March 8, 2010
Economic relief is in the air. When Cisco executive John Chambers is in a "sunny" mood and describes revenue growth as “dramatic,” you know that positive signs will shortly be all around. Forecasts of positive IT spending abound, including Forrester’s Q4 signal and 2010 perspective. Meanwhile, other sunny signals have energized the business news with hopeful glimmers here, an optimistic dusting there: the GDP has improved, unemployment is down, inventories are being replenished — and some giants are hiring.
CIOs have lots of reasons to spend. No doubt in every IT shop out there, an ever-lengthening list of deferred this-and-that stares the CIO in the face every day upon arrival at the office. Equipment refreshes, deferred upgrades to software, vendor-recommended service improvements, software for long-neglected business requests, and replacement and add-on hires to support business needs. Meanwhile, the trusted team around the office is getting a bit testy with approval delays and hemming and hawing.
But behind all of that economic good cheer lurks trouble for some — especially anyone near the extremely lengthy supply and demand automotive chain which was in a high state of anxiety about consumer behavior BEFORE what is starting to look like Watergate for Toyota. And even if you’re in an industry where the economic atmosphere is starting to feel upbeat, you may want to think twice about taking the brakes off (no pun intended) of spending restraint. Don’t get me wrong — I’m all for spending and using innovation to accelerate out of the downturn. But let’s not lose sight of the IT investment lessons many CIOs have finally operationalized during the past year or two. The success of IT's 2010 efforts will require careful evaluation of existing assets and planned investments. Forrester’s key frameworks can help:
• Forrester’s Total Economic Impact™ (TEI) approaches for ROI justification. Forrester's TEI methodology provides a consistent and straightforward approach to measuring the return on software investments. With such a swell in the amount of justification expected to be performed in 2010, IT should be armed with this framework to ensure consistent and accurate analysis across IT.
• Forrester's Technology Investment Matrix to manage priorities. Our work during the past five years with more than 100 organizations spanning various industries and market sectors has led to the development of a hybrid model of investment classification that incorporates the best of previous models. The resulting framework easily classifies IT investments, serves as a useful communication tool, and verifies priorities and key metrics.
• Capability maps to inform application portfolio reduction. As IT cleans out the existing application portfolio, it is important to ensure that business processes remain relatively undisturbed — especially as IT aims to enhance the efficiency of those processes. Capability maps link IT's applications and assets to the business processes and strategic objectives they support. Adopting capability maps will make it easier to both decide upon and justify the retirement of an application.