Measuring IT Costs and Value Maximising The Effectivenessof IT Investment

Technology Management and Strategy Report www.butlergroup.
com
Butler Group
a Datamonitor Company
Measuring IT
Costs and
Value
Maximising the Effectiveness of IT
Investment
September 2005
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ISBN: 1-904650-27-9
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www.butlergroup.com Measuring IT Costs and Value
Measuring IT Costs
and Value
Contents – September 2005
Section 1: Management Summary 9
1.1 Management Summary 11
Section 2: Introduction 15
2.1 Report Scope 17
2.2 Why Measurement is Important 18
2.3 What is IT Value? 20
2.4 Running IT as a Business 24
Section 3: IT Investment Strategy 25

3.1 The Effectiveness of IT Spending 27
3.2 Understanding IT Capability 32
3.3 Portfolio Management 37
3.4 Investment Metrics 40
Section 4: Identifying IT Value 45

4.1 Value Models 47
4.2 Using a Business Case 57
4.3 Benchmarking 59
4.4 IT Value in the Public Sector 63
Section 5: Monitoring and IT Governance 65

5.1 Using IT Governance as a Framework 67
5.2 Monitoring Performance 73
5.3 Balanced Scorecard 74
5.4 The IT Dashboard 77
5.5 IT Governance Solutions 79
September 2005 Contents – Measuring IT Costs and Value 3

Contents – Continued
Section 6: Measuring IT Efficiency 83

6.1 IT Budget Considerations 85
6.2 Asset Management 88
6.3 Requirements Management 93
6.4 Project Management 96
6.5 Effective Software Development 100
6.6 IT Lifecycle Management 104
6.7 Change Management 107
6.8 Monitoring System Usage 110
6.9 Service Management 114
Section 7: Approaches for Determining IT Cost and Value 119

7.1 Methodologies 121
7.2 Case Studies 126
7.3 IT Cost and Value Framework 130
Section 8: Vendor Profiles 131

Accenture 133
Alinean 134
Artemis International Ltd. 136
Atlantic Global Plc 138
BMC Remedy 139
BMC Software 141
Borland 142
Business Engine 143
Computer Associates International Inc. (CA) 145
Compuware Ltd. 146
CorVu 148
EMC Smarts 149
eProject 151
Hewlett-Packard (HP) Inc. 152
HyPerformix 153

Contents – Continued
Section 8: Vendor Profiles (continued)

IBM Corporation 155
Intel 156
Managed Objects 157
Mercury 159
Microsoft Inc. 161
Monactive 162
Niku Corporation 164
OPNET Technologies Ltd. 165
Oracle PeopleSoft 166
Peregrine Systems Inc. 168
PlanView 169
Primavera 171
ProSight 172
SAS 173
SeaQuation 175
Serena Software 176
Solution Matrix Ltd. 177
Telelogic 179
Touchpaper 181
Section 9: Glossary 183

www.butlergroup.com Technology Management and Strategy Report
SECTION 1:
Management Summary
Butler Group
1.1 MANAGEMENT SUMMARY
KEY FINDINGS
It is not a question of how much is invested in computer systems but the effectiveness of the
spending.
Research indicates that in many organisations less than 8% of the IT budget is actually spent on
initiatives that bring value to the enterprise.
Focusing IT investment on an organisation’s value drivers will improve competitiveness.
Organisations have become quite competent at measuring IT costs, but not the value. Return On
Investment (ROI)/Total Cost of Ownership (TCO)-type measurements should not be used in isolation
because they ignore elements such as risk and IT capability.
IT investment must be measured not only at the inception of initiatives but also throughout the
project lifecycle.
The absence of tools and methods is a major contributor to the lack of successful measurement.
In addition to compliance and management capabilities IT governance can provide a useful
framework for measurement, making sure that IT and organisation investments are synchronised.
Portfolio Management and value mapping are useful mechanisms to ensure that limited IT resources
are channelled to the initiatives that will provide the most value.
Introduction
In 2003, Nicholas Carr wrote an article for the Harvard Review that questioned the value of IT, and ever
since there has been a far ranging debate into whether IT has a meaningful contribution to make. This
interest shows no signs of abating, confirmed by a British Computer Society (BCS) survey of nearly 400
senior IT managers, conducted during March and April 2005, which found
that top of the list of concerns is quantifying the value of IT, closely followed ...top of the list of
on this occasion by the perennials of security issues and lack of representation concerns is
for IT at board level. quantifying the value
However, before any value judgements can be made on IT performance it is of IT...
imperative that the relevant measurement processes and metrics are put in
place. Unfortunately, those IT departments capable of providing this information are in the minority; small
wonder then that IT remains isolated, misunderstood, and treated simply as a cost centre by senior
management. A contributing factor, although not an excuse, is that this is difficult and costly, requiring
ongoing resources and commitment. This absence of measurement means that most organisations have no
idea whether investments in IT are providing increased efficiency, added value, or competitive advantage.
An inordinate amount of IT executive time seems to be expended on measuring and controlling costs rather
than focusing resources on initiatives that will add value to the organisation, probably because costs are
easy to identify and quantify. This is unfortunate as there is a strong correlation between the knowledge
growth of an enterprise and its market valuation. It is becoming increasingly important for IT management
to ensure that measurement mechanisms are put in place to identify intangible assets such as brand,
organisation culture, customer loyalty, innovation, knowledge management systems, and the value of staff
knowledge.
September 2005 Section 1: Management Summary 11

Measuring IT Costs and Value www.butlergroup.com
Business Issues
With the investment in IT generally amounting to around 4% of total income, and sometimes accounting
for over half of total capital expenditure within an organisation, there is a growing need for more
transparency and formalised control, along with better measurement of the IT environment. The role of IT
management is shifting away from being the guardians of technology to focusing more on aspects such as
investment planning, budgeting, governance, service quality, and risk
The role of IT management.
management is In addition, there is increasing prominence being placed on the ability of IT
shifting away from deliverables to match organisation objectives. Unfortunately, there still
being the guardians appears to be a lack of focus by IT management on understanding the
of technology to organisation’s main value drivers. Without this it is impossible to formulate an
IT strategy that will meet the organisation’s needs. IT must improve
focusing more on transparency and visibility, with accountability for performance related to
aspects such as these value drivers.
investment planning,
An important aspect in gaining this awareness is to ascertain the level of IT
budgeting, spending that is aimed at keeping the organisation running. The challenge for
governance, service IT management is to supply services that can support the organisation’s
quality, and risk growth requirements, whilst minimising the amount spent. In many instances
management. it is a significant investment, equating to around three-quarters of the total IT
budget.
It is important that the proportion of IT investment utilised to maintain the
current systems is measured, so that it can be conveyed to senior The IT department
management and fairly charged out to the rest of the organisation. The IT must grasp the thorny
department must grasp the thorny issue of chargeback: whilst the expectation
is that in many instances no cash actually exchanges hands, how can the user
issue of chargeback...
perceive value when IT services are provided for ‘free’?
The effectiveness of IT investments is a very significant factor in the ability of IT to provide value. IT
management must make a conscious effort to measure and monitor IT spending and, once this is
understood, endeavour to increase the proportion of spending on enhancements and new services designed
to transform the organisation or grow its overall value. Research indicates that many organisations have a
long way to go in redirecting IT spending towards more ‘Change the Organisation’ investments – these
currently amount to around 25%, which in many instances equates to less than 8% of the total IT budget,
after accounting for mandatory expenses and wastage.
Method Issues
Most organisations have very little visibility into IT performance. This needs to change, due in no small part to
the growing compliance and regulatory pressures, which entails the IT management having the wherewithal to
prove the department is being run effectively and offering value. To provide this transparency and accountability
many enterprises are turning to governance as an important mechanism for controlling the organisation. Butler
Group recommends the deployment of IT governance, used in conjunction with the corporate governance
initiative, and employed not just for compliance and management reasons, but
It is important that IT also for providing a framework for measuring IT costs and value.
projects are not It is important that IT projects are not viewed in isolation but looked at
viewed in isolation but holistically as one element for improving the effectiveness of the whole
looked at holistically organisation. What has been found to work well is incorporating IT projects as
part of organisation-wide initiatives, where the IT element is an enabler rather
as one element for
than the main driver. A good Portfolio Management solution helps an
improving the organisation select the right blend and balance of IT investment, as it is critical
effectiveness of the that those projects are selected that make the best use of both limited
whole organisation. financial and human resources, and provide the maximum value.
12 Section 1: Management Summary September 2005

A value identification and mapping approach has merit when comparing various IT projects, as it will allow
the discovery of IT value and also enable the monitoring of the actual value contribution on a continuous
basis. Butler Group believes that IT value management is an approach that
can bring a new perspective to IT alignment and capability measurement. IT value management
When ascertaining initiative value contribution, the use of traditional financial is an approach that
measures, such as ROI and TCO, whilst remaining important, should not be
used exclusively in making investment decisions, as these monetary-based
can bring a new
measures tend not to take any cognisance of IT capability and risk. perspective to IT
Another significant aspect for IT management to consider is the need to make
alignment and
sure that the level of investment being made in IT is delivering value for money capability
in comparison with industry peers and the wider environment. To meet this measurement.
requirement benchmarking is increasingly being employed as a way of
ensuring that the best possible value is being realised from IT investments. The use of benchmarking can
bring a number of benefits, including being a vehicle for better performance and collaboration, along with
helping to identify gaps in operational effectiveness.
To enable IT management to get their message across to stakeholders and internal staff good
communications are paramount. This is where methods such as Enterprise Architecture, business cases,
and Balanced Scorecards come into their own. A well-prepared business case is a way of putting forward
project details in a standard format, which helps purvey professional competency and makes it easier to
compare projects. Balanced Scorecards can provide a mechanism for monitoring and conveying IT
performance that simply encapsulates the state of the IT environment. However, it is necessary for IT
management to agree a small number of metrics with stakeholders, get buy-in from staff, and instigate a
regular review process.
In order to provide the required levels of transparency IT management must put in place the foundations of
well-managed IT assets, comprising infrastructure, processes, and skills, along with the use of automation,
which form very important enablers for successful measurement processes. Ad hoc manual methods based
on spreadsheets are no longer acceptable or a practicable solution; especially as data quality for accurate
and comprehensive IT reporting is now crucial. In order to reach the required
The implementation level of consistency the deployment of an integrated toolset and common
repository must be an area of focus, as is the setting up of feedback loops and
of a structured
dashboards within the IT governance framework. The implementation of a
process to manage IT structured process to manage IT investment can provide significant benefits.
investment can Accenture has found that savings in the IT budget of 10-15% are possible
provide significant within one year, whilst better IT decision-making can improve IT productivity
benefits. by up to 20%.
For those organisations unsure how to proceed, Intel’s ‘Managing IT for
Business Value Capability Maturity Framework’ provides a valuable basis for ascertaining current
competence and future direction. Butler Group recommends that organisations look to put in place remedial
action to attain Level three as an urgent necessity, bringing definition to the measuring process. The
organisation should have plans to reach Levels four and five over the medium term, evolving IT to an
optimised state where the IT department is seen as a value centre, works within a sustainable economic
model, and provides core competency.
Market Issues
The economic climate over the last five years has had an impact on IT investment. Starting in 2000 many
organisations were required to pursue cost-reduction strategies across the whole enterprise, which included
the IT department. Research indicates that the cuts in IT budgets reached a peak around 2002, and there
is now a swing towards investment in growth, with the focus returning to increasing revenue, rather than
cost efficiencies. This has enabled IT management to direct more IT spending to programmes that support
organisation growth and transformation. This is an opportunity which IT management must not squander
by ensuring the new funding is used both efficiently – doing things right, and effectively – doing the right
things.
September 2005 Section 1: Management Summary 13

The diversity of licence and deployment models available in today’s market provides organisations with an
opportunity to maximise value and improve flexibility. The IT department must make the most of new
technologies and application delivery methods found in the marketplace, such as outsourcing, near-shoring,
new architectural and delivery models, infrastructure consolidation, and IT management/governance tools.
In addition, the use of a common infrastructure platform and software stack
The diversity of as a foundation for providing value through the benefits of integration, speed
licence and of deployment, and interoperability, as well as a large developer community,
should not be underestimated.
deployment models
available in today’s It is essential that organisations review existing licence agreements and
market provides service provision mechanisms to ensure that they are meeting the needs of the
business and providing value. The increasing use of Open Source Software
organisations with an (OSS) in the enterprise environment is also causing vendors to review their
opportunity to licensing and pricing. From a user’s perspective licensing and service delivery
maximise value and should be an integral part of IT strategy, and not dealt with after the event.
improve flexibility. The need for an effective IT measurement process is again brought into focus
by these issues.
The marketplace for overarching IT management and governance suites is still very immature, with the key
software vendors still adding new components, sometimes by acquisition. Butler Group believes that this
will persist in the short term, particularly since some of the larger purveyors focusing on IT management
have yet to fully enter the market with all-encompassing, fully integrated offerings. However some vendors
have started to adopt an IT governance marketing angle to their products, which would indicate an
increasing interest around the subject.
Measuring IT Costs and Value Framework
Figure 1.1.1: IT Cost and Value Model
14 Section 1: Management Summary September 2005

SECTION 2:
Introduction
Butler Group
2.1 REPORT SCOPE

This Report is intended to provide readers with an informative guide to measuring IT costs and value. Butler
Group recognises that not every factor will be relevant to all situations, and that some organisations will
already be utilising some of the components that make up an effective solution. This Report has been
divided into segments relating to the different guiding principles of measuring IT costs and value, to make
it easy for readers to locate the Sections that relate to their particular issues.
Section 2 – Introduction
The link between business profitability and IT investment can be difficult to prove. The Introduction looks
at the connection between business value and IT investment. IT value can be characterised by three main
approaches – cost reduction (data processing), effectiveness (information usage), and value creation
(knowledge capital). Information assimilation costs are significantly higher than those of technology
overheads. Focusing on the IT value proposition and evolving the IT department into a service provider are
other important considerations appraised in this Section.
Section 3 – IT Investment Strategy
Despite a growing emphasis on business and IT alignment, there is a difficulty in accurately measuring the
business value derived from IT spending. A key step towards achieving this goal is for IT management to
determine the level of IT spending that matches business objectives. In addition, timing of investments is
often critical to success. Problems with IT investments are invariably due to people and cultural issues
rather than with the technology. Maximising investment potential requires a good understanding of IT
capability today and in the future, along with balancing outsourcing and build/buy decisions. IT capability
must be managed, measured, and governed to be effective, and various investment strategies are reviewed
in Section 3.
Section 4 – Identifying IT Value
Organisations are struggling to assess the relevance of IT. The business case is a critical component in
communicating the value of investment to management, making the justification for change and providing
the financial contribution details. This Section also looks at why value is often defined in transactional terms
rather than in organisational value, such as user productivity and Key Performance Indicators (KPIs), which
management can easily understand. Tools reviewed that can be employed include the IT Contribution Model
and IT Business Value Framework, along with benchmarking that offers a means of comparing the value
gained from IT.
Section 5 – Monitoring and IT Governance
In addition to meeting the regulatory requirements IT governance can provide a framework for monitoring
IT performance. There is an element of risk to all IT investments; various strategies must be developed for
monitoring and mitigating the risks. Using an Enterprise Architecture approach creates a foundation for
standardisation and integration avoiding application silos. Besides the different aspects of IT governance the
Section looks at the various performance measures available to the IT manager, such as balanced
scorecards, that must be put in place to enable greater control. Spending without the relevant controls in
place is no longer acceptable. Performance Management functionality, such as dashboards, Business
Intelligence (BI), Business Activity Monitoring (BAM), and Corporate Performance Management (CPM) are
important in providing monitoring and measuring capability.
September 2005 Section 2: Introduction 17

Section 6 – Measuring IT Efficiency
This Section considers the increasing need for cost management and control, and optimising the use of IT
assets. Charging for services can make them more valued by users, drive innovation and value, and provide
alignment with business requirements, although it can be restrictive. The use of management guidelines for
best practice, incorporating quality standards and frameworks including TickIT, ITIL, COBIT, and Six Sigma,
are reviewed. There are a number of management techniques, reviewed in this Section, to assist with the
monitoring of performance in the IT environment, such as Requirements Management, Project
Management, IT Lifecycle Management, and Change Management.
Section 7 – Approaches for Determining IT Cost and Value
This Section outlines a number of approaches that can be used to measure IT cost and value, along with
example methodologies, case studies, and the Butler Group Value Framework.
Section 8 – Vendor Profiles
Vendor and product profiles can be found within this Section of the Report. The product and solution
overviews are provided as an indication of what is obtainable in the market and should not be used as a
comprehensive review of all the available offerings.
Section 9 – Glossary
This is a glossary of terms used in the Report.
2.2 WHY MEASUREMENT IS IMPORTANT

Not many organisations make the effort to measure the benefits associated with IT investments. There are
a number of reasons for this, although the fact that it is difficult and costly, requiring ongoing resources and
commitment, are major contributing factors. This lack of measurement means that organisations have no
real idea whether they are benefiting from their IT investments or if these investments are in fact having a
detrimental effect on the enterprise.
However, all organisations monitor the cost of the IT environment because that is the easy part, with no
shortage of number crunching done in spreadsheets and accounting systems. Moving forward with IT
depends upon a much better understanding of the benefits being delivered. Without this information and
transparency senior managers will continue to view IT with distrust and keep back funds they perceive as
being poured into a black hole.
Measuring the returns from investments in information and computer systems requires a level of rigour that
most organisations are wholly unfamiliar with. That this will sooner or later be required is predicated by the
fact that information costs continue to rise as a percentage of all costs. Whilst the accounts department
may be quite proficient at measuring the cost of every item used by the IT department, the cost of
information is usually ignored. Every person using a word processor, a spreadsheet, an Enterprise Resource
Planning (ERP) application, or indeed any kind of application is an information cost, which is not being
measured.
Evidence would suggest that this lack of measurement results in unpredictable returns from IT investments.
Paul Strassmann has frequently identified in studies that there is no correlation between levels of IT
investment and the returns an organisation can expect. This highlights perhaps that the true costs of such
investments are not sufficiently understood and that what is of more importance is where and how the
outlay is utilised, rather than the amount.
18 Section 2: Introduction September 2005

Measuring the cost and value of IT investments is a major undertaking that

cannot simply be left to the IT or finance function. It needs commitment from Measuring the cost
the very top of the organisation, as without it things will remain as they are – and value of IT
confusing, opaque, and dogged by political infighting. Those IT departments
which continue to use technology purely as a means of cost reduction will be
investments is a
the losers, whilst the more enlightened that also employ IT as a means of major undertaking
value and knowledge creation will ensure continued investment in IT. It is that cannot simply be
therefore imperative that IT management deploy performance indicators and left to the IT or
metrics that identify the benefits that IT delivers in similar terms to those
employed by the rest of the organisation.
finance function.
The Significance of IT Governance

IT governance has three fundamental roles, firstly to implement corporate governance and the associated
controls in the context of IT systems, secondly, to actively foster the alignment of IT with organisation
strategy, and thirdly, to act as an IT management framework. Driven by the needs of compliance it is clearly
the first of these that has compelled the increased adoption of a formal IT governance approach, particularly
in respect of risk management and system integrity.
However, it is the second role that is critical to enable the measurement of IT value. Within the IT function the
practice of IT governance often begins, understandably enough, from an IT management perspective,
addressing issues such as enterprise architecture, system integrity, resource
It is when IT management, project management, service quality, and operational continuity.
governance is It is when IT governance is broadened to include an IT value perspective that it
broadened to include reaches its full potential, encompassing areas such as strategic alignment, value
creation, performance measurement, investment planning, and IT audit.
an IT value
perspective that it By adopting this approach the IT function can become more of a strategic
partner, capable of developing new solutions that provide the organisation
reaches its full with competitive advantage, and where IT is seen as a core competency that
potential... the enterprise can exploit as the basis for competitive differentiation. The one
proviso for this advancement is of course that the leadership of the
organisation has the inclination to incorporate IT into its vision in the first place. From this perspective IT
value could be expressed as: organisation input + organisation metrics + IT capability = organisation
value outcome.
The Importance of Controls

Before the IT department can start to assess its value to the business it must put in place the foundations
of well-managed IT assets, comprising infrastructure, processes, and skills. Indeed, without so doing,
measurement of costs and value, and also by extension organisation alignment, are destined to fail. Whilst
not a panacea, IT management must adopt a selection of techniques for managing and improving IT
execution, including Capability Maturity Model Integration (CMMI), IT Infrastructure Library (ITIL), COBIT
framework for IT governance, PRINCE2 project management or similar, and quality methods and standards,
such as ISO9002, TickIT, and Six Sigma.
The goal is to increase predictability, productivity, quality, and customer satisfaction, and reduce cycle times
so that the IT function earns a reputation of delivering IT projects and services that are reliable, cost-
effective, and of a high quality. The IT department should also be able to demonstrate the use of standard
methods and processes for matters such as estimation of development times and resources, financial
assessment of projects, staff productivity, and the management of supplier relationships.
These controls and methodologies underpin, and provide the discipline that is necessary to measure IT costs
and value. Once the IT function becomes process-driven in this way, the only additional capability that is
required is that of data collection and analysis, much of which follows on as a natural consequence of the
methodologies described. Several of the leading Business Intelligence (BI) vendors now provide solutions
that are targeted specifically at analysing data that relates to the IT function.

By putting in place a formal Portfolio Management solution it is possible to review, budget for, initiate, and
track the project through its entire lifecycle from an organisation perspective. When senior executives ask
searching questions on IT expenditure, it now becomes possible to provide them with meaningful answers
that are backed up by hard data. Furthermore, a Portfolio Management
...the collection and solution can provide multiple business, financial, and technology views of both
analysis of IT metrics individual projects and the entire portfolio, assisting the process of optimising
creates a feedback the set of IT initiatives being undertaken. From an IT perspective, the
collection and analysis of IT metrics creates a feedback loop that supports the
loop that supports the learning and innovation that is vital to longer term success, so this must also
learning and be incorporated into the measurement process.
innovation that is It is somewhat ironic that in many organisations Return On Investment (ROI)
vital to longer term and other financial measures are calculated in the project feasibility and
success... assessment stage, and that project success is gauged either at the point of
deployment or very soon thereafter. It is very rare indeed to find an
organisation that is still measuring ROI at the end of the payback period (often measured in years).
Therefore, it is essential that the metrics continue to be collected and analysed over this period, and that
the enterprise continues to assess the value that the project has delivered.
Both IT and enterprise executives require an overall measure of the efficiency and value of the IT function.
Indeed, in some cases, this may have a significant impact on IT management remuneration. The use of an
IT balanced scorecard is one appropriate way to achieve this. Many organisations are now looking at The
Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework for internal controls
and risk management to ensure the organisation meets profitability objectives, mitigates risks, and achieves
its goals. The processes encourage efficiency and help ensure compliance with laws and regulations.
Deploying an IT investment planning and control system, and adopting a formal methodology to manage
the associated processes, is the single most effective step that an organisation can take to improve the
accuracy and validity of its IT investment strategy. The key to measuring IT costs and value is to develop
business metrics for all IT initiatives, with data collected and analysed over the entire project lifecycle,
which are linked to business objectives and performance metrics.
2.3 WHAT IS IT VALUE?

A survey conducted by Accenture consisting of 300 IT executives and business managers in the USA found
that business managers are not so persuaded of the direct link between IT investment and business value
as their IT counterparts. These line managers are also less likely than IT management to think that IT-
enabled productivity gains have improved for the enterprise as a whole, and are even less likely to believe
that productivity has increased in their division or department.
The survey identified a clear mismatch between the perception of IT’s contribution to the organisation and
individual areas of responsibility involving business managers and IT executives, although the survey did
identify where managers from both backgrounds were in agreement. Organisations’ productivity has
increased in the past few years primarily due to four factors: better use of technology, the right amount of
investment in technology, cost-cutting measures, and business process re-engineering.
The survey highlights the fact that IT managers must be more proactive in communicating the value of IT,
but before this is achieved there needs to be a better understanding of the types of contribution IT can
provide. Butler Group believes there are three main types of benefits that can be derived from IT systems –
these being projects to support running the organisation, changing the enterprise, and initiatives focused on
knowledge creation.

Figure 2.3.1: IT Value

‘Run the Organisation’ Metrics
‘Run the Organisation’ usually entails cost efficiencies, in many instances achieved through labour displacement.
This has been the dominant use of IT for the last 30 years, and is very much focused on the transactional aspects
of the operation and processing data. Examples include, operational systems such as ERP applications, database
management, and content management.
During the IT boom of the nineties productivity in the USA rose by an average of 2.5% a year, with this being
largely attributed to the increasing use of computer systems. However, when the bubble burst in 2000 and IT
investment was essentially put on hold, year-on-year productivity gains over the next few years increased to over
4%. This does not match up too well with the suggestion that increased levels of IT investment go hand-in-hand
with better productivity, which could possibly indicate that it is getting progressively more difficult to realise
benefits through process automation.
Despite these statistics, questioning the ability for IT to improve productivity and contribute to organisational
efficiency, using computer systems is now a prerequisite for doing business in the 21st century. What is
important is that the IT infrastructure and software are flexible enough to meet the demands put upon it and
that the services are provided in the most cost efficient and appropriate manner. Often neglected is the
measurement of the IT operation in other than pure financial terms, so the correct decisions can be made on
future direction and investments.
Measuring ‘Change the Organisation’ Investment
Using IT to actually change the way the enterprise operates is not really understood by organisations, mainly due
to the difficulty in adequately measuring, along with the lack of metrics in this area. Value creation can be achieved
through making available IT solutions that improve the effectiveness of the organisation with the provision of
enhanced capability such as enabling new channels to market, and enhanced services to stakeholders, along with
improved information processing capabilities, such as BI, data warehousing, data mining, and CPM capabilities.

Butler Group has consistently found that the management in many enterprises have never considered the
use of IT for purposes other than achieving cost savings. It appears that using IT to improve effectiveness
is far less well understood in the user community than for efficiency purposes. Many senior managers agree
to invest large sums of money in ERP applications where returns can be easily quantified, than to spend
considerably less on new business intelligence applications that might make the customer service and the
sales effort considerably more effective. This inability to think beyond cost efficiencies singles out those who
make the most from IT investments from those who do not. There are numerous examples of companies
that have used IT to transform the way business is conducted, such as Amazon, Dell, Easyjet, FedEx, eBay,
and Walmart.
Using IT to provide new capabilities requires a good understanding of the organisation, including its markets
and stakeholders. Improving value creation processes within an organisation presupposes that management
know how the organisation creates value. In many instances this is simply not the case.
IT should be able to support the organisation by facilitating rapid operational integration. Unfortunately, in
many cases IT is working to a different agenda, which often happens because enterprise objectives are not
clearly communicated to IT. This whole area of matching IT investment with senior management
requirements is perhaps the most difficult of all to get right, requiring interaction between individuals that
inhabit different worlds. Regrettably, without this understanding organisations will continue to invest in IT
that does not meet the needs of the enterprise.
Understanding the Organisation’s Value Drivers
An assessment of knowledge capital can be represented by the share price of publicly traded stocks. There
can be found a strong correlation between the information and knowledge orientation of an organisation and
its market valuation. Knowledge can be viewed in terms of collaboration, workflow, ideas management, and
the organisation’s knowledge network.
It should be remembered that tangible assets represent only about one-third
It should be of the share value found in the average enterprise. Intangible assets include
remembered that brand, organisation culture, customer loyalty, innovation, knowledge
tangible assets management systems, and not forgetting the value of staff knowledge. This
represent only about can be calculated by using the Economic Value Add (EVA) formula where the
one-third of the share cost of capital is taken into account. Studies in this area conducted by
value found in the Strassmann have shown a good relationship between this theoretical value
and the actual market valuation of companies.
average enterprise.
From a Public Sector perspective there are no shareholders, but there are still
stakeholders and it is important to identify the main value drivers of the organisation, be that the provision
of efficient services, collaboration, or the accessibility of information. The majority of agencies will have
objectives that can be translated into value drivers that should be the central focus of IT service providers.
Unfortunately, there seems to be a contradiction in IT management focus in that most of the time is spent
on ‘Run the Organisation’ issues rather than concentrating resources on projects and systems that can
provide the maximum value to the organisation. IT executives must make a conscious effort to understand
the organisation value drivers and map IT capability against them.

Figure 2.3.2: IT Value Paradox

The value of information should not be taken too lightly, nor the expense of acquiring it. The cost of
information is typically ten times that of IT. For example, at a manufacturing company IT costs are roughly
1.5% of total costs and outlay on information approximately 15% of total costs, whereas in a financial
institution IT costs typically equate to 10%, with costs and expenditure on information greater than 90%
of total costs. In most organisations no one measures information costs; Butler Group contends that IT
management and the CFO should be paying much closer attention to information creation overheads and
be measuring them using existing financial data. In addition, a guide to the value of information can be
calculated using the calculation: Iv = Tv(+i) – Tv(-i), where Tv(+i) is the average transaction value with
information and Tv(-i) the average transaction value without information. The effectiveness of knowledge
and information generation is directly associated with the overall performance of the organisation.
Key Value Considerations
The IT losers will continue to use the technology purely as a means of displacing labour, while others
employ it as a means of amplifying value creation processes and increasing the value of the organisation.
It is quite difficult to understand what most organisations expect to gain from their use of IT if it is not
to add value.
The efficiency game is no more than a technology race with the technology suppliers being the major
beneficiaries.
Value creation offers the opportunity to establish real competitive advantage.

2.4 RUNNING IT AS A BUSINESS

With IT expenditure typically accounting for around 4% of total revenues, and accounting for over 50% of total
capital expenditure within the average organisation, it is understandable that there is a requirement for more formal
management control, methodologies, and particularly measurement within the IT function. As a consequence the
focus of IT management is changing, moving away from questions of technology,
...the focus of IT and concentrating more on issues such as investment planning, budgeting,
management is governance, service quality, and risk management. However, faced with questions
such as ‘what percentage of the IT budget is spent on operations and
changing, moving maintenance?’, or ‘what percentage of IT initiatives contribute directly to
away from questions organisation goals?’, IT management find difficulty in providing accurate answers in
which they, senior executives, and stakeholders can have confidence.
of technology, and
concentrating more The primary reason for this problem is the lack of tools and methods that can
be applied to measuring IT costs and value, and presenting them from an
on issues such as organisational perspective. A glance at the IT management environment
investment planning, confirms that there are plenty of tools for managing technology assets,
budgeting, methods for managing IT delivery, and frameworks to address IT and
enterprise architecture, but very few that are capable of uniting the technology,
governance, service enterprise, and financial aspects of IT initiatives.
quality, and risk The consequence of this disparity is that IT continues to be treated as a cost
management. centre within the majority of organisations, rather than as a business unit.
Whilst IT can be a key strategic asset and competitive differentiator, this will
not be the case until the IT function can demonstrate effective management and the measurement of both
costs and value. Research suggests that those organisations capable of allying IT investment with strong
governance and value measurement methodologies achieve significantly greater return on their IT
investments than the average value provided across all organisations.
A survey conducted by the Economist Intelligence Unit for Mercury highlights that trends such as strategic
sourcing of IT, compliance, and the complex systems environment are having a significant impact on IT
departments. In order to meet these and other challenges in delivering services, IT management needs to
have in place the measurement processes and monitoring capability, particularly when considering
outsourcing, where 64% of IT managers indicated quality to be a major issue. Visibility is also required to
alleviate the other recognised worries of third-party dependency and remote operations.
In the study, 39% of IT executives indicated that a lack of funding for governance initiatives was a barrier to
successful deployment. IT governance must be seen as an integral part of running IT as a business and a
framework for measurement, which means providing the budget and commitment. The survey also found that
IT management were concerned about the increasing complexity of the IT environment and were of the opinion
that providing value depends on an optimised development process and IT operations. Interestingly 60% of the
contributors indicated that testing was an important driver of value, although only 37% had invested in
automated testing software, with the remainder utilising manual testing or, more worryingly, no testing at all.
A key approach gaining credence to alleviate the problems of a complex IT environment and enable IT to
become a service provider is Service-Oriented Architecture (SOA). Existing monolithic core processing
applications can be re-engineered and opened up to enable greater componentisation and re-use across
multiple systems. Key benefits of SOA are:
No ‘big-bang’ replacement strategy is required, allowing the replacement of specific areas of functionality.
Previously the choice was between wholesale replacement with a package or maintaining current systems.
Enabling economies of scale through re-use, both on the IT architecture side and from an organisation
perspective.
Removing siloed business unit systems through use of standardised, component-based application logic.
Enhancing flexibility and business agility means that changes can be made to individual components
without major ramifications for the rest of the system.
The ability to utilise common components and services from a variety of vendors, or develop new
functionality in-house, based on a shared infrastructure platform.
New service delivery models, and reducing IT environment complexity using both SOA and consolidation
will enable the IT department to evolve to an IT architecture that will support value creation. However, a
critical factor in this migration will depend on the organisation deploying measures that demonstrate the
value of IT and on instigating IT governance processes to enable an effective monitoring framework.

SECTION 3:
IT Investment Strategy
Butler Group
3.1 THE EFFECTIVENESS OF IT SPENDING

Despite a growing emphasis on business and IT alignment, there is continuing difficulty in accurately
measuring the effectiveness of IT spending. A key step towards achieving this goal is for IT management to
determine and monitor the level of IT spending that supports business growth. This can be achieved by
identifying the percentage of IT spend invested in ‘keeping the lights on’ and money spent on projects that
enable significant changes in the way the organisation is able to operate.
Figure 3.1.1: Financial Services Industry (FSI) IT Investment Strategy

(Source: Datamonitor – European FSI Technology Survey 2004)
Post-2000 many organisations were forced to purse cost-reduction strategies across the enterprise and also
within the IT department. Datamonitor’s European FSI technology survey highlights how the cuts in IT
budgets reached a peak in 2002 within the finance community. It appears the focus is now returning to
increasing revenue, with IT management intending to direct more IT spending to programmes that generate
business growth.
Whilst it is vital to continue to invest in the constant improvement of existing services and infrastructure to
support growth, it is perhaps more important, from the perspective of adding value, that funds are made
available to invest in projects that support new ways of doing business and improving collaboration.
Therefore, IT management and senior management must reach an understanding as to the relative merits
of each investment strategy and that a balance is achieved between funding for ‘Run the Organisation’ and
‘Change the Organisation’ spending.
Despite the stated intention of many IT managers to increase spending on business growth projects, in
reality this has been difficult to achieve, as across the financial sector IT budgets remain under pressure
and it is by no means an easy feat to improve the situation in a difficult economic climate and very
competitive marketplace. Figure 3.1.2 details an analysis of IT spending by the FSI for 2003 and 2004.
From this we can see that IT investment targeted at new development projects remains constant or is
deteriorating. In the insurance sector the percentage spent on ‘Change the Organisation’ initiatives actually
declined year on year, while the Retail Banking and Corporate and Investment Banking sectors remained
static, with Group Universals showing a slight increase.
September 2005 Section 3: IT Investment Strategy 27

Figure 3.1.2: FSI Investment Strategy 2003/4 (Source: Datamonitor)
What is important to recognise is that IT management must make a conscious effort to monitor IT spending, and
once expenditure is understood, endeavour to increase the ‘Change the Organisation’ investment over time through
the deployment of enhancements and new services designed to meet the objectives of the enterprise. It is very
easy to get caught up in the day-to-day fire fighting and maintenance issues, neglecting work on IT strategy and
measurement processes that will support the value drivers of the organisation over the next few years.
‘Run the Organisation’ Investment Strategy

The challenge for today’s IT management is to deliver functionality and services that enable growth in a cost
conscious environment. The continuing growth in the organisation will drive up transaction volumes and the
expectation that IT can quickly respond to new business requirements means more pressure will be placed
upon the current infrastructure. If it is not robust enough to handle the increase, additional spend will be
required to maintain and repair the IT systems to meet new and increasing commitments.
However, this spending adds no real value, removes resources from project work, and affects delivery capability.
Increasing IT efficiency remains a key issue, especially in an improving market. This makes measurement of
existing services even more important, so an understanding can be reached which will enable the proportion of
IT investment utilised to maintain the current systems to be explained and adequately communicated to senior
management and charged out to the rest of the organisation. Investment in optimising IT infrastructure remains
a necessary part of IT spend and essential, for the following reasons:
Historically the majority of the IT spend has been directed towards infrastructure.
The amount of duplication and inefficiency that is present where multiple IT platforms currently exist.
The high support costs that currently exist due to a plethora of platforms and networks being used.
In certain circumstances an IT strategy mainly supporting a ‘Run the Organisation’ approach can be the
right objective for an IT department to adopt, either because the enterprise situation demands it, or that it
is not always the case that alignment is driven from a top-down standpoint. Whilst it is important that the
majority of the initiatives are enterprise driven, this does not have to be the case all of the time.
Identification of value is a two-way street, where occasionally disruptive and innovative technologies can
influence an organisation’s thinking.
28 Section 3: IT Investment Strategy September 2005

Before any headway can be made in improving the agility of the existing infrastructure and services, it is
vital that there is a thorough understanding of the existing environment, with the use of methodologies,
management techniques, and metrics. All of these should be focused on monitoring and costing the key
attributes of such a strategy, these being:
Resilience – understanding and mitigation of risks.
Cost effectiveness – low unit cost.
Scalability – accommodate organisation growth.
Agility – a common infrastructure platform optimised to cater for technology and business changes.
Key steps to delivering value from investment in a ‘Run the Organisation’ strategy include:
A centralised IT governance function with control over group infrastructure will allow the implementation
of best practices across the enterprise, whilst enabling business and IT alignment and enhancing
flexibility.
Centralise and share infrastructure across the organisation and develop common services, which reduces
costs and enhances IT capability. Exponentially more can be achieved through common platform than
siloed systems in a single business unit or country.
Focus on increasing long-term efficiency. Infrastructure transformation will reduce the unit cost, which
will lower the long-run cost base and provide a platform for future business growth.
Consider outsourcing where there is a lack of internal capability, high investment cost is a barrier to
transformation, or there are non-performing infrastructure functions.
‘Change the Organisation’ Investment Strategy
In the current environment one of the most pertinent issues for IT management is to provide IT services that
enables organisation growth and increases competitive advantage. This can be achieved through effective
IT spending on services that will transform the way the organisation operates or focuses on knowledge
capital growth initiatives. However, as identified in Figure 3.1.2, the last three years have resulted in
minimal new IT investment spending by the retail banking sector in this area. This allows little scope for
project failure or radical investment plans and makes achieving the growth priority difficult.
Figure 3.1.3: Retail Banking IT Spending by Performance Category 2003-2004 (Source: Datamonitor)

An analysis of retail banking IT spending (Figure 3.1.3) appears to show a correlation between a higher
percentage IT spend invested in ‘Change the Organisation’ initiatives (Development) and best-in-class and
middle business performance, as defined by the efficiency ratio (cost/income). Higher ‘Change the Organisation’
spending tends to indicate that a greater proportion of IT spending is being targeted at new programmes that
are aligned with business objectives, which in turn can lead to improved competitive advantage.
Research conducted by Accenture into the characteristics of organisations that out perform the market
points towards one of the differentiators being not how much is spent on IT but the way the investment is
focused on business value. Companies with superior earnings growth tend to invest less than peers on IT
but are able to make available more IT spending for new business initiatives.
Further indication of the link between ‘Change the Organisation’ and innovation in the UK is found where
the most successful insurance companies have been able to dedicate resources to product design, new
distribution channels, and innovative solutions to differentiate themselves from the competition. Aviva,
which has the largest insurance market share in the UK, has pioneered the use of ‘Pay as You Drive’
insurance, where the charge is levied on mileage rather than on an annual basis. Skandia has invested in
componentised product design functionality, which allows remote agents access to on-line calculations.
Maximising the level of ‘Change the Organisation’ spending can be seen as one of the main catalysts for
business growth.
Other key enablers include matching IT spending with business investment cycles and utilising technology
to provide knowledge, competitive advantage, and allow growth. The pursuit of IT efficiency must include
investments to improve infrastructure agility and service levels. Again, IT governance is critical to service
provision success as it helps with, amongst other things, enterprise and IT alignment, which is paramount
so that new services can meet the future vision set by the organisation.
Making the Most of ‘Change the Organisation’ Investment
As well as increasing the amount of IT investment focused on ‘Change the Organisation’ spending it is also
important to understand what this outlay is being spent on. It is vital that the best use is made of the limited
IT budget and resources ensuring that it is used effectively on initiatives that produce the most business
value.
Unfortunately, only around 25% of the available funding is typically targeted at ‘Change the Organisation’
initiatives. The investment directed at new and innovative developments is actually significantly less than
this, with up to two thirds of this spending more often than not spent on mandatory undertakings and
routine projects. This leaves approximately 10% of the total IT investment available to assist in the creation
of business value.
One may consider this bad enough, but the eventual amount of spend used effectively on creating growth
can be further eroded if cognisance is taken of research that has identified that up to 20% of the investment
in typical IT projects is in fact wasted, through such things as poor project control or failure. Thus it can be
argued that for many IT departments the percentage of the total IT budget being used on projects that could
bring competitive advantage or enable business growth is as little as 8% of the total funding available.
Key considerations for identifying the best initiatives within the ‘Change the Organisation’ portfolio include:
Define and standardise robust application development processes and monitoring procedures using
project planning and other relevant measurements.
Develop an internal/external assessment framework, implement Portfolio Management, and deploy an IT
dashboard, along with monitoring tools and software.
Once the correct measures are put in place and an understanding of the internal strengths and
weaknesses is achieved, a more informed decision can be made.
Outsourcing is often regarded as a cost reduction solution, utilised more often in a downturn. However,
such a strategy can be used with a growth strategy, providing a responsive solution that enables
organisations to address areas of weakness and exploit areas of strength.
Where possible focus on and give priority to Business Intelligence (BI), collaboration, and Knowledge
Capital generation initiatives.

Technology Investment Effectiveness
Datamonitor plots the effectiveness of IT investment by calculating the IT intensity ratio (IT costs/operating
costs) and efficiency ratio (cost/income) to create a quadrant that enables analysis of IT investment. By
plotting the median lines of a set of peers, with similar business composition, it is possible to create a
quadrant that allows analysis of IT spending levels.
Figure 3.1.4: IT Investment Effectiveness (Source: Datamonitor)
This model can be used to provide a positioning snapshot of an organisation in relation to its peer group,
or to indicate a trend over time. It is important to note that there is no correct position on the chart, it is
dependent upon the IT strategy being pursued at the time. For example, those IT departments supporting
a business efficiency programme using IT spend to reduce business costs would expect to be located in the
‘Enabling Increased Efficiency’ quadrant. This type of analysis highlights the importance of understanding
the alignment of IT spending, and should be performed at the beginning of any IT transformation project.
An illustration of benchmarking in the financial services sector using this model and others can be found in
Section 4.3.
In addition, the timing of investments is often critical to the success; being an early adopter is not always
the best approach. There can also be a danger of personal agendas driving IT investment, and the
propensity for decisions to be made for the wrong reasons should be guarded against, such as adding the
latest technology to the CV. The people aspects are important when
considering change and should not be underestimated: problems are
Measuring the
invariably due to people and cultural issues rather than with the technology.
effectiveness of IT
Measuring the effectiveness of IT investments is a major undertaking that investments is a
cannot simply be left to the IT or finance departments; it requires commitment
from the very top of the organisation. Unfortunately, without this support major undertaking
things will remain as they are – ambiguous and coloured by political infighting. that cannot simply be
There are a number of organisational and functional barriers to fostering a left to the IT or
culture where the measurement of IT projects and the IT function as a whole finance departments;
is an accepted and routine approach. Firstly there are a number of issues of it requires
poor management practice, of which most senior IT managers are all too
aware, but which are problematic to overcome, such as tactical purchasing,
commitment from the
poor asset management, lack of change management, and the proliferation of very top of the
suppliers. organisation.

The lack of good Tactical purchasing by individual business units is thankfully less prevalent now,
but it is clear that the IT function itself is too often guilty of implementing a
practice in asset solution to meet an immediate business need, without understanding the mid-
management is also a to long-term implications. The lack of good practice in asset management is also
major concern, with a major concern, with many organisations failing to undertake the most basic
inventory of hardware or software assets. Change management is required not
many organisations only within the IT function, but must support the communication of business
failing to undertake change across the business-IT boundary, and the proliferation of suppliers
the most basic restricts the ability to create strategic relationships with a core set of technology
providers who can understand, and contribute to, the goals of the organisation.
inventory of hardware
or software assets. It is all too easy to blame the lack of measurement in the IT environment on
the previous management, and there is little incentive, given frequent staff
turnover, to take the five-year financial view of a project that might provide a
realistic perspective of its longer term value to the business. Even more worryingly, because IT project failure
rates are still so high, there is a distinct reluctance to instil measurement at all in case the cold hard facts
show up the management failings that were responsible for poor project performance. When post-
implementation reviews can be conducted on the basis of subjective impressions it is all too easy to pass
off failure for any number of spurious reasons.
The challenge therefore is to embed sound programme and project management disciplines into the
organisation in a manner that will survive any change of personnel. Suitable approaches will include setting
up an IT Programme Management Office, adopting formal and well-documented methods for project
management and measurement, and the use of supporting tools such as Portfolio Management solutions.
Unfortunately, when the IT budget is under pressure it is these crucial activities that tend to be the first
casualties, something IT management must resist.
All of these issues are readily acknowledged by IT management, but the objective most often cited is how
measurement techniques can be used to demonstrate and present IT value to senior business executives.
The answer lies in the enterprise and IT stakeholders developing metrics that relate clearly to the objectives
of the organisation, and designing projects in such a way that these metrics are an integral component, from
pilot or proof of concept, through live deployment, right up until the solution reaches end of life. Once this
becomes ingrained in IT processes, the measurement culture has been set in motion.
Conclusions
Measuring the cost and value of IT investments is an important undertaking that requires buy-in from
the IT department and all stakeholders.
With around 8% of the total IT budget being spent on projects that will help added value there is still
along way to go before the investment in IT actually matches the real requirements of the enterprise.
The effectiveness of IT investment can be calculated by using the IT intensity ratio (IT/operating costs)
and efficiency ratio (cost/income).
3.2 UNDERSTANDING IT CAPABILITY

For many IT managers a dichotomy exists between the role that is now demanded for IT within the
organisation, and the reality found within IT operations. IT is rapidly maturing as a discipline, and as with
any other organisation function its executives are required to demonstrate its value to the organisation, to
keep its costs under firm control, to maintain the effective running of its operations, and to ensure that any
potential risk to the organisation is assessed and minimised.
The focus for IT management is turning away from the detail of technology such as server availability,
network performance, and application functionality, towards more strategic issues such as IT budgeting and
investment planning, governance, service quality and availability, IT risk management, and offshore
development. However, in contrast with other organisation functions, there has been a distinct lack of both
tools and methodologies to assist in adopting this strategic view (represented in Figure 3.2.1). Whilst
everybody is keen to move the IT department up the organisational value chain, and to increase its
contribution to the enterprise, there is still a distinct and substantial separation between the business,
financial, and technology views of the IT department.

Figure 3.2.1: The IT and Business Management Environment (Source: Artimis)
Given the dependency of modern business on IT, it may seem unnecessary to assert that when deployed
astutely IT makes a significant contribution to both the efficiency and the competitive position of an
organisation, but for many senior managers the use of IT has been a double-edged sword. They recognise the
potential of IT systems in many areas, but believe that this potential comes with a lack of rigour in
measurement, and with a substantial risk of failure. It is therefore no surprise that IT investment is treated with
a large degree of scepticism, and that the IT manager is often relegated to the role of technology caretaker.
It is evident that realising value from IT requires the same degree of planning, visibility, measurement, and
control of investment that would be applied in any other area of the organisation, be it product research,
asset management, supply chain, or corporate development. Senior executives are now seeking to have
these same disciplines applied to the IT function, but it is clear that this will require a substantial cultural
change and real progress in bridging the divide between organisation and IT perspectives.
It is important that there is an assessment process in place for monitoring IT capability. The perceptions of
both stakeholders and internal personnel are invaluable in shaping IT decision-making and identifying if
value is being provided. The methods for assessment can take a number of forms including surveys,
assessment tools, and measurement models. Assessment techniques such as benchmarking and value
mapping are considered in Section 4 of this Report.
Regular surveys of IT staff and others are an important feedback mechanism for management, which give
an indication of how they feel the IT organisation is performing and ways in which improvements can be
made. A useful assessment tool is provided by the Carnegie Mellon Software Engineering Institute (SEI), the
People Capability Maturity Model (P-CMM), which is a framework that assists organisations to tackle people
issues by employing best practices in the areas of human resources, knowledge management, and
organisational development. This results in organisations improving processes for managing and developing
workforces. Intel has also developed a streamlined assessment method known as SAM-Lite, based on The
Baldrige Award’s organisational performance model and assessment criteria.

...deploying an IT Butler Group believes that deploying an IT investment planning and control
investment planning system, and adopting a formal methodology to manage the associated
processes, is one of the single most effective steps that an organisation can
and control system, take to improve the accuracy and validity of its IT investment strategy. One
and adopting a formal such example is the Artemis IT Management Solution (ITM), which, amongst
methodology to an extensive range of IT management features, can be used to support the IT
manage the investment planning and control processes.
associated processes, Artemis ITM includes the ability to support IT strategy planning that helps
is one of the single organisations to rapidly capture existing IT projects, assets, and to digitise
most effective steps existing processes. Its IT initiative management and IT portfolio management
capabilities work together to capture all forms of IT demand, including
that an organisation
strategic projects, work requests, upgrades, and ongoing support, and to allow
can take to improve the organisation to rank and prioritise the investment and resource that is
the accuracy and allocated to this requirement.
validity of its IT For many organisations the IT investment cycle has been severely hampered
investment strategy. by the lack of any formal approach. The result is that project and asset
investments are often prioritised according to the available resource, rather
than taking into account the business goals of the organisation. Factors such as immediate demand, internal
politics, or even the personal agenda of the individual also contribute to sub-optimal decision-making.
The consequences of these failures are several and compound, as the short-term outlook changes, ongoing
projects are highly susceptible to time and cost overruns, new projects that might offer greater benefits
cannot be started, and the quality of support and maintenance work is blighted by resource conflicts. Even
where some formal procedures exist, it is often done using an inflexible spreadsheet, which, whilst listing
potential projects, provides no visibility into the availability of resource or the current workload.
Artemis addresses these issues by linking business goals to the IT portfolio, and to its delivery. This ensures
that the execution of IT initiatives is fully tracked, and the resulting benefits linked back to the strategic
objectives. By fully integrating a top-down strategy perspective with a bottom-up execution viewpoint,
Artemis is able to provide an all-embracing solution.
Service Provider Value Creation Using Corporate Vision
With well-intended attempts to plug the many information gaps, organisations have turned to familiar
project management, recording, and reporting solutions, notably Microsoft’s Project and Excel desktop
products. Whilst there is nothing fundamentally wrong with these applications, their use tends to spread
like wildfire, soon becoming out of control. People spend more and more time recording and duplicating in
exhaustive detail when they should really be focused on value-creating activities and project goals. As a
direct consequence, any hopes of getting a clear, trusted, and traceable view of overall resource utilisation
gets lost in a swamp of micro management. This, unfortunately, is the reality for far too many organisations.
Atlantic Global’s Corporate Vision solution encourages service-based organisations to re-examine their
fundamental value creation process – in terms of how they allocate and balance human and physical resources
against the demands placed upon them, the costs associated with the activities, and the time taken to complete
them. Through increased visibility and simplified traceability and management, Corporate Vision is able to foster
an altogether more holistic and realistic approach to project management, resource allocation and forecasting,
time management, budgeting and planning – in essence the foundations of good business practice.
The approach adopted by Atlantic Global differs from other vendors that market solutions in this area. The
company aims to deliver a higher level of control and visibility of information, taking the onus away from
departmental and project-specific capabilities, to more of an integrated, role-based, business-wide platform.
In particular, Corporate Vision provides enterprise resource management functionality, from simple skills
management to the real-time visibility of resource supply versus resource demand, thereby allowing
potential problems to be flagged early on. In the area of project management, Corporate Vision addresses
the challenge from one of milestone tracking rather than the traditional task-based approaches, again with
the view of providing better overall visibility and more actionable and relevant information.

