Architect Your IT Portfolio

by Jeff Tash, ITscout

If I could show you how to reduce your IT organization’s technology portfolio costs by at least 10%, would you be interested?

Let me explain how you can achieve these savings by following a simple pragmatic approach. First, focus on your technology architecture.

What’s a technology architecture? It’s a formal way of organizing, classifying, and categorizing your technology investments. Think of it as a taxonomy, roadmap, or blueprint.

Generally, technology architecture is depicted using a three-layer model. The bottom layer corresponds to infrastructure, the middle layer to applications, and the top layer to data.

Once you’ve organized your technology portfolio into a set of meaningful classification hierarchies, the next step is to establish and communicate technology standards.

Finally, you’ll want to measure how well your technology portfolio complies with your governance standards.

By following the above process, the resulting combination of product consolidation and standardization will, in most cases, decrease your overall technology portfolio expenses by between 10% and 25%. ‘Not too shabby,’ as Adam Sandler might say.

All too often an enterprise's IT investments reflect an uncoordinated collection of too many products, most often purchased over too long a stretch of time, by lots of different people, from many different parts of the organization. Unfortunately, these assets often become liabilities when business requires agility.

Who in your enterprise has the fiduciary responsibility to determine whether or not existing technology investments have been, and still are, cost-effective? Who is measuring the TCO (total cost of ownership) for technology assets? How, and to whom, is TCO information reported?

Even though all large enterprises spend significant amounts of money on IT year after year, few business executives truly understand what their enterprise actually owns in terms of technology investments. Just imagine the look on the face of a business executive glancing over a list of technology assets.

The most fundamental problem facing IT today is the same exact fundamental problem that has plagued IT since the dawn of the information age. It’s as if IT leaders have some innate inability to communicate with the business people they serve.

If you work in IT, stop and role play for a moment. Imagine yourself as being a non-technical business person. In order for you to communicate with somebody else about IT, you need to have in your head (i.e., the meat between your ears) some kind of cognitive model that serves as a roadmap for guiding your understanding of IT. What do you suppose that non-technical business person’s cognitive roadmap looks like? What is his/her perception and understanding of the world of IT?

I’ve often said you know you have a high tech job when your mother doesn’t know what you do for a living. Unfortunately, the chasm between IT and business leaders is often as wide as the generation gap between a mom and her high tech offspring.

For years, IT has repeatedly failed to explain to business executives why and how IT is like nothing else in their business universe. Nevertheless, IT has been the primary springboard from which most productivity gains have been, and continue to be, attained. This is true across virtually every facet of every industry. Similarly, IT is still the best weapon a business can use to achieve competitive advantage. IT is fueled by multiple technologies that are each advancing along exponential growth curves (the combined geometric explosion of Moore’s Law, bandwidth expansion, and storewidth growth is spectacularly awesome). Business leaders who honestly believe ‘IT Doesn’t Matter’ do so at their own peril.

Since the turn of the Millennium there has been a major upheaval in the relationship between IT and business leaders. In 2000, approximately 45% of all capital expenditures were spent on IT investments. Then suddenly, by mid-2003, the IT spending spigot was shutoff. The IT industry, as a result, suffered its most severe economic recession in its fifty year history.

Power has shifted away from CIOs and toward individual lines of business. Many surviving CIOs mistakenly now believe business people know what they want. Nothing could be further from the truth. Show business people what they can have and they’ll immediately be able to tell you what’s wrong with it. Ask them what they want and they’re clueless. What’s the lesson? That problems get defined in terms of available solutions. Hence the huge growth in the COTS applications market (COTS stands for commercial- off- the- shelf) from vendors like SAP and Peoplesoft.

IT is constantly bombarded by paradigm shifts. There is nothing even remotely comparable that occurs to any other workers anywhere else within a business environment. With maturity comes the wisdom of discovering that the solution to an IT problem merely changes the problem.

The waste and inefficiency associated with IT technology investments is typically staggeringly high. The main culprit is overlapping product functionality. Nowadays, it’s the rule rather than the exception that companies own multiple database managers, multiple email systems, multiple accounts receivable applications, etc.

Owning multiple different redundant products is indeed very expensive. Each individual product involves its own acquisition costs, annual maintenance fees, plus each tool requires its own unique set of nontransferable technical support skills.

The primary challenge is clustering together products that offer redundant overlapping functionality.

Additionally, IT needs to greatly improve and simplify how technology standards are communicated and explained to the diverse constituency of people who use, develop, operate, manage, evaluate, or purchase technology offerings.

Most importantly, IT leadership is required now more than ever to provide a technology architecture that can increase understanding and improve communication. There must be a dialog. There must be a common vocabulary. There must be a shared vision. Technology is as important to an enterprise as money, people, and property. Unfortunately, CIOs track record for managing technology are generally pretty dismal, especially when compared to how well CFOs manage money, or CHROs manage people, or COOs manage property.

IT has a long way to go. I recommend starting with a focus on technology architecture, portfolio, and standards.