360°IT Blog

As the pressure on costs continues,  how do those responsible for the 'business as usual' functions in IT react? I mean those who aren't part of the capital programme - the heads of operations, service management, security and so on. For many, the standard response is to rest on their laurels. They cite the unshakable need to 'keep the lights on' or prevent any service disruption as a solid reason to resist change. They sow fear, uncertainty and doubt about the effect of imposing cuts in their area. They argue the 'fat’ that was once perceived to exist in IT (including parts of the budget allocated for training, communications, external consulting, R&D, etc) has long since been trimmed.

Many are successful at holding the attacks at bay for some time, at least against more discretionary budgets and project areas. Others wait until the axe swings, then dive into last-minute action to defend their position before finally accepting they must make some contribution to alleviating the decline in business revenues and profits.

I believe a more healthy approach is not to assume the cost of these services has to be a large and immovable overhead.  There are ways of converting fixed into variable costs. One mechanism is to lease rather than buy. Not only can this enable the unit price to become a variable (for example, a per-user, per-month cost for desktops) but can also allow for a one-off cash injection (if your service provider  purchases your existing equipment at an agreed value).

Another option is to re-examine the scope of the IT function and challenge what really needs to be done in-house. In a downward economy, where labour costs are falling and new entrants are finding innovative ways to lower costs, there may now be an opportunity to pay significantly less for the same quality of service.

Equally, there are opportunities to drive down your own operating costs through alternative solutions and more efficient services. For example, successful organisations implementing service-centred delivery models are moving towards:

• A total focus on results, delivering practical services which truly work for internal customers;
• Organising every aspect of the function around what customers need;
• Ensuring there is a tangible link between IT activity and customer satisfaction.

A true reassessment of what you deliver has to test whether:
• Services are dependable enough to allow the business to meet its objectives at a reasonable cost for each service line;
• The IT function has a clear audit trail and is openly measurable;
• There are clearly identifiable contact points for ordering, problem reporting, enquiries and discussions concerning change;
• You provide good feedback mechanisms and users are confident they will see continuous improvement/innovation.

Finally, I offer you a few pointed questions that can help IT service delivery and operations teams quickly identify high-impact changes to enhance their business reputation:
• Have I identified the key measures that I should be valued against, and do my stakeholders agree with them?
• Do I understand the opportunities to improve service delivery and the risks and consequences associated with those choices?
• Do I have a clear sourcing strategy based on sound principles, and a clear road-map to get there?
• What do I need to communicate, to whom, and how?
• Have I got the right people and team; the right structure and skills?
• Am I learning from my network and third-parties?
• Are my risks transparent?

But perhaps the most important question of all is... Are you leading the change or hiding from it

Tim Cray is principal consultant at IT management consultancy Virtrium.

Tags:

cost reduction, leasing, customer satisfaction, business as usual, best practice, fixed costs, variable costs
 

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