Figure 3.2.2: Corporate Vision (AG-CV) Architecture (Source: Atlantic Global)
Portfolio Management is a popular term and software sector in its own right. Atlantic Global delivers these
features and capabilities within its Corporate Vision solution set. It establishes a clear line of sight from the
top-level, pan-initiative view right down to the individual project layer, allowing managers and executives to
clearly see and understand how effective their strategies are, and if necessary, which programs or projects
to review.
At this top level it is also possible to undertake full forecasting and planning activities within the same
Corporate Vision environment. For example, various strategies and plans can be simulated using scenario
modelling and ‘what if?’ analyses conducted to ascertain the impact of certain decisions. A classic example
here is the impact of slipping milestones on other projects. Key performance indicators or warning indicators
can easily be surfaced, again giving executives and managers an important window on what is happening
today, rather than having to wait until it is too late to be rectified.
Part of rectifying problems and ensuring effective portfolio management is the ability to view resource
allocation across projects and, if necessary, reallocate people to more critical activities. Again, having this
level of visibility whilst retaining the capacity to drill-down into detail is an extremely valuable resource.
Corporate Vision is designed to handle automatic resource allocation, facilitated by an underlying skills
database. This allows resource plans to be tested for feasibility, matching against skills, competencies,
experience, and availability. This gives resource managers the means to match supply and demand, and
clearly demonstrate to the rest of the business where potential shortfalls exist.
Almost every organisation uses project management software to one degree or another. Service-oriented
businesses rely on project management (and hence project managers) extensively; yet tend to struggle when
it comes to truly delivering value out of the function. This is not meant as a slight against project managers;
it is simply that no-one within the business has an accurate, constantly updated view of exactly where
resources are being used, misdirected, or under- or over-worked. Also, lacking this view, projects are often
run in isolation of one another, meaning that the knock-on impact of delays or poor resource and time
allocation cannot be predicted, leading to the inevitable fire fighting situation.
Butler Group feels that Corporate Vision improves this situation, firstly by integrating data, projects,
resources, and time management, and then acting as a central facility for describing and instilling best
practice project management disciplines right into the heart of the business.

The key to how this is achieved is through a consistent planning methodology, which is independent of any
specific management methodology. All project data is stored in a central databank allowing clear visibility
of resources and project-specifics such as tasks, budgets, goals, and milestones. Whilst Atlantic Global can
deliver such capability directly through the functional modules of its Business Solutions Set, the added value
of Corporate Vision is to deliver this visibility across any number of projects.
Using the underlying features of Atlantic Global’s Business Solutions Set, users are asked to record their
time and effort expenditure against the tasks they have been assigned within the projects that they are
involved. Corporate Vision is designed for immediate repurposing of data and information, meaning that if
necessary such time sheet information can be read in real time. Timesheet approval is also built in, allowing
supervisors to monitor input.
Time management goes further than just recording the time people spend in various activities – although
this in itself can be extremely valuable. Atlantic Global ties expense management to the time management
function, allowing costing and rates (multi-currency if necessary) to be applied. This instantly allows costs
to be analysed (in real-time if required) in a number of ways, for example, by project, by client, by activity,
and by department. This gives visibility into cost distribution and has a dramatic impact on billing.
Corporate Vision also provides clear visibility of important financial information. This is vital in order to
deliver the complete picture of how well the organisation is able to translate its resources and time into
cash. At the Corporate Vision level the mandate is very much for tracking and overview of budget, expenses,
margin, profits, and general cash flow. In addition, it provides financial
...role-based modelling and forecasting capabilities, encouraging the business to become
dashboards display more proactive. The expense management functional module of Atlantic
Global’s Business Solutions Set provides the micro-financial control, ensuring
key metrics and that information is entered and collated in line with the businesses needs.
reports, and support
The way information is accessed and utilised is clearly critical in a solution of
drill-down to the this nature. Corporate Vision uses business roles as the primary basis for
lowest level of detail. filtering information. Roles are designated with the required security and
administration levels, allowing users to see data pertaining to their function
and position within the business. These role-based dashboards display key metrics and reports, and support
drill-down to the lowest level of detail. Corporate Vision is Web-based and is highly configurable. Configuring
the solution as opposed to customising it ensures that upgrades and enhancements can be performed easily.
Any changes made by a user are captured and logged, providing a full audit trail. For example, in order to
change a milestone the project manager will have to enter an explanation as to why it needs to be shifted,
and this data automatically becomes available to his or her superiors. Corporate Vision directly supports a
decent level of reporting, for example, with out-of-the-box trend analysis. However, the underlying database
can also be accessed and queried by any enterprise BI solution.
Service-based businesses find great difficulty in achieving and maintaining a consistent high-level view that
tells them how effective they are at using their key assets – people, time, and cash. Consequently,
opportunities are lost and resources wasted as initiatives and projects get delayed and/or delivered over
budget. Atlantic Global’s Corporate Vision solution aims to address the situation, providing an abstracted,
role-based information layer that allows managers and executives to monitor and manage utilisation across
projects, portfolios, and even geographies.
Conclusions
Better decision-making will be achieved if IT management has a good understanding and control of the
current environment and a clear appreciation of future requirements.
Total Cost of Ownership (TCO) issues have the potential to either significantly improve or virtually destroy
investment returns.
Enterprise and IT management solutions, such as those provided by Atlantic Global and Artemis, can
help organisations create a framework conducive to value creation and IT capability assessment.
Aspects such as human and physical resource availability, along with budgets, are important
considerations when reviewing an organisation’s portfolio and vision.

3.3 PORTFOLIO MANAGEMENT

There is no doubt that many organisations do not have the metrics in place or defined processes for
reviewing project proposals. Recent research implies that only 25% of enterprises use a process framework
rather than haphazard planning processes. As a result, organisations attempt more projects than they are
able to cope with, and often weak projects take precedence over strong ones. There is a lack of visibility
and awareness throughout the organisation of what projects are being undertaken and why. Invariably, IT
management have to sell projects to the enterprise, when business managers should be generating and
selling the projects throughout the organisation. IT management without control of their IT project portfolios
cannot expect to fulfil the requirements of providing value from technology investments.
IBM’s Institute of Business Value study of 165 large IT projects at financial services companies identified a
number of practices that can assist organisations in improving IT investment performance. The IBM
evaluation discovered that the organisations found governance and risk management were two of the main
challenges in this area. Even though risk management is considered critical, not many enterprises had
procedures in place to evaluate and mitigate risks.
To tackle these and other related challenges, the Institute found that many financial organisations were
beginning to manage their IT investments as a portfolio instead of individual, unconnected projects.
Amalgamating IT projects into one portfolio assists senior executives and IT managers to make better
choices and can reduce overall contingency requirements. Portfolio Management is starting to become more
widely used in the financial sector, as the market-leading institutions make it an integral part of their IT
investment management practices.
Figure 3.3.1: Key Aspects of Successful IT Investment Management

(Source: IBM Institute for Business Value Analysis)
A Portfolio Management approach enables categorisation of all IT assets, including human resources. A
good Portfolio Management solution will assist an organisation in selecting the right blend and balance of
IT investment, be the emphasis on ‘Run the Organisation’ or ‘Change the Organisation’. This technique can
be used to more clearly define the stated IT and enterprise objectives. Additionally, metrics can be assigned
to projects that give a much clearer picture of business value contribution. Objectivity, especially in terms
of reigning in unsupportable expectations, can create a more structured approach to the deployment of new
functionality and infrastructure.
This objectivity has to be carried through at the highest level. A project must have not only an individual
aim but it must also serve the wider purpose. Whether the objective is increased profitability, greater levels
of customer service, or reduction in cost are to a large extent irrelevant, as long as metrics are capable of
being assigned. For example, cost reduction may have an impact on customer service. If metrics are simply
assigned on the basis of just reduced costs then there is a strong likelihood that ‘success’ as far as a project
is concerned could be measured as ‘failure’ by the organisation as a whole.
Portfolio Management enables a wider, more important, and relevant view to be taken; IT projects should
not be allowed to exist in isolation. In fact there is a school of thought that believes there should be no such
thing as a separate technology initiative and they should all be an element of business projects, with
justification and comparison of suitability and value being taken at the business project level.

A Portfolio Management solution should be used to prioritise projects against the backdrop of organisational
need. Prioritisation and risk assessment must be added into the equation. This approach provides
enterprises with a disciplined framework for management processes, as well as IT investment and
deployment. Weak IT governance structures mean that business executives often do not have clear ideas of
what they are approving and why they are doing it. It is common for IT management to have to sell projects
that should be generated and sold to the enterprise by line-of-business heads, and even if business
justifications for IT projects are produced, they are often poor.
In mitigation of this problem, a Portfolio Management programme can maximise IT investments and
minimise risks. It brings discipline to IT. Portfolio Management can encourage teamwork and improve the
communication and alignment between the IT division and the enterprise’s business managers, with the
latter taking increased responsibility for the success of IT projects. As a result, resources can be scheduled
better and projects can be managed and controlled more effectively.
Today’s organisations have to cope with reduced budgets and changing business priorities. Current
applications often lead to disjointed systems and business processes that cause organisations to have
difficulty in aligning projects, people, and partners with the corporate objectives. Portfolio Management
solutions formalise the project justification, approval, and deployment processes. They integrate all the
information related to the project within a single, Web-based enterprise solution, so that projects are better
managed and aligned to achieve a greater return on their investment.
Portfolio Management is an essential element of IT governance, especially as it recognises and addresses
the issues of creating an integrated environment from elements that have traditionally operated as individual
parts. A strong portfolio management solution can assist an organisation in selecting the right blend and
balance of asset investment. The isolation of projects is one of the major reasons why IT failures occur. The
measurements of project successes are based upon the expectations of the strategic initiator, and these are
time-limited in respect of start of implementation. The needs for a project are inherently tied into the total
requirements for each and every project and also the strategic direction of the organisation.
The approach takes an holistic view of an organisation’s overall IT strategy. IT and business managers
scrutinise project proposals by matching them with the company’s strategic objectives. The IT portfolio is
managed in a similar way to a financial portfolio, where riskier strategic investments are balanced with more
conservative investments. The portfolio is monitored regularly to determine the projects that are on track,
those that need help, and those that should be chopped.
Figure 3.3.2: Portfolio Management Framework

Collaboration is also an essential element of Portfolio Management.

Collaboration across the whole of the portfolio enables the gaining of a broad Collaboration across
picture, but also provides for quicker remedial action. A duality of view has to the whole of the
be taken. Collaboration inter-team is a well-established facet of project portfolio enables the
management, but Portfolio Management creates intra-team collaboration for gaining of a broad
those members whose responsibility lies at the macro level of an organisation. picture, but also
The remedial aspect enabled by Portfolio Management is powered by utilising provides for quicker
an ongoing and dynamic measurement base, with projections that supply
proactive capabilities. A strong Portfolio Management solution will give all of
remedial action.
the above, but it can do so in a number of ways and with varying degrees of
functional implementation.
Portfolio Management Benefits

There are a number of benefits that Portfolio Management can bring. Probably of most significance is the
ability to include the senior management in the project selection process by providing a framework that is
transparent and easily understood. It takes a lot of information and organises it in an easily understood
manner. It helps to demonstrate where money is being spent, whether projects are necessary, and what
resources are needed.
Other benefits include maximising the value that is achieved from investments in IT, and identification of
the risks. This is due to the evaluation and priority processes that are part of Portfolio Management. It can
also improve the whole environment in which the organisation operates. Communication and alignment
between IT and business leaders is promoted by Portfolio Management, along with IT and business
management being encouraged to think about team responsibility and success
Early and constant rather than on individual requirements. As there is a recognised measuring
communication is the process IT projects are selected based on merit and on the benefit to the
organisation. No longer is it the projects whose sponsors shout loudest that
key to bridging the
are selected for development. Project spends are visible to all participants so
organisation/IT divide that the value and costs are continually monitored.
and improving
Early and constant communication is the key to bridging the organisation/IT
perception.
divide and improving perception. Senior managers need to appreciate more
about how IT can affect the business, and IT management need to learn to
communicate the vision, strategies, and goals of IT in a way that non-IT executives can identify with. The
most effective way can be taking the initiative in discussing projects with managers and eventually
transferring responsibility and accountability to stakeholders.
Both management and users in IT, and also line-of-business divisions, can be educated through their
involvement in the Portfolio Management process. Possibly for the first time they are able to fully understand
how IT initiatives can have a direct effect on their enterprise. It also means that users can be empowered,
as they have a direct stake through participation in all stages of the process. In addition, planners are able
to schedule resources more efficiently, the number of redundant projects is reduced, and it is much easier
to make the decision to abandon projects as all participants have the facts presented to them by the system.
Overall, it can lead to more effective management of IT through the alignment of IT activities and
investments with the organisation’s objectives. As a result, there can be a significant effect on IT spending,
with PeopleSoft claiming that this can be reduced by up to 30%. There are many different models of
Portfolio Management promoted by vendors, consulting companies, and academics. Some organisations
also develop their own methodologies, but off-the-shelf software is available from a number of vendors.

Vendor Portfolio Management Solutions

In addition to Atlantic Global mentioned earlier and IT governance solution offerings outlined in Section 5,
which include Portfolio Management functionality, there are a number of other vendors providing Portfolio
Management products, some of which are described briefly here.
Business Engine Corporation’s Project Portfolio Management application integrates all project-related information
within a single, Web-based solution. Various methods are used to create and balance the project portfolio,
ranging from strategic to tactical. It includes portfolio analysis that aims to provide balance and risk mitigation
across strategic or business objectives, compliance or required maintenance, and research and development.
PeopleSoft says that a fundamental strategy for organisations adopting a centralised approach to IT
governance is Project Portfolio Management. Part of its Enterprise Service Automation for IT, Enterprise
Project Portfolio Management is an integrated solution designed for IT managers to align projects with
corporate objectives, reduce project delivery costs, and increase resource usage.
ProSight Portfolios Project Portfolio Management is designed to handle all facets of Portfolio Management.
It ensures collaboration between executives and team members, and prioritises and selects projects based
on business need, choosing what organisations will and will not do. It provides effective management of
projects through to completion, and it means real-time monitoring of both the on-going priorities and project
execution, continually reviewing and adjusting as necessary.
Telelogic’s Focal Point solution enables organisations to manage project and product portfolios. The aim is
to maximise the value of the portfolio, ensure a good balance between different types of projects, run the
right number of projects, to allocate and reallocate resources, and to align project decision-making with
organisation strategy.
Conclusions
Portfolio Management provides executives with visibility and the tools to unlock the value of the
investments through minimising risks, optimising resources, maximising value, and aligning IT with the
objectives of the organisation.
Efficient allocation of limited resources to competing projects and a clearer understanding of where IT
resources are being spent are enabled with Portfolio Management.
Effective control of the IT portfolio is an essential part of the IT management discipline and this can be
the single most effective step that can be taken to improve alignment.
3.4 INVESTMENT METRICS

Much is made about the need to obtain value for money from IT investments, with the focus on using Return
On Investment (ROI) for evaluating technology systems having grown in line with increased spending pressures,
as the funds available to IT directors are kept in check by difficult external environment conditions. One issue
that should always be borne in mind when considering technology investments, and which has the potential to
dramatically affect an organisation’s ability to achieve a decent and consistent ROI, is TCO. Deploying system-
based solutions is probably the easy part of the job for most IT professionals, but for many, understanding the
long-term financial commitments associated with their decisions is more problematic.
There are a number of financial metrics that organisations can employ from the well-used ROI to others
such as Net Present Value (NPV), Internal Rate of Return (IRR), Discounted Cash Flow (DCF), and
Economic Value Added (EVA). Whilst ROI is probably the simplest calculation and is used extensively, Butler
Group cautions against using it exclusively as a metric for investment evaluation and comparison. It is
important to take cognisance of the contribution the initiative will make to the organisation, as well as other
aspects such as the cost of capital. In this respect the EVA is a metric worth consideration. In addition, the
appropriate discount rates or weighted cost average should always be employed. The various metrics can
be combined into a Cost Benefit Analysis where all the plus measures are compared with the negatives or
disadvantages to identify the overall prospects for the initiative.

Alinean suggests that the first step in managing the value of IT is to perform a ROI analysis of each planned
project. Each project needs to be analysed based on the traditional ROI elements, such as project costs and
tangible benefits, but in addition to these conventional elements of a ROI cost-benefit analysis, Alinean proposes
utilising other criteria in order to better assess IT investments, including intangible benefits and project risks.
Figure 3.4.1: ROI Dashboard Model (Source: Alinean)
Other Investment Metrics
The investment metrics used for comparison and monitoring of IT initiatives is individual to each
organisation and the particular areas of focus. It is important to align the metrics with the value drivers of
the enterprise. Butler Group recommends that no more than five or six key metrics are utilised and that they
are reviewed on a regular basis to ensure they are still relevant.
Jerry Harbour originally put forward the use of SMART metrics. The acronym stands for:
Specific – make sure the metrics are targeted at the areas requiring evaluation and they are unambiguous.
Measurable – the data collected should be able to give an accurate reflection of events and be complete.
Actionable – when the metric changes positively or negatively then some corrective action must be possible.
Relevant – do not measure things that are unimportant, and when the metric is met or outperformed the
organisation gets the benefits envisaged.
Timely – the data should be available in a timeframe that enables it to be acted upon.
Ideally metrics should meet the ‘SMART’ criteria. There are many different metrics that can be utilised,
some of which are listed below. This is by no means an exhaustive list and should only be used as a guide
when contemplating those measures that would be suited to an organisation. A Balanced Scorecard
approach is frequently used as a tool for communicating measures.

Alignment
Percentage of projects approved.
Number of projects delivered on time or ahead of schedule.
IT costs as percentage of total costs.
IT costs per employee.
Compliance to strategic plan.
User Orientation
User satisfaction.
Internal Service Level Agreement (SLA) compliance.
Helpdesk response times.
User involvement in new services.
Innovation and Skills
Human Capital Index (Watson Wyatt).
Staff skills development.
New/existing system adoption.
Project expertise capture.
Staff retention.
Operational Quality
System and network availability.
Number of issues resolved per person.
External SLA compliance.
Development effectiveness.
Knowledge Capital
IT training per employee.
Intellectual capital.
Intangible Asset Monitor.
Corporate Reputation Quotient (Harris-Fombrun).
ROI and Licensing Models

The diversity of licence models available today create complexity, but also flexibility. New technologies and
application delivery methods have led to the diversity, including Web delivery, Application Service Provision
(ASP), Software-as-a-service, on-demand, utility computing, and grid computing. The equation tends to
reflect the extent to which there is a sharing of risks and rewards.
A traditional perpetual licence in the long term is perhaps the lowest cost, but entails greater risk if the
software under-performs, or the vendor goes out of business. A monthly subscription or usage-based licence
lowers the risk to the user, but is also more expensive over the long term. There are many factors to take
into account though, and cost may not be the highest-ranking criterion – for example, what is highly valued
in hosted application/service providers is the availability of the latest technology with rapid implementation.
The monthly payment models also do away with the big impact on budgets of capital expenditure and can
speed up buying decisions. However, the scrutiny of ROI and other measures should not be abandoned,
especially given that subscription models cost more in the long run. Companies need to review existing
licence agreements to ensure that they are not hampering the needs of the business. For example, in the
introduction of new technologies rigid models like per-seat licensing cannot be used to give Internet users
open access to the application.

The increasing introduction of Open Source Software (OSS) into the IT world is also causing vendors to review
their licensing and pricing. From a user’s perspective, the whole question of licensing should not be a matter
of detail after the buying decision, but should be examined and clarified at the start of any such process.
Conclusions
Achieving a quick and consistent ROI is still extremely important for all organisations especially in
today’s difficult and competitive environment.
It is becoming apparent that the simple ROI calculation used in the past is no longer adequate.
Organisations must look to put in place investment measures that encompass not only tangible benefits
but also other aspects, such as risk and intangibles.

SECTION 4:
Identifying IT Value
Butler Group
4.1 VALUE MODELS

It is important to identify those initiatives that bring the maximum value to the organisation, and as ‘Change
the Organisation’ spend is limited it is critical that investment is made in projects that will make the best
use of both limited financial and human resources. There are a number of models and frameworks available
that allow both the identification of opportunities to provide IT value, and processes to monitor progress in
achieving IT value appreciation. Outlined in this Section are a number of concepts gaining recognition in
this area, including Value Management and IT Value Management, along with the IT Contribution Model,
Intel’s Business Value Matrix, and value mapping, all of which the IT department can exploit either in their
entirety, or in part, to create an IT value framework.
Value Management
Whilst not directly involved in the technology sector the ideas promoted by the Institute of Value
Management in the UK help to gain an interesting perspective on the concept of value. The Institute defines
value as the relationship between the meeting of stakeholder requirements with the resources consumed in
doing so. The more efficient use of resources and the greater the user satisfaction levels equate to better
value. The perception of each type of user means that the value could be different for each stakeholder. The
main objective of Value Management is to resolve these differences in the perception and facilitate an
organisation meeting its needs using the minimum of resources necessary to deliver them.
What is necessary for a

desired user
Satisfaction of Needs
Value =
Use of Resources
Everything that is
required to satisfy needs
Figure 4.1.1: Value Definition (Source: The Institute of Value Management)
Value Management has evolved from the Value Analysis (VA) method developed by Lawrence Miles during
the 1940s and 50s. To start with, VA was used mainly to identify and eliminate unnecessary costs: over
time, the technique widened its appeal and was used for increasing performance and addressing resources
other than cost, along with services, projects, and administrative procedures. The Value Management
methodology consists of three main principles:
1. An ongoing focus on organisation value, including the establishment of metrics for identifying and
controlling value.
2. The definition of the objectives and targets before embarking on solutions.
3. A concentration on functionality as an enabler for maximising innovative and realistic outcomes.
Value Management is unlike many management philosophies in that the approach encompasses a number
of organisational characteristics at the same time, such as management style, human dynamics, and
involvement of both external and internal environments. In addition, the approach includes the effective use
of tools and methods. The main benefits from using Value Management include the fact that improved
business decisions take place. There is better understanding of the problems and issues due to the
embodiment of a common value culture where employees and stakeholders understand the organisation’s
objectives, leading to improved output and better competitiveness.
September 2005 Section 4: Identifying IT Value 47

In 1989, the European Council of Ministers established the SPRINT initiative to strengthen Europe’s
innovative capacity and competitiveness; Value Management was a key element of this strategy. One result
of SPRINT was that the European National Value Associations worked together to produce:
A common European Value Management Standard, approved and published in April 2000.
A universal European Training and Certification System.
The European standard EN 12973:2000.
Figure 4.1.2: The European Standard EN 12973:2000 (Source: The Institute of Value Management)
The European Standard EN 12973 involved the co-operation of eight European countries, all of which had
developed different standards for the use of Value Management. This diversity of implementation was seen
as a potential barrier for wider adoption and cross-country usage. The European Union started a number of
projects as part of its innovation programme, and this collaboration resulted in a standard that reflected best
practice across all countries and industry sectors. The idea is that the standard is not restrictive or applicable
to any single commercial sector, nor does it advocate the use of any particular techniques, but promotes the
choosing of the most appropriate methods to achieve the objectives of the organisation. The standard aims
to document the concepts found in Value Management and provide a framework for its deployment.
IT Value Management
IT investments are one of the largest single elements of capital expenditure an organisation has.
Unfortunately IT management continues to struggle to articulate the business value of IT to the organisation,
with business managers and department heads demanding justification for every penny spent on IT.
Currently, very little time and resource is spent on managing IT value as a process, integrated with other
management tasks. Ways of improving the situation, in terms of strategy, models, and tools, are available
in the marketplace today, such as Alinean’s IT Value Chain Management methodology and SAS’s IT Value
Management software.
48 Section 4: Identifying IT Value September 2005

IT Value Chain Management

To assist IT management in demonstrating and expanding the value of IT, Alinean has developed the IT Value
Chain Management framework. This methodology is designed to provide a measurement system for each
stage of the budgeting and planning cycle, helping IT executives understand the micro-economic impact of
an individual project and the macro-economic effect on overall organisation performance, as well as providing
a collaboration framework for all stakeholders who are engaged in IT investment decision-making.
Figure 4.1.3: IT Value Chain Management (Source: Alinean)
Alinean advocates that four main areas are addressed within a continuous IT Value Chain Management
process. In some situations a bottom-up method calculating the Return On Investment (ROI) for a project
is the right way to initiate consideration; in other instances a top-down approach starting at Step 4 –
competitive peer comparison and then moving to Step 1 will be applicable.
The four steps within the framework are:
1. Project ROI – provides the framework for individual project assessment, and the subsequent capability
to track the performance of the project against financial goals, risk mitigation, and Key Performance
Indicators (KPIs).
2. Project Optimisation and Budgeting – allows the project plans to be modelled to determine the
necessary IT budget, and to perform ‘what-if’ analysis to ensure that resources are available to
implement the planned projects, risks are minimised, and benefits are maximised.
3. Corporate Financial Impact – various combinations of projects, risks, and benefits can be simulated to
best support corporate financial and strategic initiatives, and meet competitive performance goals.
4. Competitive Peer Comparison – consists of performance assessments versus peers with regard to
corporate financial performance, KPIs, IT spending, and Total Cost of Ownership (TCO).

IT Value Management
The premise behind SAS IT Value Management is quite simple: enable IT to communicate and manage the
tangible costs and resulting business value of every IT service. It sounds like an easy thing to do, yet for so
many organisations it is impossible with any significant degree of granularity – and as the saying goes:
“What you cannot measure, you cannot manage”.
SAS IT Value Management enables the IT management team to clearly present and manage the costs and
value of IT in business terms. The platform offers governance and financial transparency, reflecting the need
for IT to behave as a business in its own right. The solution uses SAS IT Resource Management to turn
timekeeping and associated data into intelligence, by providing business-rich context to this information
using related SAS technologies.
Figure 4.1.4: SAS IT Value Management (Source: SAS)
The SAS view on IT governance is about how executive managers enable IT initiatives align with business goals
and deliver value, while at the same time ensuring that IT costs and fully burdened activity costs are allocated
according to use. SAS solutions use the raw data collected from IT systems to link IT cost with this business
value to yield the business context required for effective IT enterprise operations.
All SAS solutions are built on three fundamental technologies: Data Warehousing, Analytical Intelligence, and
Business Intelligence (BI). Developed by SAS over many years, these technologies are unified by an open and
extensible architecture designed to support SAS solutions across the eclectic mix of platforms and technologies
found in most organisations today.
Built on the SAS Intelligence Architecture, IT Value Management transforms raw IT data, collected from enterprise
systems, into useful, business context-rich, intelligence. At the core of IT Value Management is SAS IT Resource
Management – the company’s long established computer performance management and capacity planning offering,
which delivers an organised and summarised IT data repository of enterprise-wide IT measurements.
From here additional SAS offerings within the SAS arsenal of analytic and BI capabilities are employed to perform
context-rich IT governance, activity based cost management, cost recovery, service consumption management,
Service Level Management, and IT score-carding. These reporting, analyses, and modelling functions enable IT
to provide accurate and defendable costs and their resulting value to each serviced line of business.
By providing individual business units with clear, unambiguous statements in a language they understand, business
managers have the information they need to effectively manage the consumption of IT resources and so reduce cost,
whilst for the IT manager and his team these insights enable more accurate planning and long-range forecasting –
essential if IT is to participate in the board room and meet the future demands of the business as a whole.

SAS solutions are adapted to each individual customer. SAS starts with the ‘ETL’ process before overlaying this
on to the desired business process. ETL refers to the Extract, Transform, and Load functions combined into a
single programming tool. First, the extract function reads data from a specified source and extracts a desired
subset of data. Next, the transform function works with the acquired data – using rules or look-up tables, or
creating combinations with other data (context) – to convert it to the desired state. Finally, the load function is
used to write the resulting data (either all of the subset or just the changes) to a target database.
In Butler Group’s opinion, the functionality afforded by solutions such as SAS’s IT Value Management
software, are likely to provide organisations with the tools to manage cost, value, quality, and risk.
Additional benefits envisaged include:
Reduced long-term costs – as the alignment between IT consumption, cost, and resulting business value
clarifies corporate IT decisions.
Higher quality IT services – through an absolute understanding of the organisation’s processes and
drivers, IT consumption, and alignment with corporate objectives and strategy.
More efficient use of IT throughout the enterprise – as unnecessary system usage abates.
Increased awareness and professionalism within IT – as the organisation sees the direct correlation
between IT investment and business value.
Service Level Agreements (SLAs) can be used to prioritise IT service provision within the enterprise.
IT Contribution Model
The Canada Management Accounting (CMA) Guideline1 – ‘Evaluating Performance in Information
Technology’ has been jointly developed between the CMA and the American Institute of Certified Public
Accountants (AICPA). The Guideline defines the IT Contribution Model and a selection of metrics for
evaluating performance of IT in commercial and public sector organisations, enabling IT management to
assess and compare initiatives, along with senior management being able to make better resource allocation
decisions. In addition, it contains a method for calculating IT ROI that takes into account the significance
of measuring the total costs of an IT project including a number of disruption costs, along with the total
benefits, and the associated risks. The IT Contribution Model identifies the main inputs and processes that
need to be in place for successful internal and external IT outputs. The Model also ensures that the
contribution made by IT in the meeting of organisational objectives is measured, be that in terms of better
customer service, profitability, or shareholder value.
Figure 4.1.5: IT Contribution Model (Source: CMA)
1
Guideline can be found at: www.icaew.co.uk/fmfac

The performance of IT system delivery is dependent on many different inputs, including organisation
strategy, structure, and existing infrastructure, which can be drivers and constraints on projects. Other
important inputs such as available resources and the external environment can
...other aspects, such also have a significant impact on the development and deployment of IT
as leadership and IT strategies. Additionally, other aspects, such as leadership and IT strategy,
strategy, structure, structure, and processes, can influence the execution of IT projects.
and processes, can These inputs and processes impact both internal outputs, such as
influence the improvement in productivity, time savings, increased use of capacities,
execution of IT improved quality, and overall cost reduction, and external outputs including
channel optimisation, customer acquisition, satisfaction, and loyalty, and
projects. overall value capture. The successful deployment of IT initiatives supporting
these outputs should produce enhanced organisational outcomes. Using the IT
Contribution Model as a framework it is possible for the organisation to establish enterprise specific IT
performance goals relating to the inputs, processes, and internal and external outputs.
Suitable measurements need to be deployed to keep an eye on the many inter-relationships found in the IT
environment. To begin with, all the value drivers needed to meet the goals of the organisation should be identified
and have metrics assigned to them, even those which are hard to measure must be included in the performance
measurement system. It could be more appropriate to use non-financial metrics in some instances, although
preference should be given to monetary values as senior management prefer to be able to calculate ROI and
demonstrate IT payback. The selection of the relevant metrics will be different for each organisation and is
dictated by the circumstances and the direction of the enterprise. Some performance measures suggested by the
CMA that could be used to measure inputs, outputs, process, and outcomes include:
Performance Measures for Inputs Performance Measures for Processes

Percentage of planned change in annual IT Percentage of IT management’s bonus linked to
budget. IT profitability.
Percentage of employees compensated based on Percentage of discretionary spending decisions
individual or group performance. aligned with corporate and business unit
strategy.
Performance Measures for Outputs Performance Measures for Outcomes

Monetary increase in sales based on Percentage change in share value attributable to
productivity improvements. IT initiatives.
Monetary value accumulated based on time Earnings growth.
savings.
Figure 4.1.6: Some IT Contribution Model Performance Measures (Source: CMA)
The IT Contribution Model can be tailored to any organisation’s management system and is compatible with
most measurement and management frameworks, such as the Balanced Scorecard. The technique is
applicable to both small IT projects and large systems, and can be used in the commercial and public
sectors. CMA recommends that smaller organisations with less complex inputs, processes, and relationships
between them should apply a small number of performance measures to the most critical value drivers.

Business Value Index
Intel IT has developed the Business Value Index (BVI) methodology, an approach to identify and evaluate
potential benefits from making investments. BVI appraises aspects outside the traditional investment
assessment framework. This methodology enables the discovery of the potential strategic value of a project and
conveys this to Intel’s executive management and helps to prioritise investment options, make data-driven
decisions, and monitor progress. It encompasses business value, IT efficiency value, and financial criteria.
BVI is a composite index of factors that impact the value of an IT investment. It evaluates IT investments along
three vectors. Business value measures the impact of a project on business strategy and priorities. IT efficiency
value gauges how well the investment will use or enhance existing infrastructure. The financial criterion
measures the financial attractiveness of the investment, including time to return investment, cost/benefit ratio,
and Net Present Value (NPV) of a project. BVI complements analysis tools that measure ROI.
All three factors use a predetermined set of defining criteria that can include:
Customer need. Revenue potential.
Business and technical risks. Level of required investment.
Strategic fit. Amount of innovation and learning generated.
Each factor’s criteria are weighted according to the ongoing business strategy and environment. Changes in
business strategy could alter how criteria are weighted for different factors.
Figure 4.1.7: Business Value Index (Source: Intel)

After several projects have been scored, the Business Value Chart is used to graphically depict the three
indices for each project. The position of a bubble relative to the horizontal and vertical axes shows each
project’s business value and IT efficiency values. The width of a bubble shows each project’s financial
attractiveness value. Figure 4.1.8 shows an example of evaluated projects. The chart enables a quick
assessment of investments relative to one another. The ‘win-win’ circle shows that projects in the upper
right corner of the chart have value both to IT and to Intel’s business. Financial attractiveness is also
important when evaluating the relative strength of various investments.
Figure 4.1.8: Business Value Chart (Source: Intel)
The BVI tool is used in a Strategic Portfolio Management process that continuously manages a team’s
investments, ensuring that spending is closely aligned with Intel IT’s business strategies and priorities, and
that IT resources are effectively utilised. The process is a closed loop method; starting with understanding
IT’s business strategies and then proposing projects to support these objectives. Intel prioritises and ranks
proposals by means of the BVI and other metrics. Once the investment decisions are made, Intel commits
resources, and the team builds indicators that track success at various stages of the project lifecycle.
Intel re-calculates the BVI on a regular basis to monitor the change in business value over time for the
investments. Priorities can then be adjusted based on the indicators and the BVI results. Intel also tracks
the actual results and benefits of the investment and measures them against the expected results to provide
feedback to the management process. One of the model’s strengths is that it enables continuous alignment
between the IT investment portfolio and the dynamic business strategies and priorities. The model enables
decisions to be made using accurate data that may result in cancelling projects or initiatives that fall short
of expectations or no longer map to business priorities.
The BVI provides Intel with a common language and framework for discussing IT investments, assessing
business value, and IT efficiency contribution based on common criteria, along with prioritising diverse
investments based on environment and IT strategy. The BVI process enables continued and proactive
alignment of the IT project portfolio with corporate and IT business strategies.

Mapping IT Value
Whilst using financial measures is very important, especially when justifying initiatives to senior
management, they should not be used to the exclusion of other methods. There is danger that the sole use
of metrics, such as ROI and TCO, will not improve the alignment of IT investments with the enterprise. The
aspect that these monetary-based measures do not tackle very well is the one of IT capability. There is a
need to identify the value drivers and convey the current IT capability as matched with organisation needs.
Value mapping is an approach that can bring a new perspective to IT alignment and capability
measurement.
Value Mapping Solution
The Value Mapping Solution developed by Dr. Andrew Jack goes beyond simple measurement and provides
a holistic methodology using Value Maps and supporting assessments such as planning, decision-making,
communication, facilitation, and evaluation mechanisms to ensure that management focuses on areas of
greatest value to the organisation. Value Mapping is a tool that can assist with the process of identifying
improvements and new projects that meet stakeholder needs and achieve organisational objectives.
Figure 4.1.9: Value Mapping Solution (Source: Dr. Andrew Jack – Business Excellence International Ltd)
The Value Mapping process also includes a Value Outcome Assessment. Through an evaluation of the
impact of initiatives and activities the value created is measured. The findings from this process can form
part of the information used in reporting value, which can be used in the organisation’s strategic review
where precedence can be given to outcomes that match with stakeholder and organisation needs. The
relationship between stakeholders requirements, strategic objectives, value outcomes, value drivers, and
targeting of effort is shown in Figure 4.1.9 representing the Value Mapping solution.

IT Value Mapping
In Sourabh Hajela’s White Paper – ‘IT Value Mapping – A Quantitative Approach to Maximise Returns on
IT Investments’ a framework for using value mapping in the enterprise and IT environment is put forward.
The belief is that to improve IT decisions requires a new approach, which while being business focused
should be specially developed for IT and contain the following key features:
Practical – The deliverables from the framework should be able to be utilised.
Quantitative – Where possible financial metrics should be used in the framework enabling progress to
be understood, explained, and monitored in terms that the business understands.
Integrated – Ideally one framework connecting all the elements of business and IT capability is required,
allowing the entire effect of a decision to be understood.
Iterative – Many performance-related initiatives tend to be one-off in nature, usually instigated to solve
a particular problem. It is important that the framework is part of an ongoing process, where the lessons
learned are fed back.
Ease-of-Use – Complexity can prevent a framework from being fully adopted. The interface, data
collection, and reporting should be user-friendly.
Based upon Sourabh Hajela’s experience with IT alignment and value, the IT Value Mapping framework has
been developed, which quantifies and visually depicts the IT capability of an organisation. Value maps are
created that identify the status of important business and IT components at a particular instance, along with
the effect of each component on business value. IT Value Mapping takes a portfolio-based approach to IT
spending, meaning expenditure on an IT project is not carried out in isolation but as part of a portfolio of
IT investments. Improving IT’s performance requires stopping both current and planned projects that do not
match business needs, whilst at the same time managing the remaining investments to ensure they add
value.
Figure 4.1.10: Business and IT Value Maps (Source: Sourabh Hajela)

The business and IT footprint value maps are used to determine if investments are meeting business objectives.
The business-related value map identifies the capability of an organisation, showing the competitive
positioning. This footprint can be obtained from the business model of the organisation and provides a
foundation for all decision-making, including those of IT. Ideally, each area of the business should correspond
as closely as possible with this footprint, with investment focused on reducing the gap in the capability.
The IT footprint shows the IT capability of the organisation. Since the purpose of IT is to enable business value,
the dimensions of the IT footprint are the same as that of its business counterpart. By comparing the business
and IT footprints it is possible to discover the current state of alignment. The framework provides a mechanism
for continuously monitoring IT alignment and value creation and its future evolution through key targets.
Conclusions
Whilst Butler Group does not want to be prescriptive in the use of a particular approach against another,
what is becoming vital is that an organisation employs a method of identifying and comparing value and
uses a portfolio approach to IT investment selection.
The IT department should look to design and use processes for calculating the various different ways of
articulating IT value and develop an IT Value Management capability.
The use of IT management software and tools to automate the collection and storage of data can greatly
reduce the amount of effort required to enable effective value decision-making.
A value mapping approach appears to have merit in identifying IT investment misalignment with
organisation objectives.
4.2 USING A BUSINESS CASE

If IT management are to be taken seriously then proposals for IT investment must be presented
professionally. A common approach is to use a business case where a comprehensive review of the proposed
initiative is documented, along with the financial justification and other important information. The business
case is a way of putting forward the details in a standard format, which also assists comparisons with a
number of projects.
When done well and on a continuous basis a business case will be able to give stakeholders both a high
level view, which can then be drilled down into where required, and a good understanding of the issues and
benefits. It is important that this is an ongoing process where previous business cases feed into the current
formulation and the process is continually refined, all too frequently business cases are built from scratch.
In addition, there must be a feedback loop built into the process where the actual improvements realised
are compared with the documented justifications in the business case. This not only adds to the continual
learning process, but also helps to ensure that predicted benefits put in the document are realistic.
The contents of a typical business case include:
Management Summary.
Problem Statement.
Methods and Assumptions.
Solution Description/Alternatives.
Costs/Benefits Analysis.
Business Impacts.
Risk Assessment.
Conclusions and Recommendations.

The Business Case Solution
Solution Matrix’s ‘The Business Case Solution’ is an eight-step process with two main goals. Firstly, to
develop an accurate knowledgebase of the financial aspects and other business outcomes of management
activities, and secondly to enable the information to be used for decision support, planning, and improving
the quality of the next business case to be prepared. Solution Matrix consultants work with the client as
project leaders and coaches to deliver a business case that is credible, accurate, and meets the needs of
decision makers and planners in the shortest possible time.
1. Build a Core Solution Matrix works with the client to build a cross-functional core team of key
Team and Set individuals in the organisation to provide input in finance, operations, sales,
Objectives. IT/communications, and other areas. When the focus is alliance building, or sales
support, the core team may also include key stakeholders from partner or customer
organisations.Consultants launch the project with the core team by describing the
business objectives behind the proposed action or plan and the information needs
of decision makers and others who will use the results. Here and throughout the
case-building project, the core team helps extend business case ownership and
involvement more widely, which are key factors in building credibility.
2. Describe the Working with the core team, the current environment is surveyed and a financial
Environment. profile of the operation is created as it is today and as it would be in the near
future under usual business trading conditions. This becomes the basis for
measuring impacts of the proposed action or acquisition against proposed
alternatives.The financial profile is developed from an understanding of the
business objectives and business plans, as well as the activities, processes, cost
drivers, and resource requirements.
3. Understand The likely impacts of the proposed action or acquisition are analysed. With
the Impacts. technology acquisitions, for instance, this begins by understanding the new
functionality and how it can impact business operations, workflow, and processes.
For proposed alliances, this means developing the business model for each alliance
partner, each partner’s contributions, and the projected market response to alliance
products or services. In sales support, this means understanding how the proposed
solution helps customers meet their own business objectives.Important impacts, be
they positive or negative, are measured in concrete, operational terms. The analysis
also considers carefully all requirements and contingencies involved.
4. Design the The business case design is advanced by creating practical cost and benefit
Case and models, an appropriate benefits rationale, and clearly defined rules for determining
Collect Data. what belongs in the case and what does not. The cost model defines which cost
items belong in the case, and which do not. The benefits rationale provides a solid
basis for giving value to the full range of positive impacts, including those that are
not easily measured in financial terms.When these design elements are in place the
key individuals in the organisation are interviewed for input and all other required
data and information is gathered.
5. Analyse the Using the data from Step 4, a cash flow model of the expected cost and benefit
Financial impacts in the case are built. Cash flow projections are evaluated with standard
Model. financial criteria such as discounted cash flow, payback period, and internal rate of
return.Consultants also work with the core team to assess the relative importance
of major cost and benefit impacts that cannot be quantified in financial terms.
continued on next page...

...continued from previous page
6. Measure the A business case by definition deals with future events and uncertainties. In order to
Risks. make informed business decisions confidently, senior management will need
answers to questions such as:
How likely are the projected results?
What other outcomes are possible?
Where are the major risks?
Consultants perform a sensitivity analysis on the financial model to determine
which drivers, contingencies, and other factors control results and by how much.
They also perform an in-depth Monte Carlo simulation of the business case
scenario in order to help gain a full understanding of the likelihood of different
business case results.
7. Report the Solution Matrix prepares a management summary report of the financial analysis,
Results. risk analysis, and other findings, along with an interpretation and evaluation of all
results. The consultants will present this to senior management. A complete record
of the data and other information developed during the project, and an electronic
copy of the financial model, is also provided.
8. Validate and Consultants and core team develop an implementation plan for measuring the
Manage. accuracy of the business case over time and for adjusting the financial model as
necessary. The plan also recommends specific ways to use the case for real-time
control of technology costs and benefit.
Figure 4.2.1: The Business Case Solution – An 8-Step-Approach

(Source: Solution Matrix Ltd – www.solutionmatrix.com)
Conclusions
Management can use business cases to convey and justify initiatives to stakeholders.
A comprehensive business case can provide information for effective decision making, which can assist
stakeholders to understand how projects impact on their area.
A business case can be a useful tool for promoting projects and correcting mistaken perceptions about initiatives.
4.3 BENCHMARKING
IT management are continually having to ask probing questions about the IT portfolio, to establish whether
the level of investment that is being made in IT is delivering value for money and truly supporting existing
and emerging business services. Technology plays a pivotal role in the running and evolution of most
organisations, with IT systems an integral part of the environment. Benchmarking is increasingly being used
as a method to ensure the best possible value is being achieved from IT investments.
Benchmarking is the term used when comparing the performance of an individual organisation against standards
of performance set in the enterprise’s sector, other divisions in the same organisation, or by accepted leaders in
the particular area being benchmarked. This is achieved by using standard measurements to compare with other
organisations in order to gain a better perspective on organisational performance. Benchmarking is a good way
to identify problem areas within the enterprise, discover gaps in performance, or to find where performance is
below that of an organisation’s peers. Whilst it is important to identify areas for improvement, it is also valuable
to learn how the better performing enterprises achieve improved effectiveness.

Within the European Union, benchmarking is being deployed as a mechanism for bringing about
improvements in performance in all types of organisations, plus a way of improving the competitiveness of
the entire European economy. The European Commission has organised a programme of benchmarking
initiatives where member countries start projects that will allow the sharing of experiences and good
practice. The Enterprise Directorate General (DG) benchmarking initiatives are focused on enhancing the
competitiveness of organisations, which operate at three levels:
1. Framework Conditions Benchmarking concentrates on improving the external environment in which
firms operate.
2. Enterprise Benchmarking looks at advancing the internal environment within organisations and promotes
the adoption of benchmarking, especially among Small to Medium-sized Enterprises (SMEs).
3. Sectored Benchmarking centres on the competitive challenges that organisations come across within
particular areas and entails working with partners from the individual sectors concerned.
Benchmarking can provide a number of benefits. Most notably it can be a catalyst for improved
organisational performance and deliverable quality. By identifying gaps in operational effectiveness, as
compared with peers or leaders, more innovative ways of working can be enabled. Benchmarking can lead
to a marked change for the better in the capability to collect and analyse IT performance data, as before
comparisons can be made a good understanding of an organisation’s internal operation is required. This has
the knock-on effect of raising the profile of in-house metric collection, as there is now another reason for
using the performance measures, other than for management purposes that in many cases amounts to
blame attachment or finger pointing. If employed correctly benchmarking can also lead to better
collaboration between both internal personnel and other stakeholders.
Benchmarking in the Financial Sector

The importance of technology within financial services has risen rapidly, although in recent times life has
been tough for IT departments, as budgets have been under pressure in the face of challenging performance
targets. IT strategy and spending has come under the spotlight and the necessity to get IT right is now critical.
The need to understand IT best practice and the most effective spending has been one of the key drivers of
technology research at Datamonitor. The company has been running its study on ‘Benchmarking IT in
Financial Services’ since 2000, and this has helped build up a wealth of data from clients on IT spending
patterns. The annual study entails data being collated from the IT operations of many major financial
services institutions in Europe and the US, and involves analysing data at the group level and line-of-
business level, covering key operational and IT spending metrics and other financial data.
Face-to-face interviews with senior IT budget holders and IT strategists are conducted to support the data
and validate the findings. This has provided some considerable insight into current and future IT spending
and strategy trends that can help IT management decide on a variety of pressing issues, such as:
Has the corner been turned from an overriding emphasis on cost reduction to one of investment?
What metrics should be used to judge the ‘right’ level of IT spending?
How should IT spending and investment requests be justified?
How robust are the measures used for value creation across the institution?
What are the IT spending attributes/patterns that best enable an institution to stay ahead of the game?
Measuring the Effectiveness of Financial Sector IT Spending
There are two key points to consider when an institution is trying to better understand the effectiveness of
its IT spending. One concerns the issue of IT intensity, or the proportion of total expenditure that is directed
at IT. The second is the efficiency ratio, a measure of cost against income. An interesting picture of IT
effectiveness emerges when these two metrics are weighted against each other. A way to determine if an
institution’s IT spending level is too high or too low is to compare these metrics against peers, competitors,
and industry averages. IT management can then begin to understand the position relative to others and start
to appreciate the standing of the organisation.

Figure 4.3.1: Example IT Investment Effectiveness Comparison (Source: Datamonitor)
The example matrix shown in Figure 4.3.1 shows how organisations fall into one of four effectiveness categories.
The category boundaries are determined by the average or median performance of other benchmarked
institutions. An organisation placed in the lower left quadrant will have a worse than median efficiency ratio,
whilst one positioned in the top segments of the picture have a higher intensity ratio than the median performer.
Figure 4.3.2: IT Investment Effectiveness by Performance Category (Source: Datamonitor)

Research reveals that many market leaders actually spend less on IT than their competitors, positioning
themselves in the efficient IT quadrant (Figure 4.3.2). This indicates that the matrix is useful in measuring how
well money is spent on IT, but it does not reveal how those funds are invested in order to achieve the most
effectiveness for the strategy being pursued. It is commonly assumed that IT intensity is a critical barometer
of success. However, research (outlined in Section 3.1) indicates that the level of IT intensity is not always the
best measure of how well an institution’s IT is performing. The main conclusion drawn from this is that the
amount invested in IT is not the significant factor, but key to effectiveness is where the money is spent.
IT spending can be split into two categories: ‘Run the Organisation’ where funding is required just to keep
the status quo, dedicated to the maintenance of applications and infrastructure; and ‘Change the
Organisation’ investment which is focused on evolving the organisation, with money dedicated to new
applications development. The research consistently indicates that the important measure is how much of
the IT budget is spent on ‘Change the Organisation’ investments. Enterprises with successful and effective
IT appear to spend a greater proportion on ‘Change the Organisation’ than other institutions. To measure
the IT effectiveness and efficiency the Investment Cycle Matrix is used (Figure 4.3.3), which contrasts the
IT intensity ratio against the ‘Change the Organisation’ as a proportion of total IT cost, and in this example
plots the position of the performance groupings.
Figure 4.3.3: Investment Cycle Matrix (Source: Datamonitor)
Using the average or median performance levels of a group of financial services institutions, an organisation
can measure its own position relative to the competition and understand its comparative ‘over-’ or ‘under-
investment’ in IT and the proportion of IT spending that is used for ‘Change the Organisation’ projects. The
segment in the matrix that an organisation occupies suggests certain aspects regarding current and past
investments and IT projects. Research indicates that sound IT investment by financial institutions moves
companies into the efficient infrastructure and applications quadrant of the matrix.
In the example matrix the best-in-class organisations have the lowest IT intensity ratio, as would be
expected, but apparently a lower spend on ‘Change the Organisation’ projects as a proportion of total IT
costs than the middle group. However, this is indicative of best-in-class organisations spending less on IT
in total, as identified in Figure 4.3.2, where infrastructure spending is lower than peers when compared to
total costs but not when contrasted with only IT costs.

