Lustratus LiteBytes

Archive for the ‘ROA’ Category

In today’s climate, investment for IT is extremely hard to come buy.

BPM (Business Process Management) may promise a lot, but how can it be justified? With a free night or two in the Las Vegas MGM Grand Hotel perhaps?

The Integration Consortium, a not-for-profit consortium of users, suppliers, implementers and academia focused on all aspects of business integration, is hosting its annual Global Integration Summit this year in Las Vegas, 3rd-4th June, open to allcomers, and as a special incentive it is offering free rooms to the first 200 people to register for the event. So there’s the free night(s) in Las Vegas…but what about BPM? Well, for my sins I will be giving the ‘Featured Presentation’ at the event on how to justify BPM based on the idea of identifying the BPM Sweet Spots – that is,a range of use cases for BPM that each respond to a different investment policy. The idea is that depending on whether a company is focused on restricting resource requirements, or driving payback very quickly, or getting the biggest bang for the buck in the short term, or whatever, then there should be a BPM Sweet Spot that fits the bill. Well, that’s the theory, anyway…..!

At least the free room (if you are lucky enough to get one) is one bet you can’t lose on!

Steve

I was reading a blog post from my good friend John Schmidt, Chairman of the Integration Consortium…

…and now with a day job at Informatica, about trying to get funding for integration initiatives (in his case he was focusing on funding for an integration competency centre, a personal hot button), and I was very taken with John’s view of using an ‘internal free market’ approach to getting funding approved.

John points out that while 70% of IT budgets are non-discretionary, just keeping everything running, most companies have at least some budget for investment, but that the problem is the investment portfolio is spread across many different parts of the business, greatly reducing any individual department budget to the point that walking in asking someone for $1M of their own budget is going to be a serious impact to that budget holder. But John advises a creative approach:

So why not look at the portfolio of internal projects in an enterprise as a “market”. Why not apply some of the concepts that have proven so successful in the free market economy to the internal operations of an organization. Since everyone needs integration, if you could simply get a good understanding of the demand in the internal market, you could build a business around it.

This made me think of the Lustratus report I wrote recently on justifying integration investment in an economic downturn, by putting a laser-beam focus on ROI. Adding John’s internal market approach seems to provide another dimension to the ROI focus I was recommending. In other words, while the ROI paper looks at how to justify operational budget investment for SOA, the same problem that John describes may rear its head, and it may be impossible to find someone to slice their own investment budget even though the business case is strong. But by combining the ROI focus with an internal market business case, success is much more likely. Effectively, the running costs can then be covered by a small chargeback to each project to reflect the improved productivity they will all experience, or whatever other gain each department saw as part if its internal market needs.

Steve

I was trying to think how to get another TLA in that title, since I think you get a prize for having three three-letter-acronyms in a row.

However, the topic is definitely getting a lot of attention as companies try to decide whether SOA is worth the effort. The problem is, SOA benefits span a wide range, and are often difficult to assess. And yet, as John Soat notes in Information Week, real customers are showing major gains with SOA.

My take is that it is important to sort benefits into a spectrum of tangibleness (if such a word exists). So, reducing redundancy should have an actual dollar value reduction in maintenance costs – a tangible number. Delivering the agility to deal with new regulations more quickly is difficult to estimate in dollar terms, but could even be a survival issue. Seems to me the key is to find a way to include the full range of elements in any justification or evaluation.

Perhaps one way to add a dollar value benefit on some of the intangible benefits is to ask the executive in charge of the area most affected how much they would be prepared to pay to solve the issue. So, it might be interesting to ask the CFO how much he would invest to ensure the company could comply with new regulations within the assigned deadlines. This, then, becomes a tangible number that can be plugged into the case.

Steve