Justifying IT infrastructure investments
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
It wasn’t that long ago that the IT department drove IT investments. However, now business leaders (mostly) make those decisions. IT infrastructure investments have consequently taken a hit.
The problem is that while parts of IT may be specific to specific uses, a lot more is a shared resource (i.e., the network). And there may be projects that need specific hardware that on their own cannot come up with a business case big enough to justify a large hardware investment.
But if that hardware could be considered as infrastructure for multiple projects relying on that hardware platform … well, now you’re talking about something that enables several — not just one — business case. Taken together, those projects deliver more than enough value to pay for the hardware needed. A case in point: IoT.
If multiple groups within a company each independently decide to take on an IoT project, infrastructure issues may arise if those projects are not coordinated. Users may face network bandwidth challenges if the solution is not architected properly. Incompatible hardware or software decisions may require steep integration costs later on.
One way to avoid this is to pull infrastructure spend from the project and establish it as its own project as part of a portfolio management approach. If an advertising project needs to add digital signs in stores, the digital signage part of the project becomes stand-alone. Both projects enter a limited pilot phase, part of the goal of which is to make sure the infrastructure requirements are well-understood — things like, how much bandwidth to stores do we really need to keep a digital signage network running?
Other groups can see the infrastructure project out there in a holding pattern and can evaluate whether any of their existing needs would be served by that infrastructure. They attach their projects to that infrastructure project. As each new project is attached, the bar for adoption of that infrastructure investment is lowered. Not only will the project be seen as accruing benefits across multiple projects, but the infrastructure supporting multiple projects would make it a more strategic investment for the whole company.
If you look at infrastructure on its own, you’ll never justify it. Using a plumbing analogy, it’s not the pipes that are valuable, it’s what the pipes carry. But if you never invest in pipes, you’ll never have running water. So it goes for retail technology.
What’s your advice for helping to improve the funding of infrastructure projects amid increasing demand for more specific IT projects? What do you see as the pros and cons of a portfolio management approach as described in the article?