Further analysis of these institutions reveals that the market leading companies tend to spend much more
on new applications and much less on infrastructure than their peers. From time to time, depending on
individual and market circumstances, organisations will have strategies and goals that require different
spending patterns, as it is important that investment and the relevant measures always match the current
value drivers of the organisation.
Conclusions
Benchmarking enables the frequent comparing of performance measures with peers, enabling the
discovery of gaps in operations.
Using the technique it is possible to identify new approaches that can enable better performance and
allows the monitoring of progress relative to peers.
Benchmarking in the financial sector would seem to indicate that market-leading organisations have a
low IT intensity ratio combined with more investment focused on transforming the enterprise.
4.4 IT VALUE IN THE PUBLIC SECTOR

Shareholder value and some financial investment measures are not really appropriate to public sector
organisations, as from a stakeholder perspective the concentration is on responsibility rather than
profitability. Therefore, other measures of value are required relevant to the stakeholder. The heavy focus of
both central and local government on cost suggests that a demonstration of ROI can be an important factor
in IT investment selection.
With local government increasingly restricting its expenditure, technologies that reduce costs will certainly
prove attractive. Solutions should always demonstrate productivity improvements and better efficiencies, as
well as a reduction in the technology’s TCO. In particular, the focus within the public sector is on
modernisation of processes, and the reduction in transaction costs and
maintenance. In short, solutions should take cost out of the system over time. ...the focus within the
In terms of developing the ROI calculation, the public sector tends to be reliant public sector is on
on consulting expertise. Unlike in the private sector, where technology can be modernisation of
easily tied to revenue generation, ROI calculations often risk focusing too processes, and the
heavily on intangible costs. Technology in local government can generate a reduction in
number of soft returns, which are often difficult to measure, such as improving
responsiveness to citizens through front-end solutions. Where possible,
transaction costs and
organisations should always try to attach monetary values to any cost savings maintenance.
and identify hard returns.
Most public sector organisations attach importance to ROI models, however theoretical they are, although
any discussion relating to people is normally highly sensitive. Despite recent announcements concerning
central government lay-offs, local government institutions tend not to be keen
to sign up for redundancies, which can cause difficulties in positioning
Most public sector
technology-driven process change.
organisations attach
importance to ROI Innovation in terms of ROI modelling is certainly recommended, as is using
ROI in conjunction with other metrics such as NPV and other measures that
models, however
take into account the discounting of costs and benefits over time.
theoretical they are... Demonstrating cost savings through new means of service delivery is one
approach that can prove relatively successful. A typical example of a
technology with a clear ROI is IP telephony, with converged voice and data networking reducing
communication costs. Modernised accounting and payroll systems have also been deployed successfully
with a strong ROI. Although these technologies can clearly demonstrate ROI, others cannot. If it simply
proves too difficult, organisations possibly need to look at metrics other than just ROI and should not be
discouraged if they cannot demonstrate a clear return.

Accenture’s Public Sector Value Model
Through its Government Executive Leadership Series, Accenture has been researching effectiveness and
value creation in the public sector. The programme has produced a collection of frameworks and case
examples that acknowledge the two main measurement characteristics in the public sector – the meaning
of value, and the capabilities that provide the most value for different agency types.
The hard work done by many public sector bodies to define metrics of performance have highlighted the
complexity of the topic. There can be confusion between inputs and outputs, with the metrics that are
frequently omitted being those focused on outcomes, whilst metrics that do concentrate on outcomes often
miss a cost-effectiveness element. At least in the private sector there are standard ways of measuring value
that are in theory calculated in the same way regardless of industry, such as revenue, profit, and shareholder
value. Unfortunately stakeholder value is different dependent on the type of service being delivered.
Figure 4.4.1: Public Sector Value Model (Source: Accenture)
The Accenture Public Sector Value Model adapts shareholder value analysis to a stakeholder viewpoint,
enabling all areas of not-for-profit organisations to measure how efficiently resources provide value for the
client. The model takes into account the two dimensions of value – outcomes and cost-effectiveness, by
identifying a number of citizen-focused outcomes against which cost-effective delivery of services can be
measured. The objective of the model is to assist public sector bodies to get the right balance in improving
outcomes or performance levels and reducing costs.
Conclusions
IT value in the public sector should be monitored using metrics relevant to stakeholders.
ROI calculations in the public sector should avoid relying too heavily on intangible costs.
Despite the focus of cost efficiencies and ROI by the public sector, measures encompassing discounting
costs and benefits over time should also be utilised.

SECTION 5:
Monitoring and IT
Governance
Butler Group
5.1 USING IT GOVERNANCE AS A FRAMEWORK

Most executives today have no more visibility into their IT performance and cost structure than they did five
years ago, but the ability to prove IT is being run effectively and supplying value is critical, especially now
that compliance and regulatory pressures demand it. Improving IT value and performance requires
balancing the supply of IT products and services with demand. The governance process forces senior
executives to carefully consider how IT is performing. However, governance is not simply about compliance
or an IT management model, it should also encompass how an organisation gets value from IT.
For many IT managers governance is simply a matter of making sure that the IT environment is in order. To
this end a variety of checklists have been created that cover the minutiae of managing an IT environment.
For example, Control Objectives for Information and related Technology (COBIT) framework, with its large
number of main processes, which are then subdivided into many further items, must be maintained. Much
of this is concerned with the internal administrative processes that need to be fulfilled if IT is to run
smoothly. Capacity planning, security, and performance are typical of the issues that are tackled. These
clearly need some attention, but do nothing to increase the value of IT to the organisation.
When senior management thinks of IT governance it certainly does not dwell on the operational details that
must be attended to. What is usually foremost in executive minds is the alignment of IT investments with
the needs of the organisation. Unfortunately, there is little evidence that IT
management have got to grips with this issue. A lack of regular, meaningful IT management
communication between the organisation and IT management is perhaps the
most common reason, as is the lack of transparency. should not neglect the
cultural and political
A great deal of work taking place in the IT governance arena is focused on
areas such as technical architecture, management of IT assets, operational
aspects of the role,
procedure, and other internally focused activities. There is a tendency for something that no
many IT managers to focus on these issues and ignore the broader remit. This amount of investment
results in other senior managers dealing with the wider problems, further in frameworks and
sidelining the IT department from the key decision-making. IT management technology can assist
should not neglect the cultural and political aspects of the role, something that
no amount of investment in frameworks and technology can assist with.
with.
In addition, the issues surrounding the governance of information, such as security, accuracy, availability,
transparency, cost, and value, are becoming increasingly significant. This is certainly where legislation and
regulation is aimed and organisations need to ensure these concerns are addressed. If they are not, the
implications could have serious consequences for senior management and the organisation.
IT governance represents the management, policies, and procedures necessary to ensure that an
organisation’s information systems support the enterprise’s objectives, are used responsibly, and that IT
related risk is minimised. Whilst the concept is not difficult to understand, implementing an effective IT
governance programme is a multifaceted project. There is no single out-of-the box solution that can be
deployed to provide all the answers. It requires careful planning, an ongoing programme to implement the
necessary controls, measurement of the results, and above all, the buy-in of both the IT staff to support the
initiative and of the organisation as a whole, to understand and gain value from the benefits.
Within the IT function, the practice of IT governance often begins from an IT management perspective,
addressing issues such as enterprise architecture, system integrity, resource management, project
management, service quality, and operational continuity. However, it is when IT governance is broadened
to include an IT value perspective that it reaches its full potential, encompassing areas such as strategic
alignment, value creation, performance measurement, investment planning, and IT audit.
September 2005 Section 5: Monitoring and IT Governance 67

Figure 5.1.1: IT Governance Model

There will be an overall cost in establishing and maintaining an IT governance programme. Whilst, in
comparative terms, the cost will not be particularly large, the very fact of establishing such a programme
will have a high-profile within an organisation. It is recommended that the implications of IT governance be
made clear from the outset. When IT governance is driven by compliance requirements, establishing a
formal Return On Investment (ROI) case may not be seen as a pressing issue. It is perceived more as an
obligation, and as a necessary, if often begrudged, cost of doing business. However, it is worth identifying
the potential benefits of IT governance, and to do so it requires an understanding of the bigger picture of IT
costs.
IT governance focuses on the efficient running of the IT function, the alignment of that function with
organisation objectives, the development of an IT strategy, and the introduction of the necessary controls
and monitoring to provide visibility and feedback. The ROI of an IT governance programme will therefore
be derived from a better-organised and more effective IT function, and the ability for senior management to
understand and address these areas of internal spend.
It may not be possible from the outset to predict an overall cost benefit from IT governance, and that is why
it should be introduced in incremental steps. Find the obvious pain points within the IT function and address
these first, where results will be quick and demonstrable. This will provide the impetus for further
development of the programme. Whilst at the same time, developing a strategic plan that provides the top-
level guidance, and begins to define a target enterprise architecture that will act as a blueprint for future
development.
Whilst there will be additional upfront costs incurred for IT governance, both in terms of resource and in
supporting tools, these will be substantially outweighed by the potential savings in improved IT efficiency
and reduced internal costs. In particular, attention should be paid to the strategic planning and IT service
management processes. This is where clear definition and communication of IT strategy, and the
introduction of effective management controls will have a positive impact on the project execution and IT
service delivery. The focus on IT governance may initially be driven by compliance, but its benefits will go
considerably further.
68 Section 5: Monitoring and IT Governance September 2005

Importance of Controls
Programmers, designers, architects, and other members of the IT department can often be driven by agendas
different to those of the IT management team. It is not unusual to see technology appear by stealth and be
acquired with the simple aim of strengthening CVs. Some organisations find themselves wholly dependent
on just a few technicians, with all the problems that this can bring about. Once again it is for the IT
management to put the controls in place to ensure that the whole IT effort is aligned from top to bottom.
To be successful, organisations must do the right things in the right way at the right time. Imprecise
business objectives and requirements early in the project lifecycle can stall forward progress. Problems at
the end of a project are often caused by a failure to change the behaviour of the people whose work is
affected. These failures can be prevented with proven, predictable methods. Approaches include, pilots to
test new processes, analytical techniques to ensure that roles and responsibilities are clearly understood,
and the deployment of walkthroughs to ensure that site-specific needs are met.
Project execution addresses the development, acquisition, and integration of IT systems. This includes the
ongoing management of new projects, establishing requirements in line with corporate objectives, product
and supplier selection, development of software, and the integration of applications into the existing
infrastructure. Strong governance is key in this phase: firstly, a more rigorous approach is needed to IT
investment, project selection, project initiation, and systems integration. Costs will be incurred both in
management time and in supporting tools for project management. Secondly, compliance demands will
have a significant impact on the software development process, since additional controls will be needed as
part of the system functionality and further testing will be necessary to verify that the software does indeed
comply with the relevant regulations.
Control and security of enterprise information, and the IT systems used to process it, should form an
inherent part of any organisation’s management procedures, particularly in terms of assessing and
mitigating any potential risk that might ensue. Of late, Governments and industry bodies have drafted a
wide range of legislation and regulations that relate to information, and
compliance with these has become a major issue, particularly for large Control and security
organisations. There are now available a number of frameworks to assist of enterprise
organisations in remaining compliant, including ITIL, Six Sigma, eTOM, and information, and the
The Committee of Sponsoring Organizations of the Treadway Commission
(COSO) Internal Control – Integrated Framework. As well as COBIT a reference IT systems used to
framework for IT governance and information control and security, issued by process it, should
an industry body, the IT Governance Institute. It comprises a process model form an inherent part
and 34 high-level control objectives, spanning all areas of IT management. of any organisation’s
Whilst it is recognised that COBIT is a useful framework for IT governance, it is management
important to understand that it does not in itself provide a complete solution, and procedures,
must be used in conjunction with other elements, including effective Portfolio
Management, and programme and project management, as well as the degree of
particularly in terms
cultural adaptation that is typically required to achieve strong IT governance. of assessing and
The COBIT process model considers the IT function to consist of four domains,
mitigating any
planning and organisation, acquisition and implementation, delivery and potential risk that
support, and monitoring. The process model takes the organisation’s might ensue.
objectives as its input and forms a feedback loop that draws upon the
available IT resources. Within each domain there are high-level control objectives that can be further sub-
divided into detailed tasks. The framework draws on existing best practices in many areas of IT
management.
COBIT also identifies key goals for IT governance, and provides examples of Key Performance Indicators
(KPIs) that can be used to monitor progress. IT organisations implementing COBIT often start from the bottom
up, as the most detailed level deals in familiar concepts, some of which will already be addressed by
management controls. More difficult to define is the organisational structures and processes that will be used
to determine IT decision-making within the organisation, and it is here that the lack of a methodology for
tying business objectives to IT initiatives, and gaining visibility into available resource, can hamper efforts.

Ensuring IT Strategic Alignment
Many managers often see the IT department’s role purely as supporting the organisation, and not something
that is at the heart of the enterprise. This can create a lack of communication that results in poor alignment.
Alignment is clearly an issue of communication and is not addressed through the use of frameworks, or
indeed more technology. A goal of IT governance must be to ensure that investments are made in the best
interest of the organisation and not its management, and that these same investments add measurable
value. Most organisations have no framework for measurement and without this the results of governance
will never be known.
Alignment happens when everyone understands the value creation mechanism in an organisation and on
the face of it this should be a simple process, senior management communicate their plans for the
organisation and IT delivers systems that support those plans. However, if alignment is going to be a reality,
it needs both senior management and IT management to form an effective dialogue. The starting place for
alignment is quite simple, there needs to be broad agreement on how an organisation creates value.
Enterprise Architecture (EA) is the discipline of defining an overall set of architectural goals, logical
configurations, and detailed technical standards, which guide the progressive development of the IT
infrastructure. The primary benefits of an EA programme are providing a stable yet flexible platform for
deploying business applications, helping to consolidate the number of technologies and suppliers that must
be supported, easing the problems of integrating disparate technologies, supporting the integrity of IT
systems, and acting as an aid to mapping business objectives onto a technical infrastructure.
Without an EA perspective organisations tend to suffer from tactical IT purchasing, a dislocation between
business requirements and IT deliverables, outdated and inflexible infrastructure, conflicts between IT
suppliers, and potential exposure to failures of regulatory compliance. A clear indication of the impact of an
architectural view comes during the planning initiation of new IT projects. A strong EA programme offers
significant reductions in deployment times, more predictable project costs, and economies of scale from
standardisation. The contrasting story without EA is a struggle to carry out infrastructure upgrades,
integration work, and complex data modelling just to get a project off the
Effective strategic ground.
planning must take Strategic planning entails defining the IT strategy that will deliver on the
into account the agreed business objectives, including the policies and management structures
aggregate demand on that will be necessary to meet these goals. A study of corporate management
in Europe, carried out by European IT consultancy Acadys, showed that only
the IT function,
half of the organisations surveyed had a documented IT strategy, and that in
including new only 17% of cases was the senior management team involved in creating such
projects, maintenance a plan. This indicates that good IT governance will require additional effort in
and upgrades, IT strategic planning, particularly in areas such as Portfolio Management and EA.
operations, and Effective strategic planning must take into account the aggregate demand on
support. the IT function, including new projects, maintenance and upgrades, IT
operations, and support. This must be factored to the total resource available
and the current programme of work. The process begins with formal portfolio management, as discussed in
Section 3.3, which allows the impartial consideration of all IT project initiatives within the context of an
organisation’s strategic objectives.
Collecting project information into a structured portfolio provides a single source of information that then
forms the basis for assessing the relative benefits, risks, and payback of projects, prioritising initiatives,
gaining investment approval, and understanding, allocating, and optimising the available resource.
It is important to note that there is no such thing as an optimum portfolio, because this cannot be a static
process, as the goals, requirements, and environment of the organisation change the IT project portfolio
must be updated to reflect this. It is clearly necessary to strike a balance between this dynamic approach
and the need for forward stability. Butler Group recommends that the portfolio should be recalculated and
reviewed on a quarterly basis.

Value Creation
Another important element of IT governance is to exert control over information costs and information value,
as the influence that IT has in an organisation is an impact on these costs above all else. If they are not
falling as a percentage of overall costs then IT is not creating efficiencies, and IT investments are not giving
the returns they should do.
The difference between the market capitalisation of a company and the value of its tangible assets is largely
associated with the value of information and knowledge. It is no coincidence that companies in
pharmaceuticals and software have high valuations because of the knowledge capital involved.
It should also be borne in mind that many Chief Executive Officers (CEOs) have their bonuses linked with
share price – the better it does the larger their bonus. Creation of knowledge capital is one way of increasing
share price. Once again IT has a key role to play in the creation of this value, and since many senior
executives’ remuneration depends on share price investments to achieve these ends these types of project
should receive a fair hearing.
Assessing Risk
Another consideration of IT governance is with risk. Many IT managers understand the implication of events
such as a security breach, data loss, or system downtime more than general management, and are much
less willing to take risks. However, of more significance is the risk associated with the availability, security,
and accuracy of information, along with conformance with legislation such as Data Protection, Freedom of
Information, Sarbanes-Oxley, and Basel II. They all require that information is protected, available,
transparent, and accurate. Many IT executives have now realised that the risk of non-compliance is an IT
issue, since all new legislation involves the use of information and information technology.
IT investments are risky. Various surveys show that three out of four delivered systems are barely useable
if not at all. The continuing occurrence of high-profile IT project failures underlines the potentially serious
consequences that such problems can have, not only on the organisation’s IT systems, but also on the
organisation initiatives that depend on them. Recurring themes in these situations include poor project
initiation and alignment with enterprise objectives, a lack of ongoing project assessment, and resource
shortages and conflicts.
Risk must be addressed at all levels of the IT function. An assessment must be made both of the overall
risk that is represented by the IT portfolio, and also of the risk associated with individual initiatives and
projects. Clearly, making these assessments depends on the availability of high quality information and
metrics, but in many cases organisations find that either they lack this basic data, or are unable to achieve
visibility into the interdependencies between projects. This situation is
exacerbated because as the status and priority of projects change, the
associated risk is not re-evaluated.
As with all sources of
risk, IT risk should be
The assessment and management of risk is a fundamental capability for any
subject to a formal
organisation. With an increased reliance on information systems, IT related
risk is now a significant element of this process. The overall responsibility for
risk assessment
reviewing this danger must reside with the board of directors, which in larger exercise, which
organisations will take advice from a risk advisory committee. compares both the
As with all sources of risk, IT risk should be subject to a formal risk
probability of project
assessment exercise, which compares both the probability of project failure, failure, and the
and the consequences for the organisation should such failure ensue. Figure consequences for the
5.1.2 (on the next page) shows an example of a risk assessment matrix. This organisation should
process must be dynamic, ensuring that each risk is assigned to an owner and such failure ensue.
reviewed on a regular basis.

Possibility Unlikely Moderate Significant

of Failure
Impact on
Business
Insignificant Low Low Medium
Minor Low Medium Medium
Moderate Medium Medium High
Major Medium High High
Catastrophic High High High
Figure 5.1.2: Risk Assessment

Best practice is therefore to provide a formal framework for assessing IT projects, which allows an objective
measurement of all factors that contribute to the overall risk, including financial, business, and technical
issues. Collating low-level data from individual projects allows a very accurate and dynamic picture of
potential risk to be presented. Many organisations now use a gateway review process to ensure that a
project must pass a series of checks at each stage of its lifecycle before further resource and funds are
committed.
At the detailed project level the key is early warning of potential risk. Setting thresholds for time and cost
can successfully enable this, with progress metrics used to trigger alerts to the individuals responsible when
they go beyond the stipulated boundaries. Once potential problems have been identified, the mitigation of
risk requires responsibility to be assigned to specific teams or individuals who are empowered to resolve
relevant issues, and who use detailed project information to recommend remedial action.
Optimising Resources
Balancing supply and demand for services requires a transparent view into what people are working on
(time and skills tracking), how much services cost (project and cost accounting), and the service level
needed (performance measurement). With the right decision support tools and governance in place,
companies improve throughput, reduce wasted productivity, and increase quality. Executives that focus on
high priorities, rather than trying to push more through the pipeline, are more likely to achieve their goals.
They understand that the way to get more value out of a project pipeline is to put less into it, so projects
execute faster and with better results.
The fundamentals of managing technology are similar to those for managing other fixed assets, minimise
asset diversity and optimise asset utilisation. Failure to do so results in too many point solutions on
mismatched platforms that do not integrate. Each new application adds to the fixed operating budget, which
for many companies now exceeds 70% of annual IT expenses. Effective platform management has as much
to do with managing organisational behaviour as with managing technology.
IT service delivery is concerned with the operational aspects of the IT function, providing an efficient,
continuous service that meets the requirements of the organisation. This involves aspects such as systems
availability, systems integrity, network security, identity and access management, business continuity, and
the interface to third-party services. It is a key area for compliance, as organisations must ensure that
operational processes follow the defined policies, that any changes to processes do not have a detrimental
impact on performance, and that unauthorised changes are avoided. Expenditure on IT governance in this
area will include improved infrastructure and applications management tools to monitor the status of the IT
function, and enterprise change management tools to provide effective control of process and configuration
change.

IT Service Management provides the essential feedback loop for the IT governance process. This improves
quality, supplying visibility into IT operations, and helps to demonstrate the value of IT to the organisation.
Furthermore, closing this loop has beneficial effects on the other phases of the IT function. For example,
understanding the impact of a project should enable improved quality of strategic
planning for future initiatives and drive the efficiency of IT service delivery. IT Service
The IT function requires continuous monitoring, and IT service management Management provides
should include the necessary controls to achieve this, but again this is an area the essential feedback
that is typically not well supported in most organisations. Additional
investment will be required in management time and in supporting tools such
loop for the IT
as Business Service Management (BSM). Compliance adds an extra governance process.
dimension of audit and traceability, which may be open to independent
external assessment, with best practice in IT governance supporting the compliance effort. It is also worth
considering that effective internal IT controls will provide the reassurance to the business that the IT
function is subject to the same type of checks and balances that apply to other areas of the enterprise.
Conclusions
Governance is vital both from IT and organisation perspectives.
There is a growing need to align business, technology, and financial perspectives of IT.
Some strategic thinking will go a long way to reducing risks.
IT governance provides a framework not only to address compliance and management issues, but also
for measuring IT cost and value.
5.2 MONITORING PERFORMANCE

In a recent survey, more than two thirds of IT management reported that they had no process for auditing
the performance of their IT projects (McKinsey on IT, 2004). This is no longer acceptable. IT management
must put in place a performance monitoring process. Although, no improvement in the situation will happen
without support from IT management and senior executives, some organisations may find a third party to
be useful to assist with the design and implementation of a performance measurement.
Understanding the decision-making process is an important starting point for evaluating performance. It
allows the IT department to establish roles, responsibilities, and milestones for the various steps within the
overall process. There should be some attempt by management to isolate changes so that effects can be
measured. However, not all decisions are large-scale in nature. There is a need
The role of the to differentiate between these ‘macro decisions’ that require significant time
performance model or and have strategic impact on the whole department, and the ‘micro decisions’
that employees are required to make all the time.
methodology is to
minimise risk and The role of the performance model or methodology is to minimise risk and
maximise the value of the decision by arriving at the most appropriate
maximise the value of solution. In some respects the impact of a formalised decision-making
the decision by approach is to limit the effect of subjectivity or political bias within the
arriving at the most equation. However, decisions are rarely purely quantitative or purely
appropriate solution. qualitative, but tend to be a combination of the two. Therefore, a combination
of methods and measurement types are required to reach a balanced view.
Macro decision-making needs to sustain the overall IT strategy, which in turn supports Corporate
Performance Management (CPM) and the vision of the organisation. It requires close involvement with
stakeholders and the Board to determine alignment and the appropriate macro measures. In many instances
the logic that underpins a macro decision can be abstracted from human control and systemised by way of
a threshold or alert, with the data held in a central repository. Achieving increased levels of automation in
this manner should be seen as one of the long-term goals. Macro measures are the high-level metrics that
consider general performance and are external in nature, linked to outputs, stakeholder requirements, and
organisation objectives.

Figure 5.2.1: Measurement Architecture

Micro decision-making is typically an individual process. It relates to the series of smaller decisions that the
average employee makes during the course of a day. These decisions will naturally vary in importance,
frequency, and predictability. For example, an employee might have to make a decision at the start of each
working day dependent on the previous day’s help desk call figures. Whilst the outcome or decision will
differ, the process will largely be the same. What characterises micro decisions is that they are smaller in
scope and are made by an individual as opposed to a group.
Micro decisions should not be seen as trivial, collectively, the sum of all micro decisions made across an
organisation during a typical day are essential to supporting the strategy and meeting the goals of the IT
department as a whole. Micro measures typically monitor internal processes, and are likely to be focused
on organisational procedures, inputs, and outputs.
Conclusions
Performance monitoring solutions should be very flexible – on the one hand supporting the large,
strategic macro decisions that govern the overall IT department direction, yet also encompassing the
short-term, tactical micro decisions made by staff.
IT needs to automate the performance process (and governance) using systems that embrace both macro
and micro measures.
A trap many organisations fall into is to give priority to micro measures evaluating internal IT operations,
rather than letting an external focus, namely the stakeholder and macro measures, drive the process.
5.3 BALANCED SCORECARD

The Kaplan and Norton concept of Balanced Scorecards for implementing performance management first
appeared in the Harvard Business Review in 1992, and was expanded on in subsequent papers. Scorecards
were in common use before Balanced Scorecards, but they focused on the financials for measuring enterprise
performance. Typically these comprised valuation ratios such as price to earnings, cash flow, sales, profit
margins, growth percentages, financial strength ratios, and asset figures, along with share capital ratios such
as dividend per share and dividend yields. Kaplan and Norton argued that while the financials represented
dependent, historical indicators, what was needed was a picture of the independent variables showing current
and future performance, these being metrics more aligned with operational effectiveness.

Whilst the use of operational KPIs was prevalent before Balanced Scorecards, Kaplan and Norton
categorised them into a further three distinct groups and balanced them with the financials to provide a
more complete picture of performance. The way the Balanced Scorecard works is that in each category a
set of goals are defined, and with each goal a corresponding metric that measures how well the goal is
achieved. The Organisation Balanced Scorecard views an enterprise from four distinct but inter-relating
aspects: financial, internal business processes, customer, and innovation. This can be modified for an IT
Balanced Scorecard with the suggested four categories from an IT perspective, being:
Operational Quality – examines how well the IT function is delivering high quality, cost-effective IT projects
and processes, minimising defects, and maximising availability. This is the measure of internal efficiency,
IT capability, and control of IT costs.
User Orientation – looks at how well the IT department is meeting the needs of its clients (whether internal
or external) in terms of service delivery, service support, and training. This is the measure of external
efficiency and the perception of the service consumer or customer.
Business Alignment – examines how successful the IT function has been in alignment with business
strategy, and the extent to which it contributes measurable value and financial returns. This is the direct
measure of IT value.
Innovation and Skills – considers how well the IT function is innovating and building capabilities to support
future business requirements. This is the measure of whether an effective feedback loop exists to optimise
the value contribution.
User Orientation Business Alignment

User satisfaction. % of projects approved.
Internal SLA compliance. Projects delivered on time.
Helpdesk response times. IT costs as % of revenue.
User involvement in new apps. Compliance to strategic plan.
Operational Quality Innovation and Skills

System and network availability. Staff skills development.
No. of issues resolved per person. New/existing system adoption.
External SLA compliance. Project expertise capture.
Development effectiveness. Staff retention.
Figure 5.3.1: IT Balanced Scorecard Metrics

The synergy between the categories provides a further means of measuring performance. For example,
improvements in operational quality that did not translate into subsequent positive business alignment
would indicate a problem. The balance between the categories attempts to tackle the vexing difficulty of
getting at the root of non-performance.
An important aspect of Balanced Scorecards for Kaplan and Norton is that the metrics are to be devised from
the top down, thereby incorporating organisation strategy. The Balanced Scorecard can be the practical
embodiment of the enterprise vision. It is recommended that organisations use an hierarchical approach to IT
Balanced Scorecards, breaking down this top level view, which can be looked upon as the overall efficiency of
converting investment in IT assets into business value, into more detailed
scorecards for successive levels of the IT organisation. It is important to ensure Get the metrics right
that scorecards do not become overloaded with too many KPIs, and that there is and the Balanced
a clear understanding from IT staff of why each KPI exists.
Scorecards feedback
Balanced Scorecards also solve the problem of devising a continuous system works in
performance management system for day-to-day supervision. Constant tracking guiding the
of performance using Balanced Scorecards gives executives and managers
throughout the organisation an instant picture of how well they are doing.
organisation forward.

For senior management the scorecard provides all the essential information available at a glance for
strategically controlling a complex entity. The emphasis on encapsulating the key metrics is also a means
of cutting through the abundance of metrics that can overwhelm some organisations. Get the metrics right
and the Balanced Scorecards feedback system works in guiding the organisation forward.
If care is not taken during deployment then problems can become evident in the method. The top down
approach works at the very highest levels of the organisation, where metrics are more easily related to
strategy, further down the management chain they are more difficult to define. In practice the middle
managers are asked to create their own metrics, set the benchmarks, and feed the results back up the
chain. This should be avoided because it is a well-known phenomenon that when middle managers are
asked to produce reports that are used by others to reflect on their performance, then a tainted version of
the truth can be produced.
For better, or for worse, reward schemes exist which can distort Balanced Scorecards if no corrective action
is taken. There are a number of suggestions that can be offered that can help the situation, ensuring that
the metrics and goal thresholds are in keeping with the organisational value drivers. These include a high-
level management process of carefully creating Balanced Scorecard metrics to be used by all areas of the
organisation and the automation of Balanced Scorecard completion taking it out of reach of manipulation.
At least then the Balanced Scorecard should provide an accurate source of performance statistics.
According to Arthur Schneiderman, there are other issues with Balanced Scorecards, for example, there can
be a lag between the operational and financial metrics that prevents timely material being available for
decision-making. However, Schneiderman’s main contention is that there is a lack of formal process in
Balanced Scorecards, for example, no closed loop process for analysing results and modifying the Balanced
Scorecards metrics accordingly. Schneiderman finds that many organisations end up with the wrong
workflow and set of metrics, instead Schneiderman advocates Quality Function Deployment (QFD).
Despite its limitations Balanced Scorecards can still play an important role in monitoring IT performance,
possibly in conjunction with other operational metric methodologies. However, it is incumbent on
management to prevent a false picture of the state of the organisation to be communicated, undermining
potential benefits. The key question to ask is whether you can trust the figures presented by the Balanced
Scorecard. To this end it is crucial that IT management agrees metrics with organisation stakeholders and
management, avoids overload, communicates the metrics, and gets buy-in from staff, and establishes
regular review and updates on progress.
CoVu’s CorStrategy is an example of management software that supports Balanced Scorecards, along with
a number of other management frameworks and methodologies, such as Six Sigma, Total Quality
Management (TQM), Economic Value Add (EVA), and European Foundation of Quality Management
(EFQM). Other methods made provision for include strategy maps, objective management (with automatic
monitoring of performance against objectives), initiative management, and cause-and-effect diagrams,
which can be used for predictive modelling.
Conclusions
Balanced Scorecard reflects real-time measurement and analysis – acting as an early warning system
highlighting problem areas.
For employees a Balanced Scorecard can translate strategy into operational objectives, measures, and
targets.
Balanced Scorecards are recommended as a method for monitoring IT performance, as long as steps are
taken to mitigate the known limitations.
Through the Balanced Scorecard an organisation is able to achieve two-way communication.

5.4 THE IT DASHBOARD

Dashboards are attracting a significant amount of interest, with many software vendors providing their own
dashboard tools. The key reasons for this attention is that dashboards appeal directly to the senior
management within organisations, and the concepts of performance management, activity monitoring, and
KPIs, are getting a lot of traction as executives strive for access to reliable and timely information.
With so many tools and solutions being branded as a dashboard, a consistent description is required. At a
basic level the dashboard takes its lead from the consumer Web portal, such as those provided by MSN
and Yahoo!, which allow individuals to customise an interface in order to see only information that is
relevant to their interests. A basic publish-and-subscribe model is used, allowing users to subscribe to
channels such as news, weather, and sports with varying levels of granularity.
The dashboard used by the IT senior management will have a different look and feel to that used by the
operations manager. It has to be able to satisfy the information needs of a range of users. Therefore, rather
than referring to a dashboard in a singular sense, it is more appropriate and meaningful to think of a
dashboard strategy, as various users within the IT department may have dashboards that appear completely
different yet are bound by the same framework.
A key point to remember is that the information displayed on a dashboard should not just be a ‘free-for-all’,
it needs be reflective of the organisation’s IT strategy, along with the user’s role within the department. This
means that the information displayed has to be specific, relevant, and analysable. It needs to be
underpinned by a robust security model and act as a springboard to a full portfolio of information through
analysis, and enterprise reporting.
Sadly, the vast majority of solutions fall short in being able to adequately reflect the strategy, some kind of
link or integration is required between the objectives and measures. Without this connection there is little
way to know whether the information and indicators being displayed are the most appropriate. In order to
be an effective management tool, a dashboard’s content has to be guided by the organisation’s value drivers,
along with providing support for customisation, multiple levels of granularity, and be able to respond to
changes in the IT and enterprise environment. It needs to be deployed as part of a greater IT management
initiative within a well-governed framework and implementation methodology.
The physical implementation of the dashboard is nothing more than the tip of the iceberg – the point at
which metrics surface. Below the surface, the mechanics of measurement collection will need to be in place
to ensure that the rules that underpin the dashboard remain in step with the organisation value drivers.
KPI design is critical to a successful dashboard deployment. Indicators and
alerts can take many forms, from the classic dials and traffic lights, to KPI design is critical
maps/geographic information systems and charts. They should be designed to to a successful
take the form that makes most sense to users and renders them easy to dashboard
interpret. Most importantly, a KPI should not be thought of as an isolated
binary field or piece of data. It needs to be connected to underlying data, with deployment.
rules governing exactly when and how it should change status, and what
action to take. KPIs do not just re-purpose data, they provide the context against which the importance of
data can be judged. For example, a KPI stating the number of help desk calls answered yesterday is useless
without the context of what a typical number of calls in a day are.
This highlights the difference between discrete and continuous measures. Discrete measures are taken at a
particular instance in time and therefore tend to be connected to a particular event. Continuous measures,
on the other hand, are usually an average or aggregation of some sort. It is the latter that are best suited
to KPIs. In order to control KPIs, the business needs to focus on:
Rules – the data fields, calculations, and logic underpinning the KPI.
Thresholds – the parameters, logic, and update frequency.
Event management – what to do when the KPI changes state or a threshold is breached.

Wizards and drag-and-drop interfaces can simplify KPI design and, once defined, KPIs should be published
to an easily accessible and secure repository, allowing users to understand the context of the KPI and the
rules that underpin the indicator.
Appropriate detail is a key concept in dashboard design, the level of granularity needs to reflect the
requirements, goals, and responsibilities of the user. Furthermore, users may wish to drill-down into lower
levels of detail in order to analyse changes. The dashboard therefore needs to display information in the
form and level of detail that best suits the individual recipients. The goal is to facilitate a clear line of sight
through the organisational levels, from strategy through to execution. An example of a dashboard is shown
in Figure 5.4.1.
Figure 5.4.1: IT Dashboard (Source: Compuware)
Organisations and IT departments can utilise a structured scorecard-style methodology to help with their
dashboard deployment. However, care should be taken so that the desired control over the IT department’s
activity is achieved. Without a suitable level of integration and synchronisation the solution runs the risk of
stepping out of phase with the organisation. Whilst the dashboard will continue to be used as the basis for
setting strategy and managing performance against goals, the control mechanisms will no longer bring about
the desired results, further widening the gap between what is being measured and the operational reality.
Conclusions
The dashboard is a useful tool for ensuring that the IT strategy execution can be constantly monitored.
Key individuals have to be made responsible for their own portfolio of KPIs: updating, deleting, and
creating them as and when necessary, in order to stay in sync with the organisations value drivers.
The IT department needs to put in place the necessary structure and management controls for ensuring
that the strategy and execution are constantly inline.

5.5 IT GOVERNANCE SOLUTIONS

Whilst IT governance is at or near the top of every IT manager’s agenda, the market for IT governance tools
has some way to progress before it matures. As is often the case with hot topics, many vendors are adopting
an IT governance marketing angle, yet they come from very different backgrounds, including Portfolio
Management, professional services, and investment planning. Much of this activity has occurred through
acquisition, and the belief is that this is set to continue, particularly since some of the larger software
vendors focusing on management have not yet entered the market.
Two aspects of these products are particularly important as they evolve, firstly, the integration of a top-level
IT governance perspective with other IT management tools, and secondly the inclusion of strong process
and best practice templates. In this market it will be difficult to differentiate on Portfolio Management
capabilities alone, and it is the integration to other IT management tools that will become the defining
characteristic of the outperforming solutions.
Figure 5.5.1: Ad hoc IT Governance Tools (Source: Compuware)
The situation highlighted in Figure 5.5.1 is far from uncommon. A survey of 400 European IT senior
managers, commissioned by Compuware, identified that 84% of IT departments are relying on ad hoc
methods to keep up-to-date with the status of IT projects. This included more than half of the respondents
who said that they still rely on manual methods, such as paperwork and meetings, and that the capability
to supply information about the progress of IT projects to stakeholders could be improved. Only 16% of
organisations indicated they are able to aggregate information about IT projects into a single view, enabling
real-time visibility on the status of projects and to make decisions based on accurate data.
Many IT departments struggle with a mismatch of manual and system tools, which rarely easily integrate
with one another. There is a proliferation of spreadsheets, Microsoft Project files, interspersed with Word
documents, paper reports, and post-it notes. The IT environment becomes very difficult to control, as there
is no central point of reference or common mechanism. An IT governance solution with integrated
applications and a central repository can greatly assist in bringing understanding to the IT environment.

In order to provide effective visibility into the entire IT function, it is vital that information relating both to
IT operations and application development is included in the analysis, requiring integration with helpdesk
management, change management, project management, application lifecycle management, and
application deployment tools. Ultimately there will be a need for standards for exchanging this type of
information, in the same way that this has progressed in the infrastructure management space, but this is
still some way off.
Figure 5.5.2: IT Governance Solution (Source: Compuware)
Important considerations when evaluating an IT governance solution include:

Can the governance solution map to your organisational structure and existing systems?
Does planning cover both new initiatives, and ongoing maintenance and support work?
Does the solution capture all demands on IT?
Can the solution provide a multi-year view of projects?
Will the solution allow the management of IT processes?
IT Governance Solution Providers
IT governance solutions is an emerging space. With its close alignment to project management – which
forms part of the total solution – and also having foundations in the Professional Services Automation (PSA),
it is easy to dismiss these expanded IT governance solutions as little more than Project or Portfolio
Management re-branded. However, offerings do exist that are more closely aligned to some superset of
Project or Portfolio Management. Products from vendors, such as Artemis, Compuware, Mercury, and Niku,
provide the ability to control and manage across strategic processes, projects, and operational activities.

Artemis
Artemis IT Management (ITM) solution helps to bridge the gap between the strategic and operational views
of the IT department, by mapping strategic IT objectives into operational plans and providing strong
programme, and project management. It links together the disciplines of IT strategic planning, IT Portfolio
Management, IT budgeting, IT operational planning, and performance measurement into a seamless
process that forms the backbone of sound IT governance. By supporting the measurement of IT project
performance and benefits it helps to communicate the status of the portfolio to all stakeholders, including
senior management, in a meaningful business context, enabling them to evaluate progress, and to
dynamically adjust the project priorities to optimise the attainment of objectives and the use of resources.
Artemis supports a common approach to IT investments by the organisation and IT functions – one of the
biggest challenges of IT governance. It introduces a clear process, supported by formal metrics, to the
communication of IT strategy and objectives, which demonstrates the planned, actual, and forecast value
that the IT function is creating for the organisation. Artemis ITM supports the relevant parts of the COBIT
framework, and also complements it by providing the resource visibility that is a crucial part of planning
and executing IT initiatives.
Artemis ITM can be used as a tool for gauging IT project risk. It provides a methodology for formal project
initiation, which is configurable to capture any aspects of risk that an organisation believes to be significant.
Most importantly, it facilitates an ongoing cross-functional view of all IT initiatives, so that risk can be
considered on a continuous basis, rather than solely at the beginning of a project, as is often the case. These
features assist an organisation to gauge the overall risks of its project portfolio.
Compuware
Since its acquisition of IT governance specialist Changepoint in May 2004, Compuware, a provider of IT
management tools, has been working to integrate the Changepoint product with its existing lifecycle
management solutions, and the results of this are now emerging with the release of Changepoint 10.
Compuware believes that to capture all types of IT demand the Portfolio Management process must
encompass to the project portfolio (new initiatives), the application portfolio (the existing set of deployed
solutions), and the infrastructure portfolio (the platform which supports the first two), enabling an all
inclusive view for strategic IT decision making.
Compuware’s first two integration points are to its CARS quality assurance solution for application
deployment, and to its application service management tools, VantageView, Fault Manager, and STROBE.
The CARS integration will allow quality metrics to be assessed within the IT project portfolio, providing a
better measurement of risk, and the likelihood of delivering projects on time and to budget, both on a
discrete project-by-project basis, and as a continuous trend over time.
The integration with application service management tools will enable performance and metrics to be
viewed within the context of the application portfolio in Changepoint IT governance (including viewing
Vantage portlets), and application faults to be passed through as a source of demand into the IT governance
process. Future plans for Changepoint will also see the integration of Compuware’s application development
management tools, which will further strengthen its proposition.
Mercury
Mercury’s IT Governance Center is designed to help meet the three main components of IT governance
identified by Mercury, that of control, compliance, and alignment. The solution suite is aimed at delivering
governance for part or all of the IT value delivery processes from demand capture to measuring return of
deployed assets. In particular, Mercury has recognised that a significant amount of IT budgets and resources
are invested in maintaining and deploying ERP and existing applications.
An integral part of the IT governance suite is aimed at delivering application change management. It is seen
as a key area of use for Mercury’s IT Governance Center, with special emphasis on creating greater visibility
and utilisation of Enterprise Applications such as SAP R/3, PeopleSoft, Siebel’s CRM solution, and Oracle
Applications. Given the cost and complexity of these types of applications, any solution that can reduce
costs and free up resources (to be refocused on strategic projects and therefore more closely align their
operation with the strategic requirements of an organisation) should be seen as beneficial.

The software is intended for those organisations that recognise they need to gain a better understanding of
their IT operations and the effect that it has on the strategic effort. For too long IT has appeared to exist
separated from the rest of the organisation, and this solution rectifies the balance creating a better
transparency and understanding. Visibility is the key to this, and IT Governance Center supplies this in a
manner that is easy to use, with the provision of information on organisational assets allied to strong
workflow supporting the governance process.
Niku
Clarity from Niku (Computer Associates) is an IT Management and Governance solution, which has evolved
from a project management background, as has many of the offerings found in the IT governance space.
The suite is a fully integrated product set that provides visibility and control allied to an intuitive
methodology for customisation and personalisation. The solution enables top-down portfolio planning and
analysis with bottom-up project, program, financial, and process management, which provide IT
management with a real time view of investments, initiatives, and resources.
The Clarity solution answers the needs of organisations that require greater control and visibility across the
whole enterprise. Based on Web services architecture, the system is made up of 9 modules. This modular
structure enables phased implementations that can be a small number of users focusing on portfolio
management or by many users utilising all aspects of the system. The IT governance space is undergoing
rapid changes as more entrants join the race for market share. Niku is well placed to take early advantage
of a growing market, as its background has allowed it to organically extend its earlier products. That it has
managed to create an enterprise-class system is a testimony to the strength of the underlying architecture
and the understanding of the development team.
Conclusions
Tools help to integrate the business, financial, and technical views of the IT function.
There is now a range of integrated software available to support all aspects of IT governance, as well as
Portfolio Management.

SECTION 6:
Measuring IT Efficiency
Butler Group
6.1 IT BUDGET CONSIDERATIONS
Common Budget Problems and Perceptions
The classic, traditional way of attempting to keep the spending of a division or department broadly in line
with the financial constraints set by the enterprise has been to monitor expenditure against the annual
budget. This has become increasingly painful for CIOs and IT Directors in recent times as IT budgets have
been squeezed, and the demands for improved and expanded services have increased; they have been
expected to produce more from less. When budgets have been cut or constrained, there has been no
reduction in service levels allowed, the number or scale of projects to be completed, and the number of
resource-hungry applications.
Of course, the budget constraints are set by the enterprise, and the type of business that the enterprise
pursues often determines the scale of budgets. An example of this is that companies in the Financial
Services industry spend relatively much more on IT than do organisations, say, in the Manufacturing sector.
Unfortunately, the majority of enterprises view the IT function as a cost centre, with only a minority of
organisations recognising IT as a profit centre that can create value and competitive advantage.
IT spend alone does not guarantee better returns. Enterprises that spend more on average on IT are not
necessarily more likely to achieve more than those that spend less than average. More important is what it
is spent on and how well it is managed. This is highlighted by research carried out by the Hackett Group
among almost 2,000 of the world’s largest companies, which emphasised
that IT investment alone was not necessarily a recipe for success. It showed IT spend alone does
that those organisations that were in the top 25% for efficiency and not guarantee better
effectiveness spend on average 23% less on technology infrastructure process returns.
costs, and have 58% fewer staff involved in infrastructure management.
According to the Hackett survey, the most effective companies spend on infrastructure was €1,312 per
employee compared to an average of €1,698. The effective organisations spent 18% less on IT than their
competitors, and employed 28% fewer IT staff. The conclusions to be taken from this study are that the
most efficient enterprises keep a tight rein on IT spending, and ensure that investments are concentrated
on application and software management rather than physical IT infrastructure resources.
It seems that this can be put down to a lack of innovation by IT, which leads to the scenario where the
majority of the annual budget is increasingly consumed by maintenance of the status quo. Indeed, some
organisations spend up to 95% of their IT budget on maintenance. Enterprises need to pursue cost savings
and efficiencies aggressively through innovation to avoid this situation. The
Many instances of overall message is that no longer can CIOs and IT managers merely spend
their budgets as they previously did, but instead they must manage them.
poor alignment of IT
Many instances of poor alignment of IT with business stem from a weak
with business stem budgeting process.
from a weak
One factor that they will have to wrestle with is whether they have a
budgeting process. centralised or a distributed IT function. The centralised IT function has clear
economies of scale, it avoids the duplication of effort, provides improved
governance and compliance, and clear reporting. However, it can be unresponsive. A distributed IT model
provides closer alignment with business units, is responsive to tactical needs, and reduces competition
between the organisation’s divisions. However, the disadvantages are that it can be difficult to get an
enterprise-wide view, and it can significantly increase costs.
September 2005 Section 6: Measuring IT Efficiency 85

Setting Budgets
...enterprises The setting of IT budgets is often a basically unstructured exercise, with a lack
of recognised methodology, and no link to the strategic goals of the
invariably finish up organisation. As a result, enterprises invariably finish up with a proposed
with a proposed budget that bears very little relationship to the requirements of the business.
budget that bears Extensive uses of spreadsheets as a primary budgeting tool exacerbates the
very little relationship situation and encourages the approach of merely applying a percentage uplift
to the requirements or decrease to the previous year’s version of the budget.
of the business. Unfortunately, often a typical approach to setting the budget is that it is drawn
up from an IT perspective by adding up the perceived requirements for
projects, maintenance, support, and infrastructure. This results in the budget being wholly unaligned with
the goals of the organisation, and means that it is very difficult to demonstrate
the value from IT investments. A much more desirable approach is to map the Unfortunately, often a
budget to expected value, and draw it up based on IT initiatives funded by
business units. The IT resources are taken into account before the scaling and
typical approach to
freezing of the budget, there is a smooth transition between the budget and setting the budget is
the IT operational plan, and the budgeted investment can be compared to the that it is drawn up
subsequent business value achieved. from an IT
Butler Group research has shown that over 60% of budget proposals have no perspective...
project-related breakdown, and at best are only split by department or by
technology category. This lack of fitness for purpose has two profound consequences. Firstly, the IT function
loses its commitment to the budget, and perceives it as a hindrance rather than as a useful management
tool. Secondly, the board becomes frustrated by the lack of forward visibility and is forced into a cautious
approach to avoid budget overruns.
At an operational level, there is a lack of sophistication in the review of cumulative expenditure against
budget (which is often static), and it is often difficult to make adjustments to project funding part way
through the budget cycle, or to understand the impact of change. There is also scant attention given to the
capacity of the IT function to deliver the initiatives that are budgeted for, again creating a mismatch between
strategy, portfolio, and execution.
Effective Budgeting
Effective IT budgeting Effective IT budgeting must relate the available funds to the expected returns,
must relate the and should take into account not only the investment and resource
available funds to the requirements of all IT initiatives on a project-by-project basis, but also the
capacity of the organisation to undertake that work. This process can be
expected returns... described as performance-based budgeting.
In large organisations, where funding from IT projects may come from different business units, and be
sponsored by different project or programme offices, it is essential that there is the capability to be able to
collect budget cost and resource data from all these constituents, and compose it into cross-departmental
and cross-functional views.
Once basic assumptions are defined, the initial step is to construct a model of the desired budget to meet
the strategic objectives. This can then be married to the total capacity of the IT function so that the
preliminary budget can then be scaled accordingly (a process that can be iterative if fine tuning is required).
Both business and IT functions should approve the agreed budget, which can then be viewed from any
desired perspective, including by business unit, by project, or by strategic goal.
86 Section 6: Measuring IT Efficiency September 2005

There are many actions that IT management can take – both tactical and strategic – to better manage and
control the IT budget:
More intense scrutiny of IT spending can lead to better IT procurement and planning.
IT Asset Management applications can drastically reduce the cost of managing individual assets by up
to 30% in first year.
By reducing the number of suppliers that an organisation has dealings with, administration costs can be
reduced and better discounts can be negotiated.
Software vendors generally charge what they think the market or individual user will stand. By better
management, IT can negotiate from strength.
Outsourcing should be considered where appropriate as this can contribute to price competitiveness. It
is expected that external service providers will increase their performance significantly over the next few
years, and as a result there will be an increasing demand for their services.
Infrastructure costs should be scalable, either up or down dependent on business volumes etc.
Software charges can be linked to business volumes.
IT spend alone does not guarantee better returns.
A solution from Artemis ITM offers a highly customisable, guided process for constructing a performance-
based budget, which can be as simple or as sophisticated as required, to fit the needs of the organisation.
The required budget can be built up on a project and asset basis, and then funds can be allocated from
different departments or other funding sources.
Following this the proposed portfolio can be scaled to reflect the budget available, and go through an
arbitration phase prior to final publication. The budget plan can be transformed into an IT operational plan,
and achievement and expenditure against budget can be reviewed on a continuous basis, with budgets
being dynamically reallocated if required, to meet changing priorities. Artemis ITM also maintains a
perspective over the life of multi-year projects, so that any changes are reflected into future periods.
The considerable benefit to the organisation of this methodology is that it can now align its IT investments
to the expected return, and provide visibility into the IT budget in business terms. Combined with the
flexibility of the solution, this is the key to making the link between strategy and execution.
In order to measure the efficiency of IT in an organisation against similar organisations or competitors,
benchmarking can provide a valuable guide. By utilising such a method, organisations can benefit from:
Information on which to base their budget development.
Comparison with the budgets of competitors.
The justification of staff, hardware, software, and management budget allocations through identifying
industry norms.
Budgets can depend significantly on how assets are acquired, and the decision
whether to buy or lease such assets. This largely depends on how they will be Budgets can depend
treated for tax purposes, the enterprise’s policy, and the expected life of the significantly on how
assets. For example, major hardware and software purchases can be assets are acquired,
depreciated as can other major capital items, and this will depend on the and the decision
accounting policy of the enterprise. IT capital investment accounts for a major whether to buy or
share of the overall expenditure on assets of organisations. It is important to lease such assets.
use metrics that adequately take into account future events.

