Technology plays a vital role for organizations looking to bring innovative services to customers. But, with continued pressures placed on lowering IT budgets, how can organizations optimize technology investments and ensure they have the funding needed to do more than just “keep the lights on?”
Dramatic cost-cutting is a natural response during an economic downturn to minimize non-essential spending and uncover budget availability to support growth initiatives. Over the next three to five years, business leaders will continue to use the same recession-based guiding principles they used for the last four years, to identify revenue streams that will fund future technology investments through savings derived from existing “run the business” IT expenses.
Industry analysts indicate that most organizations actually spend less on IT today than they did five years ago and that CFOs now have greater input into IT decisions. Conversely, while less money is allocated to the IT budget, technology plays a more prominent role in maintaining a competitive advantage. This requires CIOs and their leadership teams to restructure their processes and methodologies to include a cost optimization discipline across their technology delivery framework.
This is the new reality, and for organizations, it means figuring out how to do less with less. Businesses need to get better at understanding their IT investments and the value they bring to the business. They also need data-driven insight to identify opportunities to optimize costs and create a sustainable cost structure that enables them to effectively plan for any new demand.
An information technology, finance and business management (ITFBM) solution increases visibility into IT investments and can help organizations impart a best-practices approach to IT financial management. How can an ITFBM solution uncover savings opportunities and help CIOs ensure IT investments align with current and future business goals?
Better IT Cost Transparency – Connecting IT, business performance and value are a key to optimizing costs and building a sustainable cost structure. An ITFBM solution can connect the dots between cost and consumption and help organizations determine where there are savings opportunities and where they need to invest. Transparency is critical for fact-based decision-making and can demonstrate effectiveness of spending or where there is room for improvement.
Look at Demand and Cost-effective Ways to Deliver IT Services– Doing less with less means stripping out any unnecessary expenses and identifying revenue streams that can be allocated to more mission-critical activities. To reduce costs, most organizations will first look to data center consolidation, reducing contract labor or renegotiating software contracts. For greater savings opportunities, better demand management and IT performance management will enable organizations to run IT like other parts of the business. Putting your finger on demand and being able to track consumption to cost will enable organizations to decrease the services they have in house and transition to commodity brokers.
Commit to Doing Less with Less – While many organizations look at implementation costs when considering a solution, it’s important to take a wide-range view to understand the total cost of ownership over a solution’s lifecycle. An ITFBM solution can provide costs of the lifecycle of the application – not just the implementation costs. This total cost of ownership perspective helps organizations understand the long-term investment so they can effectively determine if they are getting the right value and return on their technology investment.
In good times or bad times, having better information for decision-making purposes is critical to ensure investments align with business priorities and long-term goals. Organizations that commit to doing less with less and use technology to identify potential cost savings can actually do more – whether that’s grow the business or transform the business.
With budget shortfalls a reality for many organizations, closing the gap requires implementing a cost optimization discipline across the technology delivery framework. For IT leaders working with fewer resources and less budget, what’s your plan to optimize costs and create a sustainable future?