Why optimisation is key when investing in IT
Tue 23 Jun 2020 | Tom Kiblin
Organisations with critical digital transformation goals and limited budgets may already have the tools they need to meet those goals
Companies are taking a hard look at where technology investments are being allocated right now. Many IT leaders have been tasked with cutting costs and maximising ROI while budgets are tight and the macroeconomic environment is fluid.
Spending on “innovation,” including digital transformation initiatives, is under particular scrutiny, both positively and negatively. The good news is that IT leaders probably don’t need additional budget to accomplish the dynamic business objectives they want to pursue. Optimising the infrastructure, applications, and budget already in place is often more than enough.
This is easier said than done. However, we’ve identified four steps that IT leaders can follow to help achieve their innovation and digital transformation initiatives: clearly define business objectives, take a serious inventory of existing tools, perform triage, and plan carefully and thoroughly.
Step 1: Clearly define business objectives
The first key to optimising IT investments is to tie every dollar spent to a clear business objective.
To do this, you have to identify what those objectives are. One example might be moving to a cost-efficient, performant and secure cloud. Another may be lowering current cloud spend. A third may be retiring ageing applications that cost more to maintain than they generate in revenue.
Make sure you and your team are on the same page about how you define your objectives. Ambiguity hinders planning. Each person might have a different understanding of “moving to the cloud,” for example. For some, the term means adopting fully virtualised environments; for others, it means moving critical infrastructure and applications outside the on-prem data closet. For some others, still, it may mean a complete rethinking of business processes and engagement with customers, partners, suppliers and employees.
The point is to be 100 percent sure you know exactly how your company is using defining its objective and be 100 percent sure everyone involved in the process is working from the same definition.
When you’ve agreed on common definitions for your objective, connect it to measurable returns. IT innovation can yield returns in any number of areas, such as revenue generation, entering new markets, improved security and governance, customer acquisition, customer retention and satisfaction, profitability, operating efficiency, and more. Once everyone is aligned with an understanding of what, exactly, your outcomes will be, and how they will benefit the business, it’s time to take stock of your current situation.
Step 2: Take inventory of what you already have
In many cases, innovation doesn’t have to mean investing in new solutions. Chances are, you have existing platforms that will support the objective you’re working toward. In many cases the tools and processes are already present. However, they aren’t working toward your objectives.
In order to realise these objectives, you need to carefully and honestly assess where your budget is currently being allocated and identify the opportunities to refocus it.
Financial pressures are not new. In certain cycles, they are accentuated, but they are certainly not novel or unfamiliar. In each case these challenges push organisations to look internally to catalogue the resources they currently have and ask difficult questions about their effectiveness.
By taking inventory, many IT leaders discover that their organisations have significantly more expenses than they were aware of. Multiple cloud storage and collaboration services, unchecked cloud data ingress and egress fees, over-licensed SaaS platforms, and more are very common.
Before evaluating whether or not each IT resource is beneficial to the business, it’s important to make a comprehensive list of all existing resources, how much budget each investment consumes, and what each investment offers the business.
When taking inventory of existing cloud services, for instance, make note of their costs and the honest reasons you initially invested in each.
Step 3: Perform IT triage
Now that you have a clear picture of your IT budget’s moving parts, you can start figuring out what’s working and what’s not. Investigate everything you’re paying for in the context of your current business objectives. Is it solving your problem? If so, how efficiently?
Ask the difficult questions including:
- Is the reason or need for this still valid?
- Do we have multiple services addressing the same need?
- When is the last time someone actually used this service?
If you haven’t taken inventory in a while, you will be surprised. Be ready for it. More likely than not you are paying for multiple services that solve the same problem. For example, you might have multiple public cloud providers initially intended to perform different tasks. However, when you look into them you realise they are performing identical tasks and over twice the necessary cost.
When this is the case, it may be possible to find available budget. We see this daily. Reducing (or eliminating) your investment in one or more redundant services – or services that are no longer needed – will free up significant budget to invest in innovation initiatives.
Take this exercise one step further. What if you discover an investment that isn’t solving a business problem? This, too, is extremely common. When this occurs, take the time to see if the solution you’re paying for has any unused functionalities that could help you reach your objective. If not, you can reallocate this investment into tangible objectives.
This may sound simple. That’s because it is. It is also extremely rare to see an organisation that has invested this level of time and attention to maximise the efficiency of existing IT budget investment. It’s simply too easy to spin up new services whenever needed without thinking about the long-term operating and financial implications.
Step 4: Plan thoroughly for new digital initiatives
In instances where there are no existing IT resources that serve your desired business outcome, it’s time to invest in new solutions. When you determine a new solution is necessary, do all of your research upfront.
Many organisations without significant technology investments are undertaking their first digital transformation initiatives right now as the need for digital-first experiences is heightened. Senior management, and especially the IT decision makers of these companies, will be under high scrutiny as there will be little margin for error available with these initiatives.
Before presenting your final transformation initiative proposal to your executive team, know the risk profile of your proposed plan. Be direct and succinct in how this risk will be mitigated and how the project will be managed, implemented, and administered. The optics for digital transformation initiatives are significant and this is no time to cut corners in planning or attention to detail.
Be transparent about why you recognised these risks, your confidence in mitigating them, and why you believe this to be a valuable investment at this time. This level of detail will be well worth its effort as everyone will be on the same page at a time when having everyone on the same pages is more difficult than ever.
Note: If you’re recommending the refactoring or re-use of an existing service or platform, the same applies. Be sure to have a detailed plan for how you’ll measure whether it meets your business objective going forward so the previous issues are not recreated in your new initiatives.
Optimise every dollar in innovation spend
Organisations with critical digital transformation goals and limited budgets may already have the tools they need to meet those goals, no budget expansion necessary.
The key is to take the time and be deliberate about every dollar being spent. Optimisation happens when you take stock of your resources, honestly evaluate how you are using them, eliminate redundancy, restructure your resources to work smarter and harder for your business, and carefully introduce new ones only when your outcomes still haven’t been achieved.