Discounted Cash Flow (DCF) represents what an organisation is prepared to pay up front in order to receive
anticipated cash flow in future. Cash flows expected in the future must be discounted so that their value
can be expressed in today’s terms. The DCF for investment in an asset is calculated by estimation of the
money to be paid out versus the money to be received, and the time or times when this will be received.
Each transaction should be discounted by the opportunity cost of capital from the start of the project to
when cash will be paid or received.
By understanding Net Present Value (NPV), IT management can improve their presentation of the case for
getting approval for expenditures. NPV is the relationship between a project’s expected cash flow and the
cost of capital, which is what has to be paid or sacrificed by the organisation for buying assets associated
with the project. By speaking the same language as the finance function, IT management can be more
successful in advocating IT investment.
Conclusions
Lack of innovation leads to an increasing proportion of the budget being spent on maintenance.
More than 60% of budget proposals do not have a project-related breakdown, which leads to lack of
commitment and a cautious approach.
Benchmarking against similar organisations and competitors can provide a valuable guide.
A larger IT budget does not necessarily achieve more; it is the nature of the spend and how well it is
managed.
IT management must be more business oriented.
6.2 ASSET MANAGEMENT

There are unprecedented challenges for the IT departments of today. In the current business climate there is
constant change, leading to new requirements from IT services. Enterprises are increasingly under pressure
to deal with compliance issues, disaster recovery requirements, impact analyses, and problem resolution.
Invariably, these issues are dealt with by autonomous groups of people that use manual processes.
Consequently, high costs are incurred, actions are often duplicated, and
...IT has been opportunities are missed.
associated with the So there are increasing pressures on organisations to get more from their IT
bad practices that assets, and to comply with the increasing regulations that are being inflicted on
store up later organisations in both public and private sectors. Historically, IT has been
associated with the bad practices that store up later problems of tactical
problems of tactical purchasing and poor asset management. There have been a number of reasons
purchasing and poor for these practices, possibly the major one being the high movement of people
asset management. that led to short-term thinking along the lines that the instigator would not be
around to be responsible for clearing up the mess if things went wrong.
In order to achieve high performance levels, enterprises must have accurate information about their assets.
They must understand their IT environment and their IT infrastructure. Unless organisations know what IT
components they have, how can they successfully manage change? To
illustrate the challenges that they face, there is the growth in the purchase of
PCs with pre-installed software that has occurred in recent times. There is also
...unless enterprises
the buying of software by departmental users, which often has led to the know the anatomy
bypassing of normal controls. A further example is that an organisation with a and relationships of
3-year replacement policy for PCs, with a PC population of 600, means that their IT environments,
they are changing one PC every working day.
they are working in
It is obvious that unless enterprises know the anatomy and relationships of
their IT environments, they are working in the dark when they plan additions
the dark...
or changes to their technology or business entities. The critical relationships
between components can be easily overlooked, leading to unexpected downtime. The complexities now built
into IT infrastructures mean that powerful tools are required to assist in monitoring and controlling the whole
environment. IT divisions need to be agile in scaling up or down effectively dependent upon business
requirements and this cannot be achieved without managing their IT assets.

So what are these IT assets that we refer to? They come in a number of forms including mainframes and
servers that are bought on an occasional basis but they have high value. On the other hand, PCs are small,
frequent acquisitions with a relatively low value, storage demands and requirements can vary weekly, and
networking components are different again. Software is an entirely different type of purchase but is still an
asset that requires regular monitoring in terms of validity and usage. Application software ‘purchased’
remains the property of vendor (Intellectual Property Rights, or IPR). It is unlike most other products in that
the purchaser buys the right to use the software, and some enterprises play safe and oversubscribe to
licences when they do not have detailed information on numbers and application requirements.
IT asset management should enable organisations to forecast and monitor the usage of their assets
effectively, identify under-utilised assets, to negotiate from strength with hardware and software vendors,
plan for the obsolescence of IT components, and to deploy a chargeback system based on credible
information to provide incentive for all to avoid the redundancy of assets.
Software Asset Management (SAM) Solutions
Software Asset Management (SAM) is an increasingly popular solution that can provide significant benefits
to both medium and large enterprises. In a nutshell, SAM aims to ensure the provision of the right IT
applications to the correct people, at the right time and at the right cost. It
includes all the processes and infrastructure that are required for the effective ...SAM aims to ensure
management and protection of software assets within an organisation, through the provision of the
all the phases of their lifecycle.
right IT applications
A SAM solution also needs to manage the risks associated with software to the correct people,
usage, such as licensing breaches and incorrect versions of products. Software
vendors and trade associations are increasingly likely to demand an audit of
at the right time and
an organisation’s software and its usage with little notice. Non-compliance at the right cost.
with software licences can result in heavy penalties for an enterprise and its
officers. SAM has been wrongly regarded by some enterprises as merely ensuring compliance with software
licences; however, it is much more than this, including all matters relating to software assets, which can
provide major benefits.
Software assets are increasingly important for all organisations. They now represent a much larger
proportion of the total spend on IT, and this will continue to grow, as hardware becomes increasingly a
commodity purchase. However, to get the most out of their software, organisations must manage it properly.
Many companies still treat software assets differently to the other valuable
Poor software assets that are vital to their business. Poor software management can cost
management can cost organisations in terms of efficiency and productivity, as well as financially. The
statutory and legal issues are often well understood but businesses are still
organisations in terms unaware of the business benefits software asset management offers. So what
of efficiency and can SAM do for enterprises, and not just for their IT managers and
productivity, as well administrators?
as financially. The cost of software can be a major driver in organisations that are looking for
tools to better manage their software assets. Traditional software purchases
have involved large, upfront payments, regardless of whether the product is used or not. These costs can
then escalate when training, support, patches, and upgrades are added. However, some of the most
expensive software can be unused or lightly used. One corporate practice that can lead to this eventuality
is the use of a standard image build on all user desktops, regardless of whether each user has a need for
all the installed applications.
The growth in the direct purchasing of PCs with pre-installed software, and the buying of new software by
departmental users, has led to the bypassing of the normal controls that IT utilises. As a result of this, there
is a lack of central control of what software is being used, and whether correct software licences are in
place. Today, there is a high turnover in PC hardware which means that both hardware and software
configurations are changing frequently. An example of this is that if a company has about 600 PCs, and has
a three yearly replacement policy, it equates to changing one PC every day.

It can be common practice in many organisations to play safe and oversubscribe licences when they do not
have detailed information on the actual numbers and type of application requirements. There is also often
a lack of monitoring of users who leave the company or are deployed to
It can be common different locations, and this leads to licences being unused.
practice in many There is also the problem of under-licensing, which can result in an
organisations to play organisation having insufficient licences for the number of users that are
safe and deploying the software. Pirated software downloaded by users is also a
potential threat to a company. If these violations are discovered, costs are
oversubscribe incurred through penalties and through possible expensive court litigation. The
licences... need for compliance is further propelled by new regulatory initiatives, but the
threat of a random audit is the most alarming prospect. The major software
vendors and industry watchdogs such as the Business Software Alliance (BSA), the Federation Against
Software Theft (FAST), and The Software & Information Industry Association’s Anti-Piracy Division (SIIA/APD)
are increasingly instigating audits of organisations’ software licences and their use of software products. This
is due to the costs to vendors of pirated software, which in 2003 was estimated to be US$29 billion.
The cost of being found out is rising. In addition to the negative publicity that an errant enterprise can suffer,
regulatory authorities can invoke proceedings for copyright infringement, software theft, and software piracy.
Organisations have responsibility for their employees’ actions, and civil and criminal penalties, as well as
jail terms, can be levied. Whilst these violations may sound like wilful attempts at fraud, in practice they
often occur through bad management, as the majority of businesses wish to comply with licence terms.
Good governance is an important driver in spreading the use of SAM.
SAM can be deployed with local or remote inventory tracking. In the remote method, a central server
performs scanning of client machines one at a time, or in parallel. This approach places a high burden of
processing on the server. There is also a limitation in that the information gathered is accurate only to the
time of the last scan. With local methods, the processing is evened out across client machines and the
central server, reducing the use of scarce network bandwidth to just the downloading of application
signatures and delivering information to the central server. Local methods are also far more accurate when
agents are used to track actual usage, overcoming the weakness of scanning. Tools that can identify an
installed software suite, and not just the individual component applications, provide a superior inventory.
SAM can carry out the proactive control of software, including tasks such as denying use, blocking
installation of unauthorised software, and blocking modification of applications. This guarantees compliance
with corporate policies, since it is often the case that unauthorised installations lack a purchased licence.
Web-downloads and self-installations by users can result in overheads to IT support, not least due to related
problems such as viruses and worms inadvertently introduced in these activities.
Another area where SAM can be used is in contract management, with the
recording of details such as product name, version, vendor details, the ...the benefits from
department/location owning the software, type of licence, expiration date, SAM are not just for
cost, annual support fees, renewal dates, and description of software. IT IT management but
administrators have a difficult job, and the paperwork burden of keeping track can offer immediate
of all the different application contracts and contacts, ensuring licences are
corporate savings that
up-to-date and compliant, makes their task much harder and distracts from
other activities. will appeal to finance
directors and
SAM tools are not just software products. They are part of an information-
based process that utilises a range of tools to automate processes and support
procurement
decision-making. SAM tools can be part of a wider IT governance initiative as managers.
organisations try to ensure compliance with regulations, such as Sarbanes-
Oxley. These new standards cover the maintenance of software licences. Management can be kept up-to-
date with reports detailing execution and usage trends, and can ensure that the number of licences
purchased match the needs of the organisation. However, the benefits from SAM are not just for IT
management but can offer immediate corporate savings that will appeal to finance directors and
procurement managers.

There are significant opportunities for organisations to optimise their software licences and application
infrastructures through the use of SAM. These include the support and maintenance of contract renewals
where the enterprise must understand what options are available to it, what it currently has and what it
actually needs. When software vendors introduce new licence agreements, the organisation needs to have
information available about usage and licences in order that it can negotiate the best deal. SAM can identify
abandoned licences and relocate them, trade them in, or use them to bargain in a competitive upgrade. The
availability of information can help management make best use of given resources, and reports on usage
can also help to standardise the organisation around a given set of applications.
SAM can detect whether users are hoarding applications, and the patterns of such hoarding behaviour. It
can identify the users responsible, and allows administrators to investigate the matter so that management
can enforce the efficient use of software assets. When critical applications are in short supply throughout
an organisation’s infrastructure, users will open them up at the start of the day and keep them open simply
to ensure that they have access later on. This creates a greater shortage than there need be, with the result
that administrators have to buy too many licences.
Administrators can also be informed by SAM of those applications that have been left open for long periods
unused, and e-mail alerts can be sent to remind users to log-out; for applications in short supply this is an
effective, low-cost management option. Identifying the peak hours for usage can help managers schedule
the use by time shifting, making better use of a given number of assets. The
whole issue of managing peak demand can only be performed properly if SAM has much more
knowledge about the peak demand is accurate. to offer than merely
SAM has much more to offer than merely tracking software assets. SAM tracking software
enables enterprises to use the software licences that they already have, and to assets.
acquire only those that they need. By providing the number of licences held
for each software product, software can be redeployed by another department rather than buying more
licences. It encourages central control and management so that savings can be achieved through volume
licensing. Both finance directors and IT managers are able to take control of their own processes for
managing the efficient deployment and use of IT, and are provided with powerful information to use in their
relationships with suppliers.
Configuration Management Solutions
The complexities now present within IT infrastructures emphasise the need for automated configuration
management to assist in the creation and maintenance of the map of the infrastructure. In many
organisations, it is impossible to even consider carrying out this task manually, and those that do attempt
it will find that it is labour-intensive, expensive, and the resulting output persistently out of date. Of course,
out-of-date information can be more dangerous and damaging than no
Increasingly, proactive information, and it can cause severe problems when decisions are made on
false, incorrect configuration data.
tools are coming to
market that provide Increasingly, proactive tools are coming to market that provide solutions in this
solutions in this space space incorporating auto-discovery. Organisations implementing best practice
frameworks, such as ITIL or Control Objectives for Information and related
incorporating auto- Technology (COBIT), need a quick way to establish configuration management
discovery. databases and these management products can provide the solution. The
reasoning behind ITIL is that certain functions are imperative in managing
high-quality IT services. It provides guidelines on change management, problem resolution, service levels,
capacity and contingency planning, and configuration management. Some enterprises try to do
Configuration Management manually when they believe that it is needed. However, this highlights the
problems associated with the lack of service management information. Change planning to assess the risks
and impact of proposed changes can involve large teams of people and many meetings. Costs of services
cannot be determined, and getting to the root causes of problems is complex and time consuming.

Figure 6.2.1: Active Configuration Engine (Source: Tideway Systems Ltd)
The management of assets in the IT infrastructure is not possible without knowing what the components
are and to what function they are connected. Configuration management involves the identification and
definition of the assets within the IT infrastructure such as switches, servers, and software, and the
relationships between the various components. When the information is
stored in a centralised database, such as the ITIL Configuration Management
Configuration Database (CMDB), and updated to reflect changes, up-to-date information is
management involves available so that the impact and risks of proposed changes to the
the identification and infrastructure can be accurately assessed.
definition of the Automatic updating of a CMDB means that the current status of the
assets within the IT infrastructure is always available, and contributes to the effective delivery of
infrastructure such as IT services. Compliance with legal obligations on software is aided by the
switches, servers, and maintenance of details of all software in use by the organisation. Contingency
planning can draw upon the database for the restoration of IT services in the
software, and the event of a disaster by providing the list of elements and their location. Security
relationships between is improved by the control exercised over configuration items so that it is
the various difficult for them to be changed without proper approval. Problem
components. management can draw upon trends in performance data to identify offending
products and suppliers, negotiate with vendors, and to improve services.
IT Asset Management Solutions

Asset Management solutions can align resources with business objectives
through the management of physical, financial, and contractual aspects of
They enable
every asset through the entire lifecycle. They enable IT departments to gain organisations to
greater visibility and control of their IT environment through the lifecycle control their costs,
management of IT assets. In a climate where IT management is under and remove
increasing pressure to align resources to demonstrate a significant value
contribution and Return on Investment (ROI) to the business, these complexity through
requirements are becoming more pressing for all organisations. They enable lifecycle asset
organisations to control their costs, and remove complexity through lifecycle management.
asset management.

Solutions usually include the proactive management of hardware, network devices, software inventory
information, and software usage information. Features include asset-tracking capabilities through
automated discovery, hardware inventory, network inventory, software inventory, configuration
management, software usage monitoring, and licence management. Vendors with products in this market
space include those with service management solutions such as IBM Tivoli, Computer Associates (CA),
Hewlett-Packard (HP) with OpenView, BMC Remedy, and Peregrine.
AssetCenter from Peregrine tracks and reconciles assets in a central repository, manages software licence
compliance and entitlement, controls expenses and provides cost transparency through charge-back
programmes, and request fulfilment. It can be modularly deployed to meet specific business needs, and its
components include:
Asset Tracking with automated discovery and a consolidated asset portfolio.
Expense Control incorporates financial and contractual information.
Process Automation automates the end-to-end request and fulfilment process.
Asset Portfolio Management combines with Protiviti for helping enterprises to meet compliance and audit
requirements.
Asset Optimisation delivers business intelligence.
Outsourcing for the evaluation of options, and management and measurement of relationships.
Conclusions
Change cannot be successfully managed unless organisations know what IT components they possess.
Software assets represent an increasingly larger proportion of IT spend.
Because of the complexities of the IT infrastructure, it is imperative to have automated configuration
management.
Asset management enables the lifecycle management of IT for greater visibility and control.
6.3 REQUIREMENTS MANAGEMENT
The Need for Requirements Management

After more recent publicity about failed projects and uncontrolled project costs, it really is time that we got
to grips with the problems that cause these expensive failures. The pressure is on IT to deliver. It is not
unusual for line-of-business executives to expect the IT executive to be able to continue to deliver ever better
improvements, while they cope with frozen or reduced IT budgets. With the seemingly continual bad news
that the media seem to delight in of high-profile software projects that bite the dust with the consequent
waste of millions of pounds/dollars/euros etc., it is high time that the IT
community presented a more professional image to the general public. According to Standish
According to Standish Group, over 40% of projects fail. The problems are not Group, over 40% of
new; they just continue to frustrate us. An article entitled ‘Software’s Chronic projects fail.
Crisis’ appeared in the September 1994 issue of Scientific American. This
stated that 25% of large systems development efforts would be cancelled after they had been started. It
also said that 75% of those developments delivered would have operating failures, meaning that they would
not function as they were intended, and some would not be used at all. The article also said that, on
average, software development projects take 50% longer than planned, and that larger projects are worse
than average.

Figure 6.3.1: The Relative Cost to Correct a Requirement Defect Depending on When it is Discovered
(Source: Serena Software Inc.)
An IBM survey of leading software companies showed that ‘55% of projects cost more than expected, 68%
overran their schedules, and 88% required substantial revisions’.
The reasons for failure were due to the following risks:
Projects are started with poor requirement specifications.
Requirements are changed during the project term.
Requirements are added without conducting a risk analysis to determine the impact on the project plans.
Requirements are added and changed without the project costs being re-estimated.
The lack of requirements configuration management.
Software problems are caused by the way in which requirements for a product are acquired, documented,
agreed, and modified. Without a formal process, information is gathered informally, functionality is implied,
requirements are not defined, and the change process is casual. Re-work can
Software problems account for 30% to 50% of total development costs. The cost of correcting a
are caused by the way defect increases the later it is tackled in the development phase after
requirements through the design, code, test, and operation phases.
in which requirements
for a product are There can be no doubt that focusing on the wrong requirements delivers
disasters. IT Requirements Management is the translation of business
acquired, requirements into an operational IT system. The traditional document-based
documented, agreed, approach to Requirements Management is limited. It is difficult to keep
and modified. documents current, and manually communicating with affected team
members to keep them up-to-date is impossible. The storing of the attributes
and logical links between requirements of different types is also extremely difficult, and tracking the status
of requirements, the concurrent management of sets of requirements, and the modification by multiple
participants are all too complicated to be carried out successfully without a suitable solution. Without a
Requirements Management process, all stages of a software project can suffer, not just the early stages.

Benefits of a Requirements Management Solution

Requirements Management enables the delivery of quality products on time and on budget that meet the
needs of the customer, thereby meeting both the needs of cost control and value generation. By developing
clear requirements before the design and coding stages of a project, and practising good requirements
management, the following benefits can accrue:
Mutual understanding can be achieved between users/customers and project teams about the
requirements of the software.
The stakeholders approve software requirement specifications.
Requirements management provides a smooth flow into the software design activities.
During the coding phase, increased functionality and integrity is achieved. This also applies to system
performance when it is developed.
Testability, interfaces, and maintainability are improved.
Overall project management is improved.
Communication between the customer and project managers is better.
Improved customer satisfaction and overall quality of software product.
Cost savings.
Requirements Management Process

There are a number of initiatives taking place that aim to make application
development more amenable to established business management practice, a It is only through
process of bridging the cultural divide between the technical developers and transparency and
the project owners, of making IT more transparent to business executives. It availability of
is only through transparency and availability of information that business can
improve the alignment of its IT operation. Vendors at the forefront of this information that
approach include Borland, Compuware, IBM, Microsoft, Serena, and Telelogic. business can improve
Tools are being released that open up the seemingly arcane world of coding. the alignment of its IT
If business can understand IT then it can be used much more effectively.
operation.
Requirements are the foundation for all subsequent project management and
software development activities, and a good requirements process accelerates development. A requirements
process includes the development of requirements including the eliciting, analysing, specifying, and
validating of requirements. It also incorporates facilities to deal with the requirements when they have been
initially captured.
At the requirements gathering and specification stage, business analysts now have tools that document
requirements and provide traceability with end-product functionality. Traceability ensures that the software
product will satisfy all requirements and does not have inappropriate functionality that is not required. The
system can be audited during development and has maintainability after it becomes operational. Through
the use of these tools, a business executive can now easily see whether or not the application meets the
user requirements. Requirements Management is an often-underutilised discipline, which has developed
from Requirements Engineering, which is a mature practice in the defence and aerospace industries. It is
key to successfully developing applications that do the job that management requires so that the high-
profile IT failures are consigned to the past.
In Requirements Management the first step is to build a business case for a proposed application, then gather
the requirements. This process must identify all the stakeholders in the application; all too often an application
is built and only then is it discovered that a class of user has been overlooked. The stakeholders will include
end-users, customers acquiring the project, requirements analysts, project managers, developers, testers,
regulators and auditors, manufacturing staff, sales and marketing, and field support or help desk staff.

Modern tools keep the requirements traced to code development – this ensures that the correct application
is being built. However, the power of modern tools is to keep requirements in a central repository, so that
any change in requirements is instantly broadcast to all the project team, and crucially, the developers and
testers. Managing change is often where projects fall down: project schedules seldom cater for change,
whereas in practice change is the norm, not the exception. Requirements
Modern tools keep Management manages changes; for example, it ensures that testers are
the requirements testing against the very latest requirements.
traced to code However, once the application is released the user experience needs to be fed
development... back and Requirements Management provides that feedback mechanism.
New releases therefore carry the changed requirements from the production
environment, as advised by all the stakeholders. A further aspect to Requirements Management is the
increasing use of offshore development, with distributed teams separated by time zones. Keeping
requirements synchronised is another function that these tools can offer, as well as assisting collaboration
with comments attached to requirements, and easy retrieval, thus helping ensure that fewer assumptions
are made by developers and testers.
Conclusions
The dismal record of delivery of IT projects can be identified as due to the lack of requirements
management.
Translating business requirements into operational IT requirements requires a suitable Requirements
Management solution.
Requirements Management aids collaboration and mutual understanding of users and project teams.
Engineering disciplines such as traceability are being incorporated into Requirements Management
solutions.
6.4 PROJECT MANAGEMENT

As IT projects proliferate, prioritising and managing them is becoming increasingly important. However,
despite the impressive savings that flow from better project management, until recently little attention has
been paid to improving techniques and tools for project managers. High-profile project failures are still with
us and are seized on by the media. There can be many reasons for the
problems including the expectations of IT to deliver incremental improvements ...some elements of IT
with static or decreasing budgets. However, some elements of IT are still are still regarded and
regarded and approached as more of an art than a science. approached as more
Take the current practices for assessing project costs. The traditional process of an art than a
typically encompasses estimating the size of project (perhaps in the number science.
of lines of code, or now more commonly in function points), estimating the
time resource required in terms of person days or weeks, factoring in resource availability to arrive at a
calendar schedule, and then deriving a cost for the project according to the nature of the resources
consumed. However, there are two distinct problems with this approach. It generally takes place at the very
beginning of the application lifecycle, sometimes even before any detailed requirements capture has been
carried out, and secondly, it is rarely iterative, with perhaps the worst case being when a dreaded ‘fixed
price’ model is used. In this scenario, development managers are in a dilemma. Should they over-estimate
to make sure that there is less chance of an overrun, or should they risk the project being canned, or sub-
contracted to an external provider? Another alternative is to make a realistic estimate based on the limited
available information, and join the long list of projects that are over budget and fail to meet requirements.
Historically, managers have tended to make do with spreadsheets and ‘back of an envelope’ calculations
about the timing and execution of critical IT projects. Now ideas such as setting up a project office to
supervise and co-ordinate projects in a systematic fashion, the introduction of methodologies for running
projects, and the deployment of project tools are catching on.

Project management methodologies are no panacea. Methodologies, such as PRINCE (Projects In Controlled
Environments), are often similar in concept, and the basic controls they advocate are frankly common sense
– deciding what you want to achieve, how you are going to do it, what you need to achieve your objective,
what risks may affect the project, how to control the changes in requirements, etc. However, in practice
rather than theory, no one-size-fits-all. When the pyramids and Stonehenge were built, the same key
elements applied – how long, how much, how many resources, all without PRINCE.
Leading and motivating a team is one side of the equation. Before any project starts, it is crucial that the
project manager takes the time to ensure that the customer has fully bought into and is committed to the
project, together with a complete understanding of what is to be achieved. The good project manager asks
questions from the outset, because posing the really fundamental query is the only way of extracting the
vital information necessary to proceed. Project managers must get under the customer’s skin and avoid
dodging the obvious issues. They also need the ability to work with the customer’s resources and to
negotiate around and resolve conflict.
People are key in any
There are certain common sense principles that should be followed on all
projects such as the apportioning of large projects into small, manageable project and their
steps, or tasks that are measurable. People are key in any project and their education and
education and training must be fully covered as part of the project, and training must be fully
business resources and costs should be included as well as those from IT. covered as part of the
Organisational projects do not exist as separate entities; there are always going project...
to be more projects up for implementation than there are people available to
work on them. So, it is imperative not only that projects are prioritised, but that prioritisation is conducted
on an iterative basis with the availability of human resources included as an important – if not the most
important – metric. Managing the resources for each individual project has to be linked to a larger view of
current and proposed projects within an organisation, and this has to be a continuous, and wherever
possible, dynamic process.
Once organisations accept that individual projects never exist in isolation, it
...individual projects then becomes vital that they implement an integrated project management
never exist in solution. Individual project management software can still be used to aid
isolation... individual project managers, but these systems need to be linked to a central
repository for resource handling and other aspects of overall management.
This means that many applications that are currently used for micro-project management such as the
ubiquitous spreadsheet have to be scrapped, and replaced with dedicated applications. There should only ever
be one view of the truth in project management and this cannot be established without relevant software.
The human element of any project is the most important factor; getting the right people on the right job at
the right time. Central management addresses this issue in two respects. Firstly, a central repository of skills
and availability allows individual projects to be resourced most effectively. Secondly, the same central
repository can be used to manage time allocation based on the larger strategic view of every ongoing and
proposed project. Without this central repository approach, projects will take on the individuality that most
organisations should be trying to avoid.
An integrated project management solution can also take much of the strain from the mathematics involved
in project-change management. In this instance, it has to be an integrated solution as, again, an isolated
or individual view will not contain all the possible impact points. With any mathematical analysis the prime
requirement is to ensure that all the detail is available otherwise the ‘answer’ will be incorrect.
Although, from a strategic viewpoint, holistic project management is vitally important, it does bring with it
the added overhead of increasing change management calculations that need to be carried across all
projects. If isolationism is allowed then any change in project scope or specification will require only one
re-calculation. With an holistic approach there is the likelihood that change to one project will impact other
projects, requiring multiple calculations to be carried out.
There is an additional issue that needs to be considered: if a change to a single project scope or specification
affects other projects then impact analysis has to be carried out iteratively and projects have to be
prioritised. Without iteration of impact analysis, without prioritisation, and without clearly defined
acceptable end-points for projects, all the software in the world will not enable dynamic project
management – the calculations will form an endless loop.

Implementing a total project management solution brings real and measurable value to any organisation.
Benefits can be measured across a variety of areas. But those that create true competitive advantage include
employee satisfaction and decreased employee turnover, financial savings, client satisfaction (including
internal clients), and meeting project completion deadlines.
The savings to be made will, of course, vary from organisation to organisation and depend on the level of
project management that an organisation has currently implemented, but research indicates that
improvements in project completion can be in excess of 50%, and financial
No tool, no matter savings can also match this improvement.
how well designed, In addition to implementing an holistic project management solution, project
will work to its managers can gain improvements by introducing a project office and a project
management methodology. Those organisations that have taken the step of
maximum potential introducing these two key elements have, without exception, seen big
without an effective improvements in cost savings, employee satisfaction, and customer service.
methodology. Despite the important role that project management tools have to play within
the grand scheme of things, their implementation needs to be backed up by
the introduction of a project management methodology. No tool, no matter how well designed, will work to
its maximum potential without an effective methodology. Organisations can follow their own established
best-practice procedures, or they can purchase a pre-defined methodology from a variety of sources. Many
of the latter will be focused on best practice within a vertical market, and should be customisable to take
into account any organisational-specific requirements.
Step Aim
Project Definition Understand and get cross-department agreement on the scope and purpose
of the project.
Create Plan Create delivery dates – this has to be an iterative process in conjunction
with the Project Definition step other wise a disjoin will occur before the
project has even properly commenced.
Update Plan The plan has to be considered as an ongoing entity – within holistic project
management all plans have to be constantly updated for proper change
management control.
Problem Solving Any problems that occur have to be solved immediately – there should be
no placing of problems on the ‘back burner’ for resolution at a later time.
Maintain Boundaries Any project has defined boundaries or scope – these should be adhered to.
Altering the scope of a project is a sure way of creating problems. Project
enhancements and extensions should be treated as future projects.
Reporting All projects should include continuous reporting available to all members of
a project team.
Risk Management No project comes without some risk – the ability to manage and minimise
the risk is central to the successful culmination of a project.
Document Management Project documentation is as important as creating code documentation. The

ability to store and retrieve this documentation is an important part of any
methodology.
Quality Management This is an ongoing process that ensures that the project sponsor is happy
with the quality of the work being undertaken.
Measurement All projects should be definable in terms of cost, effort, and resource useage.
The taking of measurements within any project can be utilised to understand
‘pain points’, alowing future projects to be adjusted to remove these.
Figure 6.4.1: Key Elements of a Project Management Methodology

Implementing a methodology from perceived internal best practice, whilst having the benefit of being cheap,
is not always cost-effective in the long term. Buying-in a methodology, especially one with a vertical market
focus, has the advantage of allowing perceived best practices within an
organisation to be checked against other proven best practices. To gain true Implementing a
competitive advantage any methodology has to be adjustable to fit into
methodology from
organisational requirements.
perceived internal
Aside from a viable project methodology, the other most important element of best practice, whilst
strong project management is the setting up of a project office; this provides
the high-level strategic control required for multi-project management. having the benefit of
Implementation of a project office not only shifts the focus away from the day- being cheap, is not
to-day managing of individual projects, but also provides the infrastructure always cost-effective
framework in which all elements of the implemented methodology can run. in the long term.
The project office can define and manage the expectations of individual
projects – and help maintain focus on what the primary reasons are for commencing any individual project
in the first instance. For those not involved with project management, it may appear to be an irrelevance to
have to maintain focus, but this is not the case.
The benefits detailed earlier in terms of improvement in completion rates and
...the project office financial savings can, in a large part, be as a direct result of maintaining focus,
can manage the inter- and this can be best achieved with the implementation of a project office. The
dependency of project office understands the primary purpose of any given project and how
projects. it fits with the purpose of other projects.
Furthermore the project office can manage the inter-dependency of projects.
Often, realising the purpose of any given project is dependent upon the successful implementation of other
projects. A project office can manage this inter-dependency, with the added benefit of ensuring that projects
stay within their original scope.
One of the major reasons why projects fail to deliver on time is the extension of scope. It is very common
to add extra requirements to projects; often these additional pieces are unnecessary as their implementation
or purpose is within the scope of another project. The problem is that without the holistic view, no individual
project owner, sponsor, or manager will be aware of this crossover.
Implementing a project office demands a radical shift in the way that projects are viewed, and this is not
always an easy task to achieve. Any such implementation will demand changes in people’s attitudes, the
processes involved, and quite possibly the tools used within individual project management environments.
Implementation of a project office should follow a phased approach; attempting to alter process and tools
at the same time as modifying people’s attitudes to project management is likely to lead to confusion and
failure.
The greatest value can be obtained by creating an understanding of what a project office can achieve, and
the changes that will be required, then modifying the processes involved – using a methodology, and finally
implementing a toolset that will bring all the elements together.
Project management is too important an element in the strategic well-being of any organisation to leave to
chance or under the control of ill-purposed tools. Recognition that holistic project management is a primary
requirement is only the first stage in gathering the savings available. The vision has to be implemented with
method and tools. Once this has been completed, any organisation will find itself running projects more
efficiently and producing meaningful end results.
Conclusions
Methodologies are no panacea.
Managing resources on a project must link to the organisational view and the process must be dynamic.
The human element of a project is the most important factor.
Holistic project management is a prime requirement to achieve success.

6.5 EFFECTIVE SOFTWARE DEVELOPMENT

With the pressures on organisations to be agile and responsive now greater than ever before, they need to
be able to produce software better, faster, and cheaper. According to Business Week, the rate of productivity
in producing software in the five years to 2003 went down by 1%, whereas,
...the rate of in contrast, the productivity in the manufacture of chips rose by 19%. There
have been recent high profile failures in major software projects such as the
productivity in write-off in Sainsbury’s Business Transformation Programme and HP’s failed
producing software in SAP consolidation that cost US$400million. Indeed, experience is now being
the five years to 2003 reflected in contract negotiations such as the Ministry of Defence imposition
went down by 1%... of a failure clause on EDS before it would let the company continue its bid for
the UK£4 billion Defence Information Infrastructure contract.
There are a number of logical ways in which software development can be effective by utilising assets that
are already owned by the organisation such as existing software assets, and leveraging the strengths of
existing systems in new developments. The appointment of a strong project manager is important, as is the
leadership of development teams that fosters a spirit of common ownership of work. Large teams should
be made to work in a manner similar to small teams by the division of a large project into small, manageable
modules.
There are a number of initiatives taking place that aim to make application development more amenable to
established business management practice, a process of bridging the cultural divide between the technical
developers and the project owners, of making IT more transparent to business executives. It is only through
transparency and availability of information that business can improve the alignment of its IT operation.
Portfolio management can encourage teamwork, and improve the communication and alignment between
the IT division and the enterprise’s business managers, with the latter taking increased responsibility for the
success of IT projects. As a result, resources can be scheduled better, and projects can be managed and
controlled more effectively.
Model Driven Architecture
The Object Management Group (OMG) launched model Driven Architecture (MDA) in 2001. It is a
methodology and set of standards that aims to abstract the development of software from the technical
details of the underlying deployment platform. Despite widespread interest in this concept, and increased
support from development tools vendors, real world adoption has been relatively slow. Nonetheless, if the
software development process is to meet the demands for greater complexity, faster time to market, and
particularly for stronger alignment with business goals, Butler Group believes that the wider acceptance of
MDA and of Model Driven Development (MDD) in general is critical.
In a nutshell, the key concepts of MDA are the use of the OMG’s modelling standards, including Unified
Modelling Language (UML), the MetaObject Facility (MOF), and eXtensible Markup Language Metadata
Interchange (XMI), to support the creation of a Platform Independent Model (PIM) of a software application,
which can subsequently be implemented for a particular target environment (such as Java 2 Enterprise
Edition (J2EE), .NET, or CORBA) by mapping it to a Platform Specific Model (PSM). A study in mid-2004
by BZ Research indicated that only 16% of development managers were either using, or planned to use,
MDA-based development, with a particularly high number of 45% indicating no interest at all in the standard.
This survey makes depressing reading for those promoting MDA and its associated tools and services, but
perhaps the key to understanding the outcome lies in the role of those responding to the survey.
The major benefit of MDA is its ability to provide a formal way of translating business need into a deployed
application, but it will require the business to agree to this approach, and to ensure that there is better
communication between the development function and the rest of the organisation. A similar survey to a
business audience would undoubtedly show an even lower level of awareness and understanding of MDA,
and therein lies part of the problem, since MDA can get caught between these two stools.

For the developer community, some aspects of MDA make perfect sense:
The abstraction of the development process to higher level constructs is a common theme.
There is an increasing acceptance that environments such as J2EE and .NET will coexist.
Most development managers would agree that using UML improves communication within a project team.
However, none of these factors alone mandate the use of MDA, and most developers would claim that they
can embrace these general principles without being tied to a formal methodology, which they perceive as
running counter to some of the more creative aspects of their craft. This, however, misses the point: in
software development, just as in all other areas of IT, there is a new realism that requires greater
measurement and accountability, visibility for the business into the IT function,
audit and traceability for reasons of compliance, and formal methods for ...there is a new
aligning IT initiatives with business goals.
realism that requires
This is where MDA has a role to play, in bridging the gap between these greater measurement
requirements and the practice of developing high-quality applications. OMG’s
statement of the goals of MDA emphasises portability, cross-platform and accountability...
interoperability, platform independence, domain specificity, and productivity, and
these should all be viewed within the context of this role. In terms of portability, the emphasis is on the ability
to preserve the intellectual assets of the business (its applications) in a form that is not constrained by
impenetrable code, but which can easily be understood, communicated, evolved, and maintained.
Capability Maturity Model (CMM)

The Software Capability Maturity Model (CMM) was defined by Carnegie Mellon University’s Software
Engineering Institute to help the IT organisation to assess and improve the quality of its software
development processes. The model identifies five levels that indicate increasing levels of process maturity.
In 2000, CMM was incorporated into a new initiative, the CMM Integration project (CMMI), which whilst
still using these five levels, applies them to a broader set of software and IT-related disciplines, including
systems engineering, product development, and software acquisition.
Application development continues to evolve to meet demands for greater complexity, lower cost and shorter
time to market, whilst at the same time, new pressures such as compliance and internal governance have put
an increased emphasis on the management of the whole application development lifecycle. New applications
must also be aligned to the objectives and constraints of the business as a whole, but typically the development
process has often proceeded in an isolated manner, with little in the way of formal management methodologies.
In addition to the perennial problems of time and cost overruns, some of the indications of poor management of
the application development process include insufficient business requirements capture, lack of testing, complex
and costly application maintenance, inadequate documentation, and shifting project scope. These factors result
in the delivery of poor quality software that does not meet the needs of the business, and a situation where the
development function has gained little retained experience that can be applied to future projects.
Level Focus Key Process Area

5 – Optimising Continuous Process Change Management; Technology Change
improvement Management; Defect Prevention
4 – Managed Product & Software Quality Management; Quantitative Process

process quality Management
3 – Defined Engineering Organisation process focus; peer review; raining; software

process product engineering;...
2 – Repeatable Project Requirements Management; Software project planning,

Management tracking; QA; Sub-contractor Mng.; CCM
1 – Initial Heroes No KPAs
Figure 6.5.1: Software Capability Maturity Model (CMM)

(Source: Carnegie Mellon Software Engineering Institute)

CMM defines specific processes that should be targeted for improvement at each level, and are required for
progression to the next level. The majority of organisations operate at Levels 1-3, with only a small
percentage of organisations worldwide being certified for Levels 4 and 5. Each level forms a necessary step
for the next level, and having achieved recognition for a level without having invested in the infrastructure
and staff training to sustain it may easily result in slipping back, particularly in ‘under fire’ situations.
In the early stages of implementation of CMM, much of the focus is on putting in place strong programme
and project management disciplines, and providing a framework to document the related processes. This
then provides the basis for the process quality improvement that lies at the heart of CMM. Progressing
through the successive maturity levels requires standardisation and
One theme running institutionalisation of these processes.
throughout the CMM One theme running throughout the CMM levels is the visibility of the project
levels is the visibility to higher management, so that the higher the level, the greater visibility is
available to management not directly working at the coalface. CMM is not a
of the project to
paper-based exercise; it is concerned with instituting a culture change in
higher management... management control focused on quality, and this requires bringing on board
staff throughout the organisation. The higher the level, the greater the spread
of the culture upwards through the management layers, as well as across departments that impinge on the
project. The benefits of adopting the CMM methodology include a reduction in software defects, reduced
cycle times and predictability in project delivery, and an overall reduction in software development costs.
Agile Software Development (ASD)
Agile Software Development (ASD) is a complex area: first of all there is no single Agile way, but a multitude
of methodologies that do not necessarily coincide on all matters; and secondly the various ASD
methodologies sit within a spectrum of approaches to software development, and one cannot say that there
is a single right or wrong way in any given project scenario. It is possible to achieve project success using
quite contrary approaches, despite the pronouncements of the ‘gurus’ leading their particular camps. The
best approach for an organisation is to ask when and how the organisation or team can benefit from
adopting ASD, and where alternatives are better suited.
Figure 6.5.2: The Agile Manifesto (Source: www.agilemanifesto.org)

ASD first gained widespread attention in 2001, when the Agile Alliance was formed by a number of
software practitioners who recognised that they shared a similar vision and set of principles. Some of their
methodologies go back to the early 1990s – so there has been much experience gained and refinement
carried out. The alliance published a statement of its shared values in what is known as the Agile Manifesto,
which stated that through its work in uncovering better ways of developing software, it had come to value:
Individuals and interactions over processes and tools.
Working software over comprehensive documentation.
Customer collaboration over contract negotiation.
Responding to change-over following a plan.
This does not tell us much about the actual practice of ASD, and to understand ASD, it is necessary to look
at the detail of methodologies under the Agile banner. Much depends on the unique circumstances of any
given project, and there is also the issue of the number of people on a project. Anecdotal evidence suggests
that, given the Agile emphasis on interaction between team members, having larger project teams than, say
ten to 15 people, can overwhelm ASD. Certainly, if it is possible to divide a
large project into smaller, self-contained sub-projects, then ASD can be Butler Group’s
practised in the sub-units. There is no reason why a business management
layer with Application Lifecycle Management tools and metrics cannot sit recommendation is
above an ASD project. for project managers
More disciplined approaches to software development have ownership of the to assess the type of
design in a hierarchical structure, with architects and analysts at the top, whereas project to be
a number of Agile ways follow a more flexible team ownership of code and design. undertaken and to be
The Agile way is an encapsulation of practices that work in real projects – and flexible in the choice
reflects some of the more chaotic aspects of software development. For of management
instance, having team members in close proximity, so they talk casually over
methodology...
coffee breaks or lunch and gain the real understanding that is best
communicated face-to-face, what Agilists call tacit knowledge, cannot be
imparted in a dry document. Butler Group’s recommendation is for project managers to assess the type of
project to be undertaken and to be flexible in the choice of management methodology, rather than to assume
there is only one correct way of software development.
Measuring Software Development Costs

The estimation and measurement of software projects continues to be ever more important and challenging,
proper cost control of software projects is not possible without these metrics. There are many pitfalls in
carrying out software project estimation. There is the need to better integrate the stages of the application
lifecycle to provide an end-to-end view, with portfolio management, increased use of modelling, agile
methods, and application performance management all helping to bridge the gap between business
objectives and the software applications created to support them.
Current practices for assessing project costs can create barriers. For example, the traditional process
typically encompasses estimating the size of the project, perhaps based on the number of lines of code, or
now more commonly on function points, estimating the time resource required in person days or weeks,
factoring in the resource availability to arrive at a calendar schedule, and then deriving a cost for the project
according to the nature of the resources consumed.
However there are two distinct problems with this approach: firstly, it generally takes place at the very
beginning of the application lifecycle, sometimes even before any detailed requirements capture has been
carried out; secondly, it is rarely iterative, with perhaps the worst case being when a dreaded ‘fixed price’
model is used. In this scenario, development managers are caught in a cleft stick: does one over-estimate
to make sure that there is less chance of an overrun, and risk the project being canned, or sub-contracted
to an external provider; or does one make a realistic estimate based on the limited available information,
and join the long list of projects that are over budget and fail to meet requirements.

...in other comparative Of course, in other comparative scenarios such as an engineering team
scenarios such as an designing a new vehicle for an automotive company, it would never be
expected to work that way. A detailed investigation, requirements capture, test
engineering team marketing, and prototyping process would be undertaken, to help
designing a new progressively refine the estimated project cost.
vehicle for an
As those in the IT industry will understand, undertaking a major software
automotive company, development project can be every bit as complex, so the paradigm needs to
it would never be be changed to reflect this. The requirements capture phase, creation of
expected to work that models, and building of prototypes must be undertaken, all the time using the
way. information gathered to improve the estimated resource requirements and
overall cost of the project.
From a portfolio management perspective, this process would be reflected in the degree of risk that is
attached to a project at any particular time – at the outset, the estimated range of costs is quite wide, and
there is a higher degree of risk; as the project proceeds, the estimated range narrows, and the risk and
uncertainty decrease.
There should be a specific gateway review associated with the point where the cost estimate cannot be
sensibly refined further, and a go/no-go decision made for the project to continue. Sceptics will say that this
all adds up to additional cost and potentially wasted effort, but one has only to look at those oft-quoted
project failure rates to see that overall it makes sound economic sense.
Conclusions
Existing software assets must be utilised.
Transparency and availability are vital to improve business and IT alignment.
MDA can translate business needs into deployed applications.
CMM can bring about a culture change focused on quality.
6.6 IT LIFECYCLE MANAGEMENT

From the very beginnings of IT there have been silos of one kind or another in the technology infrastructure,
and also in the functions and people aspects of the organisation. As computing became involved in business
processes, it was necessary to segment functions and tasks in order to build
in controls that guarded against fraud and unauthorised access to the ...over the years these
production systems that were beginning to be the lifeblood of business. silo functions of
Unfortunately, over the years these silo functions of development and
operations became increasingly separated so that often they appeared to be
development and
pulling in opposite directions. There has been a wall – whether virtual or real operations became
– between development and operations, where development took a system increasingly
through its phases to testing and then passed (or threw) it over the wall to separated...
operations. There was little or no linkage between the processes.
IT has become such a major and crucial part of the business world that its
Due to its current and optimisation throughout all its silos is essential for enterprises to retain
future importance, IT competitive advantage. Due to its current and future importance, IT must be
must be run like a run like a business. In today’s environment, IT processes are business
business. processes. There must be accountability and control throughout all phases of
the IT processes to ensure that IT is aligned with the business. IT must be
responsible for delivering a continuing improvement in ROI across cost, quality, and time. By implication
this proves the requirement for top-level corporate involvement in the development of a clear IT strategy
incorporating goals, principles, functions, relationships, and processes.

Figure 6.6.1: Conquering The IT Silos (Source: IBM Software Group)
The better harmonisation of the application development and deployment

Historically, there has
areas of an organisation can help companies become much more agile by
providing crucial information in real time and having the ability to respond. been difficulty for
Historically, there has been difficulty for development and IT operations teams development and IT
to share information. This has led to the reliance on time-consuming operations teams to
processes to pinpoint and repair problems. share information.
According to IBM, the reasons for better alignment of IT development and
operations to support business objectives come from the sometimes depressing statistics that we read, such
as:
60-80% of the average company’s IT budget is spent on maintaining existing applications.
On average, enterprises suffer 501 hours of network downtime per year.
51% of projects in 2004 were delayed or over budget, and another 15% of projects failed altogether.
50% of applications that are put into production are later rolled back.
There is a need to re-engineer the processes and interfaces to better manage the whole IT lifecycle. This is
due to the increasing rate of technology development and adoption, the increasing rate of change, which
manifests itself in application updates, and the growing emergence of complex, composite applications. The
introduction of enabling technologies like J2EE and .NET, have provided a comprehensive toolkit in order
that new, complex applications can be created. These enable the more rapid development of new
applications, and importantly, they simplify connecting applications. The power of these applications
enables businesses to transform existing processes without the need to rewrite large numbers of existing
applications. However, they tend to link the development and IT operation processes, and as such
applications link many existing applications together in a complex way, problems do not necessarily show
themselves until the application is run in a live production environment.

End-users want better From a business viewpoint, it does not matter whether there is a divide
quality and cheaper between development and operations. End-users want better quality and
applications available cheaper applications available in less time. Both IT development and
operations share the goals of better alignment with the business, ongoing
in less time. quality improvement, and improved agility. These can be achieved through:
The delivery of a common process for IT governance, portfolio management, and IT investment planning.
The improvement in the functional quality of applications and the time to application acceptance in production.
The improvement in application performance and the reduction in the re-engineering of applications.
The acceleration and auditability of component deployment into development, test, and operations environments.
Figure 6.6.2: Complete IT Lifecycle Approach (Source: IBM Software Group)
Solutions in the IT Lifecycle space from vendors such as IBM, Compuware, and Mercury include:
IT Governance and aligning IT investments with business goals with Project and Portfolio Management, and
Process and Asset Management solutions.
Functional Quality achieved by Requirements Management, Process Modelling/ Data Modelling/ Architecture
Modelling, Development, Unit/Functional Testing, and Change Management solutions.
System Performance through Requirements Management, Development, Load Testing, and Change Management.
Accelerate Deployment by configuration and provisioning Management utilising Version Control/Build
Management, and Change Management solutions.
Conclusions
Development and Operations have become increasingly separated to the detriment of all.
Due to its importance, IT must be run as a business.
IT processes and interfaces need to be re-engineered to better manage the IT lifecycle.

6.7 CHANGE MANAGEMENT

Increasing external and internal influences have led to the increased requirement for change that impacts
on IT. With this growing requirement is the need to align high level and operational change. Change is
always hard work and requires the necessary attention to detail, which is why change must be managed.
The requirement for change management has increased over the last decade and this requirement will go
on increasing at an accelerated rate over the coming decade. The reasons for this are complex and
multifarious, but if one wanted to select a single overriding reason, then it would be the increasing external
influences that affect organisations. Again, if one were to select a single one of these, it would be the
increasing influence that legislation will have on IT in the coming years.
Whilst experienced business leaders would always favour a proactive rather than reactive response to
change requirements, this is not always possible. A proactive approach presupposes only minor influence
exerted by external elements. Clearly this is not the case, and in many
instances the only approach possible is reactive. This does not remove either Change management
the possibility of or the need for creating an environment in which the reactive affects all parts of the
response can be as painless as possible, almost approaching proactivity in organisational
many instances.
ecosystem...
Change management affects all parts of the organisational ecosystem, not
least of which is the political/power aspect that exists. Even though it is largely external factors that are
forcing the change in this ecosystem that does not remove the need to manage
...effective change the change as effectively as possible. In one way, the forces applied are of
management is benefit as they form a ready-made definition for the end-point of any change.
It can be defined in a number of different ways, but we regard the
essential for management of change in this case in order to support the further
successful IT development of the organisation.
governance.
There is no end of theory surrounding the subject of change management – it
is something that all organisations know they need to do, but it can be very
difficult to get right. IT governance continues to have a big impact on the area of change management, to
the point at which effective change management is essential for successful IT governance.
Figure 6.7.1: Change Management Hierarchy

Change management is required for all organisational changes, ranging from a major operational change in
the way a company does business, for example, down to a one-line change to code for a stand-alone
reporting system in the IT department. A top-down approach will help facilitate a continuous process of
improvement within the organisation – if there is no one at the top of the organisation who is an advocate
of change management or has overall sponsorship responsibility for a project, successful implementation
throughout the organisation is unlikely to be achieved. The overall objective of change management has to
be the improvement of the organisation as a whole.
The driver of IT governance will also help to achieve an improvement of the organisation as a whole.
Compliance is not only about changing processes, procedures, and systems in order to comply with relevant
legislation and regulations – it can also have the positive impact of improving the way in which an
organisation operates, and thus its cost-effectiveness. It is good for ‘auditability’ – in terms of change one
can understand what the change was, when it took place, how the change
Strong change was effected, and by whom.
management... gives Strong change management, when improving IT governance, gives an
an organisation the organisation the opportunity to be confident in compliance within the
opportunity to be organisation, which is something that few organisations have. Large and
confident in distributed organisations in particular can find IT governance a challenge (indeed
compliance within the many have not yet overcome that challenge), and thus need to be on top of
change management in order for IT governance to be effective organisation-wide.
organisation...
When change is demanded by an organisation for whatever reason, the projects
that are created to effect that change should not be viewed in isolation, and these projects need to be seen as
part of achieving the organisation’s aims and objectives. Change is not a point solution, and any ROI case will
have to be built by focusing on the overall benefits to the organisation, looking at the wider picture.
Any decision to purchase, develop, or customise a new IT solution will have been made with the overall
objectives of the organisation in mind. When the decision to purchase is made, the management of any
associated change should already have been considered. Of course, it can be expected that the project
manager and project sponsor is aware of the overall objectives of the change, but it can also be extremely
beneficial for the entire project team involved in developing and implementing the change to be aware of
these objectives, alongside everyone that will be affected. Communication is key to ensuring the success of
individual projects. By their very nature all projects have a beginning and an end, but by keeping all involved
focused on the ultimate objectives of the change – the improvement of the organisation – then the project
will have an increased chance of success in the way that it was envisaged in the first place.
ITIL was developed in the UK by the Office of Government Commerce (OGC). Its aim is to provide a
framework for IT Service Management for both public and private sector organisations, giving best practice
guidance, and one of the sub-sections of the guidelines covers Change Management, under the Service
Support section of IT Service Management.
The main thrust behind the use of ITIL for change management is that the framework recommends that
change is undertaken in the same way for all parts of an organisation, and for all projects, irrespective of
location, size of change, and so on. The benefits of this include that when required, the organisation can
react quickly to changes that are forced upon it, and also that when proactive changes are required, the full
impact of the changes can be fully and accurately assessed before they take place. Although ITIL is not a
specific methodology, rather a guideline, such guidelines can be very useful for companies looking for a way
of supporting effective change throughout the organisation.
Very few organisations have single platform IT systems across the board – it is virtually unheard of, and most
organisations have heterogeneous IT systems. Add to this the fact that multi-dimensional change is common,
with organisations needing to address, for example, changes to IT systems, changes to business processes,
implementing additional training programmes, and so on – very few changes have no knock-on effect to other
parts of the organisation – and it becomes clear that change management is a massive hurdle to overcome.
However, as with many experiences throughout our working and non-working lives, it is vital to learn lessons
from previous change management and apply those lessons to the procedures that are in place within the
organisation.

