Solid spending is essential for beefed-up IT governance dominating budget debates, according to Alinean
Orlando, FL August 27, 2003 Alinean announced it has shipped ValueIT 3.0, its return on investment (ROI) tool kit designed to aid in creating business plans for IT investment.
Alinean said the tool kit features such things as Gap Analysis and an ROI SolutionFinder; ValueMap to align projects to solve real business issues; and Peer Comparison Metrics, which provides benchmarking of financial opportunities and tracking of IT's contributions to corporate performance and competitive advantage.
The company said it has noted three factors that are shaping 2004 IT budget debates: Increasing demands on already-limited resources, nominal budget increases for the third year in a row and the emerging need for accountability via improved IT governance and enterprise portfolio management.
The new mandates of IT management are a direct outgrowth of widespread market pressure for improved financial reporting. The provider said new legislation and internal regulations will impose stronger fiscal controls over how IT projects are budgeted, if they're proceeding on schedule and within budget, and whether performance meets promised expectations, directly impacting how IT projects are selected, deployed and managed.
Alinean said that for IT consumers, the environment requires doing more with fewer resources, collaborating more effectively with business leaders, maximizing returns while minimizing risks and speaking the language of the chief financial officer by demonstrating bottom-line impact.
"Having a rock-solid plan, rooted to business priorities, is the most important part of today's push for IT governance. It will also be the vital component of enterprise IT portfolio management," said Tom Pisello, Alinean's president and CEO. "These plans and how they demonstrate value will determine the budget survivors."
ValueIT 3.0 builds on the framework of sophisticated financial planning tools for IT professionals, many of whom lack extensive financial training. It assesses competing projects, communicating value in CFO-friendly terms and comparing IT spending plans and resultant performance to more than 20,000 publicly held companies. The tool kit provides planning and analysis templates and reports for financial analysis, performance tracking, process improvements and 'what-if' scenarios.
According to Alinean, the best way for chief information officers and business unit leaders to evaluate investments from a CFO's perspective is to think of any IT spending plan as part of a value-chain, closely linking investments to corporate goals, not just technology initiatives.
The company said ValueIT implements the IT Value Chain Management methodology, which is a four-step process to IT governance and planning:
1. Apply business case analyses that stand up to CFO scrutiny. For each proposed business process improvement or IT project, use a risk-adjusted discounted cash-flow analysis to determine that the project merits investment. This analysis takes into account all costs and benefits, including often difficult-to-quantify hidden costs, potential risks and soft and intangible benefits.
2. Stack the most promising IT projects head-to-head. This helps determine the highest-reward/lowest-risk projects, set priorities and ensure proper resource allocation. This step measures the impact of a selected IT portfolio on total cost of ownership (TCO) and the IT budget overall.
3. Tie IT spending plans to top corporate goals and bottom-line impact. Simulate the planned project portfolio's impact on corporate financial statements. This business-centric view of IT is important to assure that project plans drive business goals and achieve measurable results.
4. Know the competition. Benchmark IT spending and financial performance with the company's closest peers and industry market-leaders. Investigate performance and spending gaps, track results of plan implementation and drive future improvement plans.