Enterprise IT Assets: Realizing a Business Centric Strategy. A Techlogix White Paper

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1 Enterprise IT Assets: Realizing a Business Centric Strategy A Techlogix White Paper

2 2 Enterprise IT Assets: Realizing a Business Centric Strategy EXECUTIVE SUMMARY This white paper presents a four step framework to align IT Asset Portfolio strategy with Business goals and needs. The framework is a methodology for evaluating various tactical approaches towards this goal within the context of a business driven strategy. Finally, we present iset, a software application built around this framework and designed to allow you to develop, execute and manage a businesscentric strategy for IT asset management. INTRODUCTION Aligning the deployment of enterprise IT assets with the overall business strategy and the goals of specific business units is recognized today as a key next step in the evolution of IT. This paper provides a how to focus on aligning business processes and functions with IT assets, both software and hardware, while managing the cost, technology and risk exposure associated with IT asset architectures. Fortune 1000 companies say IT asset benefit realization is a key challenge. According to CIO survey respondents, 90 percent said prioritizing projects to align with business strategies and quantifiably measuring and reporting the benefits of those projects were their most pressing initiatives 1. In this landscape, this whitepaper will seek to address some key questions including: How do we identify and manage the key dependencies of business functions on our IT assets, and the associated risks and costs? How do we identify under-utilized IT assets? How do we manage our capex and operations budgets within the context of rapidly-changing business needs as well as evolving technology standards and architectures? How do we ensure the future co-evolution of business processes and IT assets? How do we embody all of these dimensional solutions in a single, highly manageable IT asset strategy? 1 CIO Advisory Council Survey, June Conducted by PlanView

3 3 Enterprise IT Assets: Realizing a Business Centric Strategy In this paper we will discuss a four-step framework which can be used to optimize and then maintain the alignment of IT assets with business functions. This framework has been implemented by Techlogix at a number of Global 1000 companies. Then we will present iset, a software application developed by Techlogix to help implement this framework. STEP ONE: BUILDING AN IT ASSET INVENTORY The first step in this process is to build an IT asset inventory. Almost all large organizations have a mature hardware asset management process. For software assets, licensed off-the-shelf software typically is also tracked and managed fairly well. However, custom software developed to meet specific needs -- a large asset class, and often the largest -- is frequently not inventoried in any systematic manner. Since applications in this class can constitute anywhere from 30% to 80% of the total software asset base in value, this is a huge pool of assets which must be brought into a strategic management discipline. What are the elements of a Software Asset Inventory? Some of the key information which should be captured over time includes: Usage and ownership: which business units own each application and which ones use it? Technology: what are the various specific technologies and platforms used by the application? (categorized into database, middleware, programming language, and other layers) Financial: what is the cost to maintain this application? (including resource cost both internal and outsourced, licensing costs, datacenter costs etc) Vendor Support: which vendor (if any) is maintaining this application? SLA: Are there any service level agreements with either internal customers or vendors? Disaster Recovery, Backup and Archiving: how are we managing business continuity for this application? Interfaces and Services: does the application integrate with any others? Are there any dependencies on other pieces of infrastructure? Security: what is the security posture required by this application? How do I build a Software Asset Inventory? Inventory information can be imported from existing sources such as configuration management databases or asset-management applications, or can be built incrementally using a one-step-at-a-time approach if an IT organization wishes to do so. It is not necessary to resort to a resource-intensive big bang

4 4 Enterprise IT Assets: Realizing a Business Centric Strategy collection effort. Prioritizing the information requirements will allow creation of a sound starting point for strategy formulation that can be validated and fleshed out as further data are collected. STEP TWO: MAPPING IT ASSETS TO BUSINESS FUNCTIONS Having created a software asset inventory and with a hardware asset inventory already in place, the next step is to map business functions onto these IT assets. This mapping must take into account four different dimensions: Business Units: Which units within our business organization are utilizing which assets? Business Functions: How do we categorize usage by business function (e.g. Marketing, Sales)? Ideally, this mapping should be done at the business process (and sub-process) level. Software Assets: Which software assets are used by which business units to support which business functions? Hardware Assets: Which hardware assets are used to provision specific software assets? The complexity in the mapping exercise is that many of the inter-relationships between these four categories are multiple and bi-directional. For example, a specific software asset depends on multiple hardware assets (database server, application server, web server etc.). At the same time, a specific database server also supports many software assets. This same bi-directionality and multiplicity also applies between, for example, business functions and software assets. A specific business process will typically require multiple software assets while one particular software application might be supporting users from many different business functions. Only by capturing this mapping can we understand exactly how the business is utilizing the assets that IT has provisioned and only then can we move to the question of how to align the two. STEP THREE: SETTING PORTFOLIO STRATEGY IT Asset portfolio strategy can be divided into several broad types which then dictate the specifics or tactics adopted in implementing your strategy. Deciding which overall strategy to adopt is itself a challenging task. Frequently it is difficult

