Tuesday, 24 September 2013

Dear CFO - 4 factors to evaluate before you invest in new IT

written in response to this great article on WSJ Blogs: http://t.co/lbyNeeMlxm

Dear CFO,

  before you decide on your strategy for investing in IT assets, whether on-premise or public cloud, there are a couple of important correlations I think it's important for you to consider.  

  Clearly, your decision ultimately will be based on:
  • The fit with your longer-term business plans
  • The measurable benefit to your business
  • The investment needed
  Investments in IT capacity enable your business to transact a certain amount of business.  In similarity with other areas of your business, investments in capacity should be made to alleviate bottlenecks and increase the ability to transact business.  However, in IT there are certain complexities to factor in:
  • comparing and contrasting capacity options has descended into a "dark art", with many stakeholders and an over-riding aversion to risk
  • measuring capacity usage has become a specialized platform function, leading to difficulties in getting an end-to-end perspective of how much business can be transacted
  • an increasingly agile enterprise is causing rapid fluctuations in capacity requirements, again with an aversion to risk

  Long ago, a management function was created to address these problems for the mainframe platform - Capacity Management.  That function can be leveraged again now, to allow you to plan ahead effectively for your long-term IT future.  Evaluating that function within your IT department, you should ensure it:
  1. endeavours to provide a complete picture of capacity usage across all silos
  2. provides visibility of service headroom, potential bottlenecks and abundances
  3. couples together with your financial management controls, providing governance over capacity allocation
  4. gives insight into future business scenarios, allowing investments to be rebalanced against the needs to transact business
In summary - if capacity management can be harnessed to better manage the costs of IT capacity, greater focus can be made on transformational activities that add value in other ways.