Planning IT from demand to budget

IT Planning Challenges
Today’s IT planners face tremendous challenges. Requests for services frequently exceed the ability to deliver, compounding substantial applications backlogs. Opportunities to outsource and offshore tasks, and to deploy powerful yet disruptive technologies like web services, are prompting comprehensive re-appraisals of the technical landscape. New regulations are also compelling large IT Organizations (ITOs) to clearly document complex relationships between financial reporting processes and IT infrastructure. Any breach can have dire consequences. These issues are exacerbating a fundamental IT planning challenge ‑ to balance the proportions of the IT budget that support operations and innovation.

In the 1990’s ITOs had enough money to invest at least 30% of the budget in innovation while supporting the installed infrastructure. By 2001, recession had necessitated widespread cost reductions, which ITOs achieved by canceling investments in innovation, as operating costs are not easy to reduce. Operations costs swallowed up over 80% of many IT budgets, thereby preventing investments to transform the infrastructure and reduce costs in the longer term. But as IT budgets rebound the problem continues, because investments one year incur operational expenses the next, on the order of 20% per annum.

Best practices suggest that a 40:60 ratio of innovation costs and operating costs1 can be achieved by prioritizing the IT investment portfolio to meet strategic goals while eliminating project redundancies, and ensuring that, wherever possible, new projects support the reduction of long term costs. For example, systems consolidation and standardization of the architecture can reduce operations costs by 20%.