Balancing IT Supply and Demand

Q: Is strategy effective at managing and reducing IT demand?

A: Strategy can be a very effective tool in managing demand. A well-facilitated strategy process will help gain consensus on the high-value IT opportunities. Unfortunately, because strategy defines what should be done rather than what should not be done, it will not reduce overall demand unless a good investment management process is in place.

Q: How can value be managed within decentralized IT organizations (where the business units get both the IT funding and resources)?

A: By ensuring that an investment management process is in place at the business unit level. There needs to be a central IT organization that includes as its charter the definition and oversight of this process. This process can get a lot of leverage if you set future year funding and resource requests based on demonstrated ability to realize value.

Q: As an IT consultant, I am not sure who the best recipient is for the value message?the CIO, the COO, the CTO? All understand the message, but who will do something about it?

A: I’m impressed that as an IT consultant you are asking this question. Consultants get a bad name, in part from the common practice of assuming that if clients are willing to pay them, their work must be of value. This is short-term thinking that does not build a long-term relationship. The best recipient for the value message is the executive who is feeling the pain from pouring good money after bad. You are going to have to ask open-ended questions such as, How are your IT investments going? With the answers, you can understand the executive’s current issues and help him appreciate how a value focus increases project success and therefore delivers value.

Q: The investment management approach sounds very much like a “phased” approach of doing projects, in which one of the outputs for each phase is the plan or estimate for the next. What are some methods to help sell this approach, especially to those CIOs and customers who “just want to know what it’s gonna cost me”?

A: This is a great question and a common concern. Business partners often want to know the cost during the first or second meeting with their IT counterparts. There are three approaches you can take: 1) Give them a very big number and hope they go away; 2) give them a very big range and obtain funding for a first phase to develop requirements; and 3) obtain funding for a first phase to define value, identify the requirements that will drive value, and identify an approach that will balance investment with return. The last option is my favorite because it allows the IT partners to generate alternatives that are properly sized for the value generated.