Showing posts from December, 2005

Improve Project Success Rates

Although improving over the past 5 years, IT projects still suffer too many setbacks and failures.

In our latest research with IDC, the good news is that 2/3rds of IT projects are now successfully deployed. This is truly a drastic improvement over pre-2000 figures, where 1/3rd of all projects were cancelled prior to deployment, and 40% failed to meet budget, schedule and requirement criteria for success. The primary success factor has to do with a more frugal environment – today’s projects are smaller and incremental. As well, development tools and resources have dramatically improved along with application development capability and maturity. Good project management stills are still rarer than they should be, but contribute greatly to overall success when in place.

Today, of the failed projects, only 1 in 10 projects are cancelled before deployment, but an additional 2 out of every 10 are delivered short of expectations - missing scheduled release deadlines, exceeding budget estimates…

The Benefits of Storage Consolidation

Storage consolidation consists of migrating distributed storage on individual servers to a networked NAS and/or SAN solution. The following are a few of the possible benefits:

Reduce Storage Capacity and Growth Costs

Adding storage to handle growth can be expensive, especially in high growth environments:

1) Reduce Needed Headroom - Distributed storage on individual servers require headroom on each disk array – islands of unused capacity. With consolidated SAN and NAS solutions, headroom only needs to be allocated within the single storage pool rather than for each disk array island.

2) Reduce Need for Standby Storage: SANs and NAS solutions require less standby storage because instead of having to buy additional drives for distributed servers or arrays, a single standby pool can be purchased for the consolidated storage pool.

3) Reduce Need for Additional Servers: Growing local disk arrays or database storage often forces organizations to add additional servers or computing power in or…

The ROI of HR Self Service Applications

Here are a few suggested HR applications you may wish to consider for self-service enablement

Employee self-service applications

 Retiree services
 Paid time off requests
 Electronic paystubs
 Withholding changes and deductions
 Time card entry
 Personal data maintenance
 Training registration
 Benefit inquiries
 Open enrollment
 401(k) or pension services
 Employee communications (HR policies, who’s who, what’s new, FAQs)

Management self-service applications
 Leave management
 Employee change actions (transfers, promotions, terminations)
 Management reports (headcount, salary, listings, time reports, LOA reports)
 Budget analysis
 Time card approval and reporting
 Purchase orders
 Travel and expense management
 Job requisitions
 Salary and Bonus actions

Strategic self-service applications
 Workforce planning
 Succession planning
 Stock option granting and handling
 Staff development
 Skills management
 Online job postings and applications

Benefits of these applications include the follow…

The Benefits of RFID

The costs for implementing RFID are still too high for most mainstream applications, but are falling. While the costs and risks might be too high to deploy in a production environment, the benefits are proving more apparent and many should be conducting research projects to begin determining the potential ROI.

Here is a quick checklist of several benefits which can be achieved with RFID solutions:

1. Reduce Warehouse and Distribution Labor Costs - Replace the point and read labor intensive operation of tracking pallets, cases, cartons and individual products with sensors which can track these items anywhere in the facility with pin-point accuracy. This can reduce the high labor costs and service fees of regular stock management and store shelf inventory.

2. Reduce Point-of-Sale Labor Costs – With RFID enabled products, checkout can be completed with a quick scan of all items in cart helping to reduce point-of-sale labor costs. The current scan-it-yourself component of self-service check…

The ROI Risks of VoIP

VoIP projects indeed can deliver great cost savings and empower the business for greater agility, applications and capabilities. But these projects are not without their risks. These typically include:

1. Network readiness is often under-estimated resulting in higher that expected upgrade investments required in network equipment and connectivity

2. Quality of Service issues can occur if enough bandwidth is not provided, or there are network performance issues. This can cause dissatisfaction in the system by users and customers.

3. With a converged network carrying voice, data and perhaps even video the business will be more than ever dependent on the network being available. Any issues with network systems or connectivity can cause critical business outages and losses.

4. With a converged network, security is also more of a concern. Destructive intrusions or denial of service attacks can cause outages or losses effecting more business assets than before.

5. User adoption, where users do n…

The Benefits of Business Intelligence

As a result of implementing business intelligence applications, organizations are gaining key business value advantages ranging from simple cost avoidance, such as saving on the labor, printing and distributing reports, to competitive advantage, such as recognizing hot selling items quickly enough to respond to customer demands and avoid “out-of-stock” conditions. Several of the possible benefits include:

1. Consolidate Query, Reporting, Analysis, and Analytic Applications, such as eliminating custom development and manual maintenance of Excel spreadsheets and reducing data consolidation efforts

2. Leverage important and valuable data currently being captured by ERP, CRM, SCM and other systems, but locked in these systems due to inadequate and difficult mining and reporting tools

3. Improve the integrity of analytics by assuring source data validity and calculation integrity, reducing or eliminating the cost of business decisions based on incorrect data.

