Strategic Planning | MANAGE RESOURCES

This section will not provide the process and details for developing an IT strategic plan. There are other texts that can provide this information. However, this section will outline the components that should exist in an IT strategic plan and planning process that are important to enable cost reduction in your organization.

Having a solid strategic plan helps a company quickly focus on where to reduce IT costs. It also identifies and prioritizes the ways that technology is used to enable cost reduction throughout the business. For IT, the plan is essential to get the company's infrastructure and application portfolio as a whole to a cost-effective state for on-going maintenance and support. The plan provides overall direction and priorities to help the entire organization make sure it is marching toward the end goal even in light of cost reduction needs and initiatives. The clarity and prioritization that the plan provides will set the stage for easier and quicker identification of needed cost reduction as both the business and IT will know what is important. The following are key components to use as a checklist or self-assessment for your IT strategic plan and planning process:

• The IT strategic planning process involves the business and is regular, rigorous, thorough, and complete.
• The IT plan identifies strategic business opportunities with a thorough review of the business direction and the industry; it is not just a list of requested projects. The strategic business opportunities include areas where the business is able to use technology to make cost reductions. Having identified these opportunities may actually help make the case to keep or increase IT investment as it is an enabler for cost reduction within the business. The plan will help identify how to make the business more agile to improve the ability to react when cost reductions are necessary.
• The IT plan clearly communicates the current IT situation and includes an objective assessment of strengths, weaknesses, opportunities, and threats in terms the business community understands.
• The IT plan outlines guiding principles that you use on a regular basis to evaluate options. Key business drivers are the foundation for the principles. Review these guiding principles when making cost reductions to ensure the reductions are in alignment with your principles and business drivers.
  Top Tip: Have an IT strategic plan

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  "Have an IT strategic plan in place before budgeting begins. Line up your budget over a three to five year time horizon. Use portfolio management and engage with the business to manage the demand."
  —Colleen Mlecoch
  Amherst H. Wilder Foundation

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• The IT plan includes a detailed plan, or roadmap, on how to get to the stated direction. The plan should not be only high-level glossy statements of direction but the specific prioritized projects and action plans. When cost reductions are required, go back to the prioritized projects and determine the impact in timing.
• The plan provides key IT metrics so you know where you want to get to and where you are on the path to the desired destination. These metrics are important when making cost reductions as you are able to ensure that you continue to provide value to the business and do not cut too much.
• You communicate the IT plan to all areas of the business and IT. When making cost reductions, it is important to communicate, discuss, and have common expectations. Conveying a detailed IT plan across the organization provides that basic understanding. As you start planning and making cost reductions, you are able to use the plan to communicate the impact of changes and reductions.
• Use the plan on a regular basis to determine direction; make sure it is not just a book on the shelf. Use the plan to identify cost reduction actions and determine the impact on your overall plan and direction. Having a plan as a framework will ensure that the organization does not get too reactionary in a cost reduction mode and cancel active projects that are critical for the strategic direction of the company.
• The applications, systems, and tools resulting from the plan are easy to use, meet the needs of the business, and provide key business metrics and information necessary to make business decisions.

After going through a cost reduction phase, be sure to go back to your IT strategic plan and update it based on your changes. The overall direction probably did not change substantially, but the timing to achieve some of the objectives and tactics may have due to cost reduction priorities. It is important to communicate and document these changes in expectations and plans.

Project Initiation and Feasibility | SYSTEMS IMPLEMENTATION

Obviously, the cheapest time to cancel a project is before it begins. It is well worth your time to scrutinize projects before beginning investments. Ensure every project has a business case for action; specific, quantifiable, and validated benefits; a business sponsor; and alignment with the business goals. Be sure that you identify risks and costs objectively and thoroughly. The following are examples of risk factors to consider when evaluating a project as they could affect the project cost:

• Size
• Organizational structure
• Number of parties involved
• Technical complexity
• Length of schedule
• Knowledge of technology being used
• Experience of project management team
• Skills of staff
• Experience with tools being employed
• Data conversion
• Implementation complexities
• Flexibility in schedule
• Number of interfaces
• Amount of new infrastructure components required
• Amount outside of project team control

Identify actions to mitigate risks and establish procedures to monitor them as the project progresses. Have a strong governance process to review and prioritize projects based on the feasibility and business case.