If, for example, one uses the ITIL guidelines for change management, and these work satisfactorily the first
time, but the second time there is a problem, then the problem should be analysed and a change made to
the relevant procedure to ensure that the problem would not occur were the project to run again. Another
example might be the level of training required on any changes – this is something that could be assessed
during the design phase of any IT change, with the training planned to take place before the change goes
into the live environment.
From an IT perspective it is vital to plan for and record all proposed changes to
...it is vital to plan for
any and every IT system. Once the change has been made it should be monitored and record all
in order to decide whether it has been successful and achieved the desired effect proposed changes to
(determined at the planning stage) or if it should be backed out because the any and every IT
required aims and objectives have not been achieved.
system.
This monitoring must include the so-called ‘one-line’ changes to code in all IT
systems. Every developer knows that without change management IT systems would be up and running
much more quickly, with very small changes capable of being live within an hour of being requested.
However, the need to document all change has been around for many years, and developers will also
recognise the situation of picking up someone else’s work where changes have not been fully documented
(if at all), and spending twice as much time as anticipated on the change because there was a need to work
out what was going on in the first place.
The need for change management can be highlighted by the case of Cahoot’s on-line banking system, when
towards the end of 2004, changes were made to Cahoot’s on-line systems, which caused a security breach.
This breach remained unnoticed for 12 days before it was reported by the BBC, and subsequently corrected
by Cahoot. This only serves to highlight the requirement that all change should be recorded, and the impact
of that change assessed.
As Cahoot operates in the private sector we would all have remained blissfully unaware of the breach in the
company’s on-line security, were it not for a customer of the bank highlighting the problem to a BBC reporter
– at the time of the breach Cahoot did not e-mail its customers about the situation, nor did it mention the
incident on its Web site. The public sector, however, is not quite so ‘lucky’, with many of its IT changes
being subject to public scrutiny, as they are using taxpayers’ money. There is a great deal of IT activity in
the public sector at the moment, and there is a great opportunity for the public sector to lead the way in
further developing change management best practice.
Indeed, the CIO Council, which comprises a number of CIOs from central and local government in the UK,
plus others from the wider public sector, wants 2005 to be the year in which the perceived number of IT
project failures in the public sector are reduced significantly. The UK Government’s CIO, Ian Whatmore,
heads the CIO Council and has stated that his team can be used by the UK public sector to assess projects,
encouraging those in charge to only implement a solution when it was ready, and not before, even if there
was political pressure to do so. This sounds very promising, but it will take an extremely strong individual
to resist the implementation of IT change when political pressure is being brought to bear.
Change management is always going to be hard work – it requires meticulous attention to detail in order to
be successful, and must be applied throughout the organisation and at all levels. However, when done
properly, the rewards are excellent, with change being applied with the overall objectives of the organisation
in the minds of all involved. The use of ITIL should be investigated by all organisations looking to improve
their change management procedures, as this will also assist with successful IT governance – strong and
effective change management underpins IT governance. Vendors with solutions in this market space include
CA, IBM Rational, Mercury, and Serena Software.
Conclusions
The need for change management will grow due to external influences.
ITIL recommends that change is carried out in a uniform way throughout the organisation.
All IT changes must be meticulously planned, even single-line code changes.
Change management is not easy – it requires attention to detail.

6.8 MONITORING SYSTEM USAGE
Charging For IT Services
The one common denominator that is universally understood across the world is money, whether the
currency is the pound, dollar, Euro or any other that represents cost and value. Therefore, when we consider
the monitoring and control of system usage, it is logical that we should be talking about chargeback
schemes. However, even though such methods have been in use throughout the evolvement of IT over the
past 30 years to the business critical role that it occupies today, the subject still remains contentious.
The pressure on IT budgets over the past few years has led to an increased
The pressure on IT focus on chargeback, so that IT costs are charged to the user departments on
budgets over the past whose behalf they were incurred. As a result, the IT budget cannot be used
few years has led to with profligacy in expanding the IT infrastructure without checks on the
an increased focus on hardware, software, and networking, as it is the user department, division, or
chargeback... group that pays the bill. It can also help IT management to justify their
budgets, as they are being paid for by their users.
A further benefit can be that users become much more disciplined in their usage of IT resources when they
are being directly charged for them. It is also maintained by many people that unless a charge is made for
a product or service, that item will not be valued by the user. It provides alignment with the requirements
of the business, as it is unlikely that a user will be willing to pay for a service
that does not contribute to its capability and/or efficiency. When IT expenses ...unless a charge is
are retained within the overall IT budget, rather than charged back to made for a product or
departmental cost centres, enterprises do not have a measure of the real costs service, that item will
of applications.
not be valued by the
Alternatively, charging can be restrictive in that it can inhibit innovation user.
because users may be less willing to go ahead with a new application if they
are to be charged for its development and implementation. However, it can be argued that this is a benefit
to the enterprise in that if the users are not committed to a project, it will not be successful.
Of course one argument against chargeback is that IT systems, like people, do not consume resources
evenly. Data held in databases is accessed by multiple functions and multiple people it is difficult to
apportion costs.
There is no panacea for controlling an enterprise’s IT spending, and there is no perfect chargeback system.
Today’s IT costs spread far beyond the data centre with devices such as BlackBerrys and PDAs. If all that
chargeback achieves is to reshuffle costs within the organisation, then it will not be worthwhile, but if it
results in better decision-making through charging then it can prove its value.
Activity Based Costing
Activity Based Costing (ABC) and Activity Based Management (ABM) concepts have been around for some
considerable time, but have failed in their attempts to achieve mainstream adoption, and one reason is that
ABC and ABM tend to be used interchangeably. In broad terms, ABC
...activity-related represents a class of accounting technique that has been developed for the
costs can vary benefit of managers rather than accountants, giving them the ability to
ascertain the true costs associated with providing a particular product or
dramatically service. The appeal to the business is that by using ABC, such costs can be
determined by the determined, monitored, and managed with much more fidelity than was
volume of previously available. It is very relevant to IT costs and their charging in that
transactions. activity-related costs can vary dramatically determined by the volume of
transactions.

The basic premise is that each and every activity undertaken by a business, its personnel, or indeed its
partners, has a cost associated with it. Therefore, the products or services created by the business also have
costs associated with them. ABC is used by the business to capture and comprehend these costs.
Traditional accounting techniques capture costs, such as raw materials or labour, but do not incorporate
activity-related costs – the basic transaction costs involved. ABC can actually be applied to any cost-
consuming object, including customers.
ABC is therefore used to help the business identify and attribute costs to certain core activities and
resources, thus assisting with product or service pricing strategies, customer profitability studies, etc. The
software will then allow users to analyse cost distribution, assessing the origin of the costs of a given output,
in terms of the previously quantified activities and resources.
ABC can expose the
There can be no doubting the value and attractiveness of this vision. ABC can
expose the true costs associated with products, as it incorporates more true costs associated
meaningful data than that typically used in accounting. For example, as with products...
mentioned above, costs are normally allocated according to factors such as
labour costs, raw material costs, etc. This overlooks or downplays the economies of scale that come from
high volume manufacturing, leading to skewed costing profiles. ABC is more flexible, viewing each process
as a system with inputs and outputs, which can include all manner of variables or activities.
Easier to deploy means reducing the costs and time involved with deployment, placing less of an onus on
set-up costs and the time taken to get the solution live. In this respect, vendors need to provide customers
with open architectures and pre-built costing models, which they can use for rapid proof-of-concept or as
a starting point for subsequent fine-tuning. ABC is an iterative process, and in many ways an inexact
science, as organisations should continually refine and hone the solution, making it more and more accurate
and representative of the ‘true state’.
IT Performance Optimisation
Once an application is in live production the facility to track its performance and behaviour is still relatively
new territory. An analysis of costs in manufacturing, from which one can draw parallels with software
production, show that the highest costs are incurred once a product is deployed in the live environment –
incurred in general maintenance, update, and support, but also in extracting
...the highest costs the best performance from the application and delivering the highest service
quality. Reducing costs in this phase can bring considerable benefits to the
are incurred once a
Total Cost of Ownership (TCO), and also feed useful information back to
product is deployed in development so that mistakes are not repeated, reducing future lock-in of live
the live production costs.
environment... An ‘application’ means any program running on a computer, including all the
infrastructure software, including the operating system(s), legacy software
running on mainframes, a Web service, out-of-the-box software, or custom code developed in-house. Tools
to monitor and optimise applications are now appearing from new and established vendors in what is an
early adopter market.
At the other end of the spectrum of the live production environment lie the infrastructure and processes
placed to handle deployment, maintenance, problems, issues and so forth, i.e., the Help Desk and IT
Support. Collectively this range of tasks comes under the heading of IT Services Management (ITSM).
Digging deeper into the infrastructure, the Network Services Management (NSM) team look after the Local
Area Network, Wide Area Network, and related areas, such as storage, back-up, replication, failsafe, server
allocation, and hardware support. The market for supplying tools in both ITSM and NSM is fairly mature,
and quite distinct from code development and testing. However, we can see that in the post-deployment
phase of an application, all three areas conjoin.
IT Performance Optimisation (ITPO) is the concern of that overlap, where developers deliver their
application to the live environment and where IT Support takes over. Both parties retain an interest in what
takes places, and of course the end-user is now an integral player in the process.

With an increasing emphasis on service level delivery, there is a need to

With an increasing prioritise application traffic, and with it the need for traffic management tools
emphasis on service that provide the necessary information: application discovery and
level delivery, there is classification, usage profiles over time, and which applications are heavy
a need to prioritise bandwidth users.
application traffic... The first step in ITPO is to monitor the application activity; the choice here is
whether to build-in monitoring functionality in the application during
development, or install third-party tools that monitor the live production environment. The main advantage
of a built-in solution is that it provides a custom-made problem resolution capability that can locate source
code at the root of a failure or performance issue. In order that the instrumentation does not grab resources
and add to any potential performance degradation, it should be possible for the functionality to be switched
on only when needed.
Figure 6.8.1: Application Lifecycle Costs

(Source: David M. Anderson, Design for Manufacturability, 2nd Ed., CIM Press 2001)
Instrumentation can provide distinct advantages where, for example, application software development has
been outsourced, perhaps to a third-world country. Tracking problems back to the developers can be
problematical, whereas tools that can help communication during problem escalation between IT Help
Desk, IT Support, and the developers can reduce post-deployment costs. Identify Software is one company
that provides this type of functionality, logging application performance and ensuring that relevant
information is speedily passed on to the right people at each stage of the problem resolution.
Instrumentation is an option available for the software producer, but also for users with applications that
have no in-built logging, which is the case for most off-the-shelf software today, ITPO tools provide the best
solution. The application management tools on the market fall into three types: polling, agent-based, and
non-agent listening. Each has its distinct advantages and disadvantages. The polling approach may miss
important traffic events that fall between the polls, so it is the least rigorous of the three methods; however,
the resource demand of the tool on the network is light.
Agent-based systems install an active agent at various points in the infrastructure: on the client, on the
network, and on the servers. These agents are designed to have small footprints; however, they will use up
resources on their host machines, so this needs to be taken into consideration. Agent-based systems can
be installed in distributed systems without changes to the network. The agents monitor activity on their host
and report back to a central repository. Agents on the client side can provide valuable information on which
applications are used and also monitor the actual experience of the end-user. Agent-less systems install hub
servers that application clients must connect through to reach the network, so the system can continually
listen-in to traffic activity. This type of system may require some network re-design at the local client-end.

Whichever monitoring system is installed, the data feeds into the next stage of the process, which is to alert
the administrator of problems. Alarms can be raised against thresholds set on baseline activity. However,
the significant benefit of ITPO is in automatically managing performance problems, in being proactive, and
also anticipating problems and taking pre-emptive action. In this instance the monitoring triggers application
traffic software that detects and identifies individual packets of data on the network, rerouting this data if
necessary to overcome bottlenecks and enhance performance. Applications can be assigned priorities and
given maximum resources during bandwidth capacity shortages. The essential emphasis of optimisation of
applications in the post-deployment phase is to automate tasks that ensure their peak performance in the
IT environment.
An important part of the ITPO system is the reporting element. Graphical displays and Key Performance
Indicators (KPIs) are used to provide intelligence on current and historical activity and can also show trends.
Information on actual performance against pre-defined service levels is vital feedback for Service Level
Agreement (SLA) monitoring. Mapping bandwidth usage against end-users, applications, and protocols
provides essential visibility into the network. Charting the type of data crossing
the network is another important statistic that helps build a picture of the
In order to best
network performance. Reports should be customised to target either
management with key summaries or technicians to be able to drill down for analyse application
detailed analysis. performance, tools
In order to best analyse application performance, tools should provide end-to- should provide end-
end monitoring, from the end-user to the transaction sent to a remote to-end monitoring...
database. With this degree of tracking it becomes possible to tune application
transactions, delving directly into source SQL that may be causing bottlenecks. ITPO can uncover
deficiencies in not just the ‘usual suspects’ of network bandwidth and server power, but also end-user
practice, SQL tuning, badly designed ‘chatty’ applications, and mistakes in the configuration of complex
applications and network components, such as servers, routers, and switches.
An example of the power of end-to-end monitoring is illustrated by OPNET’s Application Characterisation
Environment module for IT Guru, which enables enterprises to identify the root-cause of application
performance problems. Consider the case of users calling help desk to say a new application is running
slowly. Neither the network department nor the developers see any problem and a stand-off ensues. The
lack of visibility into the network hampers resolution. IT Guru can display the core segments responsible for
an application’s performance, comprising: Tier Processing, and Network Effects, which cover Latency,
Bandwidth, and Protocol/Congestion. The Tier Processing segment sums the total processing time taken by
the application at each tier (i.e., application delay) – so if this segment dominates the chart, the developers
need to re-examine their code. Latency is the sum total of propagation delay across the network, an effect
of the speed of communication signals and device latencies. However, assuming these are adequate, the
delay will also be affected by the application’s number of ‘turns’ – a point where the application sends a
message. So high latency can indicate an application issue. Bandwidth is affected by the transmission delay
along the slowest link between two tiers, so a problem here would indicate a network issue.
Protocol/Congestion monitors the effect of queuing in the network between tiers, as well as the effects of
packet loss, and network protocols like TCP/IP, so again this segment would indicate a network department
responsibility. Resolving these types of problems by providing direct views into the network shows the
benefit of products like IT Guru.
Application traffic management addressing Layer 7 of the TCP/IP protocol stack, which deals with
applications, provides a number of benefits. Advanced tools, like Zeus Extensible Traffic Manager, can buffer
traffic from slow connections to a Web server, so the server’s CPU cycles are not wasted in ‘wait’ states and
are available for dealing with a fast stream of traffic. Traffic management tools inspect the headers in data
packets, and also with some tools the full content of XML application data being transmitted, thereby
identifying the application and able to take decisions based on business rules. The facility to write custom
scripts gives administrators a high degree of control on how to route specific application traffic.
Problem diagnosis and resolution requires a collaborative process and this is where the use of a knowledge
base and an expert system can retain past solutions and offer suggestions when new problems arise. For
example, Quest Software offers Spotlight on Active Directory and Spotlight on Windows; tools that alert
administrators of problems and provide suggestions to help resolve them.

Deployment testing, modelling, and simulation are another facet of Application Performance Optimisation.
Vendors like Compuware, HyPerformix, and OPNET offer tools to simulate a network and model how an
application would perform on it, running what-if scenarios, facilitating troubleshooting and performance
tuning, and also predicting growth and assisting capacity planning.
ITPO can help reduce the burden in the IT department through greater automation, letting key IT support
staff devote their time to essential tasks. These tools can also mitigate the problems of high staff turnover
by ensuring best practices are retained in reports, a knowledge base, and in expert systems.
As mentioned, the vendors in the NSM and ITSM space are entrenched in a mature market and generally
do not have a history in development. NSM tools focus on gathering data from infrastructure ‘sniffers’ that
monitor network traffic in switches, hubs, and routers, helping to manage and optimise network resources.
For example, load balancing helps to keep servers running at peak performance.
Conclusions
Charging for IT services can bring alignment between business and IT.
Activity-based costing can identify the true costs.
The highest costs are usually incurred once an application is in production.
The reporting elements of ITPO systems are key.
Problem diagnosis and resolution requires a collaborative process.
6.9 SERVICE MANAGEMENT

The IT infrastructure and environment is increasingly complex due to the driving requirements for ever-greater
levels of service by enterprises and ever faster developments in technology to enable these needs to be met.
As the role of technology within organisations has grown, so have expectations over performance and service
levels. Like other business functions, IT departments increasingly have to demonstrate how they deliver value
to their organisation. As a result, customer
satisfaction surveys, KPIs and operational-level
...IT departments agreements are now commonplace, especially in ...the only way that IT
increasingly have to areas where IT underpins mission-critical services services can be
demonstrate how and contributes to competitive advantage. successfully managed
they deliver value to Meeting these service levels, however, requires a is through the
their organisation. massive commitment of funds and resources by deployment of
the IT department, which flies in the face of the proactive and
drive to reduce costs. As a result IT departments are locked in a constant intelligent solutions
balancing act between cost and performance. As a consequence, the only way
that IT services can be successfully managed is through the deployment of
and tools.
proactive and intelligent solutions and tools. The complexities are such that
managers and administrators cannot cope with the volume of possible alternatives and corrective actions
without service management solutions. For many years, IT has been providing facilities to enable enterprises
to conduct their operations. Now it is IT’s turn to benefit from the improved performance and assistance
that technology can provide to run IT operations.
Service Management Frameworks

Although achieving the right balance is by no means easy, there are a number of options available to IT decision-
makers that can help them control – and even reduce – IT costs without impacting the service to the business.
The ITSM and ITIL frameworks have been developed to help organisations address the many challenges
associated with effective IT service delivery. ITIL, which is an initiative of the Office of Government Commerce,
provides a range of best practice guidelines for areas, such as service support and service delivery.

Effective ITSM can deliver a variety of benefits, such as helping to increase customer and employee
satisfaction, enhancing the value and stability of IT, and perhaps most importantly, reducing costs. Industry
experts believe that adopting ITSM can help businesses halve their annual TCO.
ITIL defines a best practice framework for the management and delivery of IT services. In many
organisations, close attention is often paid to new IT initiatives, at the expense of what is often described
as ‘keep-the-lights-on’ work: ongoing operations and maintenance. With up to 80% of IT budgets being
spent on this latter area, it is clear that controlling costs and improving efficiency must focus on this area.
Over the years, a much wider audience than UK government departments has ...increasingly vendors
adopted ITIL, and it has become popular in the US. There is still a long way
to go for the adoption of ITIL in organisations throughout the world, but are incorporating ITIL
increasingly vendors are incorporating ITIL terminology and best practices in terminology and best
infrastructure management tools. practices in
It is generally accepted by organisations that their processes are critical in infrastructure
running their business. The re-design of business processes has been adopted management tools.
as a strategy to achieve cost reduction, shortened cycle times, improved
quality, and customer satisfaction. With the increasing complexity of IT infrastructures, caused by the
advances and developments of technology, leading to the consequent greater
By defining and demands by organisations from their IT services in order to remain
improving the competitive and responsive to their customers, processes have become
increasingly important in delivering IT services. By defining and improving the
processes that form
processes that form the IT service to a customer or an internal division or
the IT service to a department of an organisation, significant benefits can be achieved.
customer or an One of the common problems with planning IT operational work is that precise
internal division or requirements and priorities are difficult to predict: there are often significant
department of an peaks and troughs in demand associated with business cycles or the
organisation, introduction of new systems; issues may require immediate priority action to
keep critical business systems up and running;
significant benefits and there may be periodic requirements for
can be achieved. ...70% of companies
additional specialists in particular disciplines.
Because of this unpredictability, it is particularly using ITIL reported
challenging to integrate operational and maintenance work into the overall IT that they had derived
portfolio, with the consequence that the resource available for new initiatives tangible and
is often estimated conservatively to provide additional leeway.
measurable benefits...
Adopting a formal, process-driven methodology to IT services has proved
highly beneficial for many organisations. In a recent survey by The IT Service
Management Forum (itSMF), 70% of companies using ITIL reported that they had derived tangible and
measurable benefits from the programme.
ITIL covers IT service support processes:
Incident Management with an objective to restore the normal service as speedily as possible, and to
minimise the adverse effects on business operations.
Problem Management for the diagnosis of the underlying causes of identified incidents. The correction
of errors in the IT infrastructure is arranged and proactive problem prevention is also carried out.
Change Management ensures that standardised procedures are used to minimise the impact of changes
on service quality.
Configuration Management identifies, controls, maintains, and verifies the elements of the infrastructure
or of a service.
Release Management provides a holistic view for the incorporation of changed services, and their orderly
release, including technical and non-technical aspects.
The five key elements of service delivery are:
Service Level Management to maintain and improve the quality of service. The processes to achieve this
are a constant cycle of agreeing, monitoring, and reporting the IT service achieved. Remedial actions to
eradicate poor service are instigated. By implication, this can assist in the development of stronger
relationships between an IT division and its customers.

Financial Management for IT Services to support the organisation in the areas of budgeting, IT
accounting, and charging mechanisms.
Capacity Management so that an organisation can manage resources at times of crisis and accurately
plan ahead for additional capacity.
Availability Management to achieve maximum capability from the IT infrastructure, the services that it
provides, and the supporting organisation. The aim is to achieve a cost effective, reliable level of service
to enable the business to meet its objectives.
IT Service Continuity Management is the harnessing of an organisation’s ability to continue the provision
of a pre-determined level of IT service following an interruption. The break in service can range from that
caused by an application or system failure up to a major disaster.
ITIL provides a framework for IT service management that includes process templates, the definition of roles
and activities within the IT function, and the communication between them. A common way to begin ITIL
implementation is to map out these existing elements within the IT function, and to create a plan for evolving
to this way of working. The standardised ITIL guides contain process flows, models, and best practice that can
be customised to the requirements of the individual organisation. ITIL requires a degree of cultural change and
education, but Butler Group has found that many IT staff welcome its introduction, because it provides a clearer
definition of their roles and responsibilities, and improved organisation of their work processes.
One of the common outcomes of this approach to IT service management, is the establishment of SLAs for
the IT function, used internally and sometimes also externally to monitor its performance across a range of
indicators. Once this is in place, it provides an excellent benchmark for subsequent service quality
improvement initiatives.
For IT service delivery, it is necessary to define and capture the metrics that gauge the performance of both
internal and third-party services. In Capacity Management, a broad view of all operational and project
requirements is the foundation for optimising the IT infrastructure.
There can be confusion over the respective merits and features of ITIL, CoBIT, and ISO and BS standards
such as ISO 9000, ISO 17799, and BS 15000. CoBIT is issued by the IT Governance Institute, and is an
IT governance framework that can be applied to the entire IT environment and its processes. It is a generally
applicable and accepted standard for good IT security and control practices. It provides a reference
framework for management, users, and Information Systems audit, control and security practitioners. ITIL
is a library of best practices for the provision of quality IT services, and is one of the global standards on
which CoBIT is based. ITIL describes the service management processes and recommends security and
control practices but does not have a standard for them, whereas CoBIT provides a great framework to
perform audits on ITIL processes.
ISO 9000 is a generic management system standard, which is concerned with the way an enterprise goes
about its work. ISO 9000 can be applied to all types of organisation, both large and small, irrespective of
its industry sector and its product or service, whether public or private. The standard does not specifically
address IT processes, but it can be applied to achieve high levels of quality in software applications and
hardware configurations. ISO 17799 is strong in security controls but does not
The OGC is currently say how to carry them out with processes. BS 15000 documents an
working on the integrated collection of management processes for the effective delivery of IT
publication strategy services, and was aligned with the best practices defined by ITIL.
for ITIL, with new In May 2005, the OGC announced its future plans for ITIL’s next stage of
publications expected evolution following a wide-ranging survey on suggested improvements. It
forms part of a major update of the ITIL best practice methodology, which has
to be available by the not been refreshed since 1997. The project began in November 2004 with
end of 2006. contributions sought input from public sector, vendors and managed service
providers, and trainers and qualification bodies in 30 countries. According to
the OGC, the participants agreed that ITIL needs to include best practice for service management in multi-
sourced environments. The next version will probably be restructured with more consistency across the
volumes of guidance. It will also concentrate on value, benefits, and ROI with case studies, and templates
for implementation. The OGC is currently working on the publication strategy for ITIL, with new publications
expected to be available by the end of 2006.

ITIL terminology is being increasingly incorporated in infrastructure management products, which will speed
the adoption of ITIL. The benefits to be gained by enterprises that adopt an ITIL strategy are numerous. It
provides for the future proofing of their IT infrastructures as more and more vendors comply with ITIL
standards, thereby ensuring that best-of-breed integration will be available in the future. It can also help in
achieving the alignment of IT operations with business strategy. Conducting IT on business value is
achieving more credibility, although unfortunately many are still driven by cost. ITIL processes can help
prevent problems and reduce expensive service incidents. Even a small reduction in incidents that result in
impaired services can achieve significant, major savings.
The growth in ITIL compliance by vendors with products that increase standards is to be welcomed. This
leads to more open and easier interfacing between software tools so that customers can adopt products
from various vendors, with the confidence that those products will provide common information sets. These
moves should make it easier for organisations to adopt tools that help them manage the IT service that
drives their business in the future. These tools will provide them with solutions so that they can contend
with the ever-changing pressures from business, and the greater complexities of the IT infrastructure.
Conclusions
IT needs to utilise advanced proactive automated products for improved performance.
ITIL provides a suitable framework for IT service management.
Metrics to gauge performance should be defined and captured.
The adoption of ITIL is growing quickly.
ITIL can provide future proofing for IT management.

SECTION 7:
Approaches for
Determining IT Cost and
Value
Butler Group
7.1 METHODOLOGIES
Accenture SITE
Accenture’s research into the qualities of businesses that out perform the market seems to indicate that one
of the differentiators in a company’s financial performance is not how much is spent on IT but the way the
investment is focused on business value. Companies with superior earnings growth:
Spend less than their industry peers on IT but are able to free up more IT investment on new business
initiatives.
Justify their IT investments with a rigorous, analytical process that enables them to discover exactly
where business performance improvement opportunities lie.
Continually monitor efforts to ensure that their investments generate the expected value.
Foster a culture in which the IT function and the rest of the business are aligned on business objectives
and priorities, and work toward the optimisation of IT resources globally for higher performance of the
organisation overall.
Accenture has found that the deployment of a structured process to manage IT spending can provide
significant benefits. Direct savings of 10% to 15% in the IT budget are achievable within six to 12 months,
while better IT decision-making can increase IT productivity by a further 20%. Indirectly, the benefits
resulting from re-prioritising projects and re-engineering IT-enabled processes can also deliver considerable
improvements in returns. To assist senior executives in this endeavour, Accenture’s Strategic IT Effectiveness
(SITE) practice has developed a transformational approach to help organisations obtain better strategic,
operational, and financial value from IT investments.
Figure 7.1.1: Transformational Approach (Source: Accenture SITE)
Setting the IT agenda includes Accenture’s IT Value Discovery methodology, which identifies organisation-
specific opportunities to create value. The approach also provides a mechanism for the organisation to
collaborate with IT in the formulation of an IT agenda to capitalise on these opportunities. The managing
IT investments aspect incorporates a structured IT Governance process, supported by tools and resources,
that guides enterprises through the challenges of aligning IT and the organisation, IT demand planning, IT
supply control, and IT value review.
The ability to deliver on the requirements of a strategic IT agenda will fail without well-organised execution.
In order to achieve this an organisation needs to have efficient IT processes, clear roles and responsibilities,
skilled people with the right incentives, and a value-focused culture. The creation of IT capability that
provides flexibility, quality, and quick turnaround is challenging and needs constant focus on all the various
elements. However, recent software vendor developments have made this easier by beginning to offer
integrated tools to assist management in implementing the IT agenda.
September 2005 Section 7: Approaches for Determining IT Cost and Value 121
IBM Zodiac
Zodiac provides the basic framework for analysis of server and storage inventory and computation of the
business case for replacement. The approach has been developed to provide a packaged assessment offering
a rapid assessment of systems capability. The method involves a short consulting engagement which:
Investigates and analyses a client’s UNIX and Wintel server environment, and develops technical
solutions and business cases for IBM solutions, migration services, and architecture services.
Must be sponsored by senior IT management.
Is completed in 2-3 weeks elapsed, including a 5-day intensive study.
Usually has two experienced IT consultants executing the engagement.
The first stage in the Zodiac approach is to obtain an appreciation of the current state. Capturing and
understanding the existing costs is key to formulating the solution business cases. Where detailed data is
not available, then estimates, assumptions, and rules of thumb are used. Information assimilated by the
study encompasses:
Collecting or estimating server inventory data from multiple sources.
Collecting or estimating server utilisation and availability data.
Gaining an understanding of the major application or functional characteristics including current
function, volumes, and utilisation.
Collecting or estimating IT service delivery people and ratios, including initial breakdown using the
organisation chart.
Collecting or estimating standard IT expenses and agreeing ‘standard’ costs for hardware, software, and staff.
Validating and analysing server data using inventory, technical estimates, and baseline cost data.
The server inventory data is loaded into the Zodiac workbook, and servers are classified accordingly. A range
of server attributes which can constrain opportunities for consolidation are identified, which then form
solution targets. In addition, support costs can be identified and allocated to servers at different levels of
refinement. From all the data a detailed picture of the current server and storage environment is achieved
showing the current capacity and workload for any group of servers defined by a combination of boundaries,
together with the associated costs.
Figure 7.1.2: Zodiac Output (Source: IBM)
122 Section 7: Approaches for Determining IT Cost and Value September 2005
From this analysis it is possible to identify groups of servers with a significant server count and where the
total workload is only a small proportion of the available total capacity, which are selected as appropriate
targets to build solution business cases, including implementation and migration costs. The Zodiac output
is made available to the customer using the workbook, an example is shown in Figure 7.1.2.
Intel’s Managing IT for Business Value Capability Maturity Framework

The framework is a matrix of the four main aspects of IT value capability: managing the IT budget, managing
the IT capability, managing IT for business value, and managing IT like a business on one axis and the
maturity levels on the other, with the intersections indicating the level of maturity for each key facet. Level
one is indicative of no mechanisms in place for measurement and control, whilst Levels two to five indicate
varying degrees of business value capability.
Major Strategies
Maturity
Levels Managing the IT Managing the IT Managing IT for Managing IT Like a
Budget Capability Business Value Business
Sustainable Corporate Core Optimised Value Value Centre

5. Optimising
Economic Model Competency
Expanded Funding Strategic Business Options and Customer/Service

4. Managed Options Partner Portfolio Focus
Management
Systemic Cost Technology Expert ROI & Business Customer/Service

3. Defined
Reduction Case Orientation
Predictable Technology TCO Technology/Product

2. Repeatable
Performance Supplier Focus
1. Initial Beginning
Figure 7.1.3: Managing IT for Business Value Capability Maturity Framework (Source: Intel)
The managing the IT budget portion of the capability maturity framework allows management to appreciate the
varying levels of sophistication required in managing the IT budget. At Level one there are no formal budgeting
processes in place with no clear owner and little or no tracking in place. Organisations without a formal
budgeting process are probably the exception, although many are based on spreadsheets and done once a year
without any continual process to enable progress to be monitored. Level two identifies those organisations that
have progressed to a defined budget, which is continuously monitored and predictable. This consistency is an
important characteristic in gaining the respect of the financial director. Moving up to Level three indicates that
the IT department has deployed processes that enable the reduction in the unit cost of IT services. Whilst Level
four determines that alternative funding sources other that from the enterprise have started to be employed. This
can include usage fees, funding from other divisions, and payments from partners. Finally, Level five identifies
organisations that have reached a sustainable financial model for the IT budget.
The five levels of maturity for IT capability start at Level one where there is no formal IT presence, where
a silo’ed approach predominates with users purchasing and supporting systems on their own. Level two
indicates that the IT department is treated, as an external supplier having no strategic input into the
organisation, and with the IT department very much a cost centre. On reaching a maturity level of three the
organisation has gained a reputation of providing quality services where the users are confident enough to
ask the IT department for a solution rather than implement an ad hoc solution. Level four builds on this
respect with the IT department seen as a strategic business partner with IT management often involved in
strategy discussions with senior executives. Level five identifies that IT’s capability is so important that it is
perceived as being critical to the success of the organisation.
IT business value capability maturity at Level one is shown by a lack of processes to deal with IT investment
decision-making where the strong out manoeuvre the weak, regardless as to the relative merits of each initiative.
Whereas this is all right in small organisations the problems it creates in the large and complex enterprises are
numerous. Level two sees organisations using Total Cost of Ownership (TCO) as a key area of focus with the cost
and quality of services rather than value the main consideration. Those organisations moving up the maturity
scale at Level three have begun to look at the value that can be generated from IT investments with a swing to
the use of Return On Investment (ROI), business cases, and a formal IT governance process. At Level four,
organisations are employing a more sophisticated approach for comparing and monitoring IT investments that
includes Portfolio Management and other value management mechanisms. Whilst Level five indicates that
organisations have become systematic in their approach to assessing optimal value, using performance
management techniques to include risk and alignment in the decision-making process.
Maturity in managing IT as a business is signified at Level one by the IT department, concentrating purely
on the technology aspects with nothing much in the way of asset or cost management systems. Move up
the capability levels to Level two, which sees the adoption of basic cost and asset management processes,
although the IT department remains focused on technology. At Level three there are the beginnings of
becoming customer-oriented, providing services that a client requires rather than implementing technology
solutions and surveying users to gain feedback on performance and future requirements. On reaching Level
four the IT organisation has deployed chargeback mechanisms and measurable customer service processes.
Level five sees the IT department with strong stakeholder focus and good alignment with value drivers.
For enterprises having difficulty deciding on a way forward, Intel’s Managing IT for Business Value Capability
Maturity Framework, can offer a way of understanding current competence and provide a road map for
improvement. Butler Group advocates that organisations start the deployment of tactical solutions to
achieve level three, as soon as possible, and have plans to reach Levels four or five, in all capability areas
over the next two to three years.
SeaQuation Approach
SeaQuation advocates an approach combining multiple disciplines to provide an holistic view of an
enterprise’s IT Portfolio, including both risk and return. Most organisations are under increased stakeholder
scrutiny, greater demands for governance, and IT management are expected to deliver more with less. This
makes understanding the financial investment and the risk in an IT Portfolio of even greater significance.
The approach includes a collection of analytical and actuarial techniques to quantify IT investments so that
strategies to deliver value to the enterprise, customers and stakeholders can be developed and sustained.
A benchmarking data repository containing empirical evidence on several thousand live and completed
projects backs up SeaQuation’s methodologies and metrics.
SeaQuation’s ING parentage means it employs Financial and Actuarial Economics to measure the real
returns on IT investments. A Capital Asset Pricing Model is used to determine the risk-adjusted yield of IT
investments against the expected return of other asset classes within the investment portfolio. SeaQuation’s
approach provides a common denominator allowing valid comparisons between the cost, benefit, and risk
of each of the investment categories and to estimate the opportunity cost. Anticipated returns must always
be related to risk, with the higher the risk the better the return that should be generated.
To start with, an understanding of the size and shape of the total portfolio is required. This can be
straightforward for a single organisation but it can be rather more problematical for large multi-national
entities. However, it is important to gain a complete picture of the portfolio to make sure that the appropriate
resources are prioritised towards those projects that are likely to deliver real value. Ideally, the portfolio
should consist of currently approved projects as well as those making the way through the approval process.
This provides better visibility, improves resource allocation, and enables proper monitoring.
Figure 7.1.4: Integrated Approach (Source: SeaQuation)
Mandatory projects consume resources and are in most instances given priority in order to meet regulatory
or other imposed deadlines. It is essential to have an understanding of the impact that these projects have
on the delivery of the rest of the portfolio. From a governance and value viewpoint most of the interest will
be on the discretionary projects, although it is important to bear in mind that the delivery of value is reliant
upon the successful deployment of all projects.
A key aspect of Portfolio Management is understanding the amount of value creation a discretionary project
is expected to contribute to the organisation. However, the situation will change during the lifecycle of a
project, which could impact the original assumptions in the business case. There needs to be a process of
continual assessment, SeaQuation suggests on a monthly basis, during the development phase of projects
feeding into the financial, risk and other relevant components of the business case. This ensures that
portfolio management and governance utilises the most up-to-date information.
The approach uses, amongst other tools, the cumulative NPV graph illustrated in Figure 7.1.5 to show value
creation (and potential destruction) within the IT investment portfolio. In this illustrative example from a total of
nearly 100 optional projects, positive value is expected to be obtained from around half, and fewer than 20 will
deliver 80% of the positive value in the portfolio. On the downside, there are around 30 projects that look to be
delivering zero or negative value. In this situation SeaQuation would propose two actions:
1. Review all negative NPV projects to determine whether they should be cancelled, rationalised, or re-
scoped. Management must be prepared to take appropriate action on those projects that are not
performing. This is essential if proper governance is to be achieved.
2. Ensure that the main projects are properly resourced and managed, to make certain they will produce
the intended value.
Figure 7.1.5: Example Cumulative NPV (Source: SeaQuation)
SeaQuation believes ensuring value is obtained from investment in IT is an essential element of IT

governance and the process needs visibility, leadership, and commitment from the top. All types of
investment, and IT is no exception, should not be undertaken without understanding the expected cost and
the anticipated return, which should always be related to risk. To make sure the whole process works and
becomes part of organisation culture it is essential to establish proper tracking mechanisms and it is crucial
to make active portfolio management part of the enterprise.
7.2 CASE STUDIES
Intel – BVI Adoption

The Business Value Index (BVI) has assisted in decision-making activities over a wide variety of IT projects.
For example, Intel’s IT Research and Development, Distributed Systems Management (DSM) team, People
Systems group, IT Innovation organisation, Customer Services group, and Global Infrastructure teams are
using the tool to prioritise project portfolios.
A successful initiative prioritised through BVI is the Content Distribution System project, a peer-to-peer
middleware services and knowledge management system. Using BVI, the
proof-of-concept was prioritised for this project and provided approval for development. Following the
successful proof-of-concept, this project has now emerged as a potential next-generation technology for IT.
The electronic Content Distribution System (eCDS) project has also utilised BVI. The development of eCDS
was appraised before it was integrated into SKOOOL, a national educational portal in Ireland. The
preliminary BVI evaluation proved accurate, resulting in a successful implementation. In parallel with
SKOOOL, eCDS has also been integrated internally into an e-learning site, and externally at the University
of Reading, as part of a pan-European, e-learning educational initiative.
The Telecom and Call Centre Services (TCCS) group in Intel’s IT Global Infrastructure organisation, recently
adopted BVI into the business process. TCCS is responsible for infrastructure projects funded by IT and for
pay-per-view projects financed directly by IT customers. The group wanted a method to help prioritise the
diverse projects and make the right investment decisions. In light of the recent economic environment,
prioritisation became an even more important process in business management.
TCCS turned to BVI as a potential tool to help solve these prioritisation dilemmas. A group composed of
TCCS managers and project managers studied the BVI tool and started a pilot effort that evaluated whether
BVI would fit business requirements. The group selected a set of current and potential future projects for
the pilot and used the BVI tool to conduct assessments.
As the pilot concluded, the group conducted a survey to gather feedback. The pilot team found the BVI tool
valuable in helping them understand and assess the business impact of projects and communicate that
information more effectively to customers. The tool also helped the team better prioritise projects. The team
commented that the time spent going through the process was well invested.
The group presented their findings to senior management, resulting in adoption of BVI as part of ongoing
business processes. Every project request is now associated with a BVI assessment before consideration for
funding approval.
Microsoft – Isle of Man

The Isle of Man is a self-governing dependent territory of the Crown, which is not part of the United
Kingdom, serving a population of more than 76,000. The Isle of Man Government (IoMG) was running a
number of disparate platforms. This was complicated to manage, and was preventing the Government from
fully achieving its e-government objectives and compromising the high-level of service it wanted to deliver
to its citizens.
The IT infrastructure was reviewed as part of its Joined UP Information for The Electronic Resident
(JUPITER) programme. This review identified the need to standardise and consolidate on a common
platform to reduce complexity and cost, and enable its small IT team to better support the organisation in
more value-add areas. The Government has 200 application servers spread over multiple locations. The
eventual aim is to put these into two data centres through physical, and then logical, consolidation.
The recommendation was the need to move from its disparate platform mix of operating systems, UNIX,
Novell, and SUN, and standardise on a common platform based on Microsoft Windows Server 2003, running
mainly on Unisys ES7000 and ClearPath servers. Microsoft and Unisys plan to complete the work by 2006,
with the objective of improving security, reducing costs, and enabling quicker deployment of systems.
The ultimate goal is to provide citizens with more value through the availability of enhanced service delivery,
and ensuring that they receive a superior customer experience. The IoMG wants to make the services it
offers to individual citizens and businesses seamless and more joined up, to ensure the continued economic
growth and prosperity of the island.
Microsoft – Tesco
Tesco is the leading supermarket in the UK with over 15 million customers shopping in its stores every week
in the UK. The retailer continues to explore new ways to improve store operations and the customer
experience. In market share and sales, it is outperforming rivals and is leading a revolution in retail, by
placing the customer at the heart of its every day operations.
Tesco has just replaced its in-store delicatessen, butcher, fish, and bakery weighing scale infrastructure with
a new system. Scales have a two-fold role, to provide the customer with accurate pricing information and
to capture data. Tesco was experiencing problems with its scales, as they were slow, provided no timely
information on what was sold or staff productivity, required lots of maintenance, and training staff to use
them was difficult.
Tesco wanted an intelligent counter scale system that could be managed centrally, would provide a wide
range of product and stock information, was easy-to-use, and, above all, was reliable. Any new system had
to easily integrate with Tesco’s existing IT infrastructure, and provide timely summarised data to the head
office for analysis and supply real-time purchase information to other systems. Tesco asked Conchango to
design and implement an intelligent counter application. The vendor used the Microsoft .NET Framework
to create the scales applications, and deployed Web services and Microsoft Message Queuing (MSMQ) to
share data between the server systems.
The system enables counter staff to serve customers much faster, and access product information
through a touch screen with a series of icons representing products. Product information can be updated
at any time and staff can easily answer questions about the products. The system also records
information key to management processes, such as stock availability, and provides summarised
information to Tesco head office. The deployment of this kind of innovative solution can provide added
value through enriching the customer experience, a key organisational value driver for Tesco, and also by
improving knowledge capital.
SAS – Belgacom
The efficient management of IT equipment is vital to achieve business success. This is particularly true
when the IT infrastructure is as large as that at Belgacom, Belgium’s principal telecom operation, where
accurate and complete information about capacity usage systems is essential for proper management of
the company’s business activities.
With more than five million telephone connections, Belgacom is Belgium’s communication market leader.
Its key businesses include voice and data transmission, managed solutions, Internet applications, and
mobile communication. To support such a wide variety of activities, Belgacom relies heavily on an efficient
IT infrastructure. The company’s IT department employs more than 400 people and has 17,500 PCs
installed at 250 supported sites, 200 UNIX servers, 500 Windows servers, and a total storage capacity
of 165 Tb across its entire network. One aspect of Belgacom’s IT infrastructure that was ready for
optimisation was its capacity management. Knowing exactly how much and when any part of the IT
infrastructure was being used allowed the identification of significant saving opportunities.
Before any reporting solution could be successfully implemented, Belgacom first needed to determine the
capacity usage of the hundreds of computers and servers at its offices. The SAS IT Resource Management
solution gathers all of the relevant data and stores it on a central server in Belgacom’s IT hierarchy. This
data is then combined with standard database configuration information to create a data warehouse. Once
that is completed, the reporting tool embedded in SAS IT Resource Management can mine the warehouse
and present clear reports to the user.
The SAS application complements the Belgacom approval process for new IT projects. Previously, when a
new IT project was given the go-ahead, team leaders began purchasing the necessary new hardware for
the projects. Now before procurement is started approval from the capacity manager is required. The
capacity manager studies the IT project and determines whether it is possible to deliver hardware from
unused or available capacity. If so, it is incorporated, eliminating the inefficiencies and unnecessary costs
associated with the purchase of new equipment. This new measurement methodology was in place for
under a year and in this timeframe Belgacom calculated savings of at least €3.9 million.
SAS – Sanpaolo IMI Group
The Sanpaolo IMI Group is Italy’s third-largest commercial bank, with 7 million customers, 3,000 branch
offices, 45,000 employees, and total assets of €213 billion in 2004. Its business growth has been
achieved through organic growth, as well as mergers and acquisitions, the most prominent of which were
the merger between Sanpaolo and IMI, along with subsequent merges with Banco di Napoli, and Cardine.
As for all large, publicly listed financial institutions, it is very important for Sanpaolo to make its business
activities transparent, something its IT department is also embracing. The company believes that IT must
proactively demonstrate its own value, which means not only capturing the information flowing in and out
of IT systems, but also capturing information about the performance of the IT systems themselves.
To achieve this objective, in 2002 Sanpaolo embarked on an IT governance project and selected SAS IT
Management Solutions for the implementation. The solution enables Sanpaolo IMI’s IT function to control
internal and external Service Level Agreements (SLAs), resource management, economic and time
management. The company found that SLAs brought commercial disciplines into IT management.
Although, making these commitments in the first place is a two-way process that must involve the client;
both parties have an interest in agreeing to service levels.
This has brought about a culture of responsibility and accountability on both sides, with Sanpaolo IMI’s
2,000 IT service providers now owning the problems and having an incentive to act on them, or solve them
before they arise. This greater transparency boosts employee morale and performance, facilitates business
partnerships, and will help Sanpaolo IMI to attract and retain consumers and investors. The company’s
experience also demonstrates that greater transparency can help reduce costs.
Telelogic – Swedbank
Cost will always be a factor when deciding on project investments, but it is no longer the only aspect, in
today’s intensely competitive financial services world, market leading firms need to consider much more.
This includes the importance of managing value throughout the Project Portfolio Management (PPM)
process to maximise ROI and improve competitive advantage. This was a consideration for Swedbank one
of the largest banking groups in the Nordic area with around 15,000 employees, and about 8 million private
customers in Sweden and the Baltic States.
The inability to make rapid decisions based on prioritised information can inhibit a company’s development effort
driving up costs, missing market opportunities, and severely impacting both revenue and competitive advantage.
The company embraces a strategy that makes it possible for most business decisions to be made at its local
banks by the people who best understand the customers banking needs. The institution recognises that this
makes for efficient, decentralised banking, and it supports a vision for collecting new project ideas in a the same
way. Accordingly, the various personnel from the local banks register their new proposals for business and IT
projects in Focal Point using a standardised template that is easy-to-use and covers all the relevant areas.
Using the Focal Point solution, Swedbank now creates proposals that focus on business aspects, rather than
technical aspects. The solution collects and monitors information, such as business value, strategic value,
and risk. Focal Point automatically calculates business metrics, such as NPV, ROI, and nominal
accumulated cost and value, which are related to the requirements and business goals. All financial
information is aggregated and displayed on a user-configurable dashboard. Focal Point’s built-in business
rules continuously monitor the business metrics and automatically notify the appropriate users of deviations
from expected project behaviour throughout the development process. This way, problems are identified and
dealt with before they ever become issues.
By adopting the Focal Point Platform and using its prioritisation, decision-making, and planning capabilities
to determine what is most important to its customers, Swedbank believes it is gaining a competitive edge
over other financial institutions that still base their important project decisions purely on cost.
7.3 IT COST AND VALUE FRAMEWORK

Measuring IT costs and value embraces the entire IT environment and is therefore difficult to condense into
a simple framework and in many respects should be embedded in IT Management and Governance
processes, and not be a method in its own right. However, it is important to identify the key techniques and
approaches to enable IT management to ensure that the right concepts and techniques are being used by
the relevant roles within the organisation. The framework is not intended to be prescriptive but is provided
as a guide to those who wish to improve measurement of IT cost and value.
Butler Group cautions against identifying too closely with frameworks that are pyramid in nature, with
strategic initiatives at the top and infrastructure at the bottom, sandwiching management and applications
in between. Whilst, this equates to the investment currently apportioned to each area, they do not cater for
the fact that on occasions, the organisation strategy could be to focus on cost efficiencies with investment
directed at IT services or ‘Run the Organisation’ initiatives.
Figure 7.3.1: IT Cost and Value Model

The most important aspects of measuring IT cost and value are transparency and visibility, this is reflected
in the framework by the central feedback loop connecting all the IT organisations and stakeholders.
Communication channels are key if the IT department is to become a strategic partner and understand the
value drivers of the organisation. The techniques and mechanisms to achieve this have been documented
elsewhere in this Report, but suffice to say that the most important methods, such as benchmarking,
business cases, Balanced Scorecards, and dashboards, all help to communicate the performance measures.
The framework also highlights that at the centre of successful measurement processes are methods such
as, IT governance, Performance Management, and Enterprise Architecture, along with the utilisation of an
integrated toolset linked to a common repository.
SECTION 8:
Vendor Profiles
Butler Group
Accenture
Strategic Information Technology Effectiveness (SITE)

SITE is an Accenture group that helps top management achieve greater business value from IT. It has the
clear perspective that IT is not merely a cost but a critical contributor to the business, focused on improving
business value and performance. When it comes to managing IT, balancing the ‘cost reduction versus value
creation’ equation is critical.
Accenture’s SITE practice focuses on improving the business value of IT. It says that its professionals are
experienced with bold, value-creating approaches to IT, bringing boardroom-relevant criteria to IT
investments, and helping high-performance businesses to ‘think bigger’ about IT’s ability to improve
operating results. To help senior executives in this effort, Accenture’s SITE practice has developed an
approach to IT that addresses the factors that determine how a company uses IT successfully to create
shareholder value.
Accenture’s specific services include:
Focusing the IT Debate on Creating Business Value – Using boardroom-relevant metrics and recognised
diagnostic tools, Accenture transforms the IT debate from “utility” to “value creation.”
Creating Powerful Propositions for IT-enabled Change – The company works with senior management
teams to frame the business rationale for significant change where IT is a major component.
Optimising the IT Investment Agenda – Accenture’s experts devise clear investment roadmaps to help
companies balance short and medium-term investment agendas, appropriate for the economic climate.
Transforming IT to Deliver Improved Capability and Business Results – It delivers a comprehensive
approach to transforming the IT organisation for better business performance.
Company Profile
Accenture (NYSE:ACN) is a global management consulting, technology services, and outsourcing company,
committed to delivering innovation. It collaborates with its clients to help them become high-performance
businesses and governments. The company says that with its deep industry and business process expertise,
broad global resources, and a proven track record, Accenture can mobilise the right people, skills, and
technologies to help clients improve their performance. In the 12 months ended 31 August 2004, it
achieved net revenues of US$13.67 billion for the fiscal year.
With more than 110,000 employees, which includes approximately 2,300 partners, Accenture has global
reach with more than 110 offices in 48 countries, in three geographic regions of the Americas, Asia-Pacific,
and Europe/Middle East/Africa (EMEA).
Accenture – United Kingdom
1 Kingsway
London
WC2B 6XD
UK
Tel: +44 (0)20 7844 4000
Fax: +44 (0)20 7844 4444
www.accenture.com
September 2005 Section 8: Vendor Profiles 133

Alinean
Alinean IT Value Management (ITVM)

Alinean IT Value Management (ITVM) solutions comprise a software toolset designed to create third-party
validation for Return On Investment (ROI) calculations on IT investment. ITVM provides a framework that
allows for a common understanding of IT spend, and for measurement of the effectiveness of an Enterprise’s
IT Budget against vertical market competition. The changing roles of the CIO demand closer understanding
and reporting between IT and the rest of the body corporate, and ITVM has the functionality required to
make this possible. With its form-based methodology, and numerous templates for project scenarios, it can
start providing value from day one. The cost is such that there is little risk involved in putting the product
through its paces, and it would be surprising if any implementing organisation did not want to extend the
use past a pilot project. The depth of analysis available and the algorithms and methodologies used, make
ITVM a strong contender to become an accepted standard for all organisations.
More than ever, CIOs and IT Executives are being tasked with proving the impact of IT spending on the
bottom-line, and justifying the value of each planned investment. To meet these challenges, Alinean has
developed a complete budget and planning platform to help IT executives create and build bullet-proof
project ROI and budget plans – and quantifiably prove the value of IT investments. The suite includes:
ROI Analyst™- Enterprise
Alinean says that over 80% of companies require ROI and Total Cost of Ownership (TCO) analysis on
projects, yet most do not have the knowledge base, staff capability, and
third-party references to do so effectively and credibly. ROI Analyst™- Enterprise, delivers tools to make ROI
and TCO analysis easy for those without financial expertise, but able to withstand CFO scrutiny. The ROI
Analyst™- Enterprise solution provides the standard platform for Enterprise collaboration on IT project ROI,
TCO, and budget analysis. It uses a library of ROI templates and worksheets to help IT executives, project
managers, and business unit managers to quickly develop and analyse the costs, benefits, and risks of any
planned projects.
ROI Analyst™- Enterprise aids in the evaluation and justification of project plans by providing answers to
the following questions:
What is the ROI and Value of each planned project?
What are the project’s strategic benefits and potential risks?
Which proposed projects have the best returns, highest strategic impact, and lowest risk?
How can all stakeholders better collaborate, communicate, and rationalise decisions more effectively?
What impact will the portfolio of proposed projects have on budget and corporate financials?
How can IT prepare compelling presentations and prove value?
PeerComparison™- Enterprise
The Peer Comparison™- Enterprise tool analyses how a company’s financial performance and IT spending
compares with more than 20,000 publicly held companies worldwide, in more than 400 different industry
segmentations. The analysis is used as the basis for SearchCIO’s 200, and used by CIOs worldwide to help
maximise returns from their IT investments.
Peers can be selected by industry, company size, revenue, geography, or name. By comparing the
company’s IT spending and performance to benchmarks in over 400 key IT spending and financial
performance criteria, all stakeholders are better equipped to identify highest areas of opportunity, establish
meaningful spending plans, justify planned projects, prove value, and drive competitive advantage.
134 Section 8: Vendor Profiles September 2005

It benchmarks an organisation’s Return On IT (ROIT™), Financial Performance, IT spending, and TCO to

uncover opportunities and prove value by answering the following questions:
How does IT spending compare to peers?
How does the overall value derived from IT compare with its nearest competitors?
What opportunities exist for savings or improved performance?
ValueExpert™ Services
Alinean provides both Advisory, and Collaboration and Validation Services to assist enterprises in delivering
what it terms Business Performance. Advisory Services comprise:
ValueExpert™ Decision Support Services – this one-five day mandate leverages Alinean’s independent
research and a team of its IT ROI value experts to produce or validate a complete business case analysis
of IT investment decisions.
ValueExpert™ Decision Workshop – a hands-on, action-learning workshop around a specific IT
investment decision. The workshop includes instructor reviews and debrief.
ValueExpert™ IT Performance Benchmark Reviews – Alinean ValueExperts provide an assessment of an
organisation’s IT spending effectiveness relative to a select set of up to 12 industry peers and best
practice companies from the company’s database of over 5,000 organisations globally. The analysis
includes Gap analysis against Peer Universe and industry averages, Identification of “hot spots”, and
recommendations for IT investment re-prioritisation and re-alignment.
ValueExpert™ Success Assurance – Alinean’s subject matter experts provide deployment and adoption
assistance, project management, and ongoing feedback, to ensure that an organisation proceeds towards
Value Management best practices and self-sufficiency.
Collaboration and Validation Services include:
ValueExpert™ Secure Hosted Collaborative Environment – where the company’s Value Experts instantiate
ROI Analyst™ IT Value Measurement solution in a secure, hosted environment that an enterprise can use
internally or to provide managed access for project-based collaboration with technology partners and vendors.
ValueExpert™ Validation – Alinean Value Experts provide an additional degree of confidence based on
Alinean independent Value Experts’ review of business case assumptions and vendor (or collaborative)
business case recommendations.
ValueExpert™ Content Development – where Alinean Value Experts work with an enterprise’s subject
matter experts to develop highly relevant and complete value measurement models, based on Alinean’s
independent research and real-world metrics.
ValueExpert™ Business Performance Integration Services – where Alinean leads a co-operative effort with an
organisation and its Business Performance Management technology partners and consultants, to deploy a fully
integrated total lifecycle IT value management system for ongoing measurement and continuous improvement.
Company Profile
Alinean is a privately owned company headquartered in Orlando, FL. The team behind Alinean IT Value
Management (ITVM) created the first TCO and ROI software tools company, Interpose, in 1994, and this
was subsequently sold to Gartner in 1998. Alinean employs a number of people from the consulting/analyst
community to provide the insight needed to provide required functionality.
It employs up to 30 people, all in the US, and it sees future growth for the company based more on
partnerships, with internal staff mainly dedicated to R&D.
As a private company, Alinean is not prepared to divulge any financial information, but it states that it is
profitable, and that 90% of its revenues come from the US market.

