Re-tooling IT
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Like never before, the IT department needs to be managed as an effective, accountable business unit. Are the tools now emerging to enable this?
There is a growing perception - and one that is not at all palatable to information technology executives.
Most core processes within organisations have been made more efficient through the use of IT, whether that is CAD/CAM in engineering, supply chain management in manufacturing and logistics, customer relationship management in sales and marketing, or administration systems in HR and accounts. These functions have been automated and optimised, and their effectiveness benchmarked as a direct result of the application of IT - albeit with varying levels of success.
Yet the management of the IT function itself has been surprisingly under-served by IT. Perhaps as a misplaced act of faith, many organisations expect IT departments to be as efficiently run as the other operations that their services seek to streamline. Unfortunately, chronic budget and time overruns, user dissatisfaction with the end result and the regular failure of
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There are plenty of reasons why this situation is now no longer tolerable. As budgets have come under pressure, as other senior management have began to question the assumption that IT adds value, as the IT department has increasingly turned into an extended mix of in-house staff, outsourcing partners and offshore contractors - the call has risen for a much more comprehensive set of software that not only ensures the successful delivery of IT-based services, but which makes the task measurable, governable and (ultimately) more successful.
Manual methods
Certainly the tools used to date have been rudimentary, often manual. The most sophisticated aids typically used in managing IT budgets, project portfolios, people and schedules have been whiteboards, Gantt charts, year-planners, Excel spreadsheets and, occasionally, basic project management software.
For many companies, that level of technology use is proving inadequate, even embarrassing. A few numbers from industry researchers portray the consequences: half of all projects come in over budget (Gartner); 90% of projects are completed late and 30% are simply cancelled before delivery (Aberdeen Group); and 74% of companies never formally review their IT projects (IDC).
That may not be so surprising, says analyst Eric Austvold of AMR Research, because "most IT organisations have antiquated processes for evaluating projects, managing their projects with makeshift tools and databases that offer tactical and often inadequate information. [As a result] the vast majority have little visibility of the entire project portfolio and have, at best, chaotic and non-repeatable processes in place."
Over the past two years, however, tools have started to emerge that seek to address some of the shortcomings in IT management support. Analysts such as Gartner and Forrester have recently been grouping such technologies under the heading 'project portfolio management'. Others observe how the core modules of what is known as professional services automation (PSA) are being applied to the management of the IT function. Others still, define the task in terms of IT governance. In any case, the companies providing such technologies are seeking the same end - an integrated, comprehensive set of tools that brings efficiency, visibility and risk-reduction to IT project portfolios.
New visibility
While products for scope management, scheduling, time tracking, cost management and related areas have existed for a decade or more, they have typically only been available as point products. In contrast, project portfolio management (PPM) suites try to support the complete IT project function by addressing four fundamental perspectives.
Firstly, they need to support portfolio selection - the management of demand by the organisation for applications, and the determination of which ones should be undertaken, limited in scope, or cancelled altogether. Secondly, PPM products need to tie directly into financial applications so that managers are accurately informed as to which projects
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AMR stresses that PPM should also extend upwards and horizontally within organisations, providing visibility into relevant aspects of a project for all the people who have an interest in its success. As such, the programme sponsor can see progress using relevant metrics, the finance director can monitor cost in detail, the project manager can scale the resources devoted to the project, and so on.
The evidence that PPM is delivering on such promises is building.
Investment bank Merrill Lynch claims that as a result of the visibility provided by PPM tools into its project portfolio it was able to reduce overall IT spend by almost a third and raise the proportion of its budget allocated to strategic projects from 40% to 50%.
Visa Europe also recently implemented PSA software with a view to more tightly aligning IT projects to key business goals. It chose a solution from one of the leaders in the sector, Niku.
"Niku gives us end-to-end visibility and control across the entire IT function," says Barry Perrins, resource manager at Visa EU. "Having a dashboard view of all projects, programmes and initiatives enables us to answer questions such as: Should we be doing this projects? If so, what business benefits and returns should we expect, and in what timeframe? What milestones will determine if the project is still on track?"
Weak governance over IT has resulted in the perpetuation of the disconnect between IT and the business's goals. The tools are now there, however, "to bridge the gap that exists between IT and the business," says Errol Rodericks, market development director for EMEA at Mercury Interactive, which recently launched into the PPM market through its acquisition of specialist PPM vendor Kintana.
Organisations want to apply the same level of corporate governance to IT as they would to a financial function, echoes Irene Dawson, vice president for EMEA at the application life-cycle management software company Compuware.
"IT can't hide it any more. Business used to be involved in requirements planning, and then they would not see the application until the project was completed - or went badly wrong," says Dawson. "Governance is all about how to make IT transparent to the business. Whether it is a report or a missile guidance system, business should be making the decisions on the project."
Under scrutiny
Given the perception that organisations are now putting IT under the microscope, it is not surprising to see software vendors rushing to grab part of the predicted demand.
"Product introductions in this immature area span a variety of market segments," says Melinda-Carol Ballow, an analyst with Meta Group. These include companies such as Artemis, coming from project management software; enterprise resource planning software vendors such as PeopleSoft and Lawson Software; specialists in PSA such as Niku and ChangePoint; application management vendors such as Mercury Interactive; and application lifecycle software vendors such as Rational.
However, both Meta and Gartner identify a clear group of leaders in PPM, even though they say many lack maturity: Primavera, Niku, PlanView, Business Engine and Artemis. Alongside them is Microsoft, which is not providing the tools but has come to dominate the project management area by providing the underlying platform in the form of Project Professional/Project Server.
As this level of activity might indicate, there is potential for a very large new software segment here. Gartner for one predicts that, by 2005, 70% of IT organisations will have adopted a mix of project and resource management application services for managing project portfolios, team collaboration, resource allocation, tracking utilisation and costs.
Clearly, there is no going back to low IT governance, says Errol Rodericks at Mercury. "This is here to stay; the CIO will be expected to provide a high level of governance from here on in."