Requirements

Clearly documented requirements reduce waste and ensure that applications meet the needs of the business. Verify that you have documented standards that are followed when requirements are defined. Use prototyping tools or process modeling tools to help develop and visualize the requirements. Redesign the business processes as that is where you find the majority of cost savings.

Design and Development

Chapter 4—Business Applications—outlines options for doing custom development and advantages to having a buy before build strategy. Whenever possible, do not develop an application unless it is required and unless there are no vendor packages or other options available. In the event you are implementing a vendor package, the design and development phase consists of configuring the software package and designing minimal customizations, interfaces, and conversions.

Design and develop applications with reusability in mind. Every time you reuse a portion of code, you save money. Look at the needs of the entire enterprise rather than the needs of one specific department. The more you leverage a solution, the less expensive it is by functionality or user. Review the design with others for additional input.

Document and follow concise standards for coding and development. Minimize the number of development languages as each additional language bears costs and resources to support. Plan development tasks with schedules and date commitments for tasks that are less than one week in duration in order to minimize the 90 percent-done syndrome (90 percent done for 90 percent of the project schedule).

Reduce development cycles and costs with agile development methodologies to get faster results with less cost and effort. Compared to traditional waterfall methodologies with agile software development, companies have improved time to market and quality with increased collaboration and productivity.

Pay particular attention to interfaces and have an overall interface strategy or application architecture. In fact, most application problems that occur can be found in bridges and interfaces between applications. Many companies that have a strategy to purchase vendor packages find themselves in the legendary plate-of-spaghetti interface dilemma where 80 percent of effort and projects go to figuring out and maintaining all the interfaces rather than adding new functionality.

Test and Validation

Detecting and fixing errors early cost much less than fixing errors at the end of the process or when the system is in production. Depending on your development methodology, introduce testing as early into the development process as possible. Testing small units of code along the way is much more efficient than waiting until completing an entire system before finding issues.

Have clearly documented test plans. Typically, it is cost beneficial to automate testing with test tools, particularly for regression and stress testing. Ensure the test environment is an accurate representation of the production environment as struggling with incomplete test environments is time consuming and costly. Having a quality assurance program with checkpoints to minimize downstream errors saves time and money and provides consistency in testing in all areas. Identify and report quality metrics to improve processes and quality. Complete user training and certification as an untrained user costs the company money. Document the system to minimize support costs.

Post-Implementation Review

Many companies have great intentions to review projects after completion but often do not do so as they rapidly move on to the next project. Carefully reviewing project successes and issues helps to reduce costs in the next project if you implement corrective action. Take time to survey users and review project metrics to track quality, delivery, and satisfaction. Document lessons that you have learned and apply them to subsequent projects. Mistakes cost money.

Although the post-implementation survey or interview should include many aspects of questions related to the project, the following are questions related to cost reduction that the review should include:

• Did the project deliver the projected savings identified in the project justification proposal?
• If no, what savings were not achieved?
• What savings have been realized from the project?
• Have any savings been realized that were not anticipated?
• Will any additional savings be realized in the future? If so, when?
• What must we complete to achieve the savings identified in the initial project proposal?
• Was the project completed on time?
• Was the project completed on budget?
• What could have been done to complete the project more efficiently?
  • How efficient and effective were project team meetings?
  • Were the objectives of the project clearly defined?
  • Were the objectives for your work and tasks clearly defined?
  • Was your role clearly defined?
  • Were you adequately involved in project decisions and activity?
  • Did the executives sufficiently support the project?
  • Was cross-functional participation adequate?
  • Was the team committed to the project schedule and budget?
  • What were the main bottlenecks or frustrations in the project? How could they be avoided in future efforts?
• What suggestions do you have for improvement? What would you change in the next project?