Optimising limited IT budgets

Due to tight budgets and highly competitive environments, enterprises will either win or lose based on their ability to respond to changing market trends, strategic business opportunities and customer requirements.

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By  Diyaa Zebian Published  July 24, 2005

Due to tight budgets and highly competitive environments, enterprises will either win or lose based on their ability to respond to changing market trends, strategic business opportunities and customer requirements. IT strategy and execution is key to remaining competitive in a business environment, where enterprises are continuously asked to service customers, partners and employees efficiently by optimising value from existing investments, and at the same time, improving productivity and responsiveness with new systems and applications. The so-called “IT gap” is created when IT capabilities are strained to keep up with constantly changing business requirements. This gap constantly stretches IT resources and limits the positive impact technology can deliver to the business. The cost of maintaining existing systems and applications is a major factor in the IT gap equation. Approximately 70%-90% of IT budgets are dedicated to “just keeping the lights on”. The remaining 10%-30% allocated for incremental investment in new applications creates further upward pressure on the 70%-90% of the budget allocated for maintenance. With little or no increase in IT budgets over the past several years, it has become increasingly difficult for enterprises to spend money on new IT applications and solutions. The gap is largely due to the result of rigid IT infrastructures and the costs of maintaining existing systems and solutions. The solution to narrowing the divide and related budget challenges lies in the infrastructure that supports the business, and how that infrastructure can enable the IT organisation to be efficient, responsive and adaptable in driving business value. The vast majority of IT budgets are consumed in maintenance and operations for existing systems. Consequently, IT strategy should be optimised to deliver on three key objectives — the lowering of ongoing total cost of ownership (TCO); increasing the business value delivered by prior investments and maximising the business value delivered by new IT investments. Enterprises are experiencing a low return on previous technology investments. In many cases, business processes are defined within software applications — packaged and customised — that have rigid implementations and proprietary technologies that limit the cost-effectiveness of extending and leveraging these processes to deliver greater business value in innovative ways. Application infrastructure that enables IT to easily integrate and extend existing apps to integrate business processes across an enterprise can lower operational costs, increase business productivity and create new revenue opportunities. The integrated platform simplifies enterprise computing, enabling IT organisations to be efficient, responsive and adaptable in driving business value by accelerating IT projects and deliverables and improving IT productivity and resource utilisation. It can also increase the return on existing IT investments while lowering the TCO. The difference between integrated and non-integrated platforms can be significant. An integrated platform reduces project cycles by 20%. In addition, integration demands approximately one eighth of the total development time, reducing time-to-market by over 20%. In addition, integrated platform versions require approximately a quarter the number of lines of code as the same application on a non-integrated platform, with a 25% cost reduction across the application lifecycle and 25%-50% reuse of the application. Integrated platforms can lower the TCO long after the applications are deployed. Increased reuse of existing applications through service-enablement leads to savings in the costs of supporting production environments and increased productivity of IT staff as knowledge and skills are concentrated in fewer, more broadly applicable industry-standards, tools and services. These platforms can also help enterprises reduce the percentage of IT budgets that goes towards “simply keeping the lights on”, thereby increasing the resources available to invest elsewhere. Faster time-to-market translates directly into increased leverage for IT budgets, increasing the number of projects an organisation can deliver. This enables IT to respond efficiently and effectively to rapidly changing business requirements, thus making significant progress towards closing the IT gap. A service-oriented architecture built on an integrated, standards-based application platform is the key enabler that drives the IT transformation underlying an efficient, responsive and adaptable service-driven enterprise. An integrated platform can also deliver significant gains in productivity, which translates directly into greater impact for each dollar of IT budget spent on new applications. These productivity gains can be attributed to two key factors: firstly, a unified platform, including an integrated application server, integration broker, and portal and secondly, a common visual development environment that unifies and simplifies application, integration and portal development. The productivity benefits are not limited to application development, however. They extend to post-deployment maintenance, management and enhancements. By simplifying service-enablement of existing applications and the assembly of reusable business services, organisations can create an adaptable IT environment that can easily automate key business processes to improve operational efficiency, making the company more responsive to customers through real time access to information and applications. IT strategy and the infrastructure supporting that strategy for new IT investments should result in fewer technologies and less complexity, not more. Adopting an integrated application platform can reduce the complexity and the cost of IT ownership going forward, as new investments become part of the legacy infrastructure to be maintained over time.

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