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Playing from the Pack

Playing from the Pack

A new report on how to assess and sell your IT spend hits the analysis market.

Any manager with even a few years of activity under his or her belt will recognize the continuing cycle of business and IT management theories, and the regular positioning by experts on current topics of note.

It is a matter of course that analysts will develop their pet theories about how business operates, with the relationship between IT and business being a particularly prolific area of activity. Like haute couture designers with annual prognostications on fashion dress sense, IT analytical firms will develop their particular theories and promote them heavily through publications and seminars, using them as a guiding corporate philosophy adhered to by all employees.

These philosophies form the basis of differentiation and marketing for IT consultancies such as Gartner, Meta, IDC, CSC, DMR, IBM, Cap Gemini and so on, as well as a coterie of technology vendors hopping in for their own tuppence-worth and market position. But how valuable are these analyses, beyond being this year's "must-read" topic of discussion. Like the technologies they discuss, some disappear almost as soon as they appear, some have high expectations and publicity followed by diminishing returns, and others settle into a comfortable position as accepted wisdom, like the infrastructure of IT projects.

The real value in this parade of analyses lies more correctly in the advice you can glean from them than necessarily any radical rewriting or, more often, less-than-earth-shattering vision of the IT universe. The particular theory may fade from sight reasonably quickly (or more likely be replaced by more recent and fashionable theories); the advice can have much longer lasting benefits.

CSC Deals Itself In

Global IT services firm CSC has entered this fray with a recent report titled IT Spend: The New Realities. This follows and complements CSC's issuing of a series of playing cards late in 2002 that laid out ideas for cutting costs and increasing value.

Chris Dale, CSC researcher and author of the report, says there have been great changes in the IT environment in recent years that have had a major impact on the operations of IT departments and the way they approach their IT spend assessments.

"This is the first time for many IT managers that they've been told to cut costs, or even stop spending entirely," he says. "An awful lot of IT expenditure is just about keeping the show on the road. There is a portfolio of legacy applications that needs to be maintained, and new things are added every year. This raises questions like: Do we really need to keep all of this going? What do we retire or re-engineer? Do we really need to provide a support team for particular applications?

"The second big change is the pervasiveness of IT; it's everywhere and affects every aspect of business. The third is that just about every business unit manager is spending on IT.

"And the fourth is the increased scepticism from the business - from the CEO, the CFO, et cetera - about the value that IT contributes. Yes, we're getting changes and savings through IT, but it took a long time, a lot more work and a lot of changes around the edges. A lot of business people are very knowledgeable about IT and they can see that [in some cases] the emperor's got no clothes."

What confuses the issue, Dale says, is that people often do not know how much they spend on IT. "The IT budget is not necessarily all that's being spent on IT. Gartner estimates an extra 8 percent of budget is being spent; 25 percent is probably more typical. Another study suggests up to an extra 100 percent on top. This extra money is being spent by the business, and that leads to the possibility of rampant duplication.

"But this is unavoidable, he says. "There's great difficulty in trying to tie down the IT spend. Projects might have an IT component that is just not obvious or visible. Some things are in the IT budget that shouldn't be there, and others should be there but aren't."

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