Banking and Mergers and IT… Oh My
Watching the chaos going on in the economy, the overnight mergers, the bankruptcies, and other tragedies in the US and in the world makes me shiver thinking about how all these IT systems are going to work together, or work at all. I heard that the value in some of these organizations is their IT infrastructure (we have said for years that banks are big IT companies with money as their product…. this bears it out) This is the time when SEER for Software and SEER for IT can really help save the day with project and operations planning in this consolidation environment.
Understand the costs of data conversion, how many help desk people will be needed to support the newer, bigger organization, how to dispose of unneeded assets. And having open eyes of the cost and schedule risks are essential.
I saw an article today stating that the current economic issues have stalled 2009 IT planning. This is not the time for stalling. This is the time for increased planning and risk management. I realize stalling buys time to see how things shake out. But planning for alternate scenarios can be extremely effective as well.
The Business Value Of IT Book
I opened my copy of this book, The Business Value of IT, by Mike Harris of DCG, David Herron and Iwknicki Stasia doing some research and I must say I enjoy this book every time I look through it. It covers how t maximize value in the short, medium and long term.
Great discussion on metrics. And the simple things which, if done well, will make IT a profit rather than a cost. They actually teach classes at our facility on occasion. I think i will slip in next time they discuss IT Value.
I am also fascinated by SEER’s ability to estimate value in addition to cost for IT, software, and other areas. Good work SEER development team.
What Is IT Infrastructure: A Definition and a Taxonomy
There are probably as many definitions of IT Infrastructure as there are IT organizations. I believe the following definitions are representative and appropriate:
IT Infrastructure.. ”IT infrastructure consists of the equipment, systems, software, and services used in common across an organization, regardless of mission/program/project. IT Infrastructure also serves as the foundation upon which mission/program/project-specific systems and capabilities are built.” from cio.gov
ITIL defines infrastructure more like: All of the components (Configuration Items) that are needed to deliver IT Services to customers. The IT Infrastructure consists of more than just hardware and software.
Additionally, for project planning purposes I believe IT Infrastructure should be subdivided into into several components:
1. Software Development
2. Software Maintenance (corrective perfective, adaptive, block changes)
3. Purchased Software (e.g. ERP system)
4. IT Infrastructure hardware (e.g. servers, switches)
5. IT Services (e.g software setup, help desk, computer administration)
Further, there are two major divisions of labor: the project and ongoing operations
Project: The project is the portion of the system life cycle where the system is developmental, that is where it is not yet in operation.
Ongoing Operations: The ongoing operations is the portion of the system life cycle where the system is deployed to users
Of course these major activities need to be further subdivided for detailed analysis and planning purposes.
Earned Value Analysis Without An Achievable Plan Is Futile
I met with a group today who is looking at improving their estimation process. The story was the same as a number of other organizations. They got into earned value (EVM) in a big way. But they aren’t getting the results. The determined that they must have a viable estimate and plan as the basis of earned value. Earned value can be an extremely valuable technique for managing projects. But the baseline plan better be viable. They also spoke of having multiple baselines as the project progeessed. They grimmiced as they told me thr number of re-baselining that occurred. But it all goes back to the basic fact… you must have a viable estimate and plan to track earned value to. If you do not, it is time to rebaseline.. with a viable plan.
IEEE Publishes New Software Failure Study: Less than 20% Failed
This new article , “A Replicated Survey of IT Software Project Failures” in IEEE Software Sept 2008 suggests that the percent of canceled projects is less than 20% and that it is not appropriate to call software a crisis. “There’s a general decreasing trend over time, with the most recent estimates mostly below the 20-percent level.” I recommend the article and IEEE software in general. The article sites many studies of cancellation:
| Cancellation / Abandonment % | |
| Standish 1994 | 31% |
| Standish 1996 | 40% |
| Standish 1998 | 28% |
| Jones 1998 systems | 14% |
| Jones 1998 military | 19% |
| Jones 1998 other | >24% |
| Standish 2000 | 23% |
| Standish 2002 | 15% |
| Computer Weekly 2003 | 9% |
| UJ 2003 | 22% |
| Standish 2004 | 18% |
| Standish 2006 | 19% |
Government IT Project Woes and Estimating Total Ownership Costs
A recent government report showed 81% of budget or $57 billion in IT projects in danger of failing. Detailed reports on the hearings can be found here. Of 413 IT projects identified by OMB and federal agencies NEARLY 80% OF THEM WERE IDENTIFIED AS HAVING BEEN POORLY PLANNED. The scorecard for IT projects shows much progress but much work left to do.
Some of our recent analysis of IT costs seems to indicate that software development may be the smallest of four components:
1. Software Development
2. Software Maintenance
3. IT Infrastructure
4. IT Services
In this example sanitized system we see software development costs (the costs many track the most.. and for good reason.. these are the highest risk items) were about 10% of the total cost of ownership. Meta analysis shows IT Infrastructure & services can be 60% or more of the system’s total ownership cost.
Forrester’s Five Essential Metrics for Managing IT
A recent report by Craig Symons of Forrester identified 5 core metrics for managing IT. This paper is full of wisdom such as “metrics for its performance must measure relevance and business impact”… effectiveness metrics rather than operationally focused metrics such as downtime.
1. Alignment of IT Investments to Business Strategy (shows how IT projects meet business strategy goals & how not all projects are mandatory))
2. Cumulative Business Value of IT Investment (shows not all projects are equal)
3. IT Spend Ratio - New Versus Maintenance
4. Critical Business Service Availability (Linked to applications or services, not generic technology)
5. Operational Health (Reliability, Safety & Security, Quality Project Execution)
This research note is currently available for free download as a special promotion (requiring registration) from a third party company.
SEER for Information Technology provides the ability to answer most of these metrics questions in quantified, risk adjusted manner.
CECIM: A Capability Improvement Model For Cost Engineering
Being a major fan of repeatable process for cost and cost engineering, I cant help but admire the work of CECIM (Capability Improvement Model for Cost Engineering.) CECIM was an excellent piece of work in establishing estimation maturity and repeatable process. The major document is a white paper written by H. Pickerin and D. Lewis. Carl Dalton of Galorath International teaches CECIM along with Hugh Pickerin in the UK. Read more
Performance Based Earned Value
It has been very interesting reviewing Paul Solomon’s Performance Based Earned Value. It is in many ways consistent with SEER’s monitoring and control. It preaches looking at quality in addition to quantity of work performed as well as capturing the issues of deferred functionality. I should point out that we sometimes called SEER’s Monitoring & Control Performance Based Earned Value before we realized it was trademaked. Since we have stuck with 4 dimensional earned value for SEER.
PBEV has 16 guidelines in addition to the 32 included in the EIA 748 earned value standard. Read more
The Total Ownership Cost of IT Systems
It is interesting to see how the much of the industry speaks of IT system cost problems while ignoring a large part of the problem. Software maintenance can be 75+% of software total ownership costs but IT Infrastructure and the cost of IT systems and services can be 60% of the total ownership cost itself. Even if we use cloud computing most of those IT service costs don’t go away. Help desk, data conversion, etc. is still a problem, even in the cloud. Read more