4. Eliminating stove-piped analys…

The ROI SLA: Assuring Value Delivery

The rules for IT spending have changed significantly in the past 18 months and financial accountability is the new name of the game. Many vendors see ROI analysis as the way to arm prospects with a dollar-driven business case needed to win C-suite approval. Unfortunately, many IT professionals are finding that even the most robust vendor ROI tools aren't enough to stand up under the increased levels of financial scrutiny.

Clearly a dangerous gap exists between the demands of CIOs and CFOs, and the ability of most IT solution providers to address their purchase decision requirements. One approach to closing the distance may be found in service level agreements - valued as a tool for guaranteeing availability and responsiveness.

What if a vendor could be engaged enough in a personal ROI analysis to stand behind the results? This may be radical thinking for many, but this type of partnership could benefit IT departments, business groups and solution providers alike.

Under the service…

CIO to CFO: Extreme Makeover

Everyone loves a good makeover. Perhaps the CIO could benefit from one. With the help of a 'keen eye' and some pointed advice, these embattled executives need to shift focus to what's really the most important criteria for IT and business success.

A recent Empirimetric analysis (contributions to profitability as surveyed by the PIMS Program from the Empirimetric Corporation – 2002) of 3,000 business units from more than 300 corporations found that operating effectiveness (also known as "the ability to run a tight ship") contributes to a company's financial performance just slightly more than luck and random events. Overwhelmingly, success depends on market position: the ability to deliver the right solutions to the right market on a timely basis.

To help drive this market positioning -- which is where the greatest opportunities for success lie -- CIOs must focus on business-oriented goals rather than technological ones.

It's a difficult mindset shift to make…


The promise of RFID is the dream of every supply chain manager -- enabling the accurate real-time tracking of every single product, from manufacture to checkout. Compared to universal product code (UPC) bar coding, which it promises to replace, RFID proactively transmits information, eliminating the manual point-and-read operations needed with bar coding. This enhanced visibility could result in significant decreases in warehouse, distribution and inventory costs, increases in margins and enhancements in customer service.

Several of the most prominent suppliers and retailers are already taking advantage of this new technology; Wal-Mart and the Department of Defense are the most visible. Wal-Mart is demanding its top 100 suppliers put RFID tags on all pallets, cases, cartons and high-margin items by January 2005; the DoD has set an early 2005 deadline for its suppliers as well, insisting that all pallets and cases are tagged. If these deadlines are met, suppliers will be forced to inve…

The ROI from CRM

Getting analysts to agree on the potential returns of CRM is nearly impossible. Several reports recently published claimed that the return on investment (ROI) from recent CRM implementations had been dismal, with eight out of 10 projects failing to deliver on ROI promises, and project failure rates typically running between 50% and 70%. Other reports were more optimistic, estimating that about 70% of companies said their CRM initiatives had exceeded original ROI expectations.

Why the big difference in the results? Some blame analysts for a lack of clarity. But the biggest problem is a failure to measure success. Only about 20% of companies surveyed were able to demonstrate ROI for their CRM investments. Additionally, most companies say that, when it comes to determining value, intangible benefits are more significant than cost savings. Yet companies often fail to establish key performance indicators for judging these intangible benefits.

Companies need to use yardstick techniques when…

Selling with ROI

IT vendors have accepted the fact that closing deals today requires proving that their products deliver substantial value. But, with some budget relief in sight for this year, vendors may be optimistic about the return of the happy days of pre-bubble selling -- and they could abandon their commitment to ROI-based selling programs.

Unfortunately, most of the recent IT budget increases will not materialize into a spending windfall, and scarce dollars are already allocated to meet backlogged demands and cover key compliance, security and infrastructure projects. The most forward-looking IT vendors will continue to improve their value-selling methodology. They'll use tools to help sales professionals and partners quantify ROI pre-sales, and implement ongoing ROI-based service-level agreements.

In a recent survey by CIO Insight and Computerworld, 80% of buyers rated financial justification as important for IT purchase approvals. However, more than 65% of buyers revealed that they do no…

CIOs: Winning the Budget Battle

CIOs at organizations of all sizes are prepared to go into budget battle -- competing for precious few dollars to fund routine IT needs and hopefully some innovative initiatives. Even while the predictions for IT spending look promising for the next year, overall available funding is going to be tight, as revenue falls victim to the whims of an uncertain and unstable economy.