Key clients using Alinean IT Value Management (ITVM) IT include:

Deutsche Bank. JP Morgan Chase.
HP. SAP.
IBM. Sun.
Alinean
13501 Ingenuity Drive
Suite 212
Orlando, FL32826
USA
Tel: +1 (407) 382 0005
Fax: +1 (407) 382 0906
E-mail: info@alinean.com
www.alinean.com
Artemis International Ltd.
Artemis Solutions for Information Technology Management

Artemis IT Management (ITM) offers a highly customisable, guided process for constructing a performance-
based budget, which can be as simple or as sophisticated as required, to fit the needs of the organisation. The
required budget can be built up on a project and asset basis, and then funds can be allocated from different
departments or other funding sources. The proposed portfolio can then be scaled to reflect the budget available,
and go through an arbitration phase prior to final publication. The budget plan can then be transformed into an
IT operational plan, and achievement and expenditure against budget can be reviewed on a continuous basis,
with budgets being dynamically reallocated if required, to meet changing priorities. Artemis ITM also maintains
a perspective over the life of multi-year projects, so that any changes are reflected into future periods.
The Artemis ITM solution helps IT executives establish effective IT governance over both strategy and
execution by providing increased visibility and improved decision-making techniques associated with a
dynamic budgeting process to enable realignment of expenditures. This is achieved via a unique top-down
and bottom-up solution, which associates Project Portfolio Management with Dynamic Budgeting, Project
Monitoring, and Resource Management. To cut-down in implementation time while ensuring effective results,
this fully Web-based solution provides a set of pre-defined deliverables specific to IT business issues:
Recommended portfolio and IT process.
Cost and benefit structures with immediate graphical representation.
Typical investment categorisation for analysis and prioritisation.
Standard investment lifecycle stages.
Suggested user roles with security access rules.
Pre-configured reports and scorecards based on industry standards and best practices.
Standard implementation approach including an assessment step designed to evaluate the solution
against specific needs.

The pre-defined solution approach, combined with a phased implementation, allows tangible benefits to be
achieved in a short time frame. Artemis says that based on feed-back from its customers, the Artemis
solution allows IT organisations to achieve:
Improved visibility and alignment of IT investments with the business strategy to better support the
organisation’s objectives.
Common ownership of the investments between IT and the business through a standardised justification
process.
Improved accuracy and speed of budgeting process for better allocation of capital and resources.
Better reaction and decisions in dealing with unplanned initiatives.
Intelligent cost reduction by identifying IT investments and assets that bring insufficient value.
Alignment of investment planning with execution to ensure benefits achievements.
A particular strength of the Artemis solution is its ability to provide multiple analyses of the IT portfolio,
including graphical views, showing factors such as project risk and reward, technology impact, and business
value.
Company Profile
Artemis International Solutions products are targeted at project, portfolio, and resource managers. The
company provides investment planning and control software that helps organisations manage their
information technology resources, product development, assets, and investment portfolios through a
collaborative workflow management and analytics system. Its software enables companies to plan, budget,
and share information about projects or resources through Web-based portals. Artemis targets customers in
the aerospace and defence, energy, pharmaceuticals, government, and financial services industries.
The company was founded in 1976 and it has refined its experience into a suite of industry-optimised
solutions that integrate application modules with packaged consulting services to provide an immediate
response to business needs. Solutions can be deployed throughout the organisation to address all the
investment planning and control needs including; IT management, new product development, program
management, strategic asset optimisation, and detailed project and resource management.
With almost 600,000 users worldwide, and a global network covering 44 countries, Artemis has helped
thousands of organisations to improve their business performance through better alignment of strategy,
investment planning, and project execution.
Artemis International Solutions Corporation Artemis international Ltd.

4041 MacArthur Blvd. Regus House
Suite 401 268 Bath Road
Newport Beach Slough, Berkshire
California 92660 SL1 4DX
USA UK
Tel: +1 (800) 477 6648 Tel: +44 (0)1753 727100
Fax: +1 (949) 660 6501 Fax: +44 (0)1753 727099
E-mail: info@us.aisc.com E-mail: info@uk.aisc.com
www.aisc.com

Atlantic Global Plc
Corporate Vision
Corporate Vision encourages service-based organisations to re-examine their fundamental value creation
process – in terms of how they allocate and balance human and physical resources against the demands
placed upon them, the costs associated with the activities, and the time taken to complete them. To refer
to Corporate Vision as an advanced timesheet and PPM solution, whilst not wholly inaccurate, would be to
miss the real value it can deliver. Through increased visibility and simplified traceability and management,
Corporate Vision is able to foster an altogether more holistic and realistic approach to project management,
resource allocation and forecasting, time management, and budgeting and planning – in essence, the
foundations of good business practice. The solution is designed for extremely rapid and simple role-based
deployment. However, the most difficult part undoubtedly lies in encouraging and managing the cultural
change required to get the most out of the product.
The approach adopted by Atlantic Global differs greatly from other vendors that market solutions in this
area. Atlantic Global aims to deliver a higher level of control and visibility of information, taking the onus
away from departmental and project-specific capabilities, to more of an integrated, role-based, business-
wide platform.
In particular, Corporate Vision provides enterprise resource management functionality, from simple skills
management to the real time visibility of resource supply versus resource demand, thereby allowing
potential problems to be flagged early on. In the area of project management, Corporate Vision addresses
the challenge from one of milestone tracking, rather than the traditional task-based approaches, again with
the view of providing better overall visibility and more actionable and relevant information.
Key feature areas in Corporate Vision include:
Portfolio Management, which establishes a clear line of sight from the top-level, pan-initiative view right
down to the individual project layer, allowing managers and executives to clearly see and understand
how effective their strategies are, and if necessary, which programs or projects to review.
Resource Management provides resource managers with the ability to match supply and demand, and
clearly demonstrate to the rest of the business where potential shortfalls exist.
Project Management integrates data, projects, resources, and time management, and then acts as a
central facility for describing and instilling best practice project management disciplines right into the
heart of the business.
Corporate Vision provides service-based organisations with visibility over their resources, projects, and
initiatives that is superior to a typical departmental or project-centric approach. In order to achieve this,
Corporate Vision blends financial management disciplines with resource management and project
management, to give its users a better understanding of what is currently happening. It then builds on this
by acting as a role-based platform for proactive planning, more effective resource utilisation, and hence
improved profitability.
Company Profile
Atlantic Global’s head office is in Bradford with satellite offices in London and the US. It currently employs
31 people in the UK, split mainly between Bradford and London, with the following functional breakdown:
R&D – 9, Marketing – 5, Sales – 8, Support – 2, Consultancy – 6, Administration – 3, Board – 8 (some
overlap with the above). The vendor intends to bolster this headcount with further recruitment in the sales
and R&D functions expected.
The company was founded by the current CEO, Eugene Blaine, in January 1993, with the specific aim of
developing business software products in the time management field. After moderate success, in 1998 the
Atlantic Business Suite of software products was launched, which marked the ‘true beginning’ of the
company. The company is now publicly traded, following initial listing on the Alternative Investment Market
in June 2001.

The past three years published financial figures are as follows (UK£000’s):
2004 2003 2002
Turnover 2,146 1,956 1,551
Gross Profit 850 1,374 927
The forecast for FY 2005 is UK£3.2 million, which if confirmed will indicate extremely promising growth.
Atlantic Global has 78 customers, all of which can be referenced, which indicates the company’s confidence
in its solutions. These include Barclays Bank Plc, Virgin Mobile, Logica CMG, Norwich Union, Man Group,
Telewest, 3 mobile, and Computacenter.
Atlantic Global Plc Head Office
Park House
Woodland Park
Bradford Road
Cleckheaton
West Yorkshire
BD19 6BW
UK
Tel: +44 (0)1274 863300
Fax: +44 (0)1274 865966
E-mail: info@atlantic-global.co.uk
www.atlantic-global.net
BMC Remedy
Remedy IT Service Management Suite

Remedy IT Service Management (ITSM) Suite is a fully IT Infrastructure Library (ITIL)-compliant suite to
support the IT service function within medium- to large-sized organisations. A fully operational IT service is
essential to the majority of organisations today, who rely heavily on high uptime, and excellent service levels
– but the complexity of the IT infrastructure means that manual methods of monitoring such services are
unlikely to be successful. Remedy provides a highly flexible, user-focused suite of tools that can be
customised to suit existing processes, as well as best-practice processes out-of-the-box. Plans to create
closer partnerships with other tools vendors will help Remedy ITSM to cover areas, like asset discovery, that
depend on such tools at the moment. Larger organisations that have a complex infrastructure to support,
and find it hard to determine which areas are causing the most pain, would benefit from Remedy’s ITSM
solution. The suite can be deployed in a modular fashion, enabling problem areas to be attacked first.
Remedy IT Service Management for the Enterprise is a suite of highly flexible applications from BMC
Software that takes a uniquely integrated approach to automating IT service and support. Remedy Help
Desk, Remedy Change Management, Remedy Asset Management, and Remedy Service Level Agreements
work together seamlessly straight out-of-the-box. Shared workflow, a consistent user interface, and a
common platform result in fast implementation, low TCO, and synergy between related ITIL processes,
including incident, problem, change, configuration, service level, and financial management.
Each application in the suite is part of one or more Business Service Management Routes to Value™ –
complete solutions that can be implemented independently for quick ROI but that ultimately function
together to deliver business-IT alignment. In addition, along with other BMC Software solutions, each share
common infrastructure services, such as, the BMC® Atrium™ Configuration Management Database (CMDB).
By operating on this common model of the IT environment, service and support applications and
infrastructure management are finally unified.

Built on the Action Request System® (AR System®) service process management platform, the Remedy IT
Service Management Suite provides proven best practice processes to get organisations up and running
quickly, and the flexibility to configure and extend processes –without programming. Remedy says that this
both improves business effectiveness and lowers TCO.
Remedy Help Desk provides the foundation for an integrated, end-to-end approach to IT Service
Management, automating the organisation’s ability to submit, monitor, and manage help desk cases, change
requests, and asset inventory records.
Remedy Change Management enables IT to implement the critical, standardised processes needed to
effectively manage enterprise change processes – from request to planning to implementation, to
verification.
Remedy Asset Management provides best practice automation of IT asset lifecycle management from
requisition to retirement, and enables contract entitlement, compliance management, and total cost and
financial controls.
Remedy Service Level Agreements enables IT to manage the entire range of Service Level Agreement (SLA)
processes, from defining SLAs and monitoring compliance, to collecting and analysing performance data,
addressing problem areas, and continually refining the services offered.
Company Profile
Remedy, a BMC Software company, has headquarters in Sunnyvale, California. The company also has major
offices in the Asia-Pacific region and throughout Europe, including Paris, Frankfurt, and Milan, with the UK
head office in Egham, Surrey. Its parent company, BMC, has headquarters in Houston, Texas, and
international headquarters in Amsterdam, The Netherlands. BMC has research and development offices in
the US, France, Singapore, Israel, and India.
While Remedy has had a long history of profitability and stable growth, having originally been founded in
1990, it went through a period of uncertainty when Peregrine Systems Inc acquired it. Since November
2002, Remedy has found new owners under the wing of BMC Software; however, it retains a strong sense
of separate identity, and operates as an independent business unit within BMC Software. Since then the
synergies between the solutions provided by both BMC Software and Remedy are growing. BMC Software
is quoted on the New York Stock Exchange under the symbol BMC.
Customer satisfaction is extremely important to Remedy, and it carries out regular surveys that indicate good
rates of satisfaction, resulting from its own help desk service. It also has an Executive Advisory Council
made up of major customers, which meets as part of the annual user group conventions and helps to drive
future direction.
Remedy employs some 800 staff overall. Remedy has in excess of 7,000 customers, including 79% of the
Fortune 100, and 83% of the top 100 European companies.
Remedy, a BMC Software Company Remedy

1030 West Maude Avenue Assurance House
Sunnnyvale Vicarage Road
CA 94085 Egham, Surrey
USA TW20 9JY, UK
Tel: +1 408 571 7000 Tel: +44 (0)1784 478478
Fax: +1 408 571 7001 Fax: +44 (0)1784 478479
E-mail: info@remedy.com E-mail: euinforem@remedy.com
www.remedy.com

BMC Software
Business Service Management

BMC offers a range of solutions that help organisations to optimise IT performance, including the
management of enterprise applications, networks, databases, and other infrastructure elements, with a strong
focus on the business requirements of the organisation. IT infrastructures have become very complex, and
the effort involved in their management can be disproportionate to the business needs – often all applications
may be monitored equally when it might be more appropriate to manage business-critical areas more
thoroughly, and automate other areas as far as possible. The breadth of management capability is one of
BMC’s key strengths, with tools to support both distributed and mainframe infrastructures. There is less focus
on the support of internally developed applications, although the underlying infrastructure technologies are
well supported. Medium to large organisations with a heterogeneous applications infrastructure, based on
more standard industry components, are likely to benefit most from BMC’s offerings.
The management of the systems environment has become very complex in most large organisations.
Systems impact upon each other, and small changes can have a catastrophic effect if not correctly handled.
BMC has developed a very broad suite of technologies to help manage change and speed up delivery in the
systems environment, including the following components:
Service Level Management.
Incident and Problem Management.
Infrastructure and Application Management.
Service Impact and Event Management.
Asset Management and Discovery.
Change and Configuration Management.
Capacity Management and Provisioning.
Identity Management.
Business Service Management (BSM) from BMC Software provides an incremental approach to understanding
and meeting the specific business needs of enterprises. The company says that with BSM customers can
identify the best technology solution to support their business and make the most of their current investments.
BMC asserts that faster, more comprehensive and consistent services can be delivered, increasing revenue
opportunities, lowering the cost of ownership, and reducing the risk of unnecessary IT expenditures.
BMC says that its open approach to enterprise management integrates its best-of-breed products with
enterprise’s current structure, and offers proven ways to accelerate IT-business alignment and realise near-
term ROI. BSM supports best practices such as ITIL, so that customers can leverage proven methodologies
to assess and optimise their current systems and lower the TCO across their organisations.
BMC’s BSM Managed Services deliver best-practice enterprise management as a service, combining the
capabilities of BMC Software products with the in-depth expertise of service provider partners and a pay-
as-you-go model.
Company Profile
BMC Software is one of the largest software providers in the world, and it is a member of the S&P 500. It
was founded in September 1980, and has grown both organically and by acquisition since taking on
PATROL in 1994, BGS Systems in 1998, Boole & Babbage and New Dimension Software in 1999, Perform
SA in 2001, and Remedy in 2002.

The company has its headquarters in Houston, Texas, with its International division based in The
Netherlands. The company has an extensive network of offices throughout the world, and BMC research
and development offices are located in the US, France, Singapore, Israel, and India. The company is
publicly traded on the New York Stock Exchange [NYSE: BMC].
BMC Software has over 6,000 employees worldwide; 2,200 in sales and marketing, about 500 in professional
services, and 2,000 in research and development. Around a third of its employees are in the EMEA region.
Total revenues for the last three fiscal years ending 31 March are:
Year 2004 (US$ millions) 2003 (US$ millions) 2002 (US$ millions)
BMC Revenues 1,400.0 1,326.7 1,288.9
BMC has approximately 13,000 customers worldwide, including those of its Remedy subsidiary. BMC says
that over 80% of the Fortune 500 companies rely on its software products. Key customers for its APM
solutions include Corio, Egg Plc, ForeningsSparbanken, UBS, and The Salvation Army.
BMC Software BMC Software
2101 City West Boulevard Assurance House
Houston Vicarage Road, Egham
Texas 77042-2827 Surrey, TW20 9JY
USA UK
Tel: +1 713 918 8800 Tel: +44 (0)1784 478000
Fax: +1 713 918 8000 Fax: +44 (0)1784 430581
www.bmc.com www.bmc.com/uk
Borland
Software Delivery Optimisation

Borland’s Software Delivery Optimisation (SDO) programme, its vision for application development, is a natural
progression for the company that started with individual productivity products, which progressed to an Application
Lifecycle Management (ALM) suite, and now the next level of abstraction melds tools, team management, and
methodology. SDO covers the complete path from software inception to product delivery and management. The
tools aspect features deep embedding of appropriate functionality for a set of roles: Analyst, Architect, Developer,
and Tester; this goes beyond merely having the convenience of a single console for launching tools. Borland’s
recent acquisition of TeraQuest, the Capability Maturity Model (CMM) specialist, allows it to offer the spectrum of
development methodologies in on-site mentoring and training through its Professional Services division. Borland
has positioned itself as a platform agnostic application development enabler, which will appeal to many
organisations, particularly at the large enterprise end, seeking to reduce project risk.
SDO is designed to enable IT organisations to reduce their software delivery risk by transforming software
development into a managed business process. One way it does this is by aligning business stakeholders
with software development, and in turn aligning software development with IT Operations. The
manifestation of the SDO vision is divided into three projects: Themis, Hyperion, and Prometheus,
representing visibility of IT at increasingly higher levels of the business. The various deliverables within these
projects are occurring simultaneously, so while the projects are layers of an ‘onion’ model, they are not
milestones on one chronology.
The first deliverables, designated Core Software Development Platform (Core SDP) Functionality, are as
follows (indicating the project source in brackets):
Team-Work Infrastructure (Themis): Role-Based Development, Change Management, Traceability,
Artifact Management, Process Management, and Technical Foundation.
Visibility and Predictability (Hyperion): Decision Support.
ERP For Software Delivery (Prometheus): Risk Management.

There are several unique competitive differentiators in this offering compared to the standalone ALM
component products. The Core SDP components provide a degree of integration that was not available
before in Borland’s ALM products. So, where previously a common console launched separate tools, on Core
SDP the functionality of various tools are embedded at a deeper level within one common console; therefore
depending on the role of the user, there is seamless access to functionality.
Company Profile
Borland (NASDAQ: BORL) has been an application development vendor since being founded in 1983, and
by 1992 it had become a leading client/server tools provider. The mid-1990s saw a change in fortunes, but
a more recent focus upon the core strengths of the company resulted in the return of the Borland brand and
resurgence in performance as well. Financial results for the second quarter of 2004 reported revenues of
US$76.5 million.
Borland’s corporate headquarters are in Scotts Valley, California, US. Following a series of acquisitions, one
of the most high profile of which was the purchase of TogetherSoft, Borland now has around 1,300
employees worldwide. Research and Development, along with distribution, operate on a global scale, with
major offices and development teams based in California, Russia, the Czech Republic, and Singapore.
The net income, operating, and revenue figures for the last three years are:
Year Ending 31 December 2004 (US$ million) 2003 (US$ million) 2002 (US$ million)
Total Revenue 309.5 295.2 244.6
Change in Revenue 4.8% 20.7% 10.3%
Operating Income (loss) 18.7 (39.9) 19.1
Net Income (loss) 11.4 (40.5) 17.3
Borland states that over three million developers in enterprises worldwide, including 25,000 large
enterprises and 95 companies in the Fortune 100, are using Borland products in support of their key
business applications.
Borland Software Corporation Borland UK Ltd.
100 Enterprise Way 8 Pavilions
Scotts Valley Ruscombe Business Park
California, CA 95066 Twyford, Berkshire
USA RG10 9NN, UK
Tel: +1 831 431 1000 Tel: +44 (0)118 924 1400
Fax: +1 831 431 4321 Fax: +44 (0)118 924 1401
E-mail: customer-service@borland.com E-mail: ukcustserv@borland.com
www.borland.com www.borland.co.uk
Business Engine
Business Engine Network™

The Business Engine Network™ (BEN™) is an integrated business and project portfolio management
system, for use in solving complex portfolio, financial forecasting, and project and resource management
issues. It is a single, integrated process and technology framework that improves information visibility, and
better supports related workflows and business processes. It addresses the requirements that organisations
have for rapid decision-making by enabling them to align projects, people, and partners with corporate
objectives. BEN customers typically replace several disparate legacy systems because the BEN provides a
critical three-way linkage between project data, budget data, and resource information, integrating all
project-related information in a single collaborative Web-based solution.

The BEN is a single environment for IT planning, financial governance, and operational execution. IT
organisations use the BEN in partnership with the business to:
Select work in concert with strategic objectives with the BEN Alignment Engine™.
Invest to maximise return with the BEN Financial Engine™.
Execute project portfolios with speed and efficiency with the BEN Delivery Engine™.
Leverage corporate knowledge with the BEN Platform™.
With the BEN, IT executives can better understand their portfolio of projects, make informed decisions
faster, get project teams on the same page for increased performance, and interact more effectively with
project sponsors and customers. With a clear understanding of investments and performance, IT executives
are therefore able to run their organisation like a business – continually working with business leaders to
ensure IT investments are aligned with the highest performing business opportunities.
BEN has been built on the principle that it must drive five primary value propositions that support IT
governance. These comprise:
Align Business Strategy and Execution – This involves integrating executive guidance for portfolio and
financial plans, aligning sponsorship, and project-level execution to ensure that the correct work is
carried out.
Plan and Execute Effectively and Efficiently – workflows should be standardised and business processes
automated to speed up the rate of work.
Leverage Resources – Resources need to be managed across the enterprise to ensure that the
appropriate resources are used including people, partners, money, and assets.
Make Global Teams More Productive – Information should be shared and reused, as well as work
products and templates.
Improve Visibility and Control – The objective of this is to gain organisational transparency so that
problems can be identified and solved before they impact on the organisation.
The above propositions are fairly obvious requirements of a business and project management solution and
Business Engine claims that BEN supports all of these. An area of strength is the integration with Microsoft
Project. BEN embeds Microsoft Project within the solutions, enabling bi-directional transfers of data.
Implementation services can be carried out by internal Business Engine consultants, Business Engine third-
party implementation partners, or client-preferred partners. Training is generally performed as part of the
implementation process, with Business Engine preferring the training-the-trainer approach.
Support is provided through two Global Support Centres located in Ontario, California, US and Brussels,
Belgium. Round the clock support is provided through the opening hours of the two centres, which means
that when one centre is closed the other centre can provide support.
BEN supports MS SQL Server or Oracle. It runs on Windows NT 4 or 2000, and UNIX platforms that are
TCP/IP enabled, such as Sun Solaris, HP-UX, or IBM AIX. The BEN supports the following client operating
systems for data entry and retrieval: Windows XP Professional; Windows NT 4.0 Workstation with Service
Pack 6a; Windows 2000 Professional; and Windows 98.
Company Profile
Founded in 1985, Business Engine is headquartered in San Francisco, California, US with offices in New
York, Ontario, and Dallas in the US, London, UK, and Brussels, Belgium, in Europe. There are currently 140
employees. It is a privately held company.
There are 36 installations of BEN with over 70,000 users comprising Global 2000 companies across the
financial Services, Telecommunications, and Retail and Manufacturing sectors, who use it primarily for
managing their internal IT, engineering, and Research and Development project or product portfolios. Key
clients include Merrill Lynch, Deutsche Bank, Tesco Stores plc, and Horizon Blue Cross Blue Shield. The
company has a total customer-base of over 400.

Headquarters UK Office
Business Engine Business Engine
100 Bush Street, 22nd Floor 37-39 Kew Foot Road
San Francisco First Floor, Richmond
CA 94104 Surrey, TW9 2SS
USA UK
Tel: +1 (415) 616 4000 Tel: +44 (0)208 614 9390
www.businessengine.com www.businessengine.co.uk
Computer Associates International Inc. (CA)

CA’s Business Service Optimisation (BSO) solution is aimed at the strategic alignment of IT with business
goals and objectives. The company says that managing IT as a business and delivering the right level of
service to customers, partners, and employees is critical to meeting the demands on enterprises in a cost-
and resource-effective manner. Its BSO solution enables the definition and management of business and IT
processes, the prioritisation of projects, assets, and resources according to business priorities, and the
delivery of IT as a service to the business with service level commitments and associated costs. CA says that
this helps enterprises deliver the most value from existing resources, align IT with the business, and ensure
that compliance, financial, and service level objectives are achieved. Its IT Governance solutions include:
Project Portfolio Management with Clarity by Niku.
IT Asset Management comprising Unicenter Asset Management, Argis Asset Portfolio Management, and
Unicenter Asset Intelligence. All Unicenter ITAM solutions have been fully integrated to allow the
automated discovery and management of IT assets throughout their lifetime, from request to
procurement, to allocation, to retirement and disposal. They deliver a number of disciplines, including
inventory discovery, allowing an organisation to understand the IT assets that it holds. Once these assets
have been discovered, it is important that they can be centrally controlled, and this facility is also
included. In order to have an appreciation of the cost of assets, an organisation needs to know how much
is being spent on its IT assets – money already spent, money that is currently being spent, and the future
spending intentions. It incorporates contract and vendor management, negotiation support, lease
management, asset replacement planning, and software licence management
IT Financial Management through Service Accounting, CA-NeuMICS, and CA-Jars. Unicenter® Service
Accounting provides organisations with detailed financial analysis information based on activities completed
and resources utilised, including service usage information in monetary terms for reporting, budgeting, and
financial planning purposes. Unicenter NeuMICS Resource Management Accounting and Chargeback
Option utilises the breadth and comprehensive detail maintained in its data repository, enabling the
customer to decide on the accounting strategy it wants to deploy and what rates it wants to apply. CA-Jars
identifies and equitably distributes IT costs to cost centres and development projects. It also provides a
means of comprehensively determining their financial impact on the enterprise’s bottom line.
Software Change Management with AllFusion Harvest Change Manager, AllFusion Harvest Endevor, and
AllFusion Harvest Enterprise Workbench. CA’s Software Change Management (SCM) solution delivers
centralised and integrated control to automate and govern change processing across the enterprise. It aims to
speed deployment, lower cost, and provide insight and accountability to management regarding application
development and maintenance. It also automates the collection and analysis of information across multiple
platforms for better visibility and decision-making, and helps meet regulatory compliance obligations
Service Management through CA’s range of Unicenter Service and ServicePlus products. CA Service
Management solutions provide the ability to deliver expected levels of service and support to maximise
business performance. The company says that they help customers quickly resolve incidents and
problems, control changes, manage resources, and monitor to service levels. To assist in the
prioritisation of management, reduce costs, and increase efficiencies, these solutions map IT
infrastructure to business processes and automatically detect, diagnose, repair and recover complex
problems across the entire technology stack, supporting critical business applications and services.

Company Profile
CA International, Inc. (NYSE:CA), positions itself as the world’s largest management software company. It
delivers software, and services across operations, security, storage, life cycle, and service management to
help organisations optimise the performance, reliability, and efficiency of their enterprise IT environments.
Founded in 1976, CA is headquartered in Islandia, N.Y., has 15,000+ employees, operates in more than
100 countries, and has achieved ISO 9001:2000 certification.
Revenues and operating income for the last three fiscal years (ending 31 March) were as follows:
2004 (US$ million) 2003 (US$ million) 2002 (US$ million)
Revenue 3,276 3,027 2,886
Change on Previous Year 8.23% 4.89% (38.10%)
Total Net Income/(Loss) 25 (267) (1,102)
Computer Associates has a stated policy to enhance and protect its clients’ IT investments by integrating a
wide range of systems in heterogeneous environments. To maintain this stance it has a wide range of
partnerships with technology vendors, systems integrators, and IT consultancies.
Key alliance partners include:
Microsoft. Oracle.
HP. SAP AG.
BearingPoint Inc. PeopleSoft.
Intel. Ernst & Young LLP.
Computer Associates counts 95% of the Fortune 500 amongst its customers.
US Headquarters UK Headquarters
Computer Associates International Inc. Computer Associates Plc
One Computer Associates Plaza Ditton Park, Riding Court Road
Islandia DatchetSlough, Berkshire
New York 11749 SL3 9LL
USA UK
Tel: +1 631 342 6000 Tel: +44 (0)1753 577733
Fax: +1 631 342 6800 Fax: +44 (0)1753 825464
www.ca.com
Compuware Ltd.
Compuware IT Governance and Management

Compuware provides a range of solutions that address key areas of IT Governance and Management that
include Development, Quality Assurance, IT Performance Management, and Support. Its Compuware
Vantage and the STROBE product family are tools that help organisations to manage the efficiency and
responsiveness of mission-critical applications on a range of platforms. Compuware’s tools offer the ability
to gain visibility into how applications are performing and where the trouble spots lie. Crucially, they also
offer assistance with resolution and can automate many of the more mundane tasks enabling support to be
provided to the most critical areas.

Since its acquisition of IT Governance specialist, Changepoint, in May 2004, Compuware has worked to
integrate the Changepoint product with its existing lifecycle management solutions, and the first fruits of
this work are now emerging. Compuware believes that Portfolio Management process must link to the
project portfolio (new initiatives), the application portfolio (the existing set of deployed solutions), and the
infrastructure portfolio (the platform which supports the first two), to capture all types of IT demand,
enabling a holistic view for strategic IT decision-making.
Its first two integration points are to its CARS quality assurance solution for application deployment, and to
its application service management tools, VantageView, Fault Manager, and STROBE. The CARS integration
will allow quality metrics to be assessed within the IT project portfolio, providing a better measurement of
risk, and the likelihood of delivering projects on time and to budget, both on a discrete project-by-project
basis, and as a continuous trend over time. The integration with application service management tools will
allow performance and metrics to be viewed within the context of the application portfolio in Changepoint
IT Governance (including viewing Vantage portlets), and application faults to be passed through as a source
of demand into the IT Governance process. Future plans for Changepoint will also see the integration of
Compuware’s application development management tools, which will further strengthen its proposition.
Compuware Vantage is a performance management solution for distributed applications, which monitors
application performance across the Client, Network, and Server infrastructure. The STROBE family of
products help the various functional groups within the IT organisation to find and then fix the causes of poor
performance within applications. It is designed for mainframe environments, including Java-based
applications as well as a comprehensive range of older languages such as COBOL.
Applications that do not perform up to expectations can be extremely costly, requiring hardware upgrades
before they are really needed, causing users to be dissatisfied and unproductive, and potentially customers
maybe lost. Also, applications may have been designed for optimal performance in a specific way, for
example, by accessing data using a specific key. If users in practice are not aware of the appropriate way
to use an application and use searches in an inappropriate manner, this can be a cause of poor performance
that could be identified by the use of appropriate tools, and remedied by further training. Compuware
differentiates itself by providing tools for organisations that have a heterogeneous applications infrastructure.
Company Profile
Founded in 1973, Compuware (NASDAQ: CPWR) has its headquarters in Michigan, USA, with offices in
some 60 countries worldwide. European headquarters are in The Netherlands. The company initially
focused on the provision of mainframe technical services, and is a recognised leader in testing tools for the
mainframe. Over the years, it has evolved and expanded to incorporate software and technical solutions for
mainframe and distributed computing environments.
After a successful Initial Public Offering (IPO) in 1992, the company has grown significantly. Revenues for
the last three fiscal years (ending 31 March) were as follows:
Annual data 2003 (US$ million) 2002 (US$ million) 2001 (US$ million)
Revenue 1,375 1,740 2,035
Change on previous year (21%) (14.5%) (9.5%)
Total Net Income/(Loss) 103 (245) 119
A significant proportion of the company’s revenues are from professional services.

Compuware is the fifth largest Independent Software Vendor (ISV) in the USA based on revenue (Fortune
Magazine). It employs in excess of 9,000 people worldwide, with over 5,000 providing professional
services. Compuware has 130 product offerings, and claims to have more than 23,000 customers in more
than 54 countries.

Key clients include British American Tobacco, House of Fraser, BT, Alliance & Leicester, Amerada Hess,
Thomas Miller, DEFRA, WM Mercer, the John Lewis Partnership, and Safeway.
Compuware Corporation Compuware Ltd.
One Campus Martius 163 Bath Road
Detroit Michigan 48226 Slough, Berkshire
USA SL1 4AA, UK
Tel: +1 (313) 227 7300 Tel: +44 (0)1753 444 000
Fax: +1 (800) 521 9353 Fax: +44 (0)1753 444 900
www.compuware.com www.compuware.co.uk
CorVu
Performance Management
With CorVu 5, the company has further integrated its series of modules around a flexible solution
architecture that allows organisations to approach strategic performance management in the most relevant
way. Each module inherits key services from the base architecture, delivering cross-platform workflow,
security, reporting, and collaboration facilities. CorVu 5 aligns well with the belief that effective performance
management disciplines need to be driven from a well developed and effectively communicated corporate
strategy – indeed CorVu provides facilities that assist companies with their strategy development.
CorVu 5 is a purpose-built performance management application that enables organisations to drive
efficiencies, drive priorities, and drive performance. Unlike scorecarding, business intelligence, and desktop
solutions, it ties performance metrics to key business processes. The company says that it is an easy-to-
use, scalable, and rapidly deployable system, and it combines two critical technology components:
Strategic Management System
This is a single, structured performance management environment that links performance metrics to key
business processes, including objective management, initiative management, budgeting and planning, risk
management, and employee incentive management. It automates popular management methodologies such
as Balanced Scorecard, Six Sigma, Economic Value Add (EVA), European Foundation of Quality
Management (EQFM), Earned Value Management System (EVMS), Total Quality Management (TQM),
Malcolm Baldrige Award for Quality, and others. It provides a secure and consistent electronic
communication and collaboration framework for all performance-related content.
Performance Metrics
A pre-built performance management data warehouse, which acts as a central repository for all metrics,
calculations, and commentary. It provides rich capabilities for custom and ad hoc reporting, alerts,
dashboards, and briefing books. Also incorporated are advanced analytics, including sophisticated
modelling, forecasting, and data mining for “what-if” analysis. It provides ADX technology that automates
data collection from virtually any source, including ERP systems, databases, and flat files.
Company Profile
CorVu was founded in 1990 as a BI software development house. With an initial product released in 1993,
the company is now a well-established global provider of enterprise business performance management, BI,
and Balanced Scorecard solutions.
CorVu has historically been a BI vendor with its CorBusiness product offering; however, the company is now
able to offer these established CorBusiness customers an easy growth path to enterprise performance
management applications.
The company has over 4,500 customers covering a wide range of sectors and industries, such as aerospace,
banking, financial services, healthcare, hospitality, insurance, manufacturing, mining, the public sector,
telecommunications, and transportation. Some of CorVu’s better known customers include: Skandia, Bosch,
HM Customs and Excise, London Underground, DELL, FedEX, T-Mobile, The US Army, Sun Microsystems,
Caterpillar, Crown Castle International, Akebono, and Schlumberger.

CorVu markets its products and services into three distinct geographies: the Americas, Asia-Pacific, and
EMEA. The company works very closely with three global partners (EDS, Mincom, and Progress Software)
and leading systems integration and software partners such as Accenture, KPMG, Seabrook, and Morse.
CorVu is investing significant energy to establish a strong partner network, recognising the fact that to tailor
its enterprise performance management solutions to the specific requirements of companies around the
world, requires a strong combination of business consulting and technology management skills.
With approximately 120 employees, CorVu is headquartered in Minnesota, US. The Company has
additional locations in Atlanta, Brisbane, Dallas, London, Melbourne, Perth, Stockholm, and Sydney.
CorVu is a publicly traded company listed on the OTC:BB exchange under the symbol CRVU. Company
financials are shown in the table below:
Period Ending: 2004 (US$ million) 2003 (US$ million) 2002 (US$ million)
Annual Sales 16.2 15.7 12.2
Net Income/(Loss) (2.1) 3.7 0.4
CorVu Australasia CorVu plc

Level 8 Craven House
Tower A 40 Uxbridge Road
Zenith Centre Ealing
821-843 Pacific Highway London
Chatswood NSW 2067 W5 2BS
Australia UK
Tel: +61 2 9495 5400 Tel: +44 (0)20 8832 7700
Fax: +61 2 9495 5444 Fax: +44 (0)20 8832 7709
E-mail: info@corvu.com.au E-mail: info@corvu.co.uk
www.corvu.com
EMC Smarts
EMC Smarts Product Suite, version 6

EMC Smarts’ Product Suite is a set of products for managing the entire IT environment, which can report the
results as part of an ITIL-oriented model of services. The solutions focus on root-cause and business impact
analysis of IT problems, and add significant value by prioritising infrastructure problems and automating
discovery and mapping of infrastructure changes. Smarts solutions are used by a large number of service
providers and telco companies, but are also suitable for large end-user organisations with complex requirements.
The EMC Smarts Product Suite delivers value-added information from organisational infrastructure elements
in order to ensure that problems can be resolved. The products available enable customers to implement a
management model of the infrastructure based on the ITIL model, in modular stages – Business Services
Management, Application Services Management, in combination with Infrastructure Management can be
provided. At the highest level, Smarts terms the value delivered to customers as Business Insight.
The Suite is based on a technology platform that Smarts terms ‘A3 Architecture’, because its approach is
based on three characteristics with the initial letter A:
Abstraction: using a built-in common information model to build a logical representation of complex IT
and business domains, including all components, relationships, behaviours, and interactions.
Analysis: pinpointing the root cause of service-affecting problems and calculating their impact,
automatically, and in real time.
Automation: building high-cost, labour-intensive tasks into software for automated problem
management prioritisation, and adaptation to infrastructure changes.

The Suite leverages the Smarts Common Information Model (SCIM), which links the normally distinct
domains of business services, applications, and systems. Additionally, its Codebook Correlation
Technology™ (CCT) can automatically diagnose any service-affecting problem, and link it to its business
impacts via ICIM. It is specifically designed to automate its problem diagnosis, employing knowledge of the
most important effects of problems that affect infrastructure, and avoiding the difficulties that can arise from
the mass of monitoring information that is generated by infrastructure elements.
EMC Smarts Service Assurance Manager is the top-level layer of the solution, as it integrates and correlates
the data obtained from the other software managers and integrated third-party managers, to provide an end-
to-end management across networks, systems, applications, and the business processes that they support.
All Smarts modules come with a library of generic models of IT objects in the managed environment,
detailing the problems that can originate in them, the symptoms of each problem, and how these symptoms
spread to related objects. The ICIM repository is originally built by instantiating generic objects from the
ICIM Library with results from Smarts Auto-Discovery, piecing together data about business objects and
their “last mile” relationships to the infrastructure – the repository subsequently stores and maintains an
up-to-date representation of the specific customer environment, with objects such as routers, servers, or
applications. The Extensible Mediation Layer associates these objects with customer data to enable
applications with an open-ended set of IT objects, as well as give incremental device support for extensions
to the infrastructure. The ICIM Repository is leveraged by CCT to map object relationships to cause-and-
effect relationships, allowing assessment of the impact that infrastructure problems will have on other
infrastructure elements, services, users, and customers.
Company Profile
EMC Smarts was founded as System Management ARTS (SMARTS) in 1993 by its president, Dr. Shaula
Alexander Yemini, who had left IBM to form a ‘think tank’ focused on network management Research and
Development (R&D). The concepts and algorithms developed to help the company’s early clients, who
included Motorola and the US Department of Defense, were formalised in Smarts patented Codebook
Correlation Technology. The company sustained steady growth of revenues to over US$60 million annually,
and attained consistent profitability, without repeatedly increasing funding.
At the end of 2004, agreement was reached for Smarts to be acquired by EMC for US$260 million, and
consequently the company gained the branding EMC Smarts. EMC continues a strategy of growth of its
markets by acquisition, having extended from its origins as a vendor of storage-related software, via
acquisitions of Enterprise Content Management, virtualisation, and other capabilities, to encompass
‘information lifecycle management’ and, with Smarts, management of infrastructure, applications, and
business services.
EMC’s President and CEO gave an undertaking after the completion of the acquisition to execute and expand
Smarts’ product roadmap, add R&D resources to increase the number of engineers developing, extending,
and leveraging Smarts technology to meet this roadmap, and explore new opportunities for customers of
EMC information storage and management software.
EMC Smarts has its headquarters in White Plains, New York, USA, but the main EMC headquarters are in
Hopkinton, Mass, USA. The EMC Smarts division also has other offices in the USA, and in the UK, and
Germany, as well as satellite offices in France, The Netherlands, Belgium, China, and Australia. The EMC
Smarts part of EMC has in the region of 300 people, of whom a third work in R&D, and a third in sales
and marketing. The company’s European presence involves 15% of employees, with 5% based in Asia-
Pacific, and the remainder in the US. Over 20% of revenues arise from European operations, while over
50% arise from the US.
Partners include Accenture, BT Global Services, The Allied Group, CSC, Dimension Data, EDS, General
Dynamics, Northrop Grumman IT, and Sayers.
Customers include clients in both the service provider and enterprise sectors, with names such as BT, Cable
& Wireless, COLT, Deutsche Bank, Shell, Radianz, Swisscom, SWIFT in EMEA, AT&T, Citigroup, Coca-Cola,
Dow Jones, Federal Express, Goldman Sachs, Qwest, UBS Paine Webber, and Vodafone, globally. The
product has been sold direct to over 100 customers, while over 1,000 organisations use it via channel
sales. Most customer implementations are EMEA-wide, or global, in scale.

Worldwide Headquarters EMEA

EMC Smarts EMC Smarts
1 North Lexington Avenue Gainsborough House
White Plains 17-23 High Street
New York 10601 Slough, Berkshire
USA SL1 1DY, UK
Tel: +1 (914) 948 6200 Tel: +44 (0)1753 878110
Fax: +1 (914) 948 6270 Fax: +44 (0)1753 878111
E-mail: mlist@smarts.com E-mail: suhela.dighe@smarts.com
www.smarts.com
eProject
eProject Enterprise
eProject says that its eProject Enterprise is built for complex project-driven organisations, and it offers the latest
in advanced Web-based project management and collaboration. It provides increased productivity because the
people and information critical to project and process success are seamlessly connected in eProject’s shared
environment. The company says that it develops products with three key components in mind:
Intuitive and easy-to-use. Low TCO allowing customers to seize a greater

ROI.
Simple and rapid to deploy.
eProject Enterprise also offers the following key benefits:
Comprehensive Feature Set
Unlike other easy-to-use Web-based project management software, eProject Enterprise does not
compromise on the core capabilities that project managers rely on. It is built on the key capabilities found
in traditional project management software, avoiding the complex capabilities that only a minority of users
actually understand. Enterprise combines the best of both worlds by offering an intuitive Web-based
dynamic workspace environment coupled with a relevant and extensive feature set.
Configurable and Customisable
eProject Enterprise is easily configurable and customisable to meet an organisation’s unique needs. From
configurable project hierarchy to custom dashboards and applications, organisations can easily mirror their
own business processes, allowing improvements in the way that they work. eProject says that unlike
traditional project management software, customisation can be done without the help of specialist IT
resources or consultants.
More than a Project Tool
Because eProject Enterprise can be easily configured to map to an organisation’s needs and customised to
capture unique relevant project data, the solution becomes more than a project management tool. eProject
Enterprise allows businesses to seamlessly implement and automate methodologies and business processes
across the organisation. Automating methodologies and business processes streamline how work is
accomplished by leveraging knowledge and best practices, and enabling on-demand information sharing.
Company Profile
eProject was founded in the summer of 1997 with the vision of offering organisations a better way to work
by delivering a foundation on which next-generation digital workspaces are created. Based in Seattle,
Washington, privately held eProject has used its unique position in the marketplace and a grassroots
approach to develop an extensive customer base built on referrals and customer adoption. The company’s
vision is to drive project success for every business. It claims to accomplish this by remaining focused on
creating intuitive Web-based project management solutions. Its solutions offer unified project planning,
communication, and execution for organisations, project managers, and teams, helping them achieve
increased productivity through effective interaction and collaboration.

eProject, Inc., was established to meet a vital need for project managers in mid-size companies for project
management and collaboration tools that are powerful, integrated and complete, without the complexity that
characterises traditional approaches. Since 1997 eProject has served more than 250 companies with
intuitive, Web-based solutions that help project teams share, communicate, and collaborate quickly and cost
effectively. An intense focus on user needs is complemented by professional staff with hands-on experience
in customer industries. Over the last five years, eProject has built a growing base of more than 200,000 users
in organisations such as, Honeywell, Petco, Washington Mutual, Cushman & Wakefield, and HP.
The company offers professional and consulting services to help customers get the most from their eProject
investment, together with training courses.
EProject
83 King Street, Suite 300
Seattle, WA 98104
USA
Tel: +1 (206) 341 9117
E-mail: sales@eproject.com
www.eproject.com
Hewlett-Packard (HP) Inc.