5 5 Enterprise IT Assets: Realizing a Business Centric Strategy to assess the impact of a specific strategy on Business and IT and hence take a meaningful decision on adopting that strategy. As an example, we present below three broad IT asset portfolio goals: Increase business productivity Improve standardization and governance Manage costs Each of these goals aligns with different types of enterprise operating environments. Additionally, each of these goals operate at so many different levels at the intersection of Business and IT that complete enterprise costs and benefits of implementing a particular goal can be difficult to analyze. Harmonizing multiple goals such as these into an overall IT Portfolio strategy is an even greater challenge. This problem of how to assess the impact of specific goals can be circumvented by taking a bottom-up approach in which we start with the specific tactics or activities we may adopt in implementing any of these goals. The smaller and more direct scope of the tactical approach allows both the potential rewards as well as costs to be more easily estimated. By then taking a view of the enterprise benefits and costs of specific tactics associated with particular strategies, we can assess which elements of an overall IT asset portfolio strategy are better aligned with business goals. In aligning your portfolio strategy with business goals, it is important that costs and benefits be separately measured for IT as well as Business. Frequently, changes have significant benefit from an IT perspective but do not directly impact business performance. For example, database consolidation may generate significant cost savings to the IT function but should (ideally!) be transparent to Business. Hence, we break out costs and benefits for Business and IT separately. From an enterprise perspective (i.e. uniting the Business and IT views), the costs incurred add together. However, the benefits are frequently multiplicative since aligning Business and IT has network effects which create virtuous circles where the benefits keep on accruing over time. Hence, to utilize the framework, we select specific tactics and assess their benefits and costs to Business and IT and categorize these as Low, Medium and High. Then assigning numeric values of 1, 2 and 3, we calculate enterprise costs and benefits as indicated above by adding Business and IT costs and multiplying the two benefits. As an example, we show the table below with some sample tactical approaches towards your strategy.

6 6 Enterprise IT Assets: Realizing a Business Centric Strategy Tactics IT Business Enterprise Score Benefit Cost Benefit Cost Benefit Cost Decrease asset complexity High High Medium Low 6 4 Standardize IT technology architecture Migrate to a process centric use of IT assets using technology like BPM High Medium Low Low 3 3 Medium Medium High Low 6 3 While the numbers presented above are representative, the framework allows you to effectively understand the overall business level benefits and costs of particular tactics and thus decide which elements should constitute part of your IT Asset Portfolio Strategy. STEP FOUR: MANAGING PORTFOLIO STRATEGY Managing your portfolio strategy requires a set of tools which allow you to situate your IT assets within the context of your Portfolio strategy. The key requirements in managing your portfolio strategy include: The relevant data for your key IT assets (including ownership, technology, financial and vendor data) A detailed understanding of the inter-relationships between your IT assets, the business and their usage patterns of these assets A plan for allocating your investment and support budgets across your IT assets based on business goals and structured around specific tactics A management and reporting infrastructure which can track the evolution of your IT assets and the resources allocated to them over time to ensure that your spend is aligned with your strategy The management discipline required in the last step above is the most critical ingredient. This allows you to convert specific one-off initiative into an ongoing process for ensuring the alignment of your IT asset portfolio with your business goals and directions.

7 7 Enterprise IT Assets: Realizing a Business Centric Strategy ISET: SETTING AND MANAGING YOUR ASSET PORTFOLIO STRATEGY iset is an application which allows you to develop, execute and manage a business-centric strategy for IT asset management. iset has been structured around the framework presented in this whitepaper. No Step iset Features 1 Building an IT Asset iset maintains a complete set of information on both software inventory and server assets. For software assets, iset starts with a minimum of 20 required fields which can be grown to upwards of 200+ data elements both pre-defined and custom defined. The data includes categories like: Usage and ownership Technology Financial Vendor SLA Disaster Recovery, Backup and Archiving Interfaces and Services Security For server assets, iset starts with a minimum of 12 fields and allows for upwards of 50 data elements to be tracked including: Hardware Network Security Vendor Maintenance 2 Mapping Business Functions and IT Assets iset allows you to cross-map four distinct dimensions of data: Business Units Business Functions Applications Servers The mapping is many-to-many: Multiple business units can be mapped to a particular software application while a business unit itself uses multiple applications. This same multiple mapping is allowed across all four dimensions of data to accurately reflect the complex, inter-relationships between Business and IT.

8 8 Enterprise IT Assets: Realizing a Business Centric Strategy 3 Setting Portfolio Strategy 4 Managing Portfolio Strategy iset follows the Strategy Framework described in this whitepaper to allow the user to determine which tactics and which strategy groups are appropriate for their use. The Strategy Control Center allows you to manage your strategy on an ongoing basis. Multiple pre-designed Key Performance Indicators and reports allow you to accurately assess the current state of implementation of your strategy. iset also allows you to track the evolution of your strategy over time by both recording your historical data as well allowing you to set the future state of your strategy and allowing you to compared plan versus actual over time. The Strategy Control Center The operational heart of iset is the Strategy Control Center which allows you to manage the execution of your strategy. Through a number of Key Performance Indicators, graphs and reports, iset ensures that you can keep track of the execution of your asset portfolio strategy. In addition, a comprehensive reporting engine allows you to generate reports on over 250 data elements that are tracked by iset.

9 9 Enterprise IT Assets: Realizing a Business Centric Strategy CONCLUSION Setting a business centric IT asset strategy is a key challenge today. This white paper presented a four step framework for creating such a strategy by highlighting the data infrastructure needed to support it and then detailing a process of how to evaluate different tactics within an overall enterprise framework. Finally, we presented iset, a software application which has been designed to implement and manage the lifecycle of the IT Asset Portfolio strategy.

10 10 Enterprise IT Assets: Realizing a Business Centric Strategy CONTACT For more information please contact Techlogix at: Techlogix 800 West Cummings Park, Suite 4950 Woburn, MA, Phone: For more information on iset, please call: Doug Kardash Director of Sales Phone: x619 doug@techlogix.com or visit us at: