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Justifying IT Spending

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This presentation examines some of the more common and unconventional ways of justifying IT spend in businesses and higher ed.

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Justifying IT Spending

  1. 1. How to Justify Your IT Spend<br />dotCMS Boot Camp<br />14 April 2010<br />Better<br />
  2. 2. If you are looking for…<br />…in advance, I apologize<br />
  3. 3. Equations are just guides<br />Every organization has a…<br />Different approach to justifying costs<br />Different risk profile<br />Different processes/culture from one college to another, or one division to another<br />Today – a framework, based upon what I see in the market, conversations, experiences<br />
  4. 4. Following this presentation you will be able to…<br />Gain or maintain credibility with your CIO/CFO<br />Move Strategic IT Spend Requests Quickly<br />Put your vendors on BS alert<br />
  5. 5. Today<br />What Should Be Included in Every Justification Approach Focus is on Strategic purchases<br />Visit the ROI Temple<br />This one is too hot, this one is too cold. And this one is just…<br />Two other quantitative approaches<br />And now, for something totally different..<br />
  6. 6. The Checklist<br />S/W Purchase<br />Implementation<br />People, Training<br />Infrastructure (Servers, Network)<br />
  7. 7. The Big Picture – Hardware & Software<br />Strategic/Drive innovation<br />Using Social to inform content selection<br />Transformation<br />WebTrends, Radian6<br />Information<br />Transactions<br />Marketing Automation<br />Tactical/Reduce Costs<br />Infrastructure<br />CMS, servers<br />
  8. 8. The Big Picture - People<br />W-OPS<br />Web Operations<br />Ensures that the tactics of Web site development align with overall organizational mission. <br />WEM<br />Web Execution Management<br />Day to day execution by the Web Team; the Web Team carries out plans developed by Web Ops. <br />WPM<br />Web Performance Measurement<br />Web analytics that are connected to business goals<br />
  9. 9. The Big Picture - People<br />W-OPS<br />Web Operations<br />Ensures that the tactics of Web site development align with overall organizational mission. <br />WEM<br />Web Execution Management<br />Day to day execution by the Web Team; ability to efficiently carry out intended plans<br />WPM<br />Web Performance Measurement<br />Web and business analytics<br />RFI for the Web Team?<br />Who re-interviews?<br />
  10. 10. What’s Being Used<br />#1 ROI <br />Direct “return” compared to the direct “cost” of the purchase<br /><ul><li>“Cost” = Tangible, verifiable costs
  11. 11. What counts – hardware, software, incremental headcount, training costs, facility drain, the Team’s preparation time
  12. 12. What doesn’t count – “opportunity cost”, 20% of someone’s time is now freed up
  13. 13. “Return” = tangible, verifiable
  14. 14. Revenue
  15. 15. Cost savings</li></li></ul><li>What’s Being Used<br />#1 ROI (cont’d)<br />One time, perpetual, shape of the curve?<br />
  16. 16. The Failing of ROI<br />A Strategic Purchase doesn’t… <br />Save you money<br />Reduce headcount<br />Simplify processes<br />By itself, make you money<br />
  17. 17. Next Time ROI Comes Up<br />Usually an organization commits to a Strategic purchase to complement a larger, business decision<br />
  18. 18. What’s Being Used<br />#2 IT Spend:Operating Expenses<br />Reflects more of the realities of the ebb and flow of an organization<br />As it enters new markets, sells subsidiaries or mirrors a contracting market<br />Does not assess the upside of an investment<br />
  19. 19. What’s Being Used<br />#3 Total Cost of Ownership<br />Originally created to capture long term and “hidden” costs<br />Acquisition/Operation/Growth and Change<br />Does not assess the upside of comparative investments<br />But does surface financial risk during the latter stages of an investment<br />Some companies abandoning ROI for TCO because TCO represents harder costs <br />
  20. 20. What’s Being Used<br /> #4 RORKAS (Return on Running a Kick Ass Site)<br />A completely qualitative approach to justification (sort of)<br />IT investments are largely forced by business decisions<br />
  21. 21. What’s Being Used<br />#4 RORKAS (cont’d)<br />Is your site the most important visual manifestation of your school/agency/business?<br />By what degree does your site lag your business?<br /> 3 Hours?<br /> 3 Weeks?<br /> 3 Months?<br />
  22. 22. What’s Being Used<br />#4 RORKAS (cont’d)<br />Your “return” looks something like this<br />Ability to correct embarrassing content in 10 minutes, not 3 days<br />Make the most of your current business opportunities because someone is tasked with daily review of site and business analytics<br />Nail new business opportunities (launch new products, services) because you have a cross functional team that can create a new application, modify templates, write copy in something less than 3 months<br />
  23. 23. What Can You Take Home?<br />Justification is what you make it<br />Can be ROI<br />IT Spend:Operating Expenses<br />TCO<br />“Hey, just imagine how better the New World will be!”<br />An RFI for the Team?<br />
  24. 24. Be Real About Costs<br />People WILL spend more time on the site (great!)<br />Your investment is the cost of running a better machine <br />Technology, people, training, 3rd party involvement and organizational support<br />
  25. 25. A Word about “Risk”<br />Needs to be addressed in every justification<br />What is Risk? Identifying executional risk, and how will those deltas be managed?<br />Recognize risk when you…<br />Buy new – does the investment take you outside of your orgs comfort zone? <br />Remain with legacy – a different risk. Risk to the business of staying with suboptimal processes, speed, accuracy, security.<br />Who is mentoring, pushing responsibility and ownership to the appropriate levels within the organization?<br />
  26. 26. Thank You!<br />Bill Beardslee<br />bill@dotcms.com<br />+1-786-594-5288<br />

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