All businesses recognize the importance of developing software within a budget. But how do you put together that IT budget in the first place? CAST has worked with a successful CIO to create a guideline of best practices. Saad Ayub, formerly CIO at Scholastic and The Hartford, suggests nine ways analytics supports better IT budgets.
One important point Mr. Ayub makes is that the discussion needs to focus ultimately on business needs. Most corporations that develop in-house software do not sell software as their line of business that means their focus must be on the business priorities, not the software itself.
As a software developer, I can attest to the importance of that latter point. For individual teams, their goal is to build the software, they are not focused on the business needs. It is not a matter of them losing sight of the business needs; they never had the sight at all. Their ambition and excitement to build the features can overplay the actual business needs, and that ambition can spread to other areas in the company. But such ambition needs to be reined in. Are the features truly needed by the business? That is why it is vital that your IT budget must center on business priorities, not the software features themselves.
This focus on the business priorities must transcend the entire operation so that all the teams involved, from the developers to the end users within the organization, play a role in the development of the IT budgets. Otherwise, a project can run out of control and over budget. While the programmers might be having fun building some cool technology, the CFO will certainly not be having a fun day. In order to accomplish these goals, you must follow nine steps.
- Balance Decision Making -Top-down for business capabilities Bottom-up effective landscape
- Assign metrics that drive prioritization based on business outcomes
- New project should balance new capability with business risk
- Focus on time to market
- Budget for high availability of critical applications and to improve runtime performance
- Strive to reduce business risks caused by application vulnerabilities
- Prepare for dynamic staffing models
- Reduce applications support cost
- Break Fix or keeping the lights on
Traditionally IT budgets came from the top, but the direction was often set from the bottom as developers ran free, whether the top realized it or not. All levels must take part in the decisions, as well as across any partners, whether internal or external, who have a stake in the software.
Software risks span the entire operation, including software complexity and production. This is why solid metrics, along with tools for gathering and presenting metrics, are needed.
One last interesting point Mr. Ayub makes is about dynamic staffing models. Fifty years ago, people would “get in with” a good company and stay there for decades until retirement. Today that is not true. People move from job to job, and anytime somebody leaves or a new person joins, there is ramp down and ramp up time. This adds to the risk. IT budgets need to account for this.
An IT budget is not easy, but is vital to the success not only of the application itself, but to your overall organization.
Erik Oltmans, an Associate Partner from EY, Netherlands, spoke at the Software Intelligence Forum on how the consulting behemoth uses Software Intelligence in its Transaction Advisory services.
Erik describes the changing landscape of M & A. Besides the financial and commercial aspects, PE firms now equally value technical assessments, especially for targets with significant software assets. He goes on to detail how CAST Highlight makes these assessments possible with limited access to the targetâ€™s systems, customized quality metrics, and liability implications of open source components - all three that are critical for an M&A due diligence.