Reining in IT costs

Tao Ai Lei

As any IT manager will appreciate, IT projects have a knack for not only exceeding deadlines, but also shooting beyond planned budgets. And the number of tardy, over-budget projects is on the rise. In this age of cost-conscious measures and tough economic conditions, controlling IT costs is a prime consideration. A tool to manage costs is enterprise project management (EPM), which has evolved into a new way of doing business, to help monitor IT spending and derive more value from IT.

Today, this broader use of traditional EPM is still known as enterprise project management, but also as project portfolio management (PPM), and professional services automation (PSA).

In this article, we will refer to the broader use of EPM as PPM to distinguish it from the more traditional definition of project management. Previously, EPM was more a productivity tool, used mainly for managing a project such as building a ship. The core components of project management would include Gantt charts, work breakdown structures, and critical-path methodology. Today, PPM applications still focus on individual projects, but they also provide a set of integrated functions designed to streamline outward functions and inward processes of project-intensive departments, industries and organisations.

Building a Portfolio

For Niku, a provider of high-end PPM applications, PPM is used by its customers to run multiple or a “portfolio” of IT programmes, as well as to manage a collection of assets, which can mean current hardware, software and networks. An example is of a semiconductor company building a new wafer fab, where PPM gives a picture of how much the factory will cost, when it will be completed, and how many chips a month it can produce, making it a “precisely managed exercise,” said David Hurwitz, vice president of Corporate Marketing, Niku.

PPM also has the advantage of giving companies insight into their operations. It can provide the “necessary capital investment or project transparency and accountability that is typically not found in financial statements,” said Paul Huang, vice president, Strategic Marketing, Asia Pacific, Artemis International Solutions.

Another perspective of PPM from Gartner is that companies are starting to use portfolio management to prioritise, and manage investments throughout their lifecycle. This assumes that IT investments can be managed like a financial or R&D portfolio. This portfolio can be reconfigured to fit changing conditions, such as shifting the balance to investments with short-term returns and lower risk during tough economic times.

The nature of IT projects has also changed, says Gartner. Today, there are few standalone IT projects. Most are business projects with varying degrees of IT support. Hence their broader scope would involve more stakeholders, and can extend beyond enterprise walls, to include alliance partners or outsourcers.

The use of PPM is also likely to be boosted, as large businesses want greater control and visibility over the money they are spending on IT, along with better accountability that the spend will deliver its promised RoI, said Hurwitz. “These numbers (IT spend) have become so large that it is imperative to manage it effectively,” said Hurwitz. “Most people at large companies say that they don’t do as good a job of managing IT spend as they do managing spend in other areas.” Over 40 percent of all capital spending in companies is for IT, he added.

According to AMR Research, as much as 75 percent of IT organisations have little oversight over their project portfolios and employ non-repeatable chaotic planning processes. “EPM is not just a technology change, but is also a change in how companies manage business processes,” said Tuan Quoc Le, regional manager, Business Productivity and Solutions Group, Microsoft Asia Pacific & Greater China.

Today, PPM applications are a “fairly recent synthesis of various scheduling, resource management, financial and communication tools,” said Tuan.

“PPM can be used to manage all investments in the form of projects such as capital, assets, IT and products to ensure that investments are aligned to strategy and delivered successfully,” said Huang. Typically, the fastest adopters of PPM tend to be those with more than 250 stakeholders in and around IT, said Hurwitz.

The early adopters tend to be in the finance and manufacturing industries, to streamline operations and remain competitive, said Tuan.

Still EPM in Asia

For the moment, the use of PPM in Asia may be more of a future than present scenario. At Samsung Electronics and Peruding Good Earth, EPM software is still mainly used to manage projects. Samsung Electronics uses Microsoft EPM to manage project deliverables and standard R&D processes. They ensure that their R&D activities are controlled by embedding Internal Standard Methodology into the EPM system.

“By integrating with Researcher time management systems, Samsung Electronics now systematically controls all man hours,” said Jong Hwan Lee, manager, Samsung Electronics.

The EPM system has also enabled the company to have greater visibility on all the issues. In addition, “EPM enables executives to make decisions within the defined budgets and timeline,” said Jong. Down the road, Jong sees that EPM will expand from departmental project management to enterprise-level project management that will encompass both strategic initiatives and investment management.

Another company, Perunding Good Earth uses the Gantt charts in Microsoft Project to show clients the progression of an implementation project. “We don’t have such large or complicated projects to manage, and our projects usually have a duration of six to 12 months only,” said Maring Yong, director at the environmental management consulting company in Malaysia.

“We are probably just using 10 percent of the software capability. Also, one of the problems we have is that not many people have Microsoft Project software, so when we email them the Gantt chart, they can’t open it,” she added. Ultimately, the use of PPM to manage IT investments in a company is just one piece of the puzzle. It may still boil down to just getting individual projects completed on time, and within budget.

This article first appeared in Asia Computer Weekly