case of IT portfolio management applications that feature inventory and evaluation of IT assets through multi-criteria analysis, as well as support transformation plans. With a rediscovered agility, IT departments will be able to implement and support new initiatives while providing added value to business.

In summary, a simple inventory of IT assets is not enough and has little value since it does not help transform IT. IT departments will determine actions to transform their IT assets through an evaluation of their assets based on pre-established criteria for optimization. With a clear view of their assets, IT departments will be able to undertake new projects, and regain agility.

[1] 2013 Forrester survey of IT leaders at 3,700 companies

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The reason for this complexity is largely due to changes companies have been through over the years: mergers and acquisitions, internationalization and globalization, development of new business processes to be more competitive.

IT departments have been affected by these changes, and they must now maintain an increasing number of applications, often redundant or heterogeneous, with additional difficulty related to globalization. While some local communities manage between 200 and 300 applications, it is common for large companies to maintain between 3,000 and 5,000 applications, and even tens of thousands.

Complexity has dramatically increased maintenance costs, while IT managers no longer have the time and resources to undertake new projects and support innovation. In a survey conducted by Forrester in 2013, IT leaders at 3,700 companies found that they spent 72 percent of their budgets on replacing or expanding capacity and supporting ongoing operations and maintenance.[1]

Consequently, rationalization projects have begun to emerge in the past few years. They not only aim to reduce maintenance costs, but also to increase visibility of IT systems. This transparency allows applications and infrastructure to evolve, and to gain "agility", while meeting the growing needs of changing business and the integration of new applications, such as cloud.

Because of lack of time, resources or long-term strategies, some companies tend to limit their rationalization projects to a simple inventory. Certainly, inventory helps increase visibility, but benefits are limited. In some cases, it can even go as far as abandoning the project because IT managers are unable to quantify the return of an inventory project.

Although not sufficient, inventory remains a necessary first step.

Inventory consists of populating a database through, for example, the automated detection of network components. The purpose of this collection is to rate various IT assets in terms of business value, costs, and risks such as obsolescence or compliance. Indeed, a router does not have the same function, the same cost, and does not present the same risk as a customer relationship management (CRM) application.

When inventory comes from a simple CMDB - Configuration Management Database – which describes objects from a technical standpoint, objects are not prioritized and significant efforts are needed to make more-informed decisions for rationalizing the IT landscape. On the other hand, if the collection is based on pre-established criteria for optimization, chances of success increase tenfold. The project manager will make sure to specify how information is collected, what information is needed and the timeline. This comprehensive inventory phase, based on pre-established criteria, should be especially well framed to make it as short as possible.

To succeed, the target database should be specifically designed to fit evaluation criteria, and should be flexible enough to adapt criteria to real life situations. Then, the step of assessing collected IT assets will naturally lead to IT transformation plans (withdrawal, migration, shift to SaaS model, etc.) based on costs, risks and business value. Companies will make informed decisions about applications and technologies to retire or maintain, and effectively transform their IT assets. This is usually the case of IT portfolio management applications that feature inventory and evaluation of IT assets through multi-criteria analysis, as well as support transformation plans. With a rediscovered agility, IT departments will be able to implement and support new initiatives while providing added value to business.

In summary, a simple inventory of IT assets is not enough and has little value since it does not help transform IT. IT departments will determine actions to transform their IT assets through an evaluation of their assets based on pre-established criteria for optimization. With a clear view of their assets, IT departments will be able to undertake new projects, and regain agility.

[1] 2013 Forrester survey of IT leaders at 3,700 companies