IT Project Priorities: Out Of Alignment With Business Goals?

IT orders multiple new servers, and then they sit unused for months. The business wants to grow by driving more customers to its Web site, but the call center agents don’t have access to the same screens as the customer and can’t help customers navigate the site. Front end technologies are significantly faster than back end technologies, causing system bottlenecks.

These are just a few examples of how IT priorities and budgets are out of synch at a number of companies, according to technology and business experts, who provide some thoughts on what leads to this disconnect and some ways to solve it.

“They average company probably has 15 to 20 percent more technology than it needs,” says Nan Andrews Amish, an independent strategy consultant. “For the last 10 years, any time IT asked for stuff, they got it.”

Other times the technology that IT acquired wasn’t in line with a company’s business goals, according to technology experts and companies themselves.

Now, however, companies are starting to realize that technology can’t be purchased for technology’s sake, that it must meet the same considerations as other corporate expenditures, Amish says.“It’s a discipline issue,” says Von Wright, vice president of IT business support and planning for Cingular Wireless, Atlanta, Ga., who admits his own company has struggled with this issue. “We have to be clear across the business what is important to us.”

As a company that provides 24x7 communications for its customers, one of the most important items in terms of budgeting and priority for Cingular are any technologies, including backup systems that help it maintain uninterrupted communications for its customers.

“If a major financial services company goes down for even a few minutes, then it has a disastrous situation,” Von Wright says. “Our job is to stay ahead of those things.”

But the IT budgeting hasn’t always done that, Von Wright admits. Sometimes other less critical priorities have received IT dollars before the more critical priorities. Changes in the budgeting process in the last couple of years have changed that.

So Cingular has adopted the concept of proactive planning. This ongoing live planning process looks stays focused on the company’s technology infrastructure, with planned investments made on a regular basis.“Three years ago, we had no governance and tended to do a bottom-up budgeting process,” Von Wright says. By shifting to a top-down process that focuses on needs centered around larger business issues such as uptime), the company has fewer surprises in terms of unexpected IT spending needed to maintain its business priorities.

Beyond the situation that Von Wright mentions, other firms struggle with the challenge of maintaining old systems versus buying new ones.

“Eighty-five percent of expenditures are tied up in maintaining current systems,” says Lynn Ferrera, who heads the leading edge forum executive program for Computer Sciences Corp., El Segundo, Calif.

But some of those old systems may no longer be needed for a company to meet its business objectives. So rather than maintaining them, companies should consider scrapping them for newer, usually faster, more efficient systems that will help them meet these objectives, Ferrera says.

Firms don’t always need to replace the high-maintenance systems with entire new systems, Ferrera adds. Instead, they can consider outsourcing certain administrative or support functions (such as human relations) along with the technologies that support it. That way a company rents only the resources that it uses and benefits from the scaled technology a large firm serving several clients can afford.The IT department also needs to be held accountable for the expenditures it makes, which often isn’t the case, according to Ferrera.

The best way to ensure budgets and priorities are in synch is to research the technology the company already has to find where any bottlenecks in the network may lie, says Gary Lindgren, national account manager for federal government customers for TeamQuest, a Cedar Lake, Iowa-based software publisher.

If connections between systems are slow, adding a T-1 line at the front end will add little in the way of systems capabilities, while improving interconnections between systems could provide much improved network performance for a lower total cost. Fixing the bottleneck first would also enable the company to get more benefit from any additional spending on a T-1 or other front end capabilities, adds Lindgren, who often finds this an issue when companies add servers.

“What we’re finding in most data centers is that companies are adding new servers without determining the capabilities of the servers they already own,” Lindgren says.

Companies also need to look at their IT spending philosophy, says Craig Macdonald, VP of product marketing and product management, Peregrine Systems, San Diego, Calif.“Too many companies treat IT as a cost center,” Macdonald explains. “They’ll cut back on technology spending across the board without any prioritization in order to save on expenses. They keep cutting back until something goes wrong.”

The next step is what Macdonald calls “reactive investing,” with companies then trying to fix or buy new systems to replace what failed. Rather than this approach, companies should examine department by department what the critical technologies are in order for the department to function at the level the business needs to operate efficiently. For those technologies that serve multiple departments, the business should install a chargeback mechanism in its accounting system to ensure costs and derived values are accounted for properly.

The big challenge for companies attempting to keep their IT budgets and priorities in synch is shifting from a cost discussion to a business discussion, agrees Steve Fink, director of IT consolidation for Hewlett Packard, Palo Alto, Calif.

So Fink recommends that firms conduct a technology assessment across the enterprise. This can reveal underutilized technology resources in one department that may be able to be shared elsewhere in the department rather than buying a new system. Grid computing, in which computer resources are shared across departments, is an example of such technology sharing that provides additional benefits with little additional technology spending – the linking of the computer resources for sharing purposes tends to be less expensive than buying additional computer resources.

Jack McDonnell, chairman and CEO of Crosswalk, Inc., Westminster, Colo., says that companies find that companies also tend to find unused storage capacity when they conduct enterprise-wide storage assessment.So experts agree that companies can get IT priorities and budgets more in synch if they follow strategic planning and business planning principles before spending IT dollars.