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PALM DESERT, Calif. -- Managers at Delta Technology Inc., the IT subsidiary of Delta Air Lines, used to debate how much to spend on IT infrastructure and on the renewal of IT assets, from laptops to mainframes to networks.
Although the IT capital budget is multiyear, these debates "seemed to occur daily," Brian Leinbach, senior vice president for operations at Delta Technology, told attendees at Computerworld's Premier 100 Leaders Conference today.
But that debating and wrangling has now largely disappeared, he said, thanks to a simple but relatively rigorous framework now being used by the company to analyze the costs and risks of IT infrastructure renewal. "It's fairly intuitive," Leinbach said. "Simple ideas are often best."
The analysis tool is based on a curve that measures risks and investments. At one end, risks are low but the investments needed to achieve goals are too high. At the other end, investments are modest but risks are high. Leinbach said the solution for Delta Technology, whose capital budget is $200 million a year, is to stay near the middle of the curve in a "manageable" area between unacceptable risk and unaffordable investment.
To do that, the company develops a weighted score for each IT asset based on five factors: technology age, business value at risk, platform supportability, platform complexity and risk of failure. Each asset is then assigned a flag that is green, yellow or red depending on whether the asset is deemed to present low, medium or high risk to the airline. The scheme is carried out by business area and asset type to show officials at a glance, for example, that an existing server infrastructure presents a low risk for Business Area 1 while network technology is deemed to present a high risk to Business Area 4.
Brian Leinbach, senior vice president for operations at Delta Technology
Image Credit: Asa Mathat
By developing the standardized risk-scoring process and using scenario-based decision processes, Delta Technologies can evaluate proposed infrastructure investment scenarios and identify mitigation strategies, Leinbach said.
The scorecards really help focus managers' attention on risks, and they help at capital budgeting time, Leinbach said. "We score ourselves, and that makes everyone take stock of their systems. A big red stoplight is a great communications tool."
The risk analysis framework has made it easier to understand capital expenditure priorities and to communicate them to all levels of management, Leinbach said.
Asked by an audience member how automated the whole process is, Leinbach said that data with respect to failure probabilities and modes is highly automated. "Some of the other stuff is harder," he added. "Some is business knowledge, and some is intuition."
The whole process is part art, part science, he said.
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