A supernova of increasing IT costs threatens to collapse into a black hole of diminishing business value.
Recently a CFO went into the office of a CTO I know and demanded an explanation for their continuing rise in IT costs. The CFO pointed at the chart on the CTO’s wall labelled “IT strategic plan.” It was littered with words like cloud applications, microservices, containerization and open source. “How,” the CFO asked, “is all that going to help us improve our bottom line?”
It’s a fair question. Ever-changing business demands in response to customer needs have led to an explosion in innovative approaches to IT. There has never been greater choice in how applications can be designed, implemented and deployed.
And your organization is using more applications than ever before. In 2019 The Wall Street Journal reported on a 68% increase over the last four years in applications used by the typical business. Because of this, there is much more spending on enterprise software, up 8.5% in 2019 compared with 2018, with another 8.2% rise predicted in 2020, according to Gartner forecasts.
When organizations used fewer applications, it was possible to analyze your costs and make gut feel decisions on value by using spreadsheets (hard work, certainly, but just about possible). But, as the complexity and scale of IT deployments increased and decentralized, spreadsheets just couldn’t cut it.
So specialist IT financial management tools appeared. However, they are myopic on cost and lack the ability to understand true business value. Using these tools to manage your complex application portfolios and make decisions on strategy that impacts business value is like you trying to play a round of golf with a single club.
Integrated IT portfolio analysis
What if you could optimize your application and IT landscape by holistically considering business value, costs and risks? It would mean that IT planning and spending can be more easily be aligned with business strategy. Cost savings from application rationalization can be realized without breaking critical business functions. The impact of new application deployments and upgrades can be readily understood, resulting in fewer failed projects.
For this you need an integrated IT portfolio analysis (IIPA) capability. IIPA tools are essential for proactive management of value, costs and risks, as no single role or individual understands all of the nuances of your strategy. IIPA can organize contributions from multiple stakeholders across your IT, business and financial domains to improve planning and decision-making. The ability to easily co-ordinate and communicate is at the heart of controlling costs, while ensuring that business value is delivered.
Best of all, the corporate memory that develops from investing in IIPA means continuous improvement becomes a reality. The ability to learn from the past and predict the impact of future decisions will distinguish you from your competitors.
Avoid the black hole of diminishing business value by collaborating across all domains to deliver superior business value from your IT investments.
Talk to us: Gartner has just named us a Leader in its Magic Quadrant for Integrated IT Portfolio Analysis Applications report for our IIPA product, Alfabet, for the ninth year in a row!