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McGee formed part of a team of Gartner analysts that helped clients cut their budgets even when they thought they could cut no more. “We had clients who came to us saying: ‘We’ve gone through three iterations of cost cutting and we think we’ve cut about as much as we possibly can.’ But as far as we’re concerned we never saw a budget that we couldn’t chop.”

To achieve this, McGee and colleagues would ask their clients the five following questions, allowing them only to answer yes or no: “Is there a complete list of all IT projects being worked on? If such a list exists, would it be possible to find the names of the business people on whose behalf they are being undertaken? Would those people be able to tell us the one-time implementation cost of their projects? Would they be able to tell us the ongoing cost of their projects? And finally, is there a document that affirms their understanding of those costs and that has their signature on?”

In the majority of cases, McGee reports, these questions would reveal that the budgetary approval of IT projects was far removed from the authority of the business. Costs had therefore escalated out of control.

This is a shortcoming that many organisations have yet to resolve, one reason why any temptation to go back to ‘business as usual’ must be resisted, says McGee. One way to resolve it is to introduce zero-based budgeting. In traditional budgeting, only incremental budgetary increases require approval; in its zero-based alternative, a given project’s entire budget must be justified every year.

McGee advises that organisations adopt zero-based budgeting as a precautionary defence against a ‘double-dip’ recession. “We are not predicting a recession, but we believe it’s prudent for CIOs to include this as one of the many things they should address in the daily execution of their jobs.”

Mobilisation issues

The issue of executive oversight also lies at the core of another IT management malaise, as diagnosed by US consultancy Diamond Management & Technology Consultants.

“What we’ve observed over the years is that an organisation will build a plan, whether it is to implement SAP or to build a new customer capability or go into the cloud, or whatever,” explains Chris Curran, Diamond’s chief technology officer. “The next step they take is to hire a systems integrator or create a big project team to work on the plan. There is a missing step between the conclusion of a plan and the start of a big project . We call that step mobilisation.”

The often absent mobilisation stage, Curran explains, involves mapping out the financial and human resources required to undertake a given plan, and understanding what the impact of diverting those resources will be on the rest of organisation. This might mean hiring replacements for certain project staff, or evaluating the impact on the short-term profitability of the company.

As this suggests, mobilising a given project requires the input of the finance department. “A lot of projects don’t involve finance enough early on, so they are playing catch-up once the project is up and running,” says Curran. This can be an extremely expensive error. “Over and over, we’ve seen companies spending millions of pounds a month on suppliers, and they are not using them to their fullest,” he explains. “It’s because they are making these mobilisation decisions for the first time two or three months into the project.”

But more than just the cooperation of the finance department, mobilisation of a given project requires the input of an executive that understands the strategic motivation behind the project and can therefore prioritise projects and allocate resources according to the greatest need.

“One of the measures of mobilisation is whether ownership of the strategic roadmap, which would have multiple projects on it to deliver a particular strategic initiative in the business, has been assigned,” says Curran. Unless the ‘ownership’ of that roadmap has been explicitly assigned, he explains, the necessary mobilisation steps will not take place, because “it’s somebody else’s problem”.

Diamond has conducted a survey of CIOs for the past three years and has consistently found that those organisations that show characteristics of good mobilisation are more likely to be top performers as measured by revenue growth. However, the survey has not detected any improvement in the average organisation’s ability to mobilise projects, suggesting that the recession has not made the typical organisation any better at managing IT project finance.

So while some specific lessons might have been learned during the downturn, the overriding message is that standard IT cost management practices are not fit for purpose. For many organisations, the challenge of addressing this issue still lies ahead.