In the first of our ten part ‘best practice’ series, we explored how top-down application portfolio management helps deliver quick wins in the battle against IT Debt – the decade’s worth of pent up IT backlog that is undermining business potential. In part two we consider how the next ten years won’t be any better unless we acknowledge that business, and not IT, is in the driving seat and is ultimately responsible for pushing through the changes we need. Senior sponsorship is going to play a major role, working in harmony with IT to impose the tough love needed for the years ahead.
Gartner analyst, Andy Kyte, defines a first law of Application Overhaul as having ’exactly the right number of applications today… to run the business the way you run it today.’ There are two ways to consider this: any change made to the company’s applications will impact the business, and business change of any significance impacts IT. After all, that’s why we care so much about IT Debt in the first place. While the observations arising from Andy Kyte’s statement may not appear particularly ground-breaking, the implications are actually far-reaching.
Previously, we highlighted the quick wins that application portfolio management discipline can deliver. And it’s true they are there to be had, but only if an appropriate level of executive sponsorship is available to make the hard decisions. The balancing act between innovation, cost-cutting and dealing with IT debt can only be resolved through what Kyte describes as ‘demand-side leadership’.
Significant changes to the application portfolio will free companies of many of their inefficiencies and promote business growth. This ‘Holy Grail’ fuels the constant quest for innovation, but it can also promote dangerous behaviour, such as sacrificing the differentiation within custom-built applications to third-party packaged solutions.
There is often a belief that only a traumatic change in IT will make business process owners take notice and drive through the efficiencies required for growth and cost improvement. For others, changes to the application portfolio open the door to innovation in a more piecemeal manner. While they satisfy legitimate needs for change, these changes often lack clear thought for the existing assets that still need attention and will continue to soak up resources until the day they are retired from duty.
So, instead of seizing the chance for portfolio evaluation and raise questions about the need for change elsewhere in the business, IT tends to focus on satisfying the immediate need. The demand-side stakeholders remain ignorant of the growing burden they represent.
Only through properly engaged senior sponsorship are reviews possible, business processes streamlined, and applications turned off – or put to use beyond the silos in which they have previously been confined. Executive support is essential to proving an effective map to guide IT towards an understanding of where business alignment has been achieved and where value is being delivered.
Interestingly, Gartner asserts that by 2015 new revenue generated each year by IT will determine the annual compensation of most new Global 2000 CIOs. This particular innovation may be the catalyst that drives organisations to achieve true business alignment, and engages senior sponsorship in bringing effective portfolio management to bear in companies whose greatest source of innovation lies within their existing assets. We will be exploring this theme further in the next part of this discussion.