When leveraged in the best way, IT can have a massive impact on corporate growth and profitability.
Employing highly skilled, higher performing employees in the right areas of the business can improve productivity, customer service, customer retention, margins and overall profitability. IT can have the same effect, and just as there is room for the cheaper, lower-skilled employees in the enterprise, there is also a place for less expensive IT.
Whilst well-chosen and implemented IT systems can have a hugely positive impact on organisational performance; the opposite is also true, so it pays to get it right.
How do I choose and implement the right systems?
Strong governance gives the best chance of success. Make sure that technology related needs, opportunities and risks are identified, evaluated and selected by the right skilled people. Clear processes that are implemented effectively are important. It’s also vital to have the right ‘technology balance sheet’ of people, skills and systems available to make it happen.
The organisation’s business strategy – and the related IT strategy – must be clear. Without clarity and vision, decisions will reflect the priorities, preferences and attitudes to risk of individuals and established practices, not the needs of the organisation.
How do I get the most from my IT investment?
Organisational IT expenditure can be substantial, but varies widely as a percentage of revenue.
It varies between sectors (for example an average 1.1% in Distribution to an average 10% or more in Financial Services), but also within sectors. When considering, optimising and controlling organisational IT spend, the most effective approach – beyond clear strategy – is to clearly separate your ‘run the business’ IT expenditure from the investments required to improve the business and enhance capabilities.
Cost management can be focused on ‘run the business’ activities, delivering the dual promise of the same level of service – or better – to the business at a lesser cost. It is best to take a holistic view of IT staffing, delivery and support processