The Road to CMDB ROI

According to research firm Enterprise Management Associates, which recently hosted a webinar on developing a CMDB project’s return on investment (ROI), there’s been a dramatic jump in the number of companies that have completed their CMDB, from just 9 percent in 2006 to one-third in 2008.

For many companies, it’s a retry of failed efforts undertaken earlier in the decade, but now almost three-quarters say their CMDB initiative is on time and on budget.

Yet, says EMA director of IT services Chris Matney, there’s been a shift in what’s expected in accounting for CMDB ROI.

“In 2006 they would go forward on soft grounds with ROI, as an enabler for culture, process and organizational changes,” he says, with not a lot of dollars being spent on ROI calculations. “In 2008, enterprise CMDB projects face significant hurdles from ROI as they move from pilot to production and implementation costs top the $1 million mark.”

How to leap over those hurdles? Advice from Matney is, don’t set expectations incorrectly. Remember that CMDB is an enabling technology, and that any ROI calculations have to keep in mind that fact, because it’s not going to have huge dollar-value returns associated with it.

Don't Justify, Right-size

“It’s the tires and wheels on a car,” he says. “You don’t need ROI to justify having tires and wheels on a car. You have to assume you need them to go forward. The CMDB is a fundamental underpinning of all ITIL (IT Infrastructure Library) processes, and that has to be understood. It’s the source foundation for reconciled information across the organization that anyone can harvest. So, ROI shouldn’t be about justifying the project, but right-sizing it."

Tangible benefits rarely will exceed TCO, Matney cautions, and in terms of hard ROI, your requirements need to justify getting at least 25 percent of value back. Same thing for soft ROI calculations. Yet, actual CMDB ROI is likely to be higher than expected.

Cost avoidance, risk avoidance, and advancing IT maturity are the three value propositions EMA recommends hitting. For example, EMA’s research has shown that 60 percent of outages have change as their root cause, and the CMDB in service of the ITIL Service Support discipline that includes change management provides the holistic view of the IT infrastructure necessary to make good change decisions.

Matney says he knows one CIO who is still trying to explain one major outage that could have been avoided by having automatic dependency mapping detect a production firewall that was incorrectly labeled as Test in a spreadsheet.

“That human error caused a customer outage on web site,” he says. “This is hard to quantify but it shows it’s incredibly important to understand the value proposition.”

He also recommends that organizations hold tight on what they include as part of the CMDB project scope — for instance, analytics, intelligence engines and dashboards, or whatever tools and efforts are needed to fill gaps in management and monitoring of the infrastructure, shouldn’t be rolled into this figure.

“People are including wrong things in the scope of the project, like governance, risk and compliance and asset management,” he says.

Matney also advises that CMDB funds be part of the base budget rather than a separate project budget, because it’s so fundamental to other areas. And, that you should “wait as long as possible to start hard ROI for your CMDB. A lot of people start too early and are disenchanted with what they get out,” he says.

Engaging with your vendor to help understand costs up-front is also helpful. Vendors are pushing the space forward with recent news, such as the one earlier this month that CA and IBM have announced the interoperability of their respective CMDBs and management data repositories (MDRs). It was the first public demonstration of any two software vendors’ systems incorporating the CMDBf specification, developed last October by the CMDB Federation and authored by BMC Software, CA, Fujitsu Limited, HP, IBM and Microsoft, according to a press release.

The specification, which the group plans to submit as an industry standard for federating and accessing IT information, is designed to integrate communication between the multiple IT management tools typically in use by enterprises.