Business confidence has been shaken over the last few years, and with the continuing economic uncertainty, it’s no surprise that cost reduction is staying firmly on the agenda. As one of an enterprise’s most significant areas of expenditure, IT is clearly in the spotlight.
The search for further cuts in IT costs, however, is a much more challenging task now than when the financial crisis originally hit because CIOs have taken advantage of the quick-wins and are already running lean organisations.
There is good news on the horizon though. Advances such as cloud computing, collaboration technologies, virtualisation, standardisation and industrialisation have dramatically expanded the CIO’s scope not only to drive down costs in IT, but also to bring innovative cost reduction ideas to the entire business.
A parallel development is that corporate boards are eager to increase flexibility and agility in their operations and cost base to equip their businesses to handle future shocks. In many enterprises, tensions have emerged between the cost and agility agendas, further complicating decision making.
The new solutions at CIOs’ disposal allow them to meet both agendas—helping reduce costs across the business while also increasing the enterprise’s flexibility and resilience to shocks. There are four waves of opportunity that CIOs should take advantage of:
Wave 1: Seize short-term cost reduction opportunities and minimise spending
Exploit immediate cost-reduction opportunities and minimise ongoing IT expenditures. Prioritise project spending; review license and procurement spending; reduce supplier costs and streamline IT operations.
Wave 2: Optimise IT for efficiency
Achieve greater control and alignment of IT with the business through service catalogues; manage supply and demand through better IT asset management, IT process management and automation; and rebuild the IT operating model on a lower cost base.
Wave 3: Re-architect IT for efficiency
IT must prepare for the challenges the business will face tomorrow. In areas ranging from mobile application support to cloud computing services to support for personal devices, IT must rethink their strategy to position themselves for a future that is significantly more complex. Organisations that can develop and implement a clear plan will be well positioned to deliver an agile, flexible and cost-effective approach to IT.
Wave 4: Drive IT-enabled business value
By putting the first three waves in place, CIOs will be positioned to help the enterprise reduce costs of business operations and increase flexibility to respond to changing conditions. The levers are increased automation of business processes and user interactions; user self-service; transparent management information and key performance indicators; and e-collaboration to boost workforce efficiency.
With these steps in place, CIOs are able to help their companies achieve far larger cost reductions by extending the same benefits across the enterprise by applying innovative services and automation technologies that are integral to new IT operating models. CIOs can go beyond elements such as SaaS and cloud to promote innovations including business-processes-as-a-service (BPaaS), process automation using business process management, standardised software components and pervasive social and collaboration platforms.
This evolution will require fundamental change in the IT-business relationship. IT will adopt an expanded multi-sourcing role, positioned between the business and its providers of cloud and X-as-a-Service (XaaS), a range of business models in which almost anything can be delivered as a service. On behalf of its business customers, IT will manage a complex ecosystem of service partners that make up its portfolio of services and the business will adopt more collaborative and flexible ways of working, achieving a powerful blend of IT-enabled cost reduction and heightened agility.
CIOs have made their IT organisations lean and adaptable and have reduced their costs. Now it’s time for CIOs to guide their enterprises in achieving the same results.
Posted by Daniel Benton, Global Lead for IT Strategy and Transformation (ITST) within Accenture’s Technology Growth Platform group