Cost Recovery Model

Gartner says IS organisations must master practices, programs and alliances that will elevate them from cost centres to business centres to increase the business value of IT.

Palmer supports this, insisting organisations should never talk about IT value in isolation from business value. All ABS IT services are cost recovered, with much of the expenditure on IT being made to enable business projects, he says. Adopting this approach means the organisation has to look at the business case for the complete project, which ideally is a business project, rather than just examining the IT costs.

Palmer says the ABS is also becoming increasingly keen on proof of concept approaches, where it engages with the client areas and gets them involved in identifying the benefits they wish to see and clear success criteria. He says the ABS' proof of concept exercises are formally managed, with project boards and the adoption of the ABS standard project management frameworks, which involves setting out a business case for the project and identifying the risks and the success criteria.

Another approach adopted by ABS as part of its cost recovery model on the infrastructure R&D side is to build into the annual budget a set of what it calls "subject to business case investments".

"We earmark the funds at the start of the year, and then during the year we work on the case for that investment and the more detailed proposals for how that project will proceed," says Palmer. "The nice thing about that approach is you set aside the funds, so you don't get into the year and have to say: 'Heck, where are we going to find the money for that?' It means it's already set aside and earmarked, but also subject to business case. The money is ring-fenced so it doesn't just get spent on other things."

Learning from Past Mistakes

Those who ignore the past are doomed to repeat it. CIOs are no different and should always endeavour to learn from previous projects. CSC CIO Emily Williams does this via routine post-project reviews.

Williams says she tries never to kick off a systems project without a strong business case. Once the business case is approved, CSC then conducts full project management tracking throughout the life of the project to ensure it is not only on target financially but is also delivering the promised benefits. But she says this year CSC has begun revisiting projects some time after they are implemented as part of the closure process.

"I did a review when I came in of one of my predecessor's initiatives, which was electronic document management, which nobody had picked up, really," Williams says. "Only one group was using it. We found that while the [business] case made sense if everybody was using it, for only one 100-person department to be using it made it just awfully expensive."

She says finding out that projects had failed to live up to their business case can be an invaluable way of providing lessons to the organisation for future benefit. "I always try to do project closures, [discover the] lessons learned and do it in a constructive fashion. I don't want to sit there and beat somebody up . . . I only to know what do we can do better next time," she says.