CIO Priorities: BMC

By Guest Author Narayanan Raman

In the next two posts, I discuss the CIO priorities of companies that provide solutions predominantly for the infrastructure layer of the IT stack. This post features Mark Settle, CIO of BMC Software. The points that stood out in our conversation were SaaS and Mark’s development of a service catalog to better manage his IT shop.

Mark, just like the other CIOs we have heard from, lays a lot of focus on SaaS in the application space. He says that many companies have favored SaaS solutions, specifically those companies that do not require highly differentiated products to run their IT shops. BMC, being a $2 billion organization, does not currently feel the need for such differentiated products; hence of the approximately 120 enterprise applications that BMC runs in its organization, about 25% are covered by SaaS providers. Mark currently taps into the services of Salesforce.com, SuccessFactors, NetSuite, and Omniture among others. Not only does he use the services of SaaS providers to run his internal IT shop, but he is also evaluating options for adapting the services of BMC to a SaaS delivery structure. But since BMC’s product offerings are primarily for system management, not all of them lend themselves easily to the SaaS model, since most of these products cater to the internal, command-and-control functions of the IT shop, which are less amenable to a third-party type of solution.

In order to manage his company’s IT operations more effectively, Mark has a vendor management office, a project management office, an enterprise architecture team, and a service management office at BMC, which he calls specialty functions, along with typical functions such as HR and finance. One of the biggest IT management initiatives Mark is undertaking is to make IT more transparent by developing a service catalog that IT can use to talk to the owners of the business units. In the service catalog, most IT activities have been distilled into 20 services that are presented to buyers (i.e. the business units) of those services. Specifically, the service catalog is used to show costs, staffing levels, and demand profiles of the services and report against SLAs, service quality, and other aspects related to those services.

IT is a significant part of the company’s operating budget (about 10%), and businesses typically have a hard time understanding this huge cost base. Business executives hence are always looking for more transparency and granularity. The service catalog helps the business units to achieve this, primarily by providing the basis to reallocate IT costs, which were traditionally booked as a corporate expense, to the respective business units that consume those services. This gives a clearer picture of the operating margins of the business units, thereby enabling the entire organization to have more meaningful discussions about IT services. The service catalog also provides a solid basis on which to benchmark the delivery of the organization’s IT shop against that of competitors.

Mark emphasized that one of the ways in which organizations are acting to better manage their IT costs is by developing these service catalogs. IT cost management need not necessarily mean cutting costs, but could also mean gaining more transparency into cost allocations, which again would provide a meaningful basis on which to trim costs as required.

This segment is a part in the series : CIO Priorities