Priority Projects

Which IT projects are surviving the budget cuts?
Priority Projects

Keith Norbie, vice president of sales and vendor management, Nexus Information Systems, Minnetonka
2010 looks to be the year of accelerating virtualization throughout the industry. I’ve recently seen companies adopt virtualization in anywhere from 30 percent to 60 percent of their IT environments, more than any year prior. Companies are also leveraging virtualization in entirely new ways for desktops and applications.
Millions of corporate desktops are running Windows XP today. Organizations can probably go two to three years before they are required to migrate to Windows 7, but they are already looking for a way to do that migration in a manageable and cost-effective way. The answer that is emerging is desktop virtualization—desktops that are run and managed in the data center and then pushed to the user. I’ve already heard of a large Minnesota company that is virtualizing over 10,000 desktops.
Also, “storage efficiency” is surviving budget cuts. The old solution has been to just add more storage. Today, with new technologies in archiving and data de-duplication, a redesign in backup has become the answer to primary storage consumption. We can identify performance issues and optimize storage to reduce a backup footprint anywhere between three to one and 20 to one.
2009 reset the thinking on upgrades. Before, they were an automatic process. Now, IT has harsh justification criteria. Companies are looking to new technologies like netbooks with VPN acceleration, Windows 7, and virtualization as the kings of budgets and projects. Ironically, another king is emerging and is trumping technology—cloud services.
So far, PC refreshes and the advancement of applications seem to be hit and miss. Getting one more year out of those assets—or another year of limping by—is still attractive. Foundational items cannot wait, but everything else can. What good are great applications unless they have the needed computing, capacity, and networking resources? Yet, infrastructure always seems to lose out to applications. That’s like buying a new car and not being able to afford gas.
Priorities have shifted to reflect new realities. “Must have” items like toner and storage are almost like electricity—they are part of a “lights on” operation. But the recession challenged most organizations to find out what the baseline of the organization could be; and as a result, they have re-assessed how they think about projects. This has made innovation take on greater importance. Eighteen months ago, organizations were still debating if server virtualization was valid. Today, that’s like looking at a 747 and saying nothing that heavy can fly.

I’m often shocked by backup and recovery systems not getting enough storage and network resources. For some reason, organizations continue to think backup is a distant third-place finish for funding. What organizations don’t always realize is that backup is 10 to 20 times more resource-intensive than some production environments.
As companies prioritize, they should start by leveraging existing investments wisely to achieve their strategic goals, but not at the expense of stifling innovation.
Rob Page, principal, Page, Inc., Savage
Our customers are certainly looking at cloud computing as an emerging trend and are increasingly interested in the enterprise economics of it. However, we see adoption at the system or application vendor level and not throughout the enterprise.
Business process management continues to gain traction as businesses start to automate more of their manual and labor-intensive processes, thus driving down their costs while increasing efficiency and scalability. Business intelligence continues to lead this trio (cloud, process, and intelligence) in adoption and budget priority. In fact, most of the projects we’re working on involve some level of business intelligence.
Our clients are upgrading hardware and other devices based on the needs of new systems and applications—and not without a sound business need. Most have already made the investments in building their infrastructure. When it comes to upgrading elements of that infrastructure, decisions hinge on the potential for substantial gains in efficiency, legacy software or systems that have reached end of life, or a software company that has gone out of business, leaving the software unsupported.
What’s on hold? Internal non–customer facing projects. For example, many of our customers have redesigned their public Web sites but have held off on redesigning intranets. And “green” projects are on the back burner—customers may think about environmental impact or power consumption when they replace a system or must upgrade, but green motives are not initiating projects.
We recommend that companies prioritize projects by factors such as net value, strategic goals, customer focus, enterprise architecture needs, likelihood of success, management or customer directive, and so on.
Brian Grafsgaard, director of professional services, Quality Business Solutions, Minnetonka
Over the last 18 months, our clients have become more inwardly focused, with an emphasis on sustaining value. Rather than investing in technologies or new capabilities, our clients have been focusing on reducing costs, especially with virtualization.
One of our clients has consolidated more than 200 distributed servers—most of which were coming off a lease—into a virtualized environment. The client is now exploring virtual desktops for its contact centers and headquarters. It will reduce costs and the risk of data loss by eliminating personal computers. The necessary security controls can be applied to the virtual desktop hosts rather than to each individual workstation.
Business process management (BPM) has also become a priority for our clients, although it hasn’t necessarily translated into an investment in BPM tools. Our clients are taking more of a manual approach, documenting their current processes and identifying opportunities to improve efficiencies. One client is documenting its creative and marketing process, a significant expense for the company, and streamlining to eliminate redundancy and waste. The next step is to automate the workflow with a BPM tool.
Another client has delayed investment in enterprise resource planning (ERP) software, but has continued to implement the process improvements identified during the project. By documenting the company’s “as is” processes, defining the “to be” processes, and identifying the gaps—in preparation for the ERP solution—several opportunities to consolidate existing systems and make incremental improvements were revealed. The client expects to reexamine the ERP solution within the next fiscal year.
If there is one common theme among our clients, it is that the recession provided an opportunity to slow down and rethink how they invest in technology. Project portfolio management can help an organization consistently assess and manage the investment of resources.
One of our clients has had great success implementing project portfolio management. Every initiative is evaluated through the same lens to determine which will provide the best return on investment. The business case and costs for each project are consistently defined so that an apples-to-apples comparison can be made.
Our clients are also re-examining their core competencies and how they provide IT services. Clients are expanding use of public cloud services, and there’s a surge in interest in governance, risk, and compliance programs, as well as information security. Much of this interest is being driven by established 2010 deadlines for Payment Card Industry compliance.
We suggest that organizations take a more holistic view and continue to develop their information security program, addressing the elements of confidentiality, integrity, and availability. Meeting the various compliance requirements becomes much more efficient if information security is considered a necessary, ongoing effort rather than a one-time project.
Jacqueline Thorn, general manager, Perficient, Inc., Minneapolis
Perficient provides IT consulting services to both the public and private sectors. In the public sector, cloud computing is being researched and discussed as a more prevalent platform for the future. The benefits include multi-tenant sharing, elasticity, scalability, better service offerings, and paying only for the services used.
Both our public and private sector customers are pursuing BPM and business intelligence (BI) this year. However, smaller budgets are hindering execution. Several of our customers have purchased BPM software suites, which have remained on the shelf due to budget restrictions and differing priorities. Our customers are now analyzing their business processes to determine some basic fundamentals (i.e. why does this process exist? is the process functional or flawed?) before diving into the technology implementation itself.
Hardware investments are typically tied to implementation of software for our clients and must be tied to strategic priorities. One client is improving an “order to cash” process. The company uses virtualization to minimize the hardware costs.
In the public sector, hardware spending drives increased security and safety of data and information assets. Also, clients want technologies that make delivery of government services more effective.
Our customers are looking closely at either revenue-generating projects—such as enriched Web applications that attract customers—or cost-reduction initiatives only. Any pet projects, or those that cannot prove a quick ROI, are typically not approved for 2010. Projects must show enterprise-level or multi-departmental value in order to be approved.
Many of our customers have already instituted virtualization to reduce storage and power costs. Reducing environmental impact is a key goal of many upcoming projects for the state of Minnesota. Its data center consolidation alone seeks to reduce the number of data centers by more than 80 percent. Another client recently completed desktop upgrades that resulted in an overall 15 percent reduction in power consumption and a $100,000 savings.
IT departments must have a committed business partner and a valid business case before they prioritize a project. Other considerations include alignment with strategic plans, enterprise impact and results, risk compared to reward, and resource requirements and ability to support the change.