Organizations need to work out a proper strategy in order to derive value from their IT investments, says a Fujitsu Asia executive.
While most organizations are aware that their IT investments need to be aligned with the business strategy, many feel that there is a disconnect between IT and the business.
According to Harold Ainsworth, pre-sales director of the solutions technology group at Fujitsu Asia, the disconnect arises from a lack of proper management of IT investments, or a failure to track the benefits the investments bring to the business.
To help organizations derive value from their IT investments, Fujitsu uses its Enterprise Value Management (EVM) framework, Ainsworth said in an interview with ZDNet Asia last week. The framework is "essentially a series of things an organization needs in order to get value out of their investments", he said. It consists of various elements: strategy management, portfolio management, architecture management, asset management, architecture management or business model, and governance.
Ainsworth explained: "The problem for many organizations today is there's a very strong focus on cost cutting… Smart organizations [know that productivity is not] just about cutting cost… [It's also] about innovation, new processes, new ways of doing things, new products [and] services."
Cost cutting is a short-term focus, he noted, whereas real business benefits often "come over the longer term" when companies achieve "synergies".
To aid organizations in thinking about the short-term as well as long-term strategy, Fujitsu typically begins by working with enterprises to develop a strategic "results chain" which maps projects and initiatives with their outcomes. This process forces key stakeholders involved in these projects, to deliberate and document issues that need to be done, implications of the actions, benefits that can be measured and allocation of responsibilities, he added.
Pay attention to IT portfolio
According to Ainsworth, portfolio management is a key activity under the EVM framework and "one of the disciplines" to achieve alignment between IT and the business. It determines the combination of programs and projects that can be carried out to deliver optimal value o an organization.
He noted that extensive portfolio management typically requires an organization to spend about two years evaluating their portfolio of investments, but he added that the benefits can be significant. Citing studies, Ainsworth said that organizations that undertake comprehensive portfolio management can cut spending on their portfolio by about 30 percent and receive 20 percent to 30 percent more on their returns on investment (ROI).
Besides ROI, portfolio management also comprises risk and resource capacity considerations, he said. Organizations need to prioritize their programs and projects given the finite resources, and not try to work on too many initiatives at the same time.
He added that businesses should deploy business-focused executives, instead of technology-focused personnel, to take the lead in portfolio management. "A lot of portfolio management at the moment is being driven by [the] IT [department], he said. "It really should be [done] on an enterprise level…[because] a lot of stuff we call IT is really not IT [but about] business."
According to Ainsworth, Fujitsu is working closely with ISACA (Information Systems Audit Control Association) on the new Val IT framework, which provides standards for organizations to manage IT investments.
Because EVM is still a relatively new concept, he noted that not many organizations have adopted the approach yet, though "many are starting to do so".