CIOs need to be on the top of their negotiating game to make certain that the dollars they need to keep technology working for the company are available -- today and in the longer term. In this fiscally prudent environment, CIOs know that every new initiative must be cost-justified through a rigorous ROI analysis. Once a CIO determines that a project makes good business sense, making the case in financial terms, with internal and external competitive awareness, will ensure victory in the budget review battle.

Here's how to speak the language of the CFO and make the case for new spending, both in terms of what i…

The ROI for Information Lifecycle Management (ILM)

With consolidation to storage area networks and advances in storage management software packages, the concept of hierarchies and intelligent management like information lifecycle management (ILM) is again at the forefront of storage architecture planning.

ILM is a growing set of recommended practices and technologies that allow companies to manage data more efficiently and effectively. Organizations process, manage, move, protect and archive various business data according to unique characteristics such as age, usage patterns, compliance and archiving policies, security and disaster protection rules, and value.

ILM has its roots in hierarchical storage management (HSM), which was popularized with mainframe storage management strategies in the early 1980s. Driven by the high cost of mainframe disk subsystems and exploding compound annual storage growth of 50% or more, mainframe managers sought HSM to reduce storage costs by migrating rarely accessed data from expensive online hard driv…

IT Does Matter

Nick Carr's argument that IT initiatives are no longer a source of corporate competitive advantage is both right and wrong. True, many IT purchases are commoditized buys that don't lift an organization past its peers. But the fundamental mistake in Carr's thesis is that all IT investments are a commodity, and should therefore be cut because they don't drive business value. Alinean's analysis of 2004 IT spending across more than 5,000 companies clearly disproves Carr's theory, showing that on average, companies that spend more on IT achieve greater bottom-line benefits. The key to ROIT™ (Return on IT) success: minimizing commodity purchases and investing more in innovation, which has proven to generate significant competitive advantage.¹

Simply put: value isn't derived from how much companies spend on IT, but from how IT dollars are invested and managed.

Nick Carr's recent comments contain a litany of flawed logic:

"IT is shifting from a potential sou…

The ROI of Server Consolidation and Virtualization

There's a huge opportunity for IT budget savings by reducing IT labor requirements – primarily administration and support. In fact, more than 70% of the total cost of ownership (TCO) for typical data centers is for labor or outsourced services.

The high cost of labor, particularly performing mundane administrative and support tasks, is one of the key reasons why little of the IT budget is left for innovative projects that can help deliver competitive value.

That's where server consolidation enters the picture. It's one of the most effective ways to lower TCO of a company's data center. Typically performed using one of the four strategies highlighted here, server consolidation methods can be applied independently or simultaneously.

Physical consolidation

This means collecting servers distributed across multiple remote/branch offices and business units into a central data center.


The team can improve configuration control by restricting server access, and strengthening …

The ROI of Business Intelligence

Companies have spent millions on transactional systems to help automate key business processes. While these systems generate enormous amounts of valuable information, they often have poor reporting capabilities, inhibiting the sharing of key information -- like demand forecasting, inventory levels, error rates, finances and budgets.

The most common way for organizations to analyze and report on valuable business data is through spreadsheets. Businesses often have thousands of these analytical spreadsheets and reports, managed by individual owners. These spreadsheets remain difficult and costly to maintain, introduce data and analytical errors, and lock key information within the hands of too few employees.

Business intelligence (BI) software offerings, such as that offered by Hyperion and SAS, hold great promise to automate consolidation, analysis, presentation, reporting and compliance capabilities necessary to free enterprise data for actionable insight. According to 2005 research b…

Ten Steps to High ROIT

1) Think like the CEO. Focus on the business first. This will affect your competitive advantage.

2) Communicate in stakeholder-specific terms, such as "competitive advantage," "growth," "income statement," "TCO" and "key business metrics."

3) Think strategically. Create a competitive analysis. Compare your company to others in the industry. Be aware of where you stand, and communicate that to your board.

4) Know where your company stands in terms of things like net income vs. IT spending and revenue.

5) Manage tactically. Project ROI. Look at the overall impact of projects across the business.

6) Don't forget the intangible benefits and risks, such as costs, financial impact, IT cost reductions, revenue and more.

7) Manage IT investments as a portfolio.

8) Translate bottom up project ROI into financial impact.

9) Remain agile and prudent but stay innovative

10) Do analysis continuously. Establish internal and external ROI SLAs for conti…

Don't just cut IT spending - Use IT to reduce SG&A is best way to cut costs

Reducing IT costs is a great idea and all, but maybe you should take a closer look at administrative expenses instead.

