Page Two

By Peter Coffee  |  Posted 2002-09-23 Print this article Print

Theres a greater need to track, with precision, whats being used now and how—to estimate, without hype, what would result from added expenditure and when. At the same time, the portfolio of IT options has become far richer in opportunities and corresponding complexities.

Its also increasingly important for IT departments to shed an image, all too often deserved, of being cavalier about meeting targets in terms of both time and money. Late, overbudget deliveries are one thing when the alternative is giving competitors a critical lead in time to market with a crucial new customer service or operations aid; theyre another thing when scarce capital could equally well be applied in some other domain with less commercial or technical risk.

IT budgeting tools and processes must make a good-faith effort not only to quantify risk, but also to integrate into each line item the related costs that are sometimes left to someone else to consider—costs such as assuring continuity of operation and including appropriate security measures, rather than treating contingency planning and IT security as if they were separate line items.

IT departments may also face growing pressure to identify opportunities for cost reduction, both immediate and long term, by varying degrees of open-source adoption. This may be through the promotion or enforcement of the use of nonproprietary data formats, or even more aggressively by replacing commercial off-the-shelf products with a combination of open-source software and site-specific services.

Faced with a growing number of build-vs.-buy opportunities, its crucial for IT budget developers to speak in terms of the business mission rather than anything that looks or smells like technology for its own sake. "Acquire and deploy office suite upgrade" might have been an unremarkable item in an IT budget in 1997, but, today, its likely to trigger questions as to what new tasks will be supported or what productivity gains will accrue.

Whats needed are budget line items that closely correlate with tangible results. "Shorten job cost analysis cycle from six days to 6 hours," for example, is a line item thats likely to trigger interest rather than enmity. To pursue such goals, IT managers need to get off the upgrade treadmill and blaze new trails that begin as close as possible to where the work is being done.

In the case of Nevada-based Cashman Equipment Co., the worlds seventh-largest distributor of John Deere and Caterpillar heavy equipment, thats literally on the shop floor. Cashman IT Director Bill Glassen chose analytic tools from Hyperion Solutions Corp., in Sunnyvale, Calif., to integrate data on shop activities and costs.

"[Using Hyperions tools,] we can parse it down to the level of a shop foreman or up to the level of a company executive," Glassen said. "We can determine if a work order is profitable, if its on time; we can give that shop a better idea of how well its working. Some supervisors were surprised to find out how much time wasnt being billed to customers but to internal activities."

Indeed, Glassens example shows that shedding light into previously dark corners of enterprise operations, rather than changing the light bulbs in the data spaces that are already well-lit, is the prospect that will propel new IT activity.

Also essential are IT budget analyses that fully reflect life-cycle costs, so that business units can be confident that an IT initiative will yield benefits that they can afford to enjoy. A massive IT investment, such as a centralized analytic platform, might have a long list of strategic benefits, but cost- and head-count-conscious business line managers wont buy into such initiatives until they know what their own budgets will have to contribute.

Steve Foley, CEO at analytics vendor Clareos Inc., in Herndon, Va., suggested in a conversation with eWeek Labs that a two-year effort consuming several million dollars can all too easily produce a result thats too costly to use. "If ITs answer to a business unit request is that they need a staff person, they need to set up the tables and the queries, they need $100,000 in software licenses and six months, the answer is, Forget about it," Foley said.

Peter Coffee is Director of Platform Research at, where he serves as a liaison with the developer community to define the opportunity and clarify developersÔÇÖ technical requirements on the companyÔÇÖs evolving Apex Platform. Peter previously spent 18 years with eWEEK (formerly PC Week), the national news magazine of enterprise technology practice, where he reviewed software development tools and methods and wrote regular columns on emerging technologies and professional community issues.Before he began writing full-time in 1989, Peter spent eleven years in technical and management positions at Exxon and The Aerospace Corporation, including management of the latter companyÔÇÖs first desktop computing planning team and applied research in applications of artificial intelligence techniques. He holds an engineering degree from MIT and an MBA from Pepperdine University, he has held teaching appointments in computer science, business analytics and information systems management at Pepperdine, UCLA, and Chapman College.

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