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May 24, 1999

Follow The Money

A new breed of software helps answer the question: Where are IT dollars going?

By Charles Waltner

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oe Connell, VP of IT at the Guardian Life Insurance Co. of America, wanted to improve cost controls by running his IT department like a consulting firm--delivering carefully detailed records for every project carried out. There was just one problem: Connell's group was having difficulty generating invoices more precise than "$50,000 for work performed."

Connell found the help he needed to track and control IT expenses more accurately--Changepoint Corp.'s Front Office for IT, an application that lets his IT department set up customer relationships with the New York insurance company's business units. Front Office helps IT staffers detail time and expense expenditures for IT projects completed for each department. It also manages interoffice invoicing for IT services and provides scheduling modules for keeping all projects running on time.

"I was surprised that there was such a small set of products out there that address these issues," Connell says. "Changepoint's software gives other departments in the company the kind of drill-down capability on IT costs they're demanding."

Connell, along with other IT managers, is benefiting from a new breed of software from companies such as Cambridge Interactive, Changepoint, Evolve Software, and Work Management Solutions that helps answer an important question: Where are IT dollars going? Also, vendors from more traditional IT support markets such as asset-inventory management and help desks have begun adding functionality to their tools that's intended to help IT managers get a better handle on their budgets (see story, p. 136).

The more holistic IT resource planning tools provide integrated modules for collecting worker-hour and expense data, tracking project time lines, and invoicing business units. They not only manage costs for individual IT projects, but tie all the projects together into a macro-view of the spending patterns for IT departments, helping CIOs understand which projects are the most cost-effective and beneficial to their companies. Most important, the tools help IT departments decide how to use their limited resources to meet unlimited demand from business departments that need everything from a new Web site or database to a legacy system upgrade.

"As a tech manager, it is frustrating not to know where and how you're spending your money," Connell says. "I wanted to detail the true costs so I could show the benefits of our IT work to the other managers in the company. The more information you give them, the happier they are."

IT resource planning tools help IS organizations in much the same way enterprise resource planning systems help businesses: by streamlining processes and generating information on resources and finances for better decision making. "These tools bring ERP control to IT management," says Ron Shevlin, an analyst at Forrester Research. "That's something that's been missing in IT organizations."

IT professionals can expect even more help as this software category gains momentum. In March, for example, Changepoint, perhaps the most-established vendor in the market, released the first version of its software that works outside the Lotus Notes environment. The new version runs on Microsoft's SQL Server 7.0, opening the product to just about any IT operation. John Bantleman, CEO of Evolve Software, says other companies are building products to compete with Evolve's Servicesphere, which hit the streets this year.

The growth of businesses' IT budgets is driving interest in these tools as CEOs and other executives critically scrutinize technology spending, says Gerry Smith, CEO of Changepoint. Analyst Shevlin adds that practices such as charging expenses for IT projects to the departments that request them make financial controls much more important to IT departments.