Organisations are challenged with balancing costs and benefits from IT investments
To remain competitive in today’s changing market conditions and technology landscape, organisations need to make sure that their operations are lean and ensure all their activities are aligned to delivery of value to the business. Controlling costs and gaining efficiencies are key contributors to market differentiation, and the delivery of competitive, high quality products.
IT costs are forming a larger proportion of the overall operational costs of an organisation, as businesses continue to focus on driving forward their digital ambitions. Organisations are challenged with balancing costs and benefits from IT investments. While it is key to ensure the right levels of investment are made to enable digital outcomes, several elements need to be evaluated to ascertain whether these services deliver the best value for money to their businesses. A simple check-list helps ensure the business case for an IT investment stacks-up:
- Alignment to outcomes – To offer good value to the business, IT investments need to ensure that projects are achieving the desired outcomes and are doing so on time and within budget. While this sounds like common sense and a practice everyone should undertake, businesses tend to overlook the importance of this activity, while signing-off IT investments leading to limited or no value extraction from IT spend. A keeping the lights on type of spend tends to be the most common investment that misses this step. Decision makers should be encouraged to review alignment and explore possibilities to unlock additional value during re-investment decisions.
- Optimising IT to realise value – Businesses need to make sure that they’ve got the most efficient operating model for their needs. Their expectation from technology teams is no different. IT teams should always consider how delivery of its services and workflows can be transformed by introducing newer working practices where possible. Lean, Scrum, Kanban and DevOps processes should always be considered and implemented as soon as the opportunity presents itself. Again, while this seems common sense and a well-accepted practice in the industry, many decision makers ignore these principles and default to the well, because we’ve always done it this way Adopting these methodologies can also put IT teams in a better position to plan for and take advantage of, new and emerging solutions. Investments in infrastructure and managed services should consider ‘transformation by design’ instead of simple replacement.
- Making spend competitive – As organisations move to consuming more commodity and off-the-shelf IT services, and as suppliers look to increase their number of service offerings and deliver greater value to customers, the marketplace is becoming extremely competitive. Just a percentage reduction in costs is no longer enough to make it a good deal. While benchmarking, contract reviews and re-negotiations are good methods to reduced cost – making spend with the supplier competitive may help deliver ‘more for less’. This may not be an ideal option in some cases, but for commodity services, service bundling (or unbundling) and the introduction of competitive tension, may help suppliers think about innovative solutions and options that may drive generation of greater value.
- Measuring performance – Today, absolutely anything can be measured, reported and analysed. Any outcomes from the investment should be measured from the outset (including the status prior to the investment being made) and tracked to measure success and the investment’s ability to achieve target outcomes. Measures should be simple to understand, quantifiable, realistic and extensible, to ensure the investment has achieved maximum impact as part of an organisation’s Benefits Realisation Management activities. Measures can also form a vital element of a feedback loop to ensure the project’s course can be updated to ensure maximum realisation of value.
I am sure there are many more great things your teams are doing on a daily basis to generate more value for your organisation. Feel free to reach out to me to share ideas on how your IT function is achieving this.
Author: Bharat Choragudi
Disclaimer – opinions expressed in the text belong solely to the author, and not necessarily to the author’s employer or organisation.