OpenView
HP is recognised as one of the leaders in the service management arena, and its holistic approach to both
infrastructure and business-focused service management, provides the ability for prospective clients to deal
with a single vendor for many of their requirements. The exception to this is where an organisation has
operations based on legacy systems, but here HP has a history of strong partnerships and can deliver
integrated solutions for heterogeneous infrastructures.
HP says that its OpenView portfolio of management solutions helps organisations take control of their IT
and telecommunications resources. By the provision of tools to troubleshoot problems, adapt quickly to
change, and keep data secure, its solutions ensure that business-critical data and services are delivered on
time, all the time. HP OpenView solutions enable enterprises to align their people, processes, and
technology to contribute to an Adaptive Enterprise environment. Its management solutions extend across
the enterprise, helping solve critical enterprise-wide business challenges.
HP’s solutions address these challenges by providing the software and services needed to manage today’s
demanding IT environments. Operational costs are reduced by increased staff efficiency, better application
availability, and optimised service delivery, allowing organisations more freedom to focus on innovation
instead of maintenance. HP OpenView comprises the following modules:
Application management that allows application owners to comprehensively monitor their entire
business-critical application environments.
Business management enables the IT team to understand the health of key business processes along
with the health of the underlying applications and IT services. This leads to improved business
performance through better process throughput, lower IT costs, and optimised IT resource allocations.
Industry management to dynamically link business strategy and IT, transforming IT from a maintenance
function to a strategic business asset.
Infrastructure management allows enterprises and service providers to understand the availability and
performance of their infrastructures, and enables them to exercise control over them.
IT service management combines powerful HP OpenView software with years of experience to transform
an organisation’s IT into a real business and competitive differentiator.
Lifecycle management solves critical security and business process challenges spanning digital identity,
change and configuration, and usage management. This allows management the time and resources to
focus on the strategic needs of the business.

Company Profile
HP was founded in a garage behind Bill Hewlett’s house in Palo Alto, California, in 1939. Today, its
corporate headquarters remain in Palo Alto, and the company has more than 540 sales and support offices
and distributorships worldwide. It has been at the forefront of technical innovation over the past six
decades. It has become one of the giants of the IT industry, with recognition of its name and stature by a
wider audience due to its broad product base.
In September 2001, HP and Compaq announced a definitive merger agreement to create a US$87 billion
global technology leader, and this came to fruition in 2002. HP (NYSE, NASDAQ: HPQ) serves customers
across 162 countries, with an employee base of 150,000.
HP believes that the future technology landscape will be dominated by service-centric computing, in which
information technologies are delivered, managed, and purchased as services. Over the past few years, it has
reorganised its business into three product-generation divisions and three customer-facing organisations. In
the 1990s, HP achieved growth rates of 20% in most years.
The company is a technology solutions provider to consumers, businesses, and institutions globally. Its
offerings span IT infrastructure, personal computing and access devices, global services, and imaging and
printing. For the fiscal year ending on 31 October 2004, HP revenues totalled US$79.9 billion. HP’s
OpenView worldwide revenues increased 30% year-over-year.
Corporate Headquarters UK Headquarters
Hewlett-Packard Hewlett-Packard (UK) Ltd.
3000 Hanover Street Cain Road, Amen Corner
Palo Alto, CA 94304-1185 Bracknell, Berkshire
USA RG12 1HN, UK
Tel: +1 650 857 1501 Tel: +44 (0)1344 360000
Fax: +1 650 857 5518 Fax: +44 (0)1344 363344
www.hp.com
HyPerformix
Integrated Performance Suite Performance Optimizer

Integrated Performance Suite Performance Optimizer (IPS-PO), from HyPerformix, allows modelling of
application behaviour and performance from the business transaction or end-to-end perspective, and runs
simulations of the effects of changes in operational infrastructure, and demand profiles. While vital in an
increasing number of cases where the risk of impaired performance (and consequent cost) is high, the
assessment of end-to-end application performance is a complex undertaking, and without tools such as IPS-
PO, it can entail significant investment in dedicated infrastructure, and lengthy involvement of expert
resources. Planners can use IPS-PO to assess where performance problems might be experienced, or where
to invest in infrastructure or application changes to resolve problems or meet demand. It can provide
benefits throughout the application lifecycle, and is most appropriate for use by organisations undertaking
deployment of complex and large-scale applications, in circumstances where performance is critical to the
business.
The Integrated Performance Suite (IPS) family of products, which implement a performance modelling
process that helps organisations make key decisions about the performance and capacity of IT applications
and environments, throughout the application lifecycle, are as follows:
Within the design phase, architecture requirements, and the impact of performance requirements on
budget, can be initially assessed. Early knowledge of any unforeseen scale of cost can assist planning
and prevent the impact of these being more difficult to accommodate later.
During the development phase, performance assessment can validate the design, and the budgeting for
performance features, as well as identifying any performance issues due to application code at an early
stage.

During application testing phases, IPS-PO can dramatically reduce the cost of performance testing by
executing ‘what-if’ scenarios with the library of over 1,600 infrastructure models provided with the
product. Different scenarios can be run and the performance and utilisation of these scenarios can then
be measured and compared until the optimal configuration for the business is reached. Typically, this
reduces the cost and time needed in the test phase by reducing the need to test as many alternative
hardware configurations.
After application deployment, the impact of external changes on critical applications can be assessed
quickly and inexpensively. Once an application’s model is built it can be tuned to reflect the production
environment, and upcoming changes in the environment like server consolidations, network upgrades,
or workload mix changes can be tested first in the model to see what the impact will be on the
performance and utilisation of the application.
IPS-PO includes various features that automate the processes of building models and of managing results,
thereby reducing further the expense incurred by including performance modelling in the application
lifecycle. It enables specialists to conduct modelling using all of the factors that affect performance:
performance data captured from applications and the infrastructure environment; application characteristics
(which can be defined automatically by IPS-PO, and adjusted manually); and demand levels. It is intended
for use by system designers, testers, capacity planners, and systems analysts, equipping them with better
information about the effects of changes on complex IT environments, without the sacrifice of costly
resources in experimental assessment of such results.
Company Profile
HyPerformix can trace its origins to the formation in the early 1970s of Information Research Associates
(IRA), which conducted scientific and engineering research. In 1989, IRA became Scientific and
Engineering Software (SES), which developed and marketed simulation and modelling products to the
engineering community. In 2000, the company transformed its mission, vision, management team, and
business model to provide enterprise performance solutions, and was renamed HyPerformix, Inc.
The company has approximately 100 employees, and is headquartered in Austin, Texas. It has regional
offices throughout the US, European offices in England and France, and an office in Japan. Being privately
owned, its preference is not to divulge details of its financial status.
The following well-known names are amongst more than 100 customers of IPS-PO:
Charles Schwab. CheckFree.
Credit Suisse First Boston. eBay.
France Telecom. Freddie Mac.
Hitachi. Nationwide Building Society.
The majority of customers have performance engineering groups, with responsibility to ensure the
performance of new applications across their organisations.
HyPerformix UK Ltd. HyPerformix, Inc.
200 Brook Drive 4301 Westbank Drive
Green Park Building A, Suite 300
Reading, RG2 6UB Austin, TX 78746-6564
UK USA
Tel: +44 (0)870 3510206 Tel: +1 512 328 5544
Fax: +44 (0)870 3510207 Free from US: 800 759 6333
Fax: +1 866 495 4291
E-mail: info@hyperformix.co.uk
www.hyperformix.com

IBM Corporation
The need for a reliable, scalable, available, and security-rich IT infrastructure, has never been more critical to
the success of organisations. IBM says that it has a comprehensive set of solutions and services that can help
optimise IT investments, improve performance, achieve availability objectives, and avoid costly problems.
IBM has introduced a range of software and services products aimed at helping customers to automate and
standardise the way that they design and integrate IT processes. The products are built on IBM’s Tivoli,
Rational, WebSphere, and DB2 middleware and they include IT process management for change,
configuration, release, and information lifecycle management. The solutions extend the company’s self-
managing autonomic technology, and include ‘tool mentors’ that help customers to practically implement
best practice guidelines described in the ITIL. IBM says that its offerings will enable customers to evaluate
their business designs, processes, and infrastructure to build responsive and automated IT environments.
IBM introduced its IBM Tivoli Unified Process solution in Q2/05, and prescribed specific actions for ITIL
through ‘tool mentors’ that enable customers to improve their IT processes integration. These provide
information on how to customise a system, put the correct steps in place, and what hardware and software is
required. IBM believes that 80% of the problems encountered in IT services is due to changes; these occur in
infrastructure elements, their relationships, and software applications. It therefore released in Q3/05 its IBM
Tivoli Change and Configuration Management Database (CCMDB) that is a virtualised database that federates
IT information spread across multiple databases. The company says that organisations adopting CCMDB as
their entry point can achieve value from the start. Next year, it will introduce its IBM Tivoli Process Managers,
which will comprise pre-packaged software to automate IT processes. They will support change and release
management, availability management, and information lifecycle management.
Additionally, IBM supports the ITIL, its relationship to IBM’s own IT Process Model methodology. IBM’s
support for ITIL serves as a foundation for its global Infrastructure and Systems Management Services
offerings, designed to deliver high-customer value.
Company Profile
IBM is the world’s largest IT company, with over 329,000 employees. It operates in over 160 countries,
and almost 60% of the company’s sales are to non-US customers.
Its first chairman, Thomas J. Watson, joined the company (then The Computing-Tabulating-Recording
Company) in 1914, from NCR. He relinquished the role to his son and namesake in 1956, shortly before
his death. Thomas J. Watson Jr. led the company until 1971, during which time it grew from income of
US$892 million to US$8.3 billion and became one of the world’s dozen largest corporations, as it still is
today. The company suffered setbacks in the early 1990s, shedding over 80,000 staff and recording record
losses, but recovered its market leading position and now employs more staff than before that period.
In 2002, Sam Palmisano became IBM’s CEO and realigned it with an initiative to enable ‘on demand’,
which has since pervaded the whole company and its products. Although its aims also relate to business
strategy, on demand is enabled by IBM’s middleware technology, and has to be mirrored in technology
strategy – its delivery has been defined as requiring software to be based on open standards, to enable
integration, to cater for virtualisation of resources, and to be autonomic (resilient to failure).
IBM manufactures a broad range of computers, including mainframes, network servers, and peripherals. Its
services arm employs about half of the employees, and contributes approximately half of the company’s
revenues. It also specialises in infrastructural software, offering solutions based on its DB2 database,
WebSphere integration and development, Lotus development and collaboration, Rational development and
testing, and Tivoli management, products.
In 2002, IBM made key acquisitions of PricewaterhouseCoopers Consulting (PWCC) to augment its services
capability, and Rational, which now stands as one of IBM’s five software brands. In 2003, ThinkDynamics
Inc. was acquired, and with it the foundation software for the TIO and TPM products.

IBM common stock is listed on the New York Stock Exchange (NYSE: IBM), and on other exchanges in the
United States and around the world. Revenues and Net Income for the last three financial years ending 31
December were as follows:
2004 (US$ million) 2003(US$ million) 2002 (US$ million)
Revenue 96,293 89,131 81,186
% Change on Previous Year 8% 10% -7%
Net Income/(Loss) After Tax 8,430 7,583 3,579
IBM United Kingdom Ltd. IBM Corporation

PO Box 41 New Orchard Road
North Harbour, Portsmouth Armonk
Hampshire, PO6 3AU NY 10504
UK USA
Tel: +44 (0)990 426426 Tel: +1 914 499 1900
Fax: +44 (0)239 222114
www.ibm.com
Intel
Intel® Solution Services

Intel® Solution Services is a worldwide consulting and services R&D organisation, specialising in distributed
solutions and data centre infrastructure. Intel Solution Services works with solution providers, Independent
Software Vendors (ISVs), Original Equipment Manufacturers (OEMs), System Integrators (SIs), and end-
customers to architect cost-effective, leading-edge solutions to help solve complex business problems. With
its world-class resources, state-of-the-art facilities and key industry alliances, it can help design and deploy
scalable, manageable, reliable, and available e-business solutions on Intel technology.
Intel Solution Services provides onsite consulting, and also works with customers at its Intel Solution
Centres located worldwide. The Intel Solution Centres are optimal environments for designing and testing
flexible, high-performance solutions infused with best-known methods and technologies from Intel and other
industry leaders. Intel’s services allow companies to architect, design, test, and optimise their solutions with
minimal impact to their day-to-day business.
Enterprise architecture planning provides a high-level vision of current and future technologies necessary for
delivering business products and services. These structured activities enable companies to build
manageable technology adoption plans that are consistent with their business goals. This integrated plan
should address important concerns, including plan flexibility, technology maturity versus risk tolerance, and
the aggressiveness of implementation timelines. Successful architecture planning will help you execute an
accelerated technology transition, reduce the risk when adopting emerging technologies, and manage the
complexity of stakeholders’ priorities for the short-term and the long-term.
With its Enterprise Architecture Practice, Intel® Solution Services offers a collaborative, enterprise-wide
planning service, based upon the Intel® Distributed Enterprise Architecture eXtended (Intel® DEAX)
framework. A successful architecture plan must start with an alignment of business strategy and overall IT
strategy. It works with enterprises to model the IT strategy and develop technology transitions plans, which
lay the foundation for successful implementations. Ultimately, the architecture plan will guide an
organisation’s multi-year technology transition as driven by its business requirements, with strategies for risk
mitigation, budget control, and provisions for checkpoints and midcourse corrections. Intel® Solution
Services can help guide enterprise architecture planning by bringing together Intel® products, emerging
technologies, and IT best practices to help enterprises to successfully deploy solutions. It works side-by-side
with software developers, OEMs, and SIs to help mitigate risks associated with adopting next-generation
technologies based on Intel® architecture.

Intel’s Practice Methodologies include:

Envision the current and desired end-states. The benefits from these include articulating problems and
motivations for change, building a consensus on goals and success metrics, and identifying the benefits
and mitigating the risks.
Define IT strategy which gives access to greater breadth and depth of technology through Intel’s alliances
with key industry leaders, communicates plans effectively, and helps secure management approval.
Plan enterprise architecture transition provides core system architecture diagram, technology roadmap,
and seamless migration plan.
Optimise the solution to create a highly scalable framework. This delivers a reliable, available, scalable,
and protected solution, and enables growth without business interruption.
Deliver financial analysis, provides operating and resource budget analysis, and provides TCO and ROI
analysis to help justify capital investment.
Company Profile
Intel Corporation is headquartered in Santa Clara, California, and has 294 offices around the world. Intel
Solution Services is Intel Corporation’s worldwide professional services organisation, enabling enterprise
companies to capitalise on the full value of Intel Architecture through the provision of consulting on
architecture transitions.
The organisation was formed just over three years ago and has 150 employees worldwide, with 40
consultants based in Europe. Intel Solution Services consultants are spread across the 12 Intel Solution
Centres around the world, including four in Europe, located in London, Munich, Stockholm, and Moscow.
Intel Solution Services are available at the Intel Solution Centres, as well as through on-site consulting.
Intel Solution Services has worked with over 100 EMEA-based customers over the last year on projects
including platform migration, server consolidation, and the deployment of new technologies such as Web
services. Customers have included Autovas, Altoweb, Cedara, DoubleClick, E-Hand, Eniro, Expoexchange,
GAP, IONA, Marriott Hotels, Merrill Lynch, MOAI Technologies, Pectra Technology, Pension Consult, Philips,
Picturesafe, SinnerSchrader, SunGard, T-Mobile, United Airlines, USA Today, QXL, Vordel, and Virgin.com
Intel Solution Services US
650 Wharfedale Road Tel: +1 866 268 9812
Winnersh Triangle
Asia-Pacific
Wokingham, Berkshire
Tel: +852 2844 4555
RG41 5TP, UK
Japan
Tel: +44 (0)118 944 7931
Tel: +81 3 5208 5375
E-mail: solution-services-questions@intel.com
Managed Objects
Business Service Management

Managed Objects’ Business Service Management (BSM) range of products based on its software platform,
Formula®, provide alignment between business services and the IT infrastructure. It now incorporates automated
Business Service Configuration Management that lowers the risk of operational problems and issues through
more effective change management. The increasing pressures on business to become more agile and the growth
in complexity of the IT infrastructure, mean that enterprises need more proactive and intelligent management
tools to control their business services. Managed Objects was a pioneer in promoting BSM, and it has now added
additional functionality. The company has historically aimed its products at Global 2000 enterprises, but it is
now targeting Small and Medium-sized Enterprises (SMEs) through its partners.
Its Formula® platform is backed by a suite of software including Business Service Level Manager™, Business
Experience Manager™, and Business Data Integrator™. It is used to measure, improve, and enforce the
performance and availability of all kinds of services, such as on-line trading, customer relationship
management, and corporate e-mail.

The modules that comprise Managed Objects’ BSM are:

Business Experience Manager
Business Experience Manager™ provides an integrated solution for monitoring real end-users, for synthetic
testing, and for application performance. The data that is collected is passed to Formula, where it is
correlated with any other combination of technology and business data.
Business Data Integrator
Business Data Integrator™ enables the incorporation of business metrics from databases, including sales
totals, help-desk tickets, and analytics from business intelligence tools. By using these metrics, key
performance indicators for business can be produced and used to populate real-time executive dashboards.
Business Service Level Manager (BSLM)
Business Service Level Manager™ evaluates and compares the real-time and historical state of entire
business services, together with the technology components that support them. BSLM is able to inform
customers of how technology problems impact business applications, and it helps them to determine
optimal business conditions and proactively establish them. This results in the provision of better service,
which is delivered more efficiently.
Business Service Dashboard
Business Service Dashboards can provide real-time and historical information on performance, availability,
outages, SLA compliance, and other business and IT metrics through an intuitive browser-based interface.
Formula Event Integrator
The Formula Event Integrator provides a way to receive, filter, de-duplicate, and normalise line-oriented
event data from sources, such as a mainframe environment and telecommunications devices. It transforms
a raw data stream into a coherent, derived event stream, which the Formula server subsequently treats as
a series of managed objects and associated alarms.
Proxy Integration
Formula integrates with many management tools out-of-the-box that have the ability to receive information
from other environments. Formula has the ability to integrate directly with these outboard management
tools, and can be used as the communication vehicle for bringing other types of data into Formula.
SNMP Integrator
The SNMP Integrator enables the polling and gathering of data that is available to SNMP agents for
integration into Formula. All the hosts and devices are displayed as objects within Formula.
Business Service Configuration Management (BSCM)
BSCM addresses the requirements of change management, and includes the following features:
Mining, which involves integration with any combination of: ESM and/or NSM tools, any configuration,
asset, or inventory data sources that may exist and the ability to integrate with tools that discover
topology and relationships.
Mapping of Relationships and Dependencies.
Correlate Element Management to achieve a consolidated view of all management systems activity.
Visualise IT Configuration provides a single view of the IT infrastructure, a virtual Configuration
Management Database (CMDB).
Analyse and Manage Change through the use of the real-time virtual CMDB allowing IT Operations to
diagnose and correct impacts from infrastructure changes, and discover gaps in the managed environment.
Business Technology Insight (BTI)
To enable service discovery BSCM deploys adapters to integrate with all the popular discovery tools e.g.
Tideway, Collation etc. For clients that do not have an existing discovery tool Managed Objects has an option
called BTI.

Company Profile
Managed Objects is a private company that was founded in 1997. Siki Giunta is President and Chief Executive
Officer. The company’s recruitment policy has been concentrated on professionals with relevant experience of
infrastructure management systems who previously worked for the major players in the IT industry.
The company has already built up an impressive list of clients who use its products based on the Formula
platform. In 2004, it added 25 new customers, and had a 60% year-over-year growth. AIB, Auchan,
Barclays, Capgemini, Computer Sciences Corporation, Credit Suisse, Decathalon, DISA, Ericsson, Fidelity
Investments, JPMorganChase, UK National Health Service, NIH, Progress Energy, Reuters, TIAA-CREF, Volvo,
and other global organisations rely on Managed Objects’ BSM technology to manage their infrastructures.
Managed Objects’ headquarters are in Virginia, USA, and it has offices in London, Frankfurt, and Paris. Over
the past year, it has appointed Tock-Ling Chua as General Manager of its new Asia-Pacific operations, and
it is opening new sales channels in Asia including the Peoples’ Republic of China, Japan, and other Asian
countries. In Europe, Managed Objects substantially increased business from partner channels, and as an
example, its partner Selesta France signed Agence France-Presse (AFP), a news service that produces one
of the top feeds for news stories breaking worldwide.
It also added a major US government health organisation as a customer that will leverage Managed Objects’
Executive Dashboard and Enterprise Systems Management capabilities. It signed one of the UK’s major
High Street banks, with more than 88,000 employees and revenue in excess of UK£60 billion, with a
mission to generate business value from IT.
Apart from its US HQ it has offices in New York City, Chicago, and San Francisco that support its sales presence
throughout North America. Its European operations are headquartered in London, Asia-Pacific from Singapore,
and its partners support sales in continental Europe, South America, South Africa, and Australia. It has grown
in size to what it considers to be manageable, and it currently employs about 100 people, 17 of whom are
based in Europe. About 25% of its workforce is deployed in R&D of the Formula framework.
UK Office Headquarters
Managed Objects Managed Objects
Transworld House 7925 Westpark Drive
100 City Road McLean
London, EC1Y 2BP VA 22102
UK USA
Tel: +44 (0)20 7549 8720
Fax: +44 (0)20 7608 1331
E-mail: info@managedobjects.com
www.managedobjects.com
Mercury
Mercury IT Governance Center

Mercury’s approach to IT Governance optimises IT business processes from demand through value
realisation – ensuring that both strategic projects and “keep-the-lights-on” IT activities are aligned with
business goals. The company’s IT Governance Center™ is a suite of software and embedded best practices
that provides enterprises with the capability to automate and control enterprise IT processes. It delivers
powerful visibility over the demands being made of IT, the portfolio of projects, and the roll-out of strategic
changes. Mercury describes it as providing one version of the truth, enabling:
The alignment of IT investments with business goals.
Decisions to be made on what not to do, and when to end projects.
The elimination or automation of low-value activities.
The management of time to free resource for more strategic projects.

Mercury IT Governance Center also helps you lower the cost of compliance with regulations such as IFS, and
Sarbanes-Oxley by automating processes, required controls, and reporting. It also supports quality programs and
process control frameworks such as Six-Sigma, CMMI (Capability Maturity Model Integration), ITIL (IT Infrastructure
Library), ISO-9000, and CobiT (Control objectives for information and related technologies).
Mercury IT Governance Center applications can be implemented individually, starting with the area of
greatest need, and then expanding across IT, adding value all the way. Here are four popular starting points:
1. Portfolio Management for the management of the enterprise’s portfolio of current applications, in-flight
projects, and proposed investments to align IT with business priorities. Because of the solution’s
workflow capability, it can also handle project requirement changes, issues, and risks.
2. Project Visibility and Control with complete visibility into project and program status, using a real-time
dashboard to manage assignments, exceptions, and drill into details.
3. IT Services Automation for managing the demand on IT by providing visibility and control over processes
and resources, including those that are outsourced.
4. Application Change Management provides control of the change process to support compliance
initiatives, reduce application downtime, lower total costs, and minimise risk.
Mercury says that its customers use its products to automate and enforce their IT governance decision-
making frameworks and align the priorities, processes, and people required to run IT like a business.
Mercury Professional Services as well as certified partners can be used to implement the full solution set.
Consultancies and SIs add additional value by delivering Business Process Re-engineering (BPR) skills,
Business Process Outsourcing (BPO) skills and services, as well as, application and outsourcing services.
Company Profile
Founded in 1989, Mercury conducts business in more than 35 countries worldwide. Nearly 90% of Fortune 100
companies use Mercury software and services to fulfil their Business Technology Optimisation (BTO) strategies.
Mercury began shipping software quality testing products in 1991. Since then, it has introduced a variety of
software and services for BTO, including offerings in application delivery (pre-production quality and
performance testing), application management (in-production application performance monitoring and
management) and, following the acquisition of Kintana, Inc. in August 2003, a family of IT governance offerings.
Mercury’s BTO offerings for application delivery, application management, and IT Governance are designed
to help customers maximise the business value of IT by optimising application quality, performance, and
availability as well as managing IT costs, risks, and compliance.
Mercury is a public company (NASDAQ: MERQ) employing over 2,700 people worldwide. There is a large
emphasis on R&D, with around 10% of revenue deployed in this area.
There are over 550 organisations using the IT Governance Center solution. These include:
Accenture. Vodafone.
Chicago Board of Trade. Credit Suisse.
GMAC. Linde Gas.
Paetec. Xcel Energy.
Mercury (UK) Ltd. Mercury

410 Frimley Business Park Building A
Camberley 379 North Wishman Road
Surrey, GU16 7ST Mountain View, CA94043
UK USA
Tel: +44 (0)1276 808 200 Tel: +1 (650) 603 5200
Fax: +44 (0)1276 291 34 Fax: +1 (650) 603 5300
E-mail: ukwebresponse@mercury-eur.com
www.mercury.com

Microsoft Inc.
Dynamic Systems Initiative
Microsoft believes that the IT industry has a responsibility to dramatically simplify the computing
environment by seamlessly weaving together all of the devices, services, and multiple layers of software into
a coherent, efficiently managed technology framework. By designing systems that can be managed much
more easily, or manage themselves, the company says that efficiency can be improved, business overhead
can be reduced, and IT management can be empowered.
Over the past several years, Microsoft, in partnership with other IT industry leaders, has been making
significant investments in the Dynamic Systems Initiative (DSI), with the goal of building a comprehensive
set of solutions for the Windows platform, that can help automate the design and management of the
increasingly complex and distributed computing systems that customers need. The company says that it is
about doing three things well:
1. Building software development tools that help IT managers and software-development teams design computing
systems that are inherently simple and inexpensive to manage. It calls this “design for operations.”
2. Enhancing the Windows operating system platform with powerful management technologies suited for complex
and constantly-changing IT environments, such as automated deployment, configuration, and monitoring.
3. Building easy-to-use, scalable solutions that cover every aspect of the management experience, with real-time
feedback on system performance and a high level of automation.
Microsoft Windows Server 2003 is at the core of DSI, and helps customers become much more productive
and efficient by solving basic manageability problems. Building on this foundation, it has developed
technologies and services that further simplify deployment, management, and security. Systems
Management Server 2003 helps companies efficiently deploy and manage their software in a systematic
way, so that they no longer have to individually ensure that every server and PC has the right set of
applications. Microsoft Operations Manager 2000 improves performance and streamlines management by
identifying “IT health” issues automatically, so that IT teams can identify problems and solve them quickly
and efficiently. Microsoft is also working to create a continuous feedback loop of information between
developers, IT administrators, and end-users, so that software developers get real-time information on the
performance of their applications, allowing them to more accurately identify problems and solve them faster.
For software developers, it is building technologies that help them work more closely with IT managers to envision
and design applications that work well in today’s distributed and complex computing environments. Its Visual
Studio 2005 system of development tools is designed to make it easier to build management into applications
from the ground up, ensuring that they are simple and inexpensive to operate after they are deployed.
Through the Microsoft Operations Framework, it is offering guidance that helps organisations develop an
optimal management strategy, and it offers a series of services and solutions built on its management
technologies, through a program called Microsoft Solutions for Management.
Microsoft is building its management solutions so that they can integrate more easily with the diverse
platforms, applications, and tools that IT managers use today. It has created a framework that enables
customers to use the capabilities of Microsoft Operations Manager to ensure the health and performance of
their Windows computers, while continuing to use existing management systems. It is working with partners
to make it possible for customers to manage UNIX, Linux, and Mac computers in conjunction with Systems
Management Server 2003, and to manage hardware devices such as desktops and servers through
solutions that update hardware-based software components using the same familiar interfaces that an
administrator would use to update software applications.
DSI is about helping customers optimise their IT investments, while simplifying, and lowering the TCO. Over
the next few years, it plans to deliver advanced solutions, such as System Center 2005, which brings its
existing management tools together and adds enhancements that simplify and optimise basic IT
management tasks. Its next version of Visual Studio will provide IT managers and developers with the tools
that they need to create and collaborate on software and services that are simple to manage. Microsoft is
also continuing to evolve the Windows Server System with advances in manageability, reliability, and
security, to an efficient IT infrastructure.

Company Profile
Microsoft (NASDAQ:MSFT) was formed in 1975 and has since grown to be one of the largest global IT
organisations in the world. It is headquartered in Redmond, Washington, USA, and has offices in more than
66 countries. The company employs approximately 57,000 people on a full-time basis, 37,000 in the
United States and 20,000 internationally. The number in product research and development is 24,000. It
supplies a wide range of products and services, including operating systems, Internet platforms, and office
documentation and workflow products.
The Microsoft organisation is currently structured around its core software and services competencies. The
company is divided into seven groups, which include the Personal Services Group, MSN and Personal
Services Business Group, Platforms Group, Productivity and Business Services Group, Worldwide Sales,
Marketing and Services Group, Operations Group, and Microsoft Research (MSR).
Microsoft partners with many organisations such as Sony, Dell, HP, Intel, and IBM. Within the knowledge
management sphere, Microsoft has partnerships with KPMG, HP, and SAP.
Published revenues and incomes for the past three fiscal years were as follows:
Annual data (30 June) 2004 (US$ billion) 2003 (US$ billion) 2002 (US$ billion)
Net Revenue 36.8 32.2 28.4
Change on previous year 14.4% 13.4% 12.1%
Operating income (loss) 9.0 9.5 8.3
Net income (loss) 8.2 7.5 5.4
Microsoft Corporation Microsoft UK

One Microsoft Way Thames Valley Park
Redmond, WA 98052-6399 Reading, RG6 1WG
USA UK
Tel: +1 (425) 882 8080 Tel: +44 (0)870 60 10 100
www.microsoft.com www.microsoft.com/uk
Monactive
activeSAM
Monactive’s activeSAM is a Software Asset Management (SAM) solution that enables effective management
and optimisation of software licences and IT assets. It is a further development of the company’s dxPRO
product. There is an increasing need for organisations to get maximum benefit from their assets, and at the
same time comply with the growing amount of regulation. activeSAM is ITIL-focused and provides all
facilities necessary to comply with the ITIL SAM Best Practice Guide. The product will benefit all types of
organisation with a PC user population of greater than 100 up to over 25,000. In addition to its value to
IT management in managing their infrastructure, activeSAM provides benefits for senior financial and
procurement management to assist them in negotiating better software licences, avoiding risk, and
achieving compliance. The activeSAM product family can be deployed in a modular manner.
Monactive’s activeSAM facilitates the management of software licences and IT assets for both Microsoft and
UNIX platforms. It discovers the PCs and Servers on an organisation’s network and deploys agents to the
PCs and Servers. These agents monitor all the software applications running on the computer, and record
usage statistics and installed inventory on a daily basis. An integrated database provides a repository for
licence entitlement evidence and financial information. A variety of compliance and reconciliation reports
are available to enable the management of risk, and the optimisation of future purchases. Information can
also be used for improved decision making for infrastructure planning, implementation, change
management, policy enforcement, and control.

In order to gain significant value from a SAM solution, it is necessary that information is available to enable
the successful management of desktop and server software. activeSAM provides:
A daily inventory of software installed on PCs. A powerful analysis and report engine.
A daily usage history for all software by PC and Reconciliation of licences against software
by User. inventory and software use.
Integrated licence database that represents the
true licence position.
In order to achieve the granularity of information available from activeSAM, agents monitor application usage
and inventory, and send a daily summary to a shared network for collection and processing by the administration
console into an SQL database. The inventory service discovers networked PCs and can deploy the agent to these
PCs. Remote PCs are catered for with FTP file transfer on connection to the Internet.
The product covers desktop PCs, laptops, thin clients, and servers. It also includes applications that are launched
locally or from servers, including Citrix and terminal servers. The activeSAM active agents continuously monitor
all the use of software products daily. This includes all software and processes launched, the total and active
use of them per day in minutes, and the usage identified by users and computers. Audits are available on a daily
basis of all licensed, unauthorised, and user specified software together with PC configurations and disk space.
On-demand audits are available to provide a full scan of all files on computer disks to FAST and Business
Software Alliance (BSA) certified standards. activeSERVER agents continuously monitor each Citrix or Terminal
server, and transmit data at preconfigured intervals to manage licence compliance for thin clients.
Company Profile
Monactive is a private company that was founded in July 1998, as Xpert Client Systems, by Dr. Ian Dunn,
the author of the leading PC audit software Expert Audit (formerly Dr. Solomon’s Audit). Xpert Client
Systems was renamed as Monactive in December 2001. Its headquarters are at 100 Longwater Avenue,
Green Park, Reading, and it has plans to significantly increase the size of its staff over the next 12 months.
The company is funded by leading venture capitalists, 3i, VCF, and Matrix.
Monactive has sold solutions to over 400 organisations, with more than half of them using activeSAM in
the UK and Europe. Its UK and international customers include:
HBOS Financial Services. ABN Amro Corp Finance.
Orange. London Borough of Hammersmith and Fulham.
Imperial Tobacco. Invesco.
Pearson Group. Telewest.
TUI. W H Smith News.
ABN Amro Corporate Finance currently deploys 16,500 PCs worldwide managed by activeSAM, which is due
to increase to more than 23,000 during 2005. Its environment is managed by EDS using Microsoft SMS in
conjunction with activeSAM. HBOS Financial Services has agents on 5,600 PCs throughout the UK and Europe,
managed by activeSAM for its procurement division. This is scheduled to increase to 6,500 by the second
quarter of 2005. The telecommunications company, Orange deploys 14000 PCs in the UK, and has been
managing this domain for three years utilising activeSAM. The London Borough of Hammersmith and Fulham
CC manages 2500 PCs using activeSAM, and claims to have achieved a 10x ROI in the first year of operation.
Monactive Ltd.
100 Longwater Avenue
Green Park, Reading
RG2 6GP, UK
Tel: +44 (0) 8700 113 222
Fax: +44 (0) 8700 119 111
E-mail: sales@monactive.com
www.monactive.com

Niku Corporation
Clarity™
Clarity™ is an IT Management and Governance system that provides an integrated middle-office solution for
providing visibility across multiple aspects of organisational planning. The cohesiveness of informational
view allied to a range of tools for planning and project management is a key strength of the product. Modular
in nature, the end-user and administration modules are underpinned by a common service layer that resides
on top of a highly scalable and secure foundation. Architected on the J2EE standard, this approach of
interlaying common services away from the functional specifics of individual modules has many advantages
when it is implemented well. The architecture allows for a great deal of extensibility for the introduction of
new modules, and more importantly, ensures that personalisation and organisation-specific customisation
is reflected across all the modules. It also creates an effective scenario for deployment, where an initial roll-
out can provide proof-of-concept, but the work carried out is directly usable for later deployments.
Niku is a well-established project and portfolio management company, and Clarity is its latest offering, and
is a further development of Niku v6.1. The name change reflects the greater functionality and the wider
breadth of the solution. Based upon the Clarity G2000 Architecture, the solution consists of a number of
modules that cover the whole range of asset and resource management. Of the eight available modules, five
are designed for use throughout the organisation, while the other three are concerned with management,
administration, and configuration of automating processes.
The first five modules are Portfolio Manager, Project Manager, Resource Planner, Financial Manager, and
Process Manager. The three modules aimed at management, administration, and configuration of
automated processes are Clarity Studio, Workbench, and Author, which are supported by Clarity Core. This
is a set of services covering Collaboration, Document Management, Portals, and Reporting and Analytics.
These core services and, by extension the modules that use those services, are in turn supported by the
Clarity G2000 Architecture, which provides a secure platform. It uses a 3-tier architecture built around the
J2EE standard. The client tier is thin with no resident or transitory software. The middle tier performs
standard tasks such as security, workflow, caching, load balancing, and failover. Clarity also has its own
management tool, Clarity System Administration, for centralised management of clustered servers.
Company Profile
Niku was founded in 1997, is headquartered in Redwood City, California, with other major offices in
London, Paris, Munich, Amsterdam, Melbourne, Atlanta, Chicago, and New York. The first product to be
released by the company was developed to support the service supply chain and was a forerunner of today’s
integrated Portfolio Management solution.
To add depth to its original offerings, Niku grew through acquisition, acquiring a number of product-relevant
organisations, companies such as ABT to provide project management functionality, Proacta for project
accounting capability, Legal anywhere for collaboration, and bSource to provide market place functionality.
The initial integrated Portfolio Management solution, Niku 6, was developed as a result of pulling together
this disparate set of applications onto a single Internet-based platform with a single user interface. Clarity
has now created extended functionality and a highly scalable architecture.
Amongst current Niku clients are:
Armstrong. British Telecom.
Harrah’s Entertainment. HSBC.
Nissan. Royal Caribbean Cruise Lines.
SingTel Optus. Unilever.
Niku is a publicly owned company (NASDAQ – NIKU), and employs around 220 staff worldwide, servicing a
total of over 600 current customers. The company is now running profitably and growth is impressive. Part of
this is due to Niku being one of the earliest players in the market, but the Clarity product is strong enough to
meet the challenges that will come as the market develops. Niku is in the process of being acquired by CA.

Niku Corporation Niku Corporation Limited

305 Main Street Ziggurat, Grosvenor Road
Redwood City St. Albans, Hertfordshire
CA94063 AL1 3DL
USA UK
Tel: +1 (650) 298 4600 Tel: +44 (0)1727 888 000
Fax: +1 (650) 298 4601 Fax: +44 (0)1727 888 100
www.niku.com www.uk.niku.com
OPNET Technologies Ltd.

IT Guru, IT Sentinel, and SP Sentinel
OPNET specialises in management software for networks and applications, and has positioned its solutions
to address business problems, rather than purely technical ones. OPNET provides products for application
troubleshooting, intelligent network auditing, and predictive network planning, to enterprise customers,
government and defence, and service providers, based on the company’s deep expertise in network
modelling and analysis.
The company asserts that by more intelligent infrastructure planning, its customers can better understand
the impact of this optimisation process on their organisations, avoiding unnecessary upgrades, and reducing
IT-related risk. Similarly, with application troubleshooting it is the ability to relate performance problems to
daily operations that adds considerable value, reducing the time to resolution, enabling improved service
quality, and helping organisations to understand the impact of infrastructure changes on end-to-end
response times.
OPNET’s VNE Server solution creates a comprehensive model of an organisation’s infrastructure, including
its applications, servers, and protocols, as well as details of the physical network and its components.
Utilising this model, OPNET’s tools, including IT Guru and IT Sentinel, are able to address areas including
problem and incident management, release management, configuration and change management, capacity
management, and security management.
OPNET has built on its success in the network management space, extending its capabilities into
application management. OPNET IT Guru can be used to diagnose end-to-end performance problems,
validate changes prior to implementation, plan ahead for growth and high availability, and conduct ‘what-
if’ scenarios without affecting the production infrastructure (networks, servers, and applications). IT Guru’s
modelling engine uses a number of best-of-breed approaches in its various network simulation products,
with discrete-event, analytical, rules-based, or a hybrid of these. An accurate network model can be built
automatically from live production data, leveraging integrations with a diverse range of third-party tools. A
range of add-on modules supports further specialist network diagnosis and modelling, as well as
application-related capabilities that can visualise in-depth behaviour characteristics, diagnose performance
problems, and optimise service levels.
IT Sentinel is a network configuration management solution for ensuring the integrity and security of
networks. It maintains a real-time network model, performs automated configuration audits, and informs
users about critical issues, and provides results through an integrated Web-based server, e-mails, and
pagers. Due to the complexities and continual change in infrastructure networks, and the need for
enterprises to become more responsive to their customers, they need a proactive management solution that
will enable them to avoid expensive downtime, performance degradation, and insecure networks. OPNET
specialises in management software for networks and applications, and in addition to IT Sentinel for
medium to large enterprises, the company offers SP Sentinel that performs the same functionality for service
providers.
Company Profile
OPNET (NASDAQ:OPNT) is headquartered in Bethesda, Maryland, USA, with international offices in Reading,
UK; Paris, France; Sydney, Australia; and Ghent, Belgium. In addition, OPNET has partners worldwide.

The company was founded in 1986 by Marc and Alain Cohen, based on simulation technology created by Alain
Cohen at MIT. OPNET currently employs approximately 330 employees, the majority of whom are based in the US.
The net profit, operating, and revenue figures for the last three years are:
Year Ending 31 March 2004 (US$ million) 2003 (US$ million) 2002 (US$ million)
Total Revenue 56.5 46.4 44.6
Change in Revenue 22% 4% 36%
Operating Expenses 38.2 36.1 33.9
Net Profit 5.7 2.7 4.4
Approximately 20.5% of total revenues are from outside the US. OPNET invests nearly 25% of its yearly
revenue into R&D for its products, and has made significant improvements to the products since their first
inception. Key clients in the UK include: HSBC Bank, TNT Express, CGEY, Warner Brothers UK, Vodafone,
Orange PCS, and Norwich Union. OPNET has over 2,500 customers worldwide.
OPNET Technologies, Inc. OPNET Technologies Ltd.
7255 Woodmont Avenue 17-23 High Street
Bethesda Slough, Berkshire
MD 20814 SL1 1DY
USA UK
Tel: +1 (240) 497 3000 Tel: +44 (0)1753 878 260
Fax: +1 (240) 497 3001 Fax: +44 (0)1753 878 261
E-mail: info@opnet.com E-mail: mkiwan@opnet.com
www.opnet.com
Oracle PeopleSoft
PeopleSoft Project Portfolio Management

Oracle’s PeopleSoft Enterprise applications are designed for complex business requirements. They provide
Web services integration with multi-vendor and home-grown applications, and they can be easily configured
and adapted to meet customer requirements. In addition, PeopleSoft Enterprise supports a very broad
choice of technology infrastructure. Following Oracle’s completion of the acquisition of PeopleSoft
Corporation in 2005, PeopleSoft Enterprise belongs to the Oracle Applications product line, which also
includes JD Edwards EnterpriseOne, JD Edwards World, and the Oracle E-Business Suite.
PeopleSoft Project Portfolio Management is a decision support application for enterprises to achieve
maximum IT value through knowing how their resources are allocated to investment opportunities. It
enables management of all disciplines to speak the same language, share risks, and collaborate in decision-
making. PeopleSoft Project Portfolio Management is a centralised on-line tool that provides a structure to
the whole project planning process. Requests can be collected from all parts of an organisation, the status
of project requests can be evaluated, compared, and reviewed in real-time, and requests can be routed to
stakeholders for review and approval.
The solution also analyses costs, benefits, and the value of projects over time using net present value,
breakeven point, ROI, and other financial calculations to assist in the decision-making process. PeopleSoft
Project Portfolio Management also groups requests into portfolios based on objectives and risks, prioritises
projects and identifies duplicates, and can weight financially potential risks. It continually monitors the state
of projects against metrics, business unit alignment, and corporate objectives, and enables the selection of
dashboard displays of KPIs that the enterprise chooses from a library of customisable charts. Proactive
alerts and indicators can be set to notify stakeholders of hot spots, projects can be compared with similar
projects, and financial performance can be analysed at department, business unit, and enterprise level.

PeopleSoft Project Portfolio Management was designed specifically for CIOs and IT managers to
continuously evaluate, monitor, and manage project investments against objectives. In conjunction with the
PeopleSoft Enterprise Service Automation (ESA) suite of applications from Oracle, PeopleSoft Project
Portfolio Management provides an integrated, end-to-end solution to align projects with corporate
objectives, reduce project delivery costs, and increase resource usage. It can be integrated with Oracle’s
PeopleSoft Enterprise Program Management, to automatically create projects for approved project requests
and feed real-time project performance updates to the portfolio manager. Budgets can be compared with
project actuals as well as new project requests using the integration with Oracle’s PeopleSoft Planning and
Budgeting solution.
Company Profile
Oracle Corporation (NASDAQ:ORCL) has its headquarters in Redwood Shores, California, and it has offices
worldwide. It is the world’s second largest independent software company, specialising in information
management. Product lines cover database, tools, and application products. The company also offers
consulting, education, and support services. Oracle technology can be found in nearly every industry
worldwide and in 98% of Fortune 100 company offices.
Larry Ellison, Robert Milner, Edward Oates, and Bruce Scott originally founded the company as Software
Development Laboratories Inc. (SDLI), in 1977. In the early days, the company built a commercial database
management system for IBM, in a project commissioned by the Central Intelligence Agency (CIA) with the
code-name ORACLE. In 1982, this became the new name for SDLI, and the company pursued the
development and distribution of database software, with Milner, Oates, and Scott concentrating on the
database development side, while Ellison was, and still is, responsible for the vision of the organisation and
for bringing clients on board. Oracle went public in 1986.
Following the acquisition of PeopleSoft, Oracle now has a combined workforce of nearly 50,000, and
supports 23,000 applications customers throughout the world. The company quickly outlined its strength
in market share, particularly in specific industries, and the speed at which it had moved to support users
of Oracle, PeopleSoft, and J.D. Edwards application software. It said that it was in a stronger position than
ever before to offer leading technology and industry expertise, greater innovation through increased R&D,
and world-class support to the benefit of its customers.
Revenues and Net Income for the last three financial years, ending 31 May, were as follows:
2004 (US$ billion) 2003 (US$ billion) 2002 (US$ billion)
Revenue 10.156 9.475 9.673
% Change 7.2% (2.0%) (11.8%)
Total Net Income/(Loss) 2.681 2.307 2.224
A sample of key clients include: MTR, Ladbrokes, Pharmacia, Abbey National, and GlaxoSmithKline
Switzerland (profiles are available on the Oracle Web site). Over 200,000 customers worldwide are using
the Oracle Database.
World Headquarters Oracle UK Headquarters
Oracle Corporation Oracle Parkway
500 Oracle Parkway Thames Valley Park
Redwood Shores Reading, Berkshire
CA, 94065 RG6 1RA
USA UK
Tel: +1 650 506 7000 Tel: +44 (0)118 924 0000
Fax: +44 (0)118 924 3000
E-mail: oraclesales_us@oracle.com E-mail: uk_sales@oracle.com
www.oracle.com www.oracle.com/global/uk/index.html

Peregrine Systems Inc.
IT Asset Management and IT Service Management

Peregrine Systems’ Asset Management and Service Management solutions enable IT departments to gain
greater visibility and control of their IT environment through the lifecycle management of IT assets and the
optimisation of global service delivery for the business. In a climate where IT management is under increasing
pressure to align resources to demonstrate a significant value contribution and ROI to the business, these
requirements will get more pressing for all organisations. Managing the trade-off between enhanced service
delivery and cost reduction in a climate of shrinking budgets and over-stretched resources, has become a
critical business issue. Peregrine’s solutions provide comprehensive functionality and powerful integration
facilities to work with an organisation’s existing infrastructure. It is aimed at larger organisations with complex
infrastructures but can be implemented in a modular manner, providing early ROI.
Peregrine says that it offers a lifecycle approach to IT Asset Management, and that its solutions fit the needs
of diverse organisations. They are designed to create real value for customers by helping them identify, track,
and allocate their IT assets more effectively and intelligently. The solutions are tailored to the needs of
organisations, and use a combination of Peregrine’s AssetCenter and its other products to help enterprises
evolve their asset management capabilities. The products include:
Asset Tracking. Asset Optimisation.
Expense Control. Outsourcing.
Process Automation. Business Continuity.
Asset Portfolio Management. Consolidation.
Peregrine offers Service Management solutions that are based on ITIL for Integrated Incident, Problem,
Change, and Service Level Management. It says that its solutions deliver real business value to the
organisation. They are built on the powerful foundation technology of Peregrine’s ServiceCenter, and its
solutions help create service efficiencies, reduce service outages, streamline service desk operations by
integrating processes and tools across the organisation, and ensure that service levels meet customer
requirements. Peregrine says that its solutions enable organisations to evolve wisely, and adapt to the ever-
changing needs of the most complex and demanding IT service environments. Its modules include:
Service Establishment. Outsourcing.
Service Control. Business Continuity.
Service Alignment. Consolidation.
Service Optimisation.
Company Profile
Peregrine Systems is a public company with its global headquarters in San Diego, California, and its EMEA
head office is in Richmond, Surrey, UK. It also has more than 20 other offices throughout the world. The
company was founded in 1981, and it has evolved through both organic growth and acquisition. However,
its core focus has remained on service and asset management. Peregrine has grown a strong global
customer base and forged significant strategic partnerships with companies such as IBM, EDS, Fujitsu, and
Siemens Business Systems. Peregrine has traditionally addressed the market through both direct and
indirect routes to market.
Peregrine Systems has about 625 employees, with approximately 40% of them located outside the United
States. Over 25% of employees are involved in Research and Development. Gross revenues grew from
US$131.6 million in 2000, to US$ 213.3 million in 2001. Approximately 70% of its revenues come from
the US. However, in 2002, the company voluntarily entered Chapter 11 status, and the following year was
difficult for the company, although Peregrine said that its customer base remained loyal.

On 7 August 2003, Peregrine Systems announced its emergence from Chapter 11 and that it would
implement its confirmed Plan of Reorganisation. Peregrine is the first enterprise software company to
reorganise successfully under Chapter 11 as a public entity. It reminded investors that it had not filed
Annual Reports for the fiscal years ended 31 March 2003 and 2002 nor the Quarterly Reports for the fiscal
quarters ended 30 June 2003, 31 December 2002, 30 September 2002 or 30 June 2002. Peregrine has
a customer base of about 3,500 organisations that are using its Consolidated Asset and Service
management products, including:
ABN Amro. Bayer.
Danske Bank. Panasonic.
EDS. IBM.
KBC Bank. Aeroport de Paris.
Peregrine Systems, Inc. Peregrine Systems, Inc.
Peregrine House 3611 Valley Centre Drive
26-28 Paradise Road San Diego
Richmond, Surrey, TW9 1SE CA 92130
UK USA
Tel: 0800 849 2050 Tel: +1 800 638 5231
Tel: +44 (0)20 8939 1111 or 858 481 5000
Fax: +44 (0)20 8939 1170 Fax: +1 858 481 1751
www.peregrine.com
PlanView
PlanView Enterprise™
The PlanView solution comprises a set of tools and packaged IT governance processes to help organisations
gain greater visibility of business strategies and projects. It addresses a need of organisations for better
accountability and more efficient management of projects, as budgets become increasingly squeezed and all
spend has to be justified. The core functionality of the solution covers the areas of work initialisation, workflow,
content management, collaboration, configurable portals, portfolio management, and business intelligence.
PlanView Enterprise™ combines portfolio management software, best practices, and proven cultural adoption
methods in a comprehensive solution that enables customers to achieve comprehensive IT portfolio
management within their organisation. It combines total business demand management with real-time
portfolio analytics, best-of-breed resource management, and action-driven processes. Working together, these
elements give customers total IT visibility, fewer redundancies, increased efficiency, and the ability to focus
limited resources on higher-value work. By integrating analytics with root-cause analysis, PlanView Enterprise
enables true optimisation, yielding greater efficiency and productivity. Components of PlanView Enterprise are:
Portfolio Management Software
PlanView Enterprise applies portfolio management methods to strategies, investments, projects, service work,
and service delivery – the total demand on IT. The demand is balanced against capacity and availability of IT
resources, with the ultimate goal of realising the business benefits of IT investments. With PlanView Enterprise,
people at all levels within an organisation gain the visibility they need to make better decisions.
In Strategic Management, it helps users to aggregate work into portfolios from where investment decisions
are made and performance measurements carried out. Within portfolios, tasks using structured analysis,
ROI, benefits stream, and balanced scorecard may be performed. Using a structured approach it is easier
to manage risks and changes, and also identify redundancies and dependencies. Collaboration is supported,
a useful feature for decision-makers and others involved in projects.

Investment Analysis and decision-making is supported through a repeatable process to scope, score, and
prioritise work. The investment decision is integrated into the processes via workflow. In order to evaluate
performance and make decisions, measurements can be taken at the portfolio level for comparative
purposes. Scenarios may be defined and activated.
For Project Management, PlanView provides functionality to help organisations manage projects from
inception to completion. Project models, project planning, estimating, scheduling, resource assignments,
and time capture and analysis functionality is provided as well as bi-directional integration with Microsoft
Project, which Butler Group regards to be a useful feature.
Resource Management is supported with features that ensure that the right people are working on the right
work at the right time. The functionality provided includes resource capacity planning and demand
management, and also resource reserves, resource allocation, and resource performance, which is based
on time and expense reporting. Resource schedules can be viewed and managed, with the ability to reserve
and allocate resources in real-time, while at the same time tracking employee backgrounds and their levels
of experience in different disciplines, ensuring that staff are allocated to tasks that are appropriate to their
level of experience and abilities.
Financial Forecasting provides the ability to perform organisational and project-based financial planning.
Incorporated are cost, benefit, and revenue planning, organisational budgeting, project budgeting,
forecasting, and analysis functionality. The information required for invoicing and chargeback is provided by
the time and expense reporting process that is available in the system.
In addition to chargeback, cost allocations and multiple bill and cost rates are supported, and the
application provides flexibility in the way in which financial data can be structured. It has clearly been
designed for global operations, as there is a full currency conversion feature that allows planning to be
undertaken in a local currency, which is then aggregated to a common currency. There is a financial
repository, XML document server, and API, that support interfaces with other applications including ERP,
payroll, human resource, and other enterprise financial systems.
Enterprise Portfolio Management for alignment of strategies and resource capacities.
Project Portfolio Management for the management of project portfolios and resource assignments.
Service Portfolio Management for the capture and management of the total cost of services.
IT Management Best Practices
PlanView’s flexible IT business process delivery allows users to select the process areas that give them the
fastest ROI, and can be adapted to their unique environment.
PRISMS™ – adaptive IT management best practices. Pre-defined PRISMS are delivered as part of the
PlanView solution, which can be used out-of-the-box or customised as required. They are delivered with
work initialisation and project model workflows, workflow roles, content documents, work breakdown
structures, resource requirements, and portal layouts. Each process is documented with training material
and quick reference cards provided. Additional re-packaged processes are available and other industry
standard processes can be input. Alternatively, organisations can create their own processes.
Cultural Adoption
PlanView’s proven implementation model and active user community gives customers confidence that they
will realise the benefits expected from an IT management solution.
Implementation Assurance Methodology is a structured change process that focuses on a quick ROI and
low organisational impact.
PlanView Direct Community provides mentoring and support through year-round forums and the
company’s on-line user community.
Company Profile
PlanView is headquartered in Austin, Texas, US, with offices across the US, and Country offices in the UK,
Germany, Italy, France, and The Netherlands. It is a privately held company that has 230 employees.
From a Financial aspect, PlanView follows a conservative growth path with stability and longevity seen as
key. PlanView has grown revenues of 30% year on year, and has been profitable every year since 1993.

PlanView has in excess of 300 customers worldwide with approximately 275,000 licences including
Allianz, Reuters, Vodafone, Allied Irish Bank, and British American Tobacco.
Global Headquarters UK Office
PlanView Inc. PlanView UK Limited
8300 North Mopac Atlantic House
#100 Austin Imperial Way, Reading
Texas 78759 Berkshire, RG2 0TD
USA UK
Tel: +1 (512) 346 8600 Tel: +44 (0)118 903 6166
www.planview.com
Primavera
Project Portfolio Management
Primavera says that with its best-of-breed Project Portfolio Management solutions for specific business
applications, it is helping companies around the world successfully manage all of their projects and services,
even in the most complex environments. IT organisations face the challenge of running IT like a business
by prioritising projects, improving operational efficiencies, and maximising ROI. Primavera says that it helps
them achieve these by making the best use of personnel and their skills, aligning projects and resources
with company strategy, and improving governance processes and quality programs. Primavera helps IT
formalise project selection and initiation processes, and once projects are under way, it makes it easy to
analyse the portfolio and assess project success metrics. It enables CIOs to increase customer loyalty and
build valuable credibility with internal customers and executives for the business value of IT.
Primavera says that it helps IT organisations succeed when facing today’s increasing demands and
challenges. It improves alignment, execution, and control, assuring that the corporation’s most strategic
needs are met. Whether customers are focused on maximising resources to provide IT support and
maintenance or developing large, strategic business applications, Primavera claims that it has a solution
that is designed to work the way that people work, whether they are an executive, project manager, resource
manager, or a team member.
Primavera says that its information technology solutions offer the following benefits:
Value creation through the maximising of investments through portfolio analysis and resource
management.
Velocity by increased speed and efficiency of project execution and IT operations.
Repeatability to achieve repeatable project success through documented best practices and knowledge
management.
Visibility through the monitoring of the portfolio and resource performance with business analytics.
Company Profile
Primavera has specialised in project, portfolio, and resource management solutions since 1983. The
company believes that this experience gives it a powerful insight into implementing IT governance
initiatives, reflecting its understanding of project and portfolio management success factors. The company
was founded in May 1983 by Joel M. Koppelman and Richard K. Faris. Its headquarters are in Bala
Cynwyd, Pennsylvania, and it has regional offices in San Francisco, Chicago, and London. Primavera has
achieved 22 consecutive years of growth and profitability, and employs more than 425 people with over
30% involved in Development and 20% in customer support. In 2004, the company achieved
US$102 million in revenue, which showed an increase of 16% over the previous year. International revenue
increased by 56% and Primavera continued to be profitable.
The company has strategic partnerships with companies such as AGC, BEA Systems, BearingPoint, IBM,
OpenText, Oracle Corporation, PeopleSoft, SAP AG, and Telelogic.

The company operates through authorised resellers in 85 countries around the world, and includes among
its customers, organisations such as Alcatel, Bovis Lend Lease, ChevronTexaco, Citicorp, ConocoPhillips,
EDS, Ericsson, ExxonMobil, Federal Express, Fluor, Ford-Jaguar, General Motors, Guardian Life Insurance,
Hewlett-Packard (HP), Intel, Johnson & Johnson, Lockheed Martin, and the U.S. Census Bureau.
Worldwide Headquarters International Headquarters

Primavera Primavera
Three Bala Plaza West 2nd Floor, Commonwealth House
Bala Cynwyd, PA 19004 2 Chalkhill Road, London
USA W6 8DW, UK
Tel: +1 610 667 8600 Tel: +44 (0)20 8563 5500
Fax: +1 610 667 7894 Fax: +44 (0)20 8563 5533
E-mail: info@primavera.com E-mail: intlinfo@primavera.com
www.primavera.com
ProSight
Project Portfolio Management

Project Portfolio Management is software for the speed of today’s business. The ProSight software
application and its interface were constructed to run in traditional Web browsers on Microsoft® Windows
platforms so that they would be simple to understand and easily accessible – ensuring that customers
become rapidly self-sufficient. ProSight Portfolio Management software carries power and complexity –
running on relational database system like Oracle® and Microsoft SQL Server – to deliver long-term value
and a significant ROI for enterprises.
ProSight Project Portfolio Management has been designed to provide a common, easily understood reference
point for dynamic and collaborative portfolio management, aggregating and interfacing many data sources
to consolidate the information in one location. Anyone in an enterprise, from the executive level to the
individual team member, can easily understand, review, and communicate about the technology portfolio
using the application, creating an invaluable resource for increasing corporate efficiency and the success
rate of technology projects.
ProSight says that its solution was designed by experts in portfolio management software, who understand
that automating portfolio management with software and services for technology organisations requires
more than a project management roll-up or a compilation of resources. Portfolio management software must
also take into account soft or subjective metrics, like value to the business, adherence to enterprise strategy,
customer satisfaction, and overall health. It ensures that corporations engage in more successful,
strategically aligned portfolios of technology initiatives.
Projects are prioritised and selected based on business need, so that organisations can choose what projects
they will do. It also means effectively managing projects through to completion, and real-time monitoring of
both the on-going priorities and project execution, continually reviewing and adjusting as necessary.
The company says that CIOs have consistently reported that their number one concern is whether the IT
projects in their portfolio are aligned with the needs of the business. They are troubled by the nagging doubt
that they might be doing a perfect job of implementing a project that has little or no value to the business.
Many organisations assume that if a project is on time and under budget it is successful. But equating this
notion of project success with its value to the organisation is dangerous.
Good management of the project portfolio is essential, and it must incorporate strong portfolio management
and strong project management, which ProSight says that its solution provides. It says that Project Portfolio
Management means:
Capturing and comparing new project concepts and business cases.
Prioritising and selecting project investments for optimum value to the business, based on an objective process.
Determining feasibility and planning a schedule based on costs and resource availability.

Tracking all aspects of the project throughout its lifecycle.

Managing project execution through to benefits realisation.
Objective evaluation and review of results obtained.
ProSight’s Fast Track PPM presents key project information at the appropriate level for everyone in the
organisation, tracking strategic and operational issues and activity in a single solution. With a shared system
of record, the communication and collaboration throughout the management chain works far better.
ProSight’s Fast Track for Project Portfolio Management incorporates a process with three basic stages,
Propose, Select, and Manage, that can be as brief or as detailed as the enterprise chooses.
Company Profile
ProSight delivers portfolio management software and portfolio management services. It comprises a number
of industry veterans with substantial expertise in software and high-technology companies. It says that it
has experienced the same problems that face customers, and that its software has been designed to solve
those problems.
The company was founded in 1998 and has its headquarters in Portland, Oregon. ProSight has gathered
an executive team and employee base with a substantial history in process management and software
development for companies such as Tektronix, Symantec, MERANT, Siebel, SAP, Oracle, Mentor Graphics,
Sequent, InFocus, MedicaLogic, and Unicast.
ProSight is a well-funded, privately held company with capital provided by the BRM Group, Genesis
Partners, Giza Venture Capital, Orama Group, Prism Opportunity Fund, and Sequoia Partners.
ProSight, Inc.Corporate Headquarters
9600 SW Barnes Road, Suite 300
Portland
Oregon 97225
USA
Tel: +1 877 531 9121
Fax: +1 503 889 4800
www.prosight.com
SAS
SAS® IT Management Solutions
SAS says that its SAS IT Management Solutions are designed to help organisations establish an enterprise
approach to optimising IT performance that is easy to maintain. The company says that the effective use of
technology can determine the success of an enterprise, and it affects both the quality of its output, and its
ability to provide products and services on a timely basis. There are a variety of budget constraints that
enterprises face. Decision makers need access to IT business information to develop and achieve strategic
goals in an ever-changing computing environment. At the same time, IT managers need to leverage
investments in existing technology. They must sustain systems performance, stability, recoverability, and
availability across the enterprise in order to provide the best IT services to their clients, and they must
protect the data centre infrastructure and company assets that lie at the heart of the organisation. Overall,
IT delivery and business demands must be aligned to optimise profitability and competitiveness.
SAS contends that these needs can be satisfied with SAS IT Management Solutions, which extend beyond
traditional IT performance management and leverage the full potential of each IT resource across the
enterprise. They enable the management of the IT organisation and service delivery, control costs, and make
informed decisions. SAS IT Management Solutions provide:
Integrated and intuitive products for IT management across the enterprise.
Sophisticated analytical reporting and data visualisation.
Reliable information on IT usage and costs.

The following modules are available in SAS IT Management Solutions:

SAS IT Resource Management gathers disparate data into a customised warehouse where it can be used
for IT resource management across the enterprise from the desktop.
SAS IT Charge Management combines IT subscription and transaction-based charge information to
allocate, audit, and invoice IT usage to specific business cost centres.
SAS IT Value Management manages the cost, value, and efficiency of IT services delivered to each line
of business. It optimises the overall performance of the IT enterprise.
SAS IT Service Level Management provides a clear and concise view of IT services with the capability
to analyse, measure, and understand the quality of services and service delivery to each line-of-business.
SAS IT Management Solutions are aimed at satisfying the critical need of organisations to align with the
bottom-line goals of the enterprise, and continuously prove the value they add to the business.
Company Profile
SAS was launched from North Carolina State University in 1976, by Dr. Jim Goodnight and three of his
colleagues. Dr Goodnight is now President and CEO of SAS. The company has its headquarters in Cary,
North Carolina, and since 1976 has grown to encompass over 9,500 employees, and 329 offices
worldwide. European Headquarters are located in Heidelberg, Germany; UK offices are located in Marlow,
Manchester, and Glasgow.
SAS integrates leading data warehousing, analytics, and traditional BI applications to create intelligence
from massive amounts of data. It is one of the leading vendors in the decision support and data warehousing
market, providing an integrated enterprise BI-platform. SAS maintains a significant budget for Research and
Development (R&D), with the stated aim of driving its domain expertise in analytical intelligence and
information capture out to end-users through its solution range.
The company is ranked as the largest privately held software company in the world, and its total revenues
for the financial year ending 31 December 2004 were US$1.53 billion.
Over 40,000 customers at business, government, and university sites use SAS software solutions.
Customers include 97 of the top 100 companies on the Fortune 500 list. SAS has a strong network of
partners through its SAS Alliance programme, including Computer Sciences Corp, EDS, HP, IBM, Intel, Sun,
Unisys, Accenture, BearingPoint, Capgemini, Deloitte Consulting, and IBM Global Services.
Worldwide Corporate Headquarters EMEA Headquarters

SAS Institute Inc. SAS International
100 SAS Campus Drive PO Box 10 53 40
Cary Neuenheimer Landstr. 28-30
NC 27513-2414 D-69043 Heidelberg
USA Germany
Tel: +1 (919) 677 8000 Tel: +49 6221 4160
Fax: +1 (919) 677 4444 Fax: +49 6221 474850
www.sas.com www.sas.com
UK Headquarters
Wittington House
Henley Road, Medmenham
Marlow, Bucks
SL7 2EB
UK
Tel: +44 (0)1628 486933
Fax: +44 (0)1628 483203
E-mail: info.uk@suk.sas.com
www.sas.com/uk

SeaQuation
Enterprise Portfolio Intelligence
SeaQuation uses a unique approach combining many disciplines to provide an holistic view of an
enterprise’s IT Portfolio with proper regard to both risk and return. Within today’s corporate environment of
increased shareholder scrutiny, greater demands for corporate governance and CIO’s under pressure to
deliver more with less, understanding the financial investment and the risk in an IT Portfolio is growing in
importance. SeaQuation aims to bring Wall Street to Enterprise IT.
In the same way that a financial investment portfolio needs active management (buy, hold, or sell) by the fund
manager, so too does the IT investment portfolio. An equity or fixed income portfolio requires constant monitoring
against the Dow Jones or other benchmarks in order to maximise the risk-adjusted returns. This involves making
decisions on increasing or reducing individual stock holdings and, in particular, making disposals of non-
performing assets. Precisely the same process. needs to be applied to corporate IT investments.
SeaQuation has developed a range of analytical and actuarial methods to quantify investments in order that
executive boards can create and manage strategies to ensure that value is delivered to the business, clients
and shareholders. SeaQuation’s methodologies and metrics are supported by a benchmarking projects data
store containing empirical evidence on several thousand live and completed projects.
SeaQuation offers services providing a holistic approach to determine the financial investment, return and
risk associated with an organisation’s IT Portfolio. The services are flexible to respond to the critical factors
identified by both SeaQuation and its clients. The drivers for these assignments include:
De-politicising the process of making IT Investment decisions.
Determining the contribution of IT investments to Shareholder Value.
Supporting the business case of major IT projects through an independent financial assessment of the
risk and return.
Due diligence to assess the financial make-up, performance, and exposure of the IT Portfolio.
IT related management information benchmarking studies to determine comparability with selected peer groups.
Within each of the services the analysis may differ from client to client, recognising the fact that no two
organisations may manage its business in the same way and the key business indicators may differ from
company-to-company. The Services are of a flexible nature and can cover many service options or additional
services to provide the client with the business indicators of greatest interest.
Company Profile
SeaQuation is a new company that was formed in 2004 as a spin-out from the highly successful IT
Performance and Investment Management Department of ING Group in The Netherlands. The company was
formed due to market demand from other corporations in the oil and gas and financial services sectors,
wanting to benefit from the methods developed and deployed by ITPM at ING.
SeaQuation now assists Fortune 2000 corporations to gain a better understanding of their IT Portfolio and
investments using financial, actuarial and insurance risk based techniques. It has also worked closely with the
IT Governance Institute in the development of the ITGI’s new ValIT product which complements the existing
CobiT standard. The company’s headquarters are in The Netherlands with operations throughout Europe, the
US and the Far East. Its business is to bring financial discipline and a quantitative, actuarial approach to assist
corporations to optimise the risk-adjusted return of their business related IT investments. The SeaQuation
approach can be summarised as bridging the gap between the CIO world of bits and bytes and the CFO world
of dollars and cents. To date, SeaQuation has supported Fortune 500 enterprises to rationalise IT portfolios
resulting in significant risk reduction and overall cost savings and cost avoidance of more than US$800 millions.
SeaQuation SeaQuation Headquarters
60 Woodlands Road Roermond
Surbiton, Surrey Wilhelminasingel 25
KT6 6PY, UK 6041 CH, The Netherlands
Tel: +31 475 381 888
Fax: +31 475 311 808
E-mail: john.spangenberg@seaquation.com

Serena Software
Serena ProcessView Composer, and Serena RTM, Serena ChangeMan
ProcessView Composer is a new member of the Serena product family, which enables visualisation and
prototyping of applications to drive requirements elicitation and provide a clear business context for application
development teams. Designed for use by business analysts, the Composer environment consists of an integrated
series of visual editors that carry a Microsoft Office look and feel. Collectively these editors enable modelling and
simulation of everything from business processes and interaction scenarios, to user experiences, business logic,
and connection points to existing systems. Once the model and prototype are complete, the Composer software
can auto-generate requirements documents and specifications for delivery to both business and IT stakeholders.
As such, ProcessView Composer becomes a key source of business input for downstream Serena ALM products,
including Requirements and Traceability Management (RTM), TeamTrack, and ChangeMan.
Serena RTM solution tracks and manages requirements throughout a project lifecycle. Enterprises are able
to quickly get the information that they need to ensure that their projects succeed. While every project
follows its own process, or lifecycle, one of the first steps is the specification of requirements. Requirements
can come from anywhere – customer and end-user requirements from the field, object-oriented design
models from development, test procedures from Quality Assurance, defects from customer service, and
change requests from all stakeholders. By tracking all these requirements across different organisations, and
understanding the impact that various requirements have on cost, schedule, and time-to-market, can have
a significant impact on project success.
Key features include:
Familiar interfaces – Microsoft Word and Web browser.
Collaboration through Discussion Threads and Change Requests.
Lifecycle Traceability with Impact Analysis and Powerful Queries.
Change Management with Versioning, State Transitions, and Change Approval.
Process Flexibility.
Data Repository.
Serena offers a full range of scalable Change Management software solutions that fit both distributed and
mainframe environments. Serena ChangeMan products automate the entire application lifecycle across all
development environments making software alterations increasingly streamlined and efficient. The
ChangeMan family includes ChangeMan Dimensions, ChangeMan ZMF, ChangeMan DS, and the
ChangeMan Professional Suite – Version Manager, TeamTrack, and Builder. The Serena ChangeMan
Professional suite brings together Serena’s home-grown products and acquisitions in the Software
Configuration Management (SCM) space, including what was Merant Professional. The suite comprises
Serena ChangeMan Version Manager, Serena TeamTrack (replacing the previous Tracker product), and
Serena ChangeMan Builder, offering version control, defect, and issue tracking, and automated builds in a
single package. On top of its strengths in scalability, performance through its multi-threaded architecture,
security and distributed, Web-based development capabilities, version 9 adds the following:
Integration options into the Eclipse Platform and Microsoft Visual Studio.NET.
Integration between TeamTrack and Version Manager.
Improved Builder features, such as Java Ant support.
Compliance features include electronic signature authorisation, audit trails, and controlled workflows.
Company Profile
Serena Software (NASDAQ: SRNA) headquartered in San Mateo, California, was first incorporated in 1980,
and provides infrastructure software for Enterprise Change Management. Serena has US regional Offices in
Colorado Springs, CO, and Woodlands Hill, CA. Major European offices are located in the UK (including a
development centre at St. Albans), France, Germany, and Belgium.

In May 2004, the company completed its acquisition of Merant – giving it a broader range of Change
Management tools, including Professional. The company now provides a comprehensive range of multi-
platform products meeting the needs for Software Change Management and Enterprise Change
Management, including the Serena® ChangeMan® series of tools, Serena® StarTool® to edit and manage
data, and Serena® Comparex® for comparing files intelligently (this was in fact the first product Serena
shipped). The company acquired TeamShare in 2003 principally for the TeamTrack® product, which has
now replaced ChangeMan ALM in the Serena tool portfolio.
Serena has about 750 employees, over 200 of these are engaged in Research & Development, 250 in Sales
& Marketing, 170 in Customer and Consulting Services, and 120 in Finance, Administration, and
Operations. In the last financial year, the company spent 15% of its revenue on Research and Development,
amounting to US$31 million.
The net profit and revenue figures for the last three years are:
Year Ending (31 January) 2005 (US$ million) 2004 (US$ million) 2003 (US$ million)
Total Revenue 208 106 96
Operating Income/(Loss) 137 53 46
Net Income 9 21 23
Revenue is split by region as follows: North America – 69%, Europe, Middle East, and Africa – 30%, and
Asia-Pacific – 1%.
There are many hundred thousands of seats of Professional implemented worldwide at 15,000 sites,
including 98 of the Fortune 100.
Key customers include: US Government, Blue Cross & Blue Shield, Lockheed Martin, General Electric,
United Parcel Service, Siemens, The Hartford Financial Services Group, and Intel Corporation.
Serena Software Serena Software, Inc.
Abbey View 2755 Campus Drive
Everard Close 3rd Floor
St.Albans San Mateo
Herts, AL1 2PS California 94403
UK USA
Tel: +44 (0)1727 812812 Tel: +1 (650) 522 6600
Fax: +44 (0)1727 869252 Toll Free: 800 457 3736
Fax: +1 (650) 522 6699
E-mail: ukinfo@serena.com E-mail: info@serena.com
www.serena.com
Solution Matrix Ltd.
Business Case Analysis

Solution Matrix products and services include:
Consulting services, including business case analysis and business planning.
Professional training.
Business case tools such as published guides, software, and templates.
Special reports and white papers on business case issues.

The company contends that the business case that is produced and delivered must score high in credibility,
accuracy, and practical value. Solution Matrix says that in order to achieve this objective, an organisation
must begin by understanding that numbers alone do not make the business case. How the business case
is designed, developed, and presented is as important as the ROI and other figures that are projected.
Since 1994, Solution Matrix has helped hundreds of individuals and organisations use the Business Case
Solution to obtain solid, practical answers to questions such as:
How long will it take for a new Enterprise Resource Planning (ERP) system to “pay for itself”?
How can a capital review process be put in a business case framework?
How to determine if there is a profitable business model for all partners in a proposed business alliance?
The company draws on 10+ years of experience in a wide range of industries and business issues, and
delivers business solutions with a focus on decision-making and planning issues in business investment
decisions, strategic business planning, alliances and partnerships, sales support, emerging technologies,
and IT justification.
Justifying IT actions or acquisitions in a complex business environment can be a serious challenge. IT is
notorious for ‘hidden’ long-term costs and business benefits that are hard to quantify. Solution Matrix says
that all the business case questions about IT ‘ROI’, IT payback, and TCO are important.
It is no secret that the challenge in justifying IT actions is not financial arithmetic. The mathematics in
justifying IT actions is simple and has been used since the early 1900s, but the real challenges are:
Deciding which costs and which benefits belong in the case and which do not (or, whose costs, and
whose benefits).
Assigning value to cost and benefit impacts from the IT action.
Making concrete the benefits and costs that may not be measurable in financial terms, the so-called
‘intangible’ benefits and costs.
Making tangible the connection between IT actions and contributions to business objectives.
Solution Matrix says that it specialises in devising the approach and the kind of business case that answers
the challenging questions effectively, in practical terms that everyone including CFOs, engineers, and other
professionals can understand and trust.
Company Profile
Solution Matrix Ltd. was founded in 1994 and is based in Boston, Massachusetts, USA. The company is a
management consulting firm dedicated to helping executives, managers, consultants, and other
professionals understand the impact of management actions on business performance. Its clients include
individuals and organisations on five continents, in business, government, education, the military, and non-
profit organisations. Its primary objectives are to help clients to meet decision support and planning needs
through high-quality business case analysis, and to help them establish business case skills and resources
in their own organisations.
Solution Matrix Ltd.
304 Newbury Street
Suite 350
Boston MA 02115
USA
Tel: +1 617 267 9607 (Mon-Fri, 0900-1700 US Eastern Time)
Fax: +1 617 249 0130
Email smatrix@solutionmatrix.com
www.solutionmatrix.com

Telelogic
Telelogic DOORS/ERS, TAU Generation2, SYNERGY, and Focal Point
Telelogic provides an integrated family of software solutions that collectively automates, supports, and
manages the development lifecycle. The company’s core products consist of: DOORS/ERS – a requirements
management toolset; TAU Generation2 – a set of visual systems/software development and testing tools;
and SYNERGY a change and configuration management solution. The strength of the solution offered by
Telelogic comes from the integrated nature of the core product families, as a combined entity, and from their
individual abilities to operate as stand alone products, often alongside other, third-party application
development solutions. Within the development environment, and throughout its lifecycle, the Telelogic
toolset supports the automated tracking of compliance to user specified requirements, enables and supports
rapid impact and change analysis, delivering an end-to-end development automation solution.
Telelogic, through the use of its Automated Lifecycle Management products, provides an integrated set of
software development tools that have particular strengths in the areas of requirements management,
modelling and automated code generation, and change/configuration management. The company’s focus is
on delivering technology solutions that can be used to build and deploy specified end-user processes and
systems as quickly and as accurately as possible – this, from a systems perspective, means fast tracking
the systems build and delivery capabilities, whilst maintaining the accuracy required to build solutions that
fit the end-users stated specifications, and at the same time keeping down costs through the integration of
its end-to-end development processes.
Requirements Management – The Telelogic DOORS/ERS product family is used to document systems
requirements, and for code generation. The product set comprises of an integrated family of tools that can
be used by organisations and their developers to capture the scale and detail of user requirements. It makes
use of a structured requirements management process build methodology, which supports effective
communication and collaboration between all active participants in the development process.
DOORS/ERS is positioned by Telelogic as a multi-platform solution, which has enterprise wide systems
design capabilities. This positioning supports the products ability to capture, link, trace, analyse, and
manage information from across the enterprise, aligning it to support project/compliance issues, and
enabling it to support defined standards within the organisation. DOORS is the central tool in the
DOORS/ERS family.
DOORS/Analyst is a superset of DOORS, it provides the facilities to analyse requirements using Unified
Modelling Language (UML) models to deliver improved clarity and understanding. However, this is also
providing the core functionality to align the open nature of the solution with industry standards.
Visual Modelling and Testing Facilities – These are provided using the Telelogic TAU Generation2 products,
a range of visual development tools that support the modelling, design, implementation, and
systems/software elements of the process development cycle.
Telelogic TAU Generation2 supports the visual modelling and testing elements of systems and software
engineering projects. Its core features are TAU/Developer and TAU/Architect.
TAU/Developer enables users to generate applications based directly upon graphical models. This provides
significant benefit in environments where the complete design, development, and deployment of software
is a common requirement.
TAU/Architect has been designed to support the specification and design of large, and often complex
enterprise systems, based upon UML. Supporting this approach, one of the reasons why visual modelling
strategies are winning converts at the enterprise level is that complex specifications can be visually
validated, a step that using TAU/Architect can now occur much earlier in the development process than
would be possible if traditional methods were being used. From the user perspective this greatly reduces
the opportunity for error, and should result in a more rapid and cost-effective project development cycle.

Change and Configuration Management – Is provided by the Telelogic SYNERGY product family. Telelogic
SYNERGY delivers an advanced change and configuration management offering, covering areas such as, the
lifecycle control of digital assets, and project tracking – including all tasks and the people assigned to them
(even where these are distributed across multiple locations).
We believe that a key differentiator from traditional CM tools is the product’s ability to break down change
and configuration management into basic tasks, enabling a more detailed level of management and tracking
to be evolved. The solution centrally manages all software versions and configurations, and includes the use
of a change request and defect tracking facility that allows organisations to respond effectively to both
internal and external changes.
The solution incorporates the use of an integrated central repository database of software assets, as well as
providing a single common touch point for all personnel involved in projects. In Butler Group’s opinion, the
value of such a common resource is considerable, as software engineering, in the context of this solution is
not restricted to developers alone – it is seen as a collaborative process, and the Telelogic offering, which
can be delivered in various flavours, has been designed specifically to be flexible in its delivery methodology
to meet the needs of individual customer organisations.
Decision Support, Portfolio Management, and Product Management – are supported with the FocalPoint,
a Web-based application that incorporates tools to assist with activities such as stakeholder collaboration,
prioritisation, decision-making, and visualisation. FocalPoint is helping product development and IT
organisations at AstraZeneca, ABB, and Sony Ericsson to optimise business and product decision-making.
Company Profile
Telelogic was originally founded in 1983, as an R&D unit by the main Swedish Telecommunications
operator. Since 1999 the company has been publicly owned, and is listed on the Stockholm Exchange
(using the symbol TLOG). Telelogic has its headquarters in Malmö, Sweden, and operates in 17 countries
worldwide.
It has major offices in Irvine, California (USA); Oxford (UK); Munich (Germany); Paris (France); and Tokyo
(Japan) – employing around 700 staff across its operations.
The company’s focus is upon the provision of solutions to enable software development, and to support the
operation of advanced enterprise systems. Telelogic is recognised as a provider of advanced integrated
software tools – supported by a professional services arm – which are designed to enable the automation
of developmental lifecycles.
Telelogic is actively involved in the work of various standards bodies, such as the OMG, where it has
contributed significantly to the advancement of the UML 2.0 standard. Its products are based upon open
architectures and standardised languages, in order to ensure minimal integration issues when its products
are deployed.
Telelogic has reported the following revenues figures over the last three trading years:
2004 2003 2002
Revenues in millions of Swedish Krona (MSEK) 1039.3 937.0 1121.0
The company’s current customer list includes the following high-profile organisations: Bank of America, BAE
Systems, BMW, Boeing, Ericsson, Ford, Lockheed Martin, Motorola, and Vodafone.

World Headquarters Americas Headquarters

Telelogic AB Telelogic North America, Inc.
PO Box 4128, Kungsgatan 6 9401 Jeronimo Road
SE-203 12 Irvine
Malmö CA 92618
Sweden USA
Tel: +46 (40) 650 00 00 Tel: +1 (949) 830 8022
Fax: +46 (40) 650 65 55 Fax: +1 (949) 830 8023
Sales TollFree: +1 877 275 4777
E-mail: info@telelogic.com
www.telelogic.com
UK Headquarters
Northbrook House
Oxford Science Park
Oxford
OX4 4GA
UK
Tel: +44 (0)1865 784285
Fax: +44 (0)1865 784286
E-mail: info.uk@telelogic.com
Touchpaper
IT Service Management Suite (ITSM)
Touchpaper ITSM Suite is a series of Infrastructure Management products that run as stand-alone or fully
integrated applications. IT staff often find themselves spending most of their time reacting to problems, at
the expense of projects, to improve the efficiency of the infrastructure. Touchpaper ITSM Suite provides a
wide range of functionality to enable administrators to manage end-users, the infrastructure, and
applications. A particular strength is the tight integration between all of the products, facilitated by the
utilisation of Web services developed using the Microsoft .NET architecture. It has elements that will be of
benefit to any organisation requiring true IT service management capabilities, particularly if they have a
significant desktop or mobile PC population.
Touchpaper ITSM Suite provides a wide range of products to enable IT staff to be more proactive in
managing events before they turn into problems and start impacting performance. Furthermore, Touchpaper
ITSM allows organisations to be more proactive in terms of using IT to help drive business growth and
development. The range of products available includes:
HelpDesk. NMS.
ChangeManager. SurveyCenter.
AutoServe. PassMe.
Recently, Touchpaper has added ServicePortal, MobilePortal, ProcessManager, Enterprise AssetManager,
and ActiveAssistance to its range of solutions.

The company’s strategy is to move away from simple, help desk products to complete IT Business
Management solutions, and services encompassing IT Service Management, Customer Service Solutions
and Systems and Network Management. To achieve this, it has embraced Web services to facilitate fast and
flexible development, efficient re-use of code, and automated management processes.
Architecturally, these latest modules represent the way forward for Touchpaper. Using .NET as the
development and deployment framework allows for high levels of component reuse and simplifies
deployment. Customers can simply plug-in the various parts of the suite they need today whilst retaining
the ability to add-on as and when their needs change. Customers can also easily integrate Touchpaper
applications with other applications across the organisation. Touchpaper Console is the vendor’s .NET
container, and gives a central point of administration and management. Over time, the whole Touchpaper
portfolio will become ‘.NET-enabled’.
Company Profile
With over 20 years of experience across the UK and Europe, the USA, and South East Asia, Touchpaper is
one of the most established and respected international providers of IT Business Management (ITBM)
solutions.
Instrumental in redefining the move away from simple help desk products to complete ITBM solutions and
services encompassing IT Service Management (ITSM), Customer Service Solutions (CSS), and Systems and
Network Management, they now have over 1700 customers around the world, supporting over 3 million
users.
Touchpaper’s goal is to help its customers deliver efficient, effective IT and customer services through teams
who exceed expectations for service, minimise security risks, and drive operational value through
technology. The company has grown from its UK origins to become a successful international software
solution provider to a worldwide customer base. Touchpaper employs 200 staff with approximately 80% in
the UK and Ireland, 10% in Germany, and 10% in the US.
The company has a loyal customer base of over 1700, including a wide cross-section of corporate and
public sector organisations such as: Reebok, Merrill Lynch, Mercedes/AMG, Parliament of Victoria, The
Body Shop, Staffordshire County Council, Dixons, DSO National Laboratories, London Business School,
Kent County Constabulary, Reuters, Michelin, and Jordan F1.
Touchpaper has had steadily increasing revenues throughout its history. The major share of its revenue,
75%, comes from the UK and Ireland market, approximately 10% from the US, and a similar amount from
the German market.
Headquarters North America
Touchpaper Touchpaper Corporation
Dukes Court 440 Ninth Avenue
Duke Street 8th Floor
Woking, Surrey New York
GU21 5RT NY 10001
UK USA
Tel: +44 (0)1483 744400 Tel: +1 (646) 205 3400
Fax: +44 (0)1483 744401 Fax: +1 (646) 205 3499
Germany Ireland
Touchpaper GmbH Touchpaper, Denshaw House
Otto-Hahn-Straße 46 120/121 Lower Baggot Street
D-63303 Dreieich Dublin 2
Germany Ireland
Tel: +49 (0)6103 3 79 04 0 Tel: +353 1 659 9424
Fax: +49 (0)6103 3 79 04 44 Fax: +353 1 676 1960
E-mail: intouch@touchpaper.com
www.touchpaper.com

SECTION 9:
Glossary
Butler Group
Accounting Standards Board (ASB)

A subsidiary of the UK Financial Reporting Council.
ACCA
Association of Chartered Certified Accountants.
Advanced InTelligent (AIT)
A type of tape cartridge developed by Sony, which uses 8mm cassette tapes and can hold up to 100GB of
data.
Advanced Technology Attachment (ATA)
A disk drive implementation that integrates the controller on the disk drive itself.
AIM
Alternative Investment Market.
Anti-Money Laundering (AML)
The processes that identify when monies that are generated by crime, or are going to be used to fund crime
or terrorism, pass as transactions through the banking system.
ARA
Assets Recovery Agency; set up by the Proceeds of Crime Act 2002.
AS
Australian Standard.
ASB
Accounting Standards Board.
B2B
Business-to-Business.
BS
British Standard.
BS 7799
British Standard 7799 (also known as ISO 17799), an internationally recognised information security
standard comprising a broad range of information security controls and best practice.
BS ISO 15489 (See ISO 15489)
Business Activity Monitoring (BAM)
A process that identifies the ways in which the provision of instant access to disparate data sources and
applications within an organisation, can optimise the speed and efficiency with which business decisions
are made.
Business Process Management (BPM)
BPM concerns the software and tools required to model and execute an organisation’s business processes,
through the orchestration and integration of the necessary people, systems, applications, and application
components.
BVPI
Best Value Performance Indicator, used in the public sector in the UK.
CAO
Chief Accounting Officer.
CARD
Consolidated Admissions and Reporting Directive, UK.
CCTV
Close Circuit Television.
CEO
Chief Executive Officer.
CFO
Chief Financial Officer.
September 2005 Section 9: Glossary 185

CLI
Calling or Connected Line Identification: this relates to the display on certain telephone equipment which
alerts the subscriber to the identity of the caller before the connection is made, and the 1471 service in the
UK.
CMS
Centers for Medicare and Medicaid Services, US.
Compliance
The active process of addressing the relevant legislation and regulation.
Content Addressed Storage (CAS)
An object-oriented system for storing data that is not intended to be changed once it has been stored, for
example, medical images, sales invoices, and archived e-mail. CAS assigns a unique identifying logical
address to the data record when it is stored, and that address is neither duplicated nor changed in order to
ensure that the record always contains the exact same data as was originally stored. CAS relies on disk
storage rather than removable media, such as tape.
Corporate Governance
The way in which companies are directed and controlled.
Corporate Performance Management (CPM)
CPM fits within the BI sphere and can be thought of as a largely (70%-90%) pre-built BI solution for
financials.
Data Controller
Data Controllers make decisions about how Personal Data is processed or used (DPA).
Data Processors
Individuals and organisations who process Data on behalf of Data Controllers (DPA).
Data Subject
An individual who is the subject of Personal Data (DPA).
Digital Imaging and Communication in Medicine (DICOM)
The DICOM standard provides a common specification for the distribution of medical images such as CT
scans, MRI scans, and Ultrasound images. DICOM format files are those which are compliant with Part 10
of the DICOM standard. The UK standard for digital imaging.
Digital Linear Tape (DLT)
A well-established tape standard with a back-up speed of 20GB per hour.
Digital Versatile Disk (DVD)
DVD provides high-quality video, audio, and data storage and access.
Direct Attached Storage (DAS)
Traditional form of storage where the storage devices are directly attached to, and managed by, an individual
server.
Discussion Paper (DP22)
UK Financial Services Authority discussion paper on extension of ‘Know Your Customer’ requirements across
the Financial Services.
DoD
Department of Defense, US.
DPA
Data Protection Act 1998, UK.
DPEC
Directive on Privacy and Electronic Communications.
DTI
Department of Trade and Industry, UK.
186 Section 9: Glossary September 2005

Dublin Core
The Dublin Core Metadata Element Set is a common semantic building block of Web Metadata. It has 15
elements that provide broad categories for describing most information resources. Often, additional
semantics are required to fully describe resources, and other pieces of metadata can be combined with it
to create richer descriptions. Dublin Core metadata can reside in XML, HTML, or RDF.
ECA
Electronic Communications Act 2000, UK.
ECHR
European Convention on Human Rights 1950.
EEA
European Economic Area.
e-GIF
UK electronic Government Interoperability Framework, one of the UK’s e-Government standards.
e-GMF
e-Government Meta Data Framework, one of the UK’s e-Government standards.
e-GMS
e-Government Metadata Standard, the UK Government’s standard to describe the way that metadata should
be structured.
Enterprise Application Integration (EAI)
A software framework that enables links between applications on an organisation-wide scale. Provides
different types of interfaces, such as data integration, application integration, and process integration, to
cope with the requirements of different software packages.
ERM
Electronic Records Management.
EU
European Union.
eXtensible Business Reporting Language (XBRL)
An XML-based specification for publishing the financial information of an enterprise. The standardisation of
the specification makes it easier for public and private companies to share information with each other and
with industry analysts across all software formats and technologies, including the Internet.
eXtensible Markup Language (XML)
Markup language, derived from SGML, defined by the W3C as a Recommendation in 1998. Used as a
metalanguage to describe data, it is now finding widespread application in areas such as application
integration, content management, electronic data interchange, and wireless communications. XML is
‘extensible’ because, unlike HTML, the markup symbols are unlimited and self-defining. Using an XSL
Stylesheet, XML can be transformed for display as HTML on a Web page, or to alternative formats for
display on other types of client device.
FBI
Federal Bureau of Investigation.
Financial Reporting Council (FRC)
A unified, independent UK regulator which:
Sets, monitors, and enforces accounting and auditing standards.
Oversees the regulatory activities of the professional accountancy bodies, and regulates audit.
Promotes high standards of corporate governance.
Financial Reporting Review Panel (FRRP)
A subsidiary of the UK Financial Reporting Council.
Financial Services Authority (FSA)
UK super regulator of the banking and financial services market

FOI
Freedom Of Information Act, UK.
FPS
Fax Preference Service UK – statutory lists of numbers where the subscriber has registered a general
objection to receiving unsolicited marketing material on that number.
FSA
Financial Services Authority, UK.
FSAP
Financial Services Action Plan, UK.
FSMA
Financial Services and Markets Act 2000, UK.
FTC
Federal Trade Commission, US.
GAAP
Generally Accepted Accounting Procedures.
GSI
Government Secure Intranet, UK.
HIPAA
Health Insurance Portability and Accountability Act, US.
Host-based Intrusion Detection System (H-IDS)
A detection system that resides on a particular device, and which only monitors that device. (See IDS.)
HRA
Human Rights Act 2000, UK.
HyperText Markup Language (HTML)
A markup language designed to display material in a browser. As with XML, it consists of a series of tags,
but unlike XML it contains information about the way in which text is displayed and does not describe the
data.
IAS
International Accounting Standards.
IC
Information Commissioner, appointed by the UK Government under the DPA.
ICAEW
Institute of Chartered Accountants in England and Wales ACCA.
IFA
Independent Financial Advisor, UK.
IFRS
International Financial Reporting Standards.
Intrusion Detection System (IDS)
The IDS can be positioned either on a specific device, or on a section of a network. Its role is to monitor
traffic and report unusual occurrences to the administrator. However, if the system is poorly configured,
alerts will be almost constant. False positives, alarms without good cause, are a serious problem with
almost all IDS implementations.
Information Lifecycle Management (ILM)
A strategy and the technologies for the management and storage of information from the point of creation
to its deletion.
International Organization for Standardization (ISO)
An international organisation composed of national standards bodies from over 75 countries.

IPv4
Internet Protocol, version 4.
IPv6
Internet Protocol, version 6.
IRB
Internal Ratings-Based approach: part of the approaches to credit risk detailed in Basel II.
ISO 15489
An international records management standard based on the Australian standard AS 4390 of 1996.
ISO 17799 (See BS 7799)
ISP
Internet Service Provider.
Key Performance Indicator (KPI)
An important metric or calculation, usually displayed with graphical notion, illustrating whether the figure
has breached a defined maximum or minimum threshold.
Lightweight Directory Access Protocol (LDAP)
A software protocol for enabling anyone to locate organisations, individuals, and other resources such as
files and devices in a network, whether on the Internet or on a corporate Intranet.
Linear Tape-Open (LTO)
A tape standard developed jointly by HP, IBM, and Seagate.
Local Area Network (LAN)
A network consisting of machines within close physical proximity to each other: for example, on a single
floor of a building.
LSE
London Stock Exchange.
Mean Time Between Failures (MTBF)
The average time a device will function before failing, which is measured in hours.
Metadata
Data that describes or defines another piece or related pieces of data.
Mirroring
A form of replication.
MLRO
Money Laundering Reporting Officer: a person appointed as part of the Money Laundering Regulations, to
whom knowledge or suspicions of money laundering must be reported.
NASD
National Association of Securities Dealers, US.
NCIS
National Criminal Intelligence Service, UK.
Network Attached Storage (NAS)
A storage device located on the network dedicated to file sharing.
Network-based Intrusion Detection System (N-IDS)
A detection system that resides on a particular network segment, and which only monitors traffic that
crosses that segment. See IDS.
NYSE
New York Stock Exchange.
OFR
Operational and Financial Review.

Personal Data
The information held must have the individual as its focus. Also, the information tells you something
significant about the individual (DPA).
Phishing
Generally, e-mails sent to individuals purporting to be from their banks for example, providing them with a
link to log on to their on-line banking facility. The input account numbers and security details are recorded
by the fraudsters, who subsequently use this information to access the individual’s account.
POBA
Professional Oversight Board for Accountancy.
PRO
The National Archives – formally The Public Records Office.
Publication Scheme
States what information the authority (central and local government and authorities) publishes and can be
used to assist members of the public to understand what authorities do under the UK Freedom of
Information Act 2002.
RAIN
Redundant Array of Independent Nodes
RDF
The Resource Description Framework is a general framework for how to describe any Internet resource such
as a Web site and its content.
Redundant Array of Independent Disks (RAID)
A method of storing the same data on multiple hard disks.
RIPA
Regulation of Investigatory Powers Act 2000.
ROI
Return On Investment.
SAR
Subject Access Request.
SEC
Securities and Exchange Commission, US.
Small to Medium-sized Enterprise (SME)
A company comprising of no more than 500 employees.
Snapshot
A point in time copy of data.
SSL
Secure Sockets Layer.
Storage Area Network (SAN)
A high-speed sub-network of shared storage devices.
Storage Resource Management (SRM)
Software for managing storage resources.
Subject Access
The right of an individual to be told by the Data Controller whether they, or someone else on their behalf,
can process that individual’s Personal Data (DPA).
TCO
Total Cost of Ownership.
TPS
The UK Telephone Preference Service – statutory lists of numbers where the subscriber has registered a
general objection to receiving unsolicited marketing material on that number.

UKLA
United Kingdom Listing Authority: regulates the continuing obligations of those companies whose shares
are traded on the LSE.
Virtual Private Network (VPN)
A secure network that uses public wires, most commonly the Internet, to connect nodes, often remote
computers, to a network.
Voice over Internet Protocol (VoIP)
The technology employed to transmit voice over a data network using IP.
Wide Area Network (WAN)
A network made up of devices that are not located closely together in geographic terms. An example of a
WAN might be a college network, spread across several buildings in a city.
Workflow
This is a term used to describe the tasks, procedural steps, organisation or people involved, required input
and output information, and tools needed for each step in a business process.
Write Once Read Many (WORM)
A technology that allows data to be written to a tape, disk, or optical media once. After that the data is
permanent and can be read any number of times.
WTO
World Trade Organisation.

Butler Group
Technology Management and Strategy Report www.butlergroup.com
This Report reveals:
How to focus IT resources on the initiatives that deliver the

greatest value.
Why the measurement of IT costs and value is a fundamental

component of IT management and governance.
The approaches and methods that can help organisations to

identify and augment value.
How the implementation of a structured measurement process

brings substantial benefits.
Why most enterprises are quite proficient at measuring IT costs,

but neglect to quantify value.
The importance of automated tools and a common repository for

the successful measurement of IT costs and value.
Why the IT manager must explore new architectures, technologies,

and delivery methods to increase efficiency.
What to consider when moving the IT Department from a cost

centre to a strategic partner and value contribution model.
Butler Group
a Datamonitor Company Analysis without compromise
Headquarters: Australian Sales Office: USA Sales Office:

Europa House, Butler Direct Pty Ltd., Level 21, Butler Group,
184 Ferensway, Tower 2, Darling Park, 245 Fifth Avenue, 4th Floor,
Hull, East Yorkshire, 201 Sussex Street, New York, NY 10016
HU1 3UT, UK Sydney NSW 2000, Australia USA
Tel: +44 (0)1482 586149 Tel: +61 (0)2 9955 6249 Tel: +1 212 686 7400
Fax: +44 (0)1482 323577 Fax: +61 (0)2 9006 1282 Fax: +1 212 686 2626
RT010905MCV

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Analysis without compromise

Research Important Notice

Section 3: IT Investment Strategy 25

Section 4: Identifying IT Value 45

Section 5: Monitoring and IT Governance 65

September 2005 Contents – Measuring IT Costs and Value 3

Section 6: Measuring IT Efficiency 83

Section 7: Approaches for Determining IT Cost and Value 119

Section 8: Vendor Profiles 131

September 2005 Contents – Measuring IT Costs and Value 5

Section 8: Vendor Profiles (continued)

Section 9: Glossary 183

September 2005 Contents – Measuring IT Costs and Value 7

1.1 MANAGEMENT SUMMARY

September 2005 Section 1: Management Summary 11

12 Section 1: Management Summary September 2005

September 2005 Section 1: Management Summary 13

Measuring IT Costs and Value Framework

Figure 1.1.1: IT Cost and Value Model

14 Section 1: Management Summary September 2005

2.1 REPORT SCOPE

Section 3 – IT Investment Strategy

Section 4 – Identifying IT Value

Section 5 – Monitoring and IT Governance

September 2005 Section 2: Introduction 17

Section 6 – Measuring IT Efficiency

Section 7 – Approaches for Determining IT Cost and Value

Section 8 – Vendor Profiles

This is a glossary of terms used in the Report.

2.2 WHY MEASUREMENT IS IMPORTANT

18 Section 2: Introduction September 2005

Measuring the cost and value of IT investments is a major undertaking that

The Significance of IT Governance

The Importance of Controls

September 2005 Section 2: Introduction 19

2.3 WHAT IS IT VALUE?

20 Section 2: Introduction September 2005

Figure 2.3.1: IT Value

September 2005 Section 2: Introduction 21

22 Section 2: Introduction September 2005

Figure 2.3.2: IT Value Paradox

September 2005 Section 2: Introduction 23

2.4 RUNNING IT AS A BUSINESS

24 Section 2: Introduction September 2005

3.1 THE EFFECTIVENESS OF IT SPENDING

Figure 3.1.1: Financial Services Industry (FSI) IT Investment Strategy

September 2005 Section 3: IT Investment Strategy 27

Figure 3.1.2: FSI Investment Strategy 2003/4 (Source: Datamonitor)

‘Run the Organisation’ Investment Strategy

28 Section 3: IT Investment Strategy September 2005

‘Change the Organisation’ Investment Strategy

September 2005 Section 3: IT Investment Strategy 29

30 Section 3: IT Investment Strategy September 2005

Technology Investment Effectiveness

Figure 3.1.4: IT Investment Effectiveness (Source: Datamonitor)

September 2005 Section 3: IT Investment Strategy 31

3.2 UNDERSTANDING IT CAPABILITY

32 Section 3: IT Investment Strategy September 2005

Figure 3.2.1: The IT and Business Management Environment (Source: Artimis)

September 2005 Section 3: IT Investment Strategy 33

Service Provider Value Creation Using Corporate Vision