That's the advice from Alinean Research. The ROI consultancy, based in Orlando, Fla., crunched several years' worth of financial data from 10,000 publicly held companies and found that IT departments have indeed reduced costs through consolidation and cutbacks. But sales, general and administrative costs (SG&A), have proved resistant to savings. Given that IT spending generally represents 3.5% of revenue, while SG&A represents 19% to 23%, the latter represents some significant opportunities for improving the bottom line, said Tom Pisello, Alinean's CEO.

"We found that when we compare current revenue and the revenue of the last five years with SG&A spending, the ratios haven't changed very much," Pisello said.

"Companies need the same amount of SG&A. If IT was doing what it was supposed to, those ratios would change. That ju…

Does Size Matter in ROIT?

It's a long-held theory that larger companies have an advantage over smaller ones in IT spending, largely because of their ability to tap economies of scale. They can spend less and extract more value from investments. Recent research supports the notion that size does matter but that companies investing the most in IT are not always the winners. In fact, on average, the most successful small and midsized (SMBs) companies are more frugal than the average large company when it comes to spending as a percentage of revenue.

To understand the differences between large and small companies, Alinean turned to its PeerComparison ™ database of 8,000 companies worldwide, which includes detailed IT spending and financial performance data. To judge if size really matters, the IT spending and performance ratios of public U.S. companies were compared between large companies with revenues greater than $2 billion, midsized companies with annual revenues between $50 million and $2 billion, and sma…

Q&A for SearchCIO: The State of ROI from IT

Between utility computing and offshore outsourcing, it's a pretty safe bet that the data center of tomorrow won't look like the data center of today. What can CIOs do to prepare for the inevitable evolution? In this interview, Tom Pisello, founder, CEO and president (basically "The Man") of Orlando, Fla.-based Alinean LLC, a company that develops tools to measure IT value and ROI, talks to about which current trends merit attention -- and what CIOs should be doing to stay ahead of the curve.

What current trends -- tech or non-tech -- do you see having the biggest impact on tomorrow's data center?
Tom Pisello: Budgets are still tight, and the data center is still a place where CFOs are demanding that CIOs do more with less, and that current investments be maximized before any new investments are improved. Three areas will be the focus of investments:

Continued consolidation of servers and storage to minimize the assets and associated TCO needed to deli…

The ROI for Anti-Spam

The spam issue has reached such epidemic proportions that if its growth goes unabated, it can potentially ruin the utility and business value of e-mail. Nearly 36% of all e-mail messages received today are spam, according to NetIQ Corp.'s recent study of 750 small and large organizations worldwide. That's a sixfold increase over the past three years.

As the spam count mounts, the cost of managing the overflow (now estimated at $285 per employee per year) rises in lost productivity and incremental IT costs. As a result, the business case for antispam tools continues to increase: The typical organization gets payback on antispam software in six months or less, and an return on investment (ROI) of well over 300%, according to Alinean Corp. research.
All employees complain about the overflow of e-mail in their inboxes each morning, how long it takes to weed through it all and, increasingly, how embarrassing the e-mails are to the user and to the company.

The impact of spam is most…

Front office investments vs. back office investments

In a current IT spending vs. performance study we are doing with Bain we are looking at various IT success factors - trying to determine what makes some organizations more successful with their IT investments. One of the first items we confirmed, was the long standing belief that it is not how much you spend on IT that matters, but rather what you invest in that counts. Looking at 500+ companies we plotted IT spending versus performance metrics such as revenue growth, profitability and economic value add (EVA)- and the results showed no correlation between more spending and higher performance.

With overall spending versus performance proving inconclusive, we are now researching additional success factors which we think drive superior performance.

One of the key factors we are researching as to how it drives superior performance is front office investments versus back office. Front office investments include direct external customer facing applications and resources, as well as indirect …

Vendor ROI: Can it be trusted?

As an IT buyer you often don't have time to do your own ROI analyses, and often rely a lot on vendors to help. But, can vendor ROI analyses be trusted?

The simple answer is yes and no. Just like a reporter putting together a news story, your reliance on vendor ROI analyses depends on having a credible source and questioning/validating the facts. You should not accept just any solution provider's ROI as gospel; however, working with a good solution provider in partnership and using their ROI analysis can help the team reduce the time it takes to gather an understanding of the opportunities, the potential benefits and the costs.
Here are a couple of guidelines to making sure the ROI collaboration is successful:

1) The analysis should use a standard methodology for calculating ROI, one that matches recognized accounting principals and financial facts -- better yet one developed by a credible third party and not the solution provider themselves.

2) The analysis needs to be complete…