Categories
Trends

IT Spending Flat in 2009

Computer Economics reports zero growth in IT spending in 2009

IT operational spending growth peaked in 2007 at 5.0% and then declined this year to 4.0%. As reported earlier in this study, however, a significant number (41%) of respondents do not expect to spend all of the money budgeted for this year, which means that the 2008 growth rate will almost certainly fall short of the budgeted 4.0% rate. That pessimism extends into 2009.

The news is even worse: Not only do more companies expect spending cuts in 2009 than increases, but many organizations have spent–or plan to spend–less than their budgets in 2008. It also means that in fixed dollar terms, IT spending will be down 3-4%.

IT spending is now a microcosm of the economy as a whole. The best and worst of expectations of Information Technology have been removed from C-suites, which means IT spending is more grounded in actual business performance. This is good, in that we don’t expect IT spending to underperform the broader economy, as we saw in the 2001/2002 recession, but it also means outlandish ideas of IT-derived productivity will not buffer IT from the current recession either.

In a nutshell, IT investments are more closely aligned with business requirements, which is a major goal of good IT governance.

Categories
ERM

On Enterprise Risks

Here are some nice observations on risk. 

Risk in the case of the meltdown of the balance sheets of the world’s most important financial institutions is quite different than the type of risk that financial institutions and insurance agencies were used to dealing with. What characterizes what we might term “normal risk” are three things: it is exogenous, stationary and uncorrelated.  

Although non-standard risks are difficult to plan for and manage, we must do so nonetheless. Risk models that breakdown when risks are endogenous, moving, or correlated is like building a car whose seat belts when the driver falls asleep, or whose car bag fails over 10Mph.

Transparency is a core issue. Risks cannot be managed if they cannot be measured. If government is to become the insurer of last resort, then it has the right (and obligation) to ensure transparency of the markets. The CDO and DSO markets are very opaque, to the benefit of nobody except a small handful of inside players.

If ERM is limited to risks that are exogenous, stationary, and uncorrelated, then I wonder whether we need to begin applying principles of BCP to ERM, particularly the need to identify and plan for the “worst case scenario”, which will help identify systemic risks which cannot be identified with traditional methods.

Categories
Project Management

Researching the Value of Project Management

On Tuesday I attended the monthly dinner meeting of Portland Chapter of the Project Management Institute, where Dr. Janice Thomas presented some results of her three year study that PMI will sell this year in a paper called Research on the Value of Project Management. The research team studied over 60 organizations over a year and a half in a variety of industries. They gained access to senior managers and detailed project records in order to corroborate interview statements with actual findings.

I initially skeptical of the research. Imagine this: research sponsored by the Project Management Institute finds that organizations always find value in Project Management. The research sponsor proclaims “I can definitively say that project management will bring value to companies”. However, the presentation by Dr. Janice Thomas showed she was very intelligent and thoughtful, and she was aware of the implicit biases.

Some interesting observations:

  1. Companies who focus on project management to control costs find a strong correlation with customer satisfaction, and that correlation is negative.
  2. No company in the sample could deliver ROI numbers for their project management programs. In other words, there was no ROI for calculating ROI.
  3. Companies who benefit from project management cannot simply make a one-time investment and then let it go. They must continually adjust, improve, and invest in the project management program for it to continue to succeed.

The full research paper will be available at PMI.org for $50 for non-members and $40 for members.

Categories
Tools

Numara Software Introduces FootPrints 9

Last week Numara Software announced the new version of FootPrints. Cutting through the marketing hype, the new version of the product consists mostly of minor refinements and enhancements to functionality. For example, customer accounts can now be Change approvers (only Agent accounts could approve Changes in v8), and the Address Book now allows a field for manager, which will assist in approving Changes. Otherwise they expanded the tabbed interface in the Project Administration and System Administration screens.

The lack of major new functionality is a good thing, as the product shouldn’t be plagued with a lot of new bugs typically associated with new products. The major new piece of functionality they did add is the Service Catalog, which uses (and extends) the CMDB. Service Catalog is free for CMDB customers. I will review the Service Catalog functionality later, as I haven’t yet had time to play with it in depth.

Note: The author is a contractor and consultant for Numara Software.