Nirvana (the highest level of maturity) is not reality in IT organization. It is a stretch goal. There are always room for improvement in any IT organization.

Some time back, a set of projects were perceived as a high business value projects and in last few months the business climate or economical climate might have changed and the project could be in the brink of extinction.

Some time back, a set of skills was perceived as a core competency for the future organization and due to the recent merger or acquisition or economical situation, the business strategy changed and hence the IT strategy. The core competency developed few years ago is not core any more in the current environment.

Some time back, a set of tools bought to enable efficiency with in the organization is not really working out due to various reasons..

What ever the situations may be, the past investment made in technology, people, process may not be currently required with in the organization.

IT Waste Management must be part of IT finance management group and IT finance manager/director is responsible for IT waste management function.

IT Waste Management Process:

Trigger:
Change in business strategy, IT strategy,executive leadership (end up by changing the IT strategy) or  merger, acquisition

1. Clearly understand the current direction of company
2. Clearly understand the change in direction due to the trigger
3. Identify the gaps
4. Assess the impact of directional change in terms of
   • Vendor Contract  – Hardware/software/Purchase service/Professional service
   • Intellectual  capital loss (work with HR and IT senior management )
   • System landscape  (work with Architecture team)
5. Identify the retirement plan or reusable plan for all IT assets. Multiple teams like architecture, HR, procurement all need to work together to develop the above plans.
6. Execute the plan. Realize and monitor the benefits
7. Report the sun downed systems to IT controlling as IT impairment assessment. The IT intangible assets which are in the books can be adjusted and would bring tax benefits to the company.

The systems which are sun downed or retired in the process must be reported to IT controlling as a IT asset impairment assessment to reflect the new IT intangible asset value in the books. It would bring tax saving to the company.

The above steps are part of IT waste management process and must be performed every 3-6 months in every IT organization.  It will bring operational and cost efficiency to any IT organization.

Due to the role and function of IT changing rapidly, I predict that trend is going to change so quickly. In the near future, the companies are going to look for an extensive functional knowledge as a requirement for CIO. With increasing success of SaaS, ASP models, the hard core IT function (SAN, NAS, Network architecture, load balancers, SSL accelerators and etc) are not required to be directly performed by IT organization. It will be done by service providers and it is requirements by an IT organization to better manage the SLA, vendor relationship. Since the IT function is to enable and drive business (IT is not a service provider to the matured innovation organization) the functional knowledge is extensively required for a CIO to make the right decision. It is not going to be nice to have competencies of a CIO.

For example, for an Oil & Gas company, the CIO MUST clearly understand how OIL & GAS function generally work and it will be required that CIO must have worked in that sector as a Business Director or business senior manager.

How much functional knowledge required for a CIO?
Significant business functional knowledge is REQUIRED for future CIO to run the IT shop.

To test my theory, let us take Toyota Financial. As I understand (as per their web site), they are looking to fill the CIO position. Toyota financial organization goal is to support the consumer (who buys Toyota and Lexus product) by providing financial products like loan, lease, insurance and etc and dealers by providing financial products like floor plan, whole sale and etc.

As per my theory (or speculation), the new CIO will have an extensive business knowledge in the financial lending industry (like mortgage, auto loan, banks, etc). Let us wait for press release and verify my speculation.

Generally IT budget has the following category. Some of the categories are expenditure not investment.

• Projects
• Maintenance & Enhancement
• Lights on
• Technology
• Hosting
• Internal IT special projects (innovation or cost optimization)

Projects, technology and internal IT special projects are considered as investment and other categorize are expenditure. IT investment management is a structure and governance for the projects, technology and internal IT special projects.

Projects

Projects are major initiative an organization under take for that year to meet the organization goal. The project selection for each year will under go an internal process. The executive team will be part of the process and other key stakeholder (ideally from all the business process area) will participate to select and prioritize the projects and budget for those projects.

The projects for each year of an organization should be decided based on the current state of the organization and immediate requirements. In this market condition most of the industry segment (may be not oil & gas companies) are looking for the cost efficiency to sustain and continue the operation. For example, the financial industry (like Citi) are looking for funding to run their business. Looking for external investors like Abu Dhabi or Dubai etc and also they may look for innovative ways to bundle the securities to mobilize more funding or look for only a best customers to improve their securitization standards. The projects for this year for Citi will be more focused on this line of business. IT department will adjust their priorities and take this projects to support & enable Citi’s business. The IT projects are driven by the business team based on the current immediate needs. Strategic projects which may not fetch immediate benefits to the organization will be in the list and it will be prioritized accordingly.

Maintenance & Enhancement

Minor changes to the existing systems but a project. It is fine tuning the existing systems to continue to support and enable the core businesses. In few cases, regulatory requirements also will come under maintenance & enhancement IT budget bucket. This expenditure generally can not be avoided.

Lights on

This bucket is for keeping the system running to support and enable the core business. It is a regular maintenance like ensuring the log files are rotated, database back ups are taken, systems are regularly monitored etc. Some of the maintenance and enhancement may come under lights on. This expenditure can not be avoided.

Technology

Technology priority matrix (a different perspective of technology road map) is a list of technology and its priority to the company. For example, for financial service company the top most priority is to secure the systems to protect the consumer data.

An example of technology priority matrix:

1. Security Technologies
2. Business Intelligence
3. Business Process management
4. Enterprise systems
5. Infrastructure technologiesAll the technological investment will be made based on technology priority matrix.

Hosting

It is a fixed cost for the running all the systems. It includes hardware, software, network, software license, desktop, system monitoring, mainframe, web environment. Every organization has a hosting cost and it generally it is a majority of the IT cost. It is slowly going to become a commodity and IT organization will not focus primarily on the hosting and focus on the business value augmentation.

IT special projects

Most of the organization does not have the IT special project bucket within their IT investment management plan. The purpose of this category to have funding to drive innovation, cost optimization (hosting provider evaluation), sourcing advisory, application portfolio assessment and etc. The special project priority matrix is created in collaboration with the senior and executive management of IT based on the IT strategy and direction. For an example, a special projects priority matrix is given below

1. Innovation
2. Cost optimization
3. Organization alignment