White Paper
Removing the Barriers to IT Governance:
How On-Demand Software Changes the Game
Download as PDF
Executive Summary
IT governance has a well-deserved reputation for being extremely complicated, expensive, and time-consuming. But today's CEOs and governing boards expect accountability, strategic alignment, cost saving, and contributions to overall growth from IT departments, all of which can be facilitated by IT governance.
This white paper will examine the fact that, for the first time ever, there is a faster, less expensive, lower risk way to make IT governance a reality. Instead of implementing bloated server-centric software solutions that require expensive consultants and customization, companies are turning to applications delivered on-demand over the Internet. On-demand software delivers many benefits, including lower costs, faster implementation, and higher quality solutions.
This white paper will define IT governance Ð what it is and what it is not Ð and will take a closer look at how on-demand software is changing the game for enterprises looking to achieve IT governance simply and rapidly. Business and technical decision makers will gain a deeper understanding of the opportunity presented by the intersection of IT governance and on-demand software.
About IT Governance
IT governance is important, and we all know it. Effective governance provides mechanisms that enable management to develop integrated business and IT plans, allocate responsibilities, and prioritize IT initiatives. The process of IT governance enables Chief Information Officers (CIOs) to organize their projects and applications as an aggregate collection of expenses that gets balanced against priorities, budgets, and available resources.
While IT governance delivers benefits in all economic conditions, it becomes even more necessary during periods of slow economic growth, when making the right financial decisions is more critical than ever. Enterprises that can successfully implement IT governance solutions will have a unique opportunity to gain a competitive advantage by transforming IT from a cost center into a value driver for the enterprise.
Defining IT Governance
There are many definitions of IT governance. The following description of the overall objectives of IT governance activities, from the IT Governance Institute, is the most commonly accepted definition:
- To understand the issues and the strategic importance of IT;
- To ensure that the enterprise can sustain its operations; and,
- To ascertain that the enterprise can implement the strategies required to extend its activities into the future.
In other words, IT governance practices aim at ensuring that expectations for IT are met, its performance is measured, its resources are managed, and its risks are mitigated. It means understanding and aligning with the strategic direction of the enterprise, and then managing the implementation and delivery of new IT initiatives required to move the organization forward based on the strategic direction - all while guaranteeing that daily IT operations run smoothly.
The Unified Approach to IT Governance
If we divide IT organization activities and spending into two buckets, they are:
- Managing IT maintenance and sustaining operations, including hardware, software applications, and staff, also known as "keeping the lights on." Managing sustaining operations is often also referred to as Application Portfolio Management (APM).
- Managing new strategic IT initiatives, generally classified as initiatives designed to move the business forward. These projects typically involve more than 100 to 200 man-hours of labor. Managing these initiatives is typically known as Project Portfolio Management (PPM).
In many companies, these two sides of IT are managed in disparate systems that never "talk" to each other. Ideally, an IT governance solution delivers a single portfolio view of both new initiatives and ongoing, sustaining operations, thus providing CIOs with truer visibility across their IT activities and project portfolio.
This combined approach gives management the ability to maintain existing operations and then balance that against the need to move new initiatives forward to drive value. They can manage budgets and resources across all work and projects, tracking the cost of both the strategic project portfolio as well as the application lifecycle, from implementation, management, and maintenance, to upgrades and redundancy.
IT Governance Maturity
Different organizations have different levels of maturity regarding IT governance. The IT Governance Institute has created a maturity model that helps IT organizations understand where they stand in terms of governance:
| Level | Characteristics |
|---|---|
| 0 Nonexistent | Management processes are not applied at all. |
| 1 Initial | Processes are ad hoc and disorganized. |
| 2 Repeatable | Processes follow a regular pattern. |
| 3 Defined | Process are documented and communicated. |
| 4 Managed | Processes are monitored and measured. |
| 5 Optimized | Best practices are followed and automated. |
Figure 1: IT Governance Institute's Maturity Model
In order to evolve to higher levels of the maturity model, IT organizations need to implement some kind of IT governance technology solution. But this is where many organizations can get lost, trying to implement overly complex IT governance strategies, and unfortunately, in the process, implement expensive software systems that contribute little value to the organization.
How On-Demand Software Changes the Game
In the early 2000s, a new software distribution model began to emerge. Software as a Service (SaaS), or on-demand software, is a model of software deployment in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet. This approach is revolutionizing the way enterprise-class applications are implemented. IT governance is one of the newest areas to utilize the on-demand delivery model.
A New Vendor/Customer Relationship
On-demand software represents a new view of the relationship between vendor and customer. In contrast with perpetual (or installed) software licenses, on-demand customers are not buying a product, but instead are "renting" it by paying a subscription fee to use the software. If customers become dissatisfied with the software or vendor, they can cancel the subscription and will have spent money only for the value they have received.
