BI for IT Departments

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IT Costs and Service Quality Correlation

 

Service level agreements (SLAs) are a part of a service contract where the level of service is formally defined.  However, how can a business determine which service is the most profitable, which one is the most expensive, and what the optimisation and rationalisation paths are?


For Business & Decision, it is a matter of tracking SLAs through regular measurements stored in a database, determining costs analysis based on quality criteria and generating appropriate reporting.


IT performance consolidated, relevant and useful view?

 

Proprietary tools are built to meet specific needs and as such, will often not provide a consolidated activity view. Maintenance of these can often prove difficult as they are usually integrated into ‘on-standard’ technology.  Also, they do not follow an ideal process flow for activity management: either they are redundant, or they leave problematic management gaps, and sometimes they even contradict one another.


For Business & Decision, it is essential to first identify the IT Department as the project owner. Then, the management processes must be formalised (using industry best practices) that unite the IT Department’s partners, to their internal customers. From there on, functional criteria can be used to assess the market’s software solutions. By comparing them to existing tools, a ROI can be calculated, and experience has shown that a return is possible within 2-years.


Reducing costs without hindering service delivery development

 

The current economic crisis and ever-increasing energy prices are pressuring IT departments to reduce costs. A simple solution is to finance development by rationalising information systems’ hardware and software components. This leads to the prioritisation of new development projects and qualification of existing systems in terms of profitability. There are several possible solutions.  
 

1. In the short term, a brief audit to identify “wasted applications”, i.e. those applications that are forgotten and are rarely, if at all, used. Experience has shown that these applications exist through successive restructurings, the natural evolution of business processes, or even developed by IT itself. Regular cleansing is recommended.

2. In the medium term, from a logic perspective, cost reduction opportunities can be identified during applications rationalisation.  Why keep licenses for redundant tools? Why pay for all software features when only a quarter of them are actually used in practice? Why keep five products’ repositories if a master repository and unmanaged copies are enough? Why not group all the core management rules shared by everyone in a unique system? What is the point of detecting faults in control chains if they will not be fixed and the quality does not gradually improve?

3. Also in the medium term, but from a physical perspective, the energy efficiency of IT production can be questioned. For example: how much can the IT department save through migration of a PC’s files space to a green data centre? If the company’s hosting service provider was using a green data centre, how much would it reduce the IT department’s bill? Would it be more advantageous for the company to subscribe to an application (SaaS) instead of owning it, i.e., to only pay for actual utilisation? If the company was to develop a skills or services centre, what impact would that have on costs and the internal organisation.

 

Identifying the impact of all regulatory changes on all master data and rules, and evaluating the subsequent impact on IT cost

 


Changes are quite easy to implement when master data or rules are held within a unique application, such as an ERP solution. A dedicated administrator will be assigned to the task with the support of a team.


But if the rules are spread across various business areas and are buried in programs that can only be modified by IT specialists, then the development timeframe will be longer and the cost, uncertain.

 
To solve the problem, an IT Department can then place a unique master database at the intersection of inter-application exchanges, or even opt for a unique master rules base if the company has an exchange bus.


Business & Decision can provide the framework and implement, these Master Data Management (MDM) or Business Rules Management Systems (BRMS) projects.


Ensuring regular, fair and compliant reporting at Top Management, Corporate or Regulatory levels

 

One can vouch for a certain level of accuracy in published results, but usually one cannot certify these results, much less commit to regular publication, especially if the figures result from international consolidation. Indeed, internal standards for reporting rules rarely exist since management systems are heterogeneous and decision support systems are numerous and vary according to countries.

One approach is Master Data Management (MDM) and Business Rules Management Systems (BRMS).


Top management reporting is usually seen as a consolidation of business and local decision support systems. However, an alternative means of reporting can be achieved if a unique corporate system is established, and then made available to local systems. In this case, for strategic reporting, the adaptation effort comes from the local systems and not the corporate system. Business & Decision refers to these systems as CPM: Corporate Performance Management.

 

Assessing contribution of IT activities to the company’s value creation process

 


An IT Department is, without doubt, a cost centre and this cost is usually identified in order to set a budget. Equally, the IT department should be seen as a profit centre: otherwise, the cost would not be maintained from year to year. However, this profit is very rarely identified. In fact, IT management control is more often about closely monitoring expenses than measuring profitability. And yet, it forms part of the company’s intangible capital.

Methodologies, such as COBIT, ITIL, CMMi and others, exist to break down and evaluate Information Systems governance. They each have their specificities with their own concrete improvements, strategic development constraints, deadlines and costs.

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