A New Model for IT Demand Management

has a resource base comprising highly paid specialists, produces highly complex products and services, and has an annual budget of anywhere from two to 10 percent of annual revenue

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In short, when it comes to supply and demand, IT is unduly focused on the supply side of the equation, or the how (project management, software development and managing physical assets like hardware and networks)—to the detriment of the demand side, or the what (capturing and prioritizing demand, assigning resources based on business objectives and doing projects that deliver business benefits).

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It can also end up delivering products which don't correspond to what the customer really wants—or, paradoxically, products which do correspond to what the customer wants, but did not yield the desired results, even though built close enough to spec.

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Once projects have been delivered, the absence of rational demand management becomes even more acute. While you can usually count on business executives to obtain the funding to launch projects, the same is rarely true to fund the resulting applications after delivery. This is usually because the executive sponsor has either moved on (often as a result of the project's success—or failure) or is far less motivated to go and bat for operational funding, which doesn't have the same visibility and organizational rewards as launching a new project—especially when, as is usually the case, the magnitude of the ongoing funding was not part of the original business case.

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So demand management is clearly the missing link in most IT departments. Yet any successful business model by definition has to be built on the effective management of demand as well as supply.

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For those who believe in the myth of the sacrosanct "IT Annual Plan," remember it's just that—a myth. In the real world demand is coming in every single day, so the challenge is to capture that demand, both planned and unplanned, as early as possible, expose the high-level business justification and set up an ongoing dialogue between IT and its customers. This enables the management of a demand pipeline. An opportunity analysis on this pipeline, based on an appropriate scoring model, will give rise to an initial screening and validation process which will enable an idea to move down to next stage and become a project request. Typical examples of filtering criteria for a scoring model are expected revenue, expected cost reduction, regulatory compliance or operational improvements.

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