The subscription service model changes the vendor/customer relationship in another important way: the on-demand software vendor is more truly in a partnership with its customers. The perpetual (installed) license vendor usually makes one big upfront sale that accounts for the vast majority of revenue it expects to see from a customer. As a consequence, the long-term health of the customer's business is of little concern to the vendor. In contrast, an on-demand software vendor will treat a customer like a partner because if the customer chooses not to renew, the vendor loses a continuous revenue stream. As a partner, the on-demand software vendor is highly motivated to perpetuate "shared success" with the customer's business month after month, year after year.
Faster, More Successful Technology Implementations
On-demand software customers enjoy a quicker implementation process, which means faster time to success and return on investment. The typical on-demand IT governance implementation takes less than four weeks, thanks to out-of-the-box best practices for IT and a robust implementation methodology designed to maximize value quickly based on immediately addressing a customer's challenge areas.
Another cause for accelerated implementation is the concept of configuration over customization. This means that the average business user should be able to modify an on-demand software application without custom development. Rather than trying to customize the application before users have had a chance to learn what works and what doesn't work, the on-demand software vendor's goal is to deploy the application quickly, and then work with customers to configure it over time as customers learn more about the solution. This approach is more scalable and flexible, and aids in the continual improvement of processes. Another advantage of this approach is that vendors can continually improve their products, and the new features and capabilities are automatically available to users the next time they sign in, with little impact to their current implementation. This nimbler solution contrasts sharply with heavy installed software updates that can disrupt business flow, or require months of planning, testing, and reconfiguration.
Lower Cost
Companies do not need to hire new support staff or purchase new infrastructure equipment, such as servers, to utilize on-demand IT governance software solutions. Additionally, the upfront costs of perpetual licenses that are typical of installed solutions can be prohibitively high for some businesses. The on-demand subscription model allows everyone to get rich full-featured enterprise-class applications at a lower initial cost and with less risk of failure. In fact, study after study shows that on-demand software is typically delivered at one-third the price of traditional on-premise applications.
Additionally, the financial benefits continue beyond implementation. Web-based applications generally utilize the latest principles of good interface design, whereas legacy applications often carry forward cumbersome design principles of the past. Thus, on-demand software solutions are usually easier to use than traditional software, and users require less training and are more productive.
Choosing the Right On-Demand Solution for IT Governance
Companies that want to implement an on-demand IT governance software solution should seek a solution that manages both strategic initiatives, through Project Portfolio Management, as well as sustaining operations, through Application Portfolio Management. Additionally, the software should include IT best practices and a built-in library of pre-defined project templates and processes. This will make the application easier and faster to set up because the roles and skills that are pre-packaged in the software will already be IT specific. Pre-defined reports and dashboard metrics are another important area to evaluate. The application should provide visibility and reporting analysis across all functional areas, including reports on the application portfolio inventory and request activities, key performance indicators, resource capacity management, and time sheet management. Ideally, the reporting function should be part of the application itself, and not an integrated add-on module.
In sum, on-demand IT governance solutions should enable CIOs and IT management to drive visibility across both strategic initiatives and sustaining operations, resulting in greater visibility and decision making across the IT portfolio.
The Innotas On-Demand IT Governance Solution
Innotas is the only vendor that provides an easy to use, rapid to deploy, and cost-effective IT governance solution to manage resources and budgets across the complete inventory of IT initiatives and sustaining work items. Innotas provides a robust IT governance solution that integrates both Project Portfolio Management and Application Portfolio Management capabilities into one system, and offers a delivery model that creates customer success in just a few weeks.
While the Innotas IT Governance solution is built on a strong foundation of IT Project Portfolio Management, it also includes Application Portfolio Management capabilities aimed at providing visibility into sustaining IT operations and maintaining infrastructure. These functions include Application Portfolio Management, Resource Management, Application Management, and Financial Management, as well as Service Request templates to support maintenance and application requests. These templates consist of web forms, workflows, and approval gates that are specific to IT organizations.
Conclusion
Traditionally, IT governance has been perceived as confusing, expensive, and difficult to achieve. As a result, many enterprises and IT organizations have not devoted resources to implementing governance solutions that are commensurate with other enterprise-class management systems. Today, however, IT governance solutions can be delivered with great success using on-demand software. This approach not only takes less time, but it enables IT to establish governance and oversight without a huge upfront investment. Organizations that recognize the value of on-demand IT governance solutions will have a unique opportunity to gain a competitive advantage by transforming IT from a cost center into a value driver for the enterprise.
