This may be a marketing opportunity for various configuration management products, which could position themselves as enablers for IT succession planning. The knowledge of experienced staff needs to be captured somehow... we did a lot of this during Y2K, but didn't put it in structured formats, nor back it with maintenance processes.
It's easy to put a value on physical computers. It's much harder to put a value on an enterprise's applications, but these are more significant by far. Two interesting developments I noted while perusing some literature on the plane:
The Economist magazine (2/18/2006, p55 - online access paid) has a very focused discussion on the under-valuation of software as an enterprise asset in OECD countries, particularly the United Kingdom: "The new [OECD] numbers reflect a huge exercise to make sure software investment is counted correctly. The big change has been to "own-account" (developed and produced in-house) rather than purchased software. The revisions show [for the United Kingdom statistics] own-account software of £13 billion in 2003, compared with the previous figure of £2.5 billion. Estimates had been failing in particular to capture in-house software in financial and business services."
$17 billion dollars or so delta, yeah, that's real money...
I spoke in a previous post about the Norton/McFarlan article in 10/2005 Harvard Business Review; another section of that article reads: "One rule of thumb in determining intangible assets [i.e. applications] is to first measure the hardware inventory - including all mainframes, servers, and PCs - and then multiply that by ten. This renders a rough notion of what the software inventory will be (including off-the-shelf and proprietary software)."
If applications are real capital showing up on real balance sheets, can more effective management be far behind?
PS. And if applications are valued, can data be far behind? DAMA folk take note...
The Harvard Business Review published a most interesting article in October 2005; a response to it led me to track down the original. By Richard Nolan and F. Warren McFarlan, it's entitled "Information Technology and the Board of Directors." (Paid access required.)
Interesting passage, quite in sync with what this blog has been saying for 2.5 years:
"A board needs to understand the overall architecture of its company's IT applications portfolio ... Physical IT assets ... are relatively easy to inventory; intangible assets are not. Despite the fact that intangible assets have largely been ignored by the accounting field, most companies are increasingly reliant on them. Companies have huge investments in applications software, ranging from customer and HR databases to integrated supply chains. The board must ensure that management knows what information resources are out there, what condition they are in, and what role they play in generating revenue... the IT organization [must sort] the wheat from the chaff by determining the number and location of aging and legacy programs, and then decide which should be upgraded or maintained."
Maybe if a couple of Harvard professors say it ...
However, another thing they say is more problematic: "To date, there have been no standards for IT governance." As with issues raised last week, I have to again disagree: we do have ITIL and COBIT, which at least deserved a mention. The ISACA president Everett C. Johnson feels the same way, as his rebuttal to Norton and McFarlan was published in the February 2006 Harvard Business Review: "Norton and McFarlan should have mentioned that there is a widely accepted international framework for IT governance...COBIT."
This article by DiamondCluster CTO Chris Curran on Systematic Technology Management, with a proposed four-level maturity model for what I would call ERP for IT, is top notch. What he calls the TMO I call the "IT enablement" capability. He also correctly identifies the current project-centric flaw in too much portfolio management practice, as I have discussed here and Robert Handler covers in his book. He calls for supply chain thinking and experience as well.
Great work Chris! We're definitely seeing a convergence and acceleration of thought in this space. Exciting!
One of the major sections in my book is the development of a unified process framework. The reader might well ask: with such breadth and depth available in COBIT, CMMI, and ITIL, why spend any time developing a new framework? As Jeff Kaplan notes in his excellent Strategic IT Portfolio Management,
The last thing the IT industry needs is another proprietary framework. The best thing that could happen would be if all the disparate IT associations (ITIL, SEI, COBIT, etc.), as well as academics who study and teach IT management, were to consolidate their frameworks into one definitive, comprehensive, public-domain reference model that would align industry terminology and create a single blueprint for IT managers.