Governing the IT Value Chain

One of the key tasks of the Governance Board is to ensure that appropriate policies for the IT Value Chain are put into effect — and used.

These are designed to ensure a steady flow of value-enhancing ideas into the project portfolio, to limit enhancements of operational items as their accumulated depreciation burden needs to be wound down, a regular schedule of renovation and replacement, and retirement decisions for the no-longer needed.

Properly done, these policies ensure both solid returns on investment, and an asset portfolio with few liabilities buried within it that can inhibit the enterprise when a strategic shift is required.

The Seven Steps

The IT Value Chain is composed of seven steps or phases:

  • Idea Generation: To help bubble up more ideas than simply canvassing the business for new desires can generate, a formal process of information-aided business and technology-aided business scenario formation needs to take place. Narrative processes can also be used to build a database for analysis and weak signal detection to ensure opportunities and threats are not missed.
  • Concept Development: Each idea now enters the portfolio for readiness assessment, financial development, and other work to allow an informed “release” decision to be made. Many of these “projects” will never be released: they either will not prove out, or the potential value return won’t make the cut. Ideas which languish should periodically be purged.
  • Solution Development: The first stage of “release” is to fund and authorise the development of the solution. Will this be components within existing packages, services bought, a new package or custom code? What information does it require, create, and how will that pay back to the firm? How much workplace change is involved? This completes the planning phase and allows for the formal “go” decision as a part of the “get it done” part of the portfolio.
  • Solution Deployment: Once released to be implemented, this phase brings the project to a successful conclusion. At this point, achievement of the timeline and commencement of the value flows is critically important, and therefore the organization as a whole will have few deployments going on concurrently. The Governance Board at this point is watching for deployments spiralling out of control, and will if necessary stop the project, release the resources, and bounce it back to the development phase to be rethought.
  • Operate the Asset: During the early stages of operation, the Board is concerned only that the expected value flows are occurring. There is also attention paid to extensions to the depreciation associated with the asset. Periodically the Board should require an assessment be done, to determine if the asset is still performing as expected.
  • Renew the Asset: One key reason for limiting endless enhancement of operating assets is to ensure that they can be completely renewed when necessary. This can involve shifting provisioning (from an in house package to a software-as-a-service operation, for instance), replacement with a like product (a major version upgrade of a package), or replacement with a completely different solution. Assets should be examined for fit (if we didn’t have this, would we solve the problem this way now) and accumulated complexity, both in the workplace and within the technology base.
  • Asset Retirement: Just as new ideas for value generation begin in scenarios, there are similar scenarios dealing with the end-of-life conditions for assets. These can be driven by technology roadmaps (ideally based in projections of the cost points to own and operate, not in expectations about and by vendors), by financial models, and again by narratives about work. Where retirement becomes an issue, this becomes a factor which controls the way projects are developed and released in order to complete the underlying retirement task.

    It should be noted that the Board, throughout, has never had to deal with deep technological issues, but rather with standard business cases, analysis of masses of narrative data and the like. In other words, they are being asked to make business decisions about priorities.

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About passionateobserver

I am a passionate observer of our society, the economy, and politics. Mostly I don't like much of what I see, so I write as a concerned citizen. To the fray, I bring a background in the philosophy of history, a lifetime's reading, a work history in information technology management, consulting and education.
This entry was posted in Asset Portfolios, Governance, IT Finance, Project Portfolios, Value Generation and tagged , . Bookmark the permalink.

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