Is IT Helping or Hurting Finances at Your Business?

Expectations! Many of the business’ concerns surrounding information technology spending could be quelled if only IT did a better job of setting the business leader’s expectations concerning technology spending. Just as a person expects a place to sit when they come into the office, computers also need a place to sit. People expect electricity and environmental controls – air conditioning, heating and humidity – to operate properly, making the office area conducive to productivity. Computers, machines far less adaptable than the human machine, require similar treatment. Employees expect phone and network services to be in place to help them achieve their business objectives. All of these attributes establish a foundation of services needed to operate a business in this age. No one would argue the point that a bank without an ATM network is doomed to failure. An ATM network is a business requirement for banks. Computing systems are now a business requirement for most companies.

Therefore, IT needs to help the business understand that a definable percentage of the annual IT expenses need to be viewed as business services that are delivered in the same manner as the Facilities team provides its services. With this expectation set, business leaders will comprehend that office space costs and computer room space costs are the same, office building electrical costs and computer room electrical costs are the same, and that services like water, phone and networking are all core services. Consequently, IT has the same responsibility as Facilities when it comes to cost control and service availability. IT needs to focus on arresting inflationary maintenance and licensing costs, eliminating system complexity to drive down administrative support costs and to improve application usability, reducing risks surrounding access and failures and constantly communicating their successes to the business teams. By diligently pursuing decreased costs, while enhancing these core services, IT will be seen in a more positive light than just a dark and expensive monster that continuously feasts on money.

Making it happen! IT within business’ that are not producers of information technology hardware, software or services need to view themselves as enablers. Enablers are people and processes that can help a business deliver its products or services in the most efficient – both in process and costs – manner. Hence, IT leaders at every level in the organization need to “role play” various scenarios that should help them develop contingency plans that may be needed to keep the company alive during the current economic atmosphere. For instance, an IT infrastructure manager may look at unused capacity to see if current expansion needs can be absorbed into the current infrastructure without additional investment. Virtualization is a high-profile theme concerning this point. Consider the fact that if you could harness ten percent of the unused CPU capacity from ten different computers, you would potentially have an unused computer available for other projects. Or, at the minimum, you know that you should be able to grow the current environment by ten percent without additional investment. Opportunity may also come from assessing your application portfolio. What if the Director of Application Development commissioned his or her team to research application overlapping? Could functionality be added – say a billing module – to application A allowing application B to be decommission, facilitating savings on application licensing, support costs and hardware infrastructure? The Network Manager should consider the availability of new technologies that may allow for a decrease in the number of circuits or a decrease in the bandwidth required for the circuits. Using network virtualization or wide-area network traffic prioritization or compression technologies will diminish the need to extend the ever-growing demand for network capacity.

Monetarily speaking, IT leaders should toil with their key vendors at least annually to get the best price-point for every service. Even a modest savings of three to five percent may be worth the time invested when you are addressing your top ten costs. Many times a “special bid” can be requested from a vendor that is already providing a service that may result in savings in the 20% to 25% range. Too many times the budget process just forwards the current number into the budget for next year without anyone proactively taking the time to ask the vendor for a cost reduction. What can they say, “No”?

Thanks!

P.S. I have appended a few links to recent and relative articles showing other people’s thoughts concerning this matter.

http://www.cioupdate.com/budgets/article.php/3826071/5-Ways-to-Cut-Costs-With...

http://www.cioupdate.com/budgets/article.php/3830751/Five-More-Ways-to-Cut-Co...

http://www.cio.com/article/497321/CIOs_Need_to_Get_More_From_the_Assets_They_...