My step son loved his 1994 BMW convertible but today he drives a recent Audi. Repairs and other operational costs for the BMW became increasingly expensive, and it lacked the technological features, safety, and comforts that are routine in today’s automobiles. For similar reasons, an Operational Analysis Review (OAR) helps your enterprise evaluate IT investments and make necessary decisions.
Operational Analysis is one of the keys to effective IT portfolio management. You may find legacy systems that are performing poorly or consuming too much of your budget. What's more, business needs change, and systems designed for five, ten or twenty years ago may not meet current needs. Some systems require pruning to eliminate functions or assets no longer needed. Some are just budget hogs. Others may need repairs to fix software or hardware glitches. Some systems should be consolidated, replaced, or eliminated. Others just need to be modernized and optimized to be more efficient and meet user expectations.
The Problem
The cost of maintaining and operating your existing systems and assets is the elephant in the room of enterprise IT budgets. For IT within the Federal government, for example, the Office of Management and Budget (OMB) points out that operations and maintenance (O&M) is longest phase of the lifecycle, and ownership costs in this phase can consume up to 70 percent or more of the total lifecycle costs.
The Solution
Operational Analysis Reviews provide a means for evaluating the performance of your existing systems and assets in the operations and maintenance (O&M) phase of the IT lifecycle. The reviews and decision-making about the findings are the single most significant means for improving the performance of your enterprise IT budget.
An Operational Analysis Review (OAR) should be conducted annually or at least every several years for major investments. It provides an excellent opportunity to assess the value of the investment to the enterprise. Changes or modifications may greatly enhance the value of the IT asset. However, particularly for old legacy systems, the OAR may be the checkpoint to determine whether the system should be retired, replaced, or consolidated with other investments. Recent technology may make it cheaper to replace a legacy system.
Tip: Even though it is traditional to conduct an OAR after a major IT asset is in steady state (O&M) status, it is crucial to begin keeping records about performance at the time of deployment. Data about costs and benefits, performance metrics, risk issues, and stakeholder satisfaction will be crucial to conducting a valid OAR.
What’s New
- The methodology and quality of the OARs are important. GAO found deficiencies in the quality and timeliness of OARs during reviews of IT investments at Defense, Veterans Affairs, and the Treasury.
- Improvements in Portfolio Management can enable an enterprise-wide approach to Operational Analysis Reviews
- Enterprise OARs can aid the decision-making process for system consolidation (and decommissioning obsolete or redundant systems)
- OARs should be extended to cloud computing investments during the O&M phase.
QT Plan
In our experience as facilitators and coaches, the Operational Analysis Review takes 1 – 4 months, depending on the availability background documents and data, the OAR Team, and customer satisfaction data. Following is a task list for your operational analysis review:
- Task Management Plan for Operational Analysis Review, Including Methodology, Scope, Schedule
- Collect Background Information: Baseline Documents, Performance Measurement Reports, accounting and contractor cost data, Rebaselining (if any), Risk Logs, Help Desk problem logs, Stakeholder Feedback
- Organize Operational Analysis Review Team
- Orient Team about OAR Roadmap and Schedule
- Obtain and Review Current Business Requirements and Stakeholder Satisfaction
- Optional: Conduct Stakeholder Satisfaction Survey or Other Data Collection
- Review Mission, Architecture, and Relationship to Overall Enterprise Portfolio
- Compare Planned to Actual Technical Performance
- Evaluate Results, Gaps, Shortfalls, Impact on Business Requirements and IT Budget
- Consider Alternatives
- Conduct Analysis
- Develop Conclusions/Decisions
- Identify Follow-Up Actions
- Prepare OAR Report
Reference
- Agencies Need to Strengthen Oversight of Billions of Dollars in Operations and Maintenance Investments, October 16, 2012, GAO-13-87, http://www.gao.gov/assets/650/649563.pdf
- Capital Programming Guide v. 3.0, OMB, Section III.3,
See past articles by Jim Kendrick:
- Operational Analysis Reviews, 2006
- Taking Operational Analysis Reviews to the Enterprise Level, 2009
- Operational Analysis Review, Template for Federal IT Capital Investments, 2010
More Help
Through the P2C2 Group, Jim Kendrick has been a pioneer in developing methodology and leading Operational Analysis Reviews. We can adapt best practices to your specific situation and IT environment.
Last Word
Operational analysis will lose much of its benefit to the capital programming process if early warning indicators do not serve as a trigger mechanism within the agency to take corrective actions. - OMB, Capital Programming Guide.
