Welcome » IT Booklets » Management » IT Risk Management Process » Planning IT Operations and Investment » Operational IT Planning
Operational plans should flow logically from the strategic plan.
Management should review and revise them at least annually.
Operational planning focuses on short-term actions and incorporates
the annual budget process. Management should reference the
strategic plans and adjust operational plans based on changes in
the underlying business needs.
Operational planning addresses the near-term support for
business operations. Specifically, operational planning focuses on
immediate concerns such as adequate IT resources, sufficient
budget, and appropriate risk identification.
Management should ensure that IT resources are adequate to meet
the current operational needs of the organization. Operational
planning should consider the adequacy of IT resources and the
impact of any changes on critical business processes. Business
processes are the integration of people, technology, and procedures
used to accomplish a task or complete a transaction. Changes in
business processes require coordination or alignment with the
available IT resources. IT resources that require management
Budgeting is another step in the operational planning process.
The board should assess management's plans and its success in
defining and meeting budgetary goals as one means of evaluating the
performance of the data processing and operations management. The
budget is a coordinated financial plan used to estimate and control
the organization's activities. By assessing future economic
developments and conditions, management creates an action plan and
records changes in the balance sheet accounts and profitability
(predicated on implementation of the plan). The budget not only
projects expected results, but also serves as an important check on
Management, when considering new technology projects, should
look at the entry costs of the technology and the post
implementation support costs. Increasingly institutions are
demanding, and vendors are providing, information regarding the
total cost of ownership (TCO) beyond the initial entry costs.
Technology projects often have undocumented costs including the
resources required to configure, maintain, repair, support,
upgrade, and manage the technology over its lifetime. Readily
available TCO models, as well as historical data, provide
management with tools to incorporate these hidden costs into the
selection and budgeting process.
Some financial institutions budget IT as a separate department
of the institution. A financial analysis of an IT department should
include a comparison of the cost-effectiveness of the in-house
operation versus contracting with an outside servicer. It may also
include a peer group comparison of operating costs and ratios with
a peer group of institutions. Depending upon its size and
complexity, the institution may or may not allocate costs to the
user departments. Where cost allocation exists, management should
ensure equitable assignment of the costs to each user department.
This is often accomplished by use of a chargeback system that
records usage of resources based upon a performance metric such as
Central Processing Unit cycles. In some instances, a separate
subsidiary of the holding company manages the IT function. Ideally,
an IT subsidiary of a holding company should have a positive affect
on consolidated earnings performance. It can provide essential
services at costs below external providers or individual financial
institutions. However, some relationships may not result in a cost
savings. To avoid a preferential arrangement with an affiliate, the
contracts between the holding company or its subsidiary and the
serviced financial institutions should ensure "arms-length"
transactions. Institution management should assess these
relationships to ensure they are fair and equitable to all parties.
The IT Handbook's "Outsourcing Technology Services Booklet" has
additional information on contract considerations.