hmm.. Do you know what is being wasted in your IT organization?
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:
Change in business strategy, IT strategy,executive leadership (end up by changing the IT strategy) or merger, acquisition
- Clearly understand the current direction of company
- Clearly understand the change in direction due to the trigger
- Identify the gaps
- 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)
- 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.
- Execute the plan. Realize and monitor the benefits
- 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.
Understanding how the IT budget process fit into the overall corporate finance is essential to grasp the big picture. The following figure illustrates how the IT G&A operating budget fits into the over all corporate finance.
IT organization must decide the technique suitable for the budget cycle. To select the best suited techniques the organization must make them self familiar with the available options. Let me list the various widely used technique available to create the IT G&A operating budget.
- Static Budget – Presents one forecast for a given time frame and does not change for budget cycle
- Flexible Budget – Budgeted Revenue and cost are adjusted during the budget cycle
- Incremental budget – Previous year actual are taken as the base line and added or deleted additional cost for current year
- Zero Based budget – Begins from ground up
- Top Down budget – Each directors are given a budget task to align to CIO budget target
- Participatory Budget – Developed as a collaboration with all directors (generally very difficult to make it practical)
There are other budgeting technique like activity based budgeting, Kaizen budgeting and etc. Kaizen is a type of incremental budget with cost effectiveness target are given to each directors. To make the framework complete, I understand the widely used budgeting technique must be captured and it will eventually.
For this version 0.1, I want to start with zero based budget since I like the concept. It is very practical and gives an opportunity to each director or even senior manager or manager level to challenge every activities and look for some level of business case. Zero based technique can be used if it is top down budget and budget task are given by CIO to each director. Let me start with ZBB.
Zero based budgeting must be done in the manager or team leader level and rolled up to director and CIO level. It requires the manager or team lead to understand the business and forecast the work required to keep the systems lights on, enhancements and G&A project.
The cost for lights on, enhancement and projects are will be incurred by employee, contractor, purchase servie, software cost & hardware cost. Each manager or team lead under each director will forcast for lights on, enhancement and project in terms of employee, contractor, purchase service, software cost and hardware cost.
The training required to perform the forecast will be the starting session of next part of this initial IT Financial Framework.
In last few weeks, there has been increased attention to Twitter micro blogging concept and technology since president elect Barack Obama’s twitter account was hacked along with few other celeberties. Micro blogging was a dismissed concept in its infancy stage and due to its adaption particularly by the teens it gained its popularity and benefit visualization was accomplished in a short time span.
Micro blogging is a compontent of web 2.0 and web 2.0 has been seriously considered by enterprises to maximize the benefits. Vivek Kundra was promoting Twitter in the public office and there are major benefits of micro blogging in the emergency operation.
My views on how Twitter can be applied to an enterprise.
- Twitter can be used to communicate the status of various team members tasks in Agile software development methodology.
- Twitter can be used to keep the key stakeholder updated on the recent progress in production outages resolution (part of incident management)
- Twitter can be used to keep the team members up to date on execution of a major projects when teams are spread across the states, countries and continents
- Twitter can be used to understand what employees really LOVE to do. (All HR policies must be applied before enterprise uses this information for its use)