News

‘IT Governance’ gaining momentum

• By Alan R. Earls
• October 29, 2003

It’s the old story of the cobbler’s children who had no shoes. Ted Kempf, an analyst with Gartner Inc., Stamford, Conn., says IT departments have brought efficiencies to every corner of the organization through automation and powerful apps like ERP but that they themselves have continued to operate a craft business where “flying by the seat of the pants” is the rule rather than the exception.

“Just as important,” said Kempf, “it seems like the enterprise hasn’t been willing to make the additional investment in IT.” But that’s changing, with burgeoning interest in what Gartner (www.gartner.com) calls project portfolio management and many others call IT governance. At its heart, governance is a new way of looking at IT that embraces life cycle management and day-to-day control of projects and operations.

In practice, the concept is increasingly embodied in a range of products like Mercury Interactive Corp.’s (www.mercuryinteractive.com) IT Governance Center, an integrated set of IT governance software, services and best practices that became available in September. The software, built around products originally developed by Kintana prior to its acquisition by Mercury, is supposed to enable CIOs to manage IT strategy and execution by consolidating key governance functions such as demand management, portfolio and project management, and resource management.

According to Mercury officials, the Governance Center is made up of integrated Mercury modules, a real-time dashboard and an enterprise foundation. Software modules within the IT Governance Center include: Demand Management, Portfolio Management, Program Management, Project Management, Resource Management, Time Management, Financial Management and Change Management. The IT Governance Center also contains the Mercury IT Governance Dashboard and Foundation. The IT Governance Dashboard provides visibility across IT based on transactions recorded as IT work is performed and enables IT alignment with business needs. The IT Governance Foundation provides an integrated transaction processing architecture with shared workflow and services across all current Mercury IT Governance products.

Christopher Lochhead, chief marketing officer at Mercury, says he finds that governance has become a hot topic in his meetings with corporate CIOs. “People need to get more value from IT -- which sometimes represents half of the capital spending in an enterprise,” he said. What’s more, Lochhead said industry estimates put the amount of wasted IT spending at about 25%. “There is an issue of transparency, where the investments are going, and whether those investments are in line with corporate goals,” he added.

“With this product people can tell in real time what they have spent and what progress they have made -- and they can turn the dial and change priorities,” he added.

Mike Carlson, managing director of business transformation with the IT organization at Xcel Energy says he has so far been very happy with the Mercury IT Governance product. He cites savings or “repurposed” spending of more than $10 million. “We have cancelled projects and avoided $3.6 million in spending that I think would have continued to go forward without the visibility provided by this product,” he said. What’s more, his department was able to identify $4.3 million in “earnings contributions” because they were able to align costs to the right project or identify duplicate costs or initiatives.

Kempf said such results are what makes governance so compelling -- not only helping IT get a handle on its own affairs but also helping justify and explain IT’s investments to general managers and corporate managers.

Kempf said to date no single company yet dominates the governance market but other key players include Changepoint Corp. (www.changepoint.com), PlanView Inc., (www.planview.com), Primavera Systems Inc. (www.primavera.com) and Niku Corp. (www.niku.com). “The squeeze on IT spending has a lot to do with the increased interest this is gaining,” said Kempf.