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Six ways for Managing IT Assets For Value

January 8, 2008

I believe that the IT organization’s theory of business should embrace the value chain and asset management. Here are six basic strategies that I recommend to systematically maximize business value delivered to the firm. I shall provide some examples of principles in action, and link this discussion on IT assets and IT value chain to topics covered elsewhere.

  • Develop and manage IT assets based on projected demand and growth.
    • Any business needs to scale its assets based on project demands and growth. For example, manufacturing firms build factories to a specific size based on projected growth. Similarly, the IT assets of a firm should be scaled to meet forecasts of future demand. For the IT infrastructure, this means either having needed capacity in place or developing the ability to provision capacity in response to new demands.
    • At ServiceXen  we use a scale-up/scale-out approach when designing IT infrastructure. In response to increased demand, we can either scale up by adding more processors to make a single server more powerful or we can scale out by adding more servers.
    • In a similar manner, we manage our people asset as a flexible resource by using a mix of internal and external IT professionals to obtain the skill sets that we need. As skill sets at ServiceXen  change, we invest in developing new competencies for our people with vigorous training programs. In this way we upgrade the value of our IT people asset.
  • Focus on the highest leverage services and on strategic initiatives.
    • We make a point of identifying capabilities that are crucially important to ServiceXen  and improving the links in the IT value chain that delivers these capabilities. Input to the value chain is always a business opportunity or a business need. For some needs and opportunities, we need new and innovative approaches and for others, we need to tune the deployment and operation of the systems currently in place.
    • Investment governance, outlined in another post, is a key process area for ensuring that the IT value chain is focused on the right issues. The business capability roadmap (BCR) discussed in another post is an example of locking of the IT value chain on a particular vector and sequencing a number of solutions along the vector based on priority and need for the business.
  • Improve speed and effectiveness of value chain transformation and execution.
    • The speed and effectiveness of the IT value chain needs to be continuously improved. I think the key issue is usually quality IT program governance. The value chain requires leadership and oversight. Governance assures that IT is focused on satisfying business needs and opportunities by efficiently and effectively delivering the right solutions in the time frame required by the enterprise. Methodologies such as rapid application prototyping or Xtreme Programming are examples of approaches that can be used to speed up the “beat rate” of the IT value chain, that is, how quickly the IT organization responds to new needs or opportunities.
    • Someone in the IT organization should be directly accountable for the IT value chain. That individual’s challenge is to ensure that each stage in the value chain is performed effectively and that the links between stages are as tightly integrated as possible. I believe that the IT value chain itself is a candidate for a business process re-engineering exercise. Regular reviews to seek out improvements are often handsomely rewarded.
  • Improve conversion efficiency by raising asset utilization and improving alignment between IT and business objectives.
    • Redeployable IT assets, underpinned by open and scalable IT architectures, enable an efficient IT value chain. When the enterprise invests in new IT assets, the IT organization’s goal is to create a virtuous circle where new assets are integrated with existing assets to provide useful new IT services at a small incremental cost. The goal is high utilization and I believe that infrastructure and people assets are often underutilized. Here are two examples:
    • Highly skilled IT professionals are often bogged down in supporting IT customers in tasks such as resetting passwords. Such tasks as this are better performed by an automated system. The enterprise is incurring an opportunity cost because that same professional could be focused on delivering a higher-value IT solution to the firm.
    • Many firms add computing assets, particularly servers and storage, on an application-by-application basis and lack an architecture that supports shared resources. As a result, server and storage assets are effectively stranded, and thus under-utilized. New technologies such as peer-to-peer computing and grid computing are aimed at enabling better IT asset utilization.
  • Sharpen customer focus by investing in improved customer account management.
    • The IT organization must understand the firm’s information needs and opportunities in order to deploy IT capability accurately and effectively. Customer account management, discussed in Chapter 8, is a key part of running IT like a business. The ability to understand the needs of the firm and identify how information technology solutions can be used to meet or exceed business needs is essential in optimizing the use of the IT capability. Excellent customer account management will ensure strong business and IT alignment.
  • Migrate IT resources upstream in the IT value chain (i.e., to the innovation and solution development states).
    • I believe that the IT organization should have a profile of budgeted expenses that is balanced across the IT value chain. Without aggressive management, resources tend to migrate downstream in the value chain. Over time, ongoing operations can consume nearly all resources. Lost is the opportunity to provide new and innovative IT solutions that might truly provide competitive advantage.
    • When resources can be directed upstream to IT innovation, there is a greater likelihood that more business value will be generated. I encourage IT managers to automate service provisioning as much as possible. Move the people asset freed by automation upstream in the value chain so that they can seek out better IT solutions.

I am not suggesting that services provisioning is not important. Keeping IT services running smoothly is a crucial first step in improving the IT capability. Only after successfully automating daily functions as much as possible will it be possible to shift resources to earlier stages in the IT value chain.

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