As IT budgets swell, CEOs and CFOs reasonably wonder whether they’re getting full value for their money. And while every IT department leader may think otherwise, the fact is that some projects do not justify the cost.
When IT departments spend money on projects that don’t drive business value — or that simply never get done — that leaves fewer dollars for worthier ideas. CIOs must always be on the lookout for wasteful spending, and there are telltale signs that a project may be ready for the cutting-room floor.
Here are three of the most common:
1. Trim Runaway IT Projects
Most organizations have a clear gatekeeper role designed to keep projects from starting without a project plan and a solid business case. But once the project launches, project teams are often free to engage in scope creep, wandering off course and causing budget overruns.
Software upgrades are a great example. Of course, it’s vital to keep business-critical tools updated, and the scope of a typical upgrade can be modest even for very important tools. However, once a new version is installed for testing, users and IT teams often discover interesting new features, and a basic software upgrade can turn into a business process re-engineering project, adding costs and risks.
The difficulty with these types of projects is that, because each individual step makes sense, they can be hard to argue against. But the ad hoc nature of the change from version upgrade to revised business process means that the budget and timeline are unpredictable. In addition, other projects can be starved for resources, and project interlock — where a software version change suddenly depends on an unscheduled storage area network capacity upgrade — can cause substantial delays and block other activities.
CIOs should look for projects where the scope, budget, resources and time requirements have shifted significantly from startup — and be unafraid to roll a project back to its original goals and most efficient use of resources.
2. Don't Waste More Time on Black Hole Projects
An enormous part of IT budgets is spent supporting existing tools and systems. Businesses cut these checks each year without considering alternatives. When leaders justify a continuing investment with “of course we have to keep our X running,” they waste funds. This waste happens as often in hardware as it does in software.
A good example of stale investment is building local area network technology. Many organizations write a check without question to their LAN vendor for hardware support; they never bother to analyze the actual failure rate for LAN technology, which has been generally stable since 1-gigabit-per-second switches were installed.
Alternative support structures, whether that means simply stocking used parts or using a third-party company, can keep things running efficiently — and may be faster than the vendor’s own support team.
Vendors love to spread fear, uncertainty and doubt: “That core router is near end of life” or “We aren’t going to update that anymore.” But the reality is that, once something is 5 or 10 years old, a business’s IT team should be able to maintain and manage it without hand-holding from the vendor. If it can’t, that’s another issue to be investigated.
The same argument holds true for software: Paying a high price to maintain the status quo not only wastes resources, it keeps teams from thinking clearly about whether tools can be consolidated or even decommissioned.
CIOs should require a justification for any support costs, not only in terms of incidents and hardware swapped each year. And to keep IT teams advocating for new solutions, CIOs should use the savings from support as a way to invest in innovation.
3. Beware of Reality-Challenged IT Projects
Many IT projects start with a fairly blue-sky idea: “Let’s go fully mobile” or “Let’s migrate our data center to the cloud.” It’s important to invest in these types of projects to keep innovation flowing through the organization. However, blue-sky ideas have to be brought down to earth fairly quickly, or they won’t deliver a return on investment.
Cloud migration is a good example. A project can start with the goal to completely shift all applications to the cloud. But that’s not actually practical for many organizations. While cloud infrastructure and software deliver cost savings, agility, reliability and scalability, few organizations can migrate 100 percent of their data center applications. That means someone has to figure out what can be moved, and what must stay — and those are hard questions to answer.
Watch for projects where a vague scope and timeline suddenly branches into many subprojects. If a cloud project suddenly becomes five cloud projects, that’s a sign that people are ignoring the integration costs, risks and uncertainties attached. Any project where two diametrically opposed points of view suddenly reach an agreement where neither side has to compromise is another huge danger sign. That usually means both sides got their way, usually by spending more money.
The way out of these ballooning projects is to be willing to cut scope to a clearly achievable set of goals. By tightening everyone’s attention on the most important aspect of each project, CIOs can move forward on vital objectives — and leave room for future projects.