August 10, 2007, 11:59 AM — Budget season is once again upon us, and as IT leaders, we are often faced with a stark realization about the prior year: Despite our best efforts, last year's budget seems now to be some distant reminder of last year's strategic priorities, which had to be abandoned to address this year's emergencies. Once again we vow to redouble our efforts for the next budget cycle and not repeat our mistakes.
Obviously, many factors play into budget preparation, including the strategic priorities of internal and external customers, IT infrastructure cost and operational reviews, negotiations of budget limits and expectations, and your own gut instinct -- honed over many years -- for what can reasonably be accomplished given your IT organizational restraints. One way to bring focus and direction to your strategic planning and budget exercises is to use outside benchmarks to learn how your IT organization compares to others within your revenue range and industry in terms of cycle times, staff productivity, and cost effectiveness. Benchmarks help determine reasonable targets and priorities -- especially if your organization has a "do more with less" mentality.
To aid in this planning exercise, APQC has been collecting benchmarks of IT organizational performance since late 2005. This research focuses on general IT processes, including the following:
• Manage the business of IT-financial, portfolio, supplier, and staff management;
• Develop and manage IT customer relationships-marketing, customer satisfaction, and service levels;
• Manage business resiliency and risk-disaster recovery, regulatory compliance, and security;
• Manage enterprise information-content management and enterprise information architecture;
• Develop and maintain IT solutions-creation and maintenance of technology; solutions including development, testing, enhancements, and retirement;
• Deploy IT solutions-communication, training, scheduling, and distribution of IT releases;
• Deliver and support IT services-infrastructure services such as assets, inventory, network, facilities, and help desk;
• Manage IT knowledge-strategies, processes, and repositories
To date, APQC's most significant findings pertaining to budgeting and strategic planning within the IT organization are the following:
1. When managing electronic information, integration pays off.
When comparing the linkage between integration of information and overall IT expense per employee, the benefits of integration in term of expense reduction are striking. Those respondents who reported having completely unlinked information sources or repositories in their businesses also reported spending over $11,000 on IT expenses per employee per year. Conversely, those that reported having fully integrated information repositories reported spending only $5,400 per employee on IT-related expenses. For various intermediate levels of integration, the costs fell as the level of integration rose.
Why the difference? Think single sign-on (SSO) as an example. The most likely and obvious reason is that information stored in fewer places requires fewer resources (hardware, software, and personnel) to manage it. Integration reduces the need to store related or overlapping information in multiple systems with varying degrees of accuracy, thereby reducing any type of data reconciliation or troubleshooting exercises.
Although not captured in the cost comparison, there's also the added benefit of having customer, product, and resource information readily available in real time from a single source. This enables organizations to perform better data analysis on a wide variety of cross-department information, which may result in a wide variety of benefits.
2. Standards matter in project performance, but not issue resolution cycle time.
Those who reported having standards (infrastructure/architecture) enforced at the department level also report delivering, on average, 60 percent of their projects on time or early. Those who report having standards enforced at the enterprise level deliver over 70 percent of their projects on time or early. This shouldn't come as a big surprise since having enterprise-wide standards makes integration projects easier and also allows architects, project managers, developers, and support staff to more easily understand (and reuse!) prior work. It also provides a basis for forming an ROI on standardization projects at the enterprise level.
