How Do You Know if IT Costs Too Much?

Steven Hall of ISG – writing at CFO – has penned an excellent post “How Do You Know if IT Costs Too Much?” that very much reflects our thinking here at QuePro Advisors.  Steven’s post looks at the issue of “IT Spend” most often expressed as Percentage of Revenue or Spend per Employee.  In the more traditional IT environment of the past, these metrics failed to give meaningful insight into current investments in IT, and offered no guidance as to future investments in IT. As Hall frames the problem:

“The traditional metrics also don’t address the broader question, “Am I spending on the right things?”

With today’s rapidly changing IT landscape – the rise of apps and shadow IT, cloud, demand for agility, SaaS, pressure for IT to operate at two speeds – the situation has only grown more dire.

The recommended solution – Technology Business Management – is an excellent starting point, establishing a financial driven framework of best practices that enables organizations to understand costs and maximize return on IT investment. .As Steven’s post points out:

“The biggest impediment to effectively managing an IT portfolio is lack of transparency. Most organizations simply do not have effective analytics to manage IT spending. Sure, there are basic IT cost controls, such as counting the number of servers, dissecting the various storage layers, comparing labor rates, allocating capex and opex spending, or allocating costs to users based on service or help desk costs. These measures may give business leaders a sense of control, albeit a false one, but do they really indicate the value of the IT investment? Are these costs really aligned with the business drivers? The biggest challenge to transparency is in mapping these “tower-based” costs to IT or business services. But there is a way now to overcome that challenge, through a discipline known as Technology Business Management, or TBM.”

As good as a framework as TBM is, it requires information to make it truly effective for managing IT as a business.  Many organizations continue to use point tools – spreadsheets, Sharepoints, or single purpose commercial solutions – that fail to provide the real-time, 360° view of the entire IT landscape that is necessary to effectively management the Applications Portfolio.

Cloudbyz ITPM is the perfect tooling to compliment the TBM methodology.  Unlike any other tooling available, ITPM fully integrates Project Portfolio Management, Application Lifecycle Management, and Application Portfolio Management into an intuitive, easy to implement, cloud based platform.  Increasingly, we are seeing ITPM integrated with leading Service Management solutions, to give true “end-to-end” visibility.  With the ITPM solution, real-time visibility gives stakeholders reliable information about the status of projects in motion and allows executives to confidently allocate resources to future development projects.

ITPM’s powerful APM capabilities provide comprehensive visibility and knowledge of application portfolio including Cost, Value, Risk, Quality and the ability to identify and analyze application portfolio optimization and rationalization opportunities via business and technical data-driven decisions aligned to business priorities and enterprise policies. Our powerful capabilities provide the ability to manage ongoing governance through business events such as M&A, divestiture, IT strategy change, sourcing strategy change.

QuePro Advisors can introduce your organization to the power of Cloudbyz ITPM. Contact us for additional information or to arrange a demo and check out Our Thinking.

This was a guest article written by Tim Janisch.