UMT360 Blog

Blog Posts from the Leader in Enterprise Portfolio Management

Archive for the ‘IT’ tag

Strike & Maintain the Right Innovation Balance

Written by Mike Gruia on June 7th, 2014 at 6:00 am

IT and the business knows:    The year-to-year viability of a company depends on its ability to innovate.

We have learned over the years that innovation comes from three sources.

  • Top Down – Driven by management imperatives (i.e. we have to be in the cloud)
  • Bottom Up – Can originate anywhere in the organization, everyone participates and offers new ideas (i.e. start with a blank piece of paper)
  • Middle – This core innovation represents efforts to make incremental changes to existing applications and incremental inroads into new markets.  Such innovations draw on assets the company already has in place.

Read the rest of this entry »

Rationalize & Get More Business Value from Your Applications – March 18th

Written by Ben Chamberlain on March 10th, 2014 at 8:00 am

Today, more than a third of IT budgets are consumed by applications with half of that dedicated to maintaining legacy systems which, in so many cases, don’t align with current business needs.    As a result, executives are turning to Application Portfolio Management (APM) to rationalize their operational costs, modernize their applications and better align with business priorities and needs.   In a webinar now available on-demand, UMT360’s Ben Chamberlain demonstrates how UMT360’s APM is helping businesses get more business value from their application portfolios.

He will show how UMT360 helps you:
  • build an application inventory and maintain key metrics
  • derive total cost of ownership of each application
  • identify redundancies across the portfolio
  • use TIME analysis techniques to rationalize the portfolio
  • capture lifecycle decisions in powerful transformation roadmaps

Click here to view the complimentary webinar on Application Portfolio Management and for more information about UMT360, contact us today.

5 Principles Essential to IT Cost Optimization

Written by Mike Gruia on March 3rd, 2014 at 9:55 am

IT investments face a leaner, slimmer future but the companies that master IT investment cost optimization will emerge with better ROI on their investments.  IT investments are positioned as so essential to core operations and integral to business success that they often remain remarkably resistant to cutbacks, even in economic downturns.  Although IT investment budgets can seem vague, they do need to be rigorously scrutinized because waste is built into them.  In general, companies overspend on IT because they are unwilling to say no to business and IT.  Instead, executives along with their IT and division leaders need to face some truths about what drives up IT investment costs.

Read the rest of this entry »

Ushering in 2014 & Your Application Spend

Written by Mike Gruia on January 6th, 2014 at 8:29 pm

As we ring in 2014, IT spending is on its way up.  Gartner is forecasting a 3.1% increase in worldwide IT spending this year taking it to an estimated $3.8 trillion.  Also on the rise, the amount of software budgets dedicated to applications.  In a Gartner enterprise IT spending study last year, respondents indicated the largest portion of their software budgets, 36%, is focused on enterprise application software; 33% of the budget goes to infrastructure software; and 31% to vertical industry-specific applications. The increase in funds dedicated to enterprise application software is necessary largely due to organizations working with outdated application systems.  In most mature markets, those systems are more than a decade old and replacement of the antiquated technology is critical to remaining competitive.

This is a good time to review your own 2014 application spend asking yourself whether your budget as currently written will be able to help you achieve your business goals and new business needs among the ever changing market conditions.  As well, how will the move to the cloud impact your spending?  Gartner reported last year that only 38% of organizations they surveyed were using cloud services, yet 80% of respondents indicated they would be using cloud services over the next year so certainly the cloud will have a strong impact on spending in 2014.

Here are some recommendations and thoughts we share with our own customers as they step into Q1 – subjects we’ll be discussing more throughout 2014:

  1. Shining a light – Prepare an IT strategic road map and ensure it’s aligned to business strategy.
  2. Time to get started – Develop a APM approach to rationalize or modernize your application portfolio.
  3. Product revolution – Use the more agile product-focused thinking when examining your IT spend.
  4. Tracing spend – Prevent the failure to control the life cycle cost liabilities of your portfolio.
  5. Playing responsible – Assess the ability of existing APM, PPM and Financial Governance mechanisms to effectively support your strategic direction and change.
  6. There is only one portfolio – Integrate APM and PPM decisions to create and sustain competitive advantage.
  7. Where are the benefits? – Business benefits and their tie to business engagement will be increasingly important this year.

How PFI helps align IT spending with corporate strategy.

Written by Ben Chamberlain on December 4th, 2013 at 1:54 pm

When Frank La Rocca was named VP at a major northeastern utility company, the CFO and COO told him they wanted to ensure that IT spending was aligned with corporate strategy.  It’s a goal that has stayed in the back of his mind ever since – the need to understand or measure the alignment factor.  This driver is at the core of what’s becoming known as Portfolio Financial Intelligence (PFI).

La Rocca quickly learned that the answers to the bigger questions on portfolio strategic alignment, total portfolio spend and value were not as readily available as one might expect.  “The answers had to be culled from many different systems and spreadsheets and from interviewing the right people,” he explained.

La Rocca sought out solutions to provide the financial transparency he needed to have the right conversations and ultimately make smarter decisions about the portfolio’s management and investments.  Incorporating this Portfolio Financial Intelligence (PFI) was essential to achieving the goals within his department and supporting the organization’s overall strategy.

To institute PFI, La Rocca identified four main challenges that the organization had to address.

  • The Demand Management and Selection Process – Projects selected were not always the most strategic or had the best financial return.  “Often times, the funding would go to the project with the strongest sales pitch and slideware.”
  • Improved Financial Governance – Standardizing the workflow, cost/benefit analysis and authorization associated with business cases.
  • Annual Planning, Poor Forecasting and Inaccurate Cost/Benefits Estimates – People overestimated benefits to get projects approved and were rarely held accountable.  There were very few standards around the process.
  • Siloed Financial Data and Spreadsheets – Spreadsheets required manual intervention to get at data when time may be better spent on analytical rather than tactical spreadsheet work.

He recommends that organizations begin by building a financial management foundation so they’re able to access the financial data even if initially in spreadsheets.  La Rocca created a standard repository and required that any business case being considered go through the new process.  “Ensuring you have only one method of accepting a project proposal levels the playing field,” he explained.  “There can be no back door to financial governance.”

In order to effectively compare the wide array of capital projects, he helped establish a ‘strategic value currency’ which enabled his company to quantifiably compare the benefit of doing one project over another.  “The strategic value currency helped ensure that strategic alignment and removed the subject nature from the business case development.”   To do this, La Rocca and his team looked at the strategic development within the company, mined corporate statements to identify business drivers, prioritized the drivers through a pairwise analysis with the company leadership, then used those to rank the project proposals before them.

He also spent a significant amount of time defining key metrics, determining how to develop trends and analytics to improve metrics, and establishing the base line so that they could set and communicate targets to improve.  He found success in publishing those metrics and data internally to ensure people were accountable.

Perhaps most impactful was his decision in 2012 to institute a ‘sweep process’ to allow for dynamic budget reallocation.  “It allows project managers to release funds dynamically during the year and secure those funds for other projects.  Once we know a project is not going to use that money, we take it, we sweep it away and we invest it strategically in another project.”  He says that allowed the utility to increase its utilization though it required a culture change early on.  “The sweep process is really where we get a lot of bang for our buck and if I were to describe the process, it’s really breaking the annual budgeting planning mold.  We had so many project managers say ‘that estimate you’re holding me accountable for , we did that so early on when we didn’t really know a lot about the project yet, now that the project is executing, you’re still holding me accountable and that’s not fair.’  What we allow them to do is literally reforecast on a quarterly basis and give up money that we can use for other projects.”

For more on Frank La Rocca’s PFI experiences at Con Edison, view his webinar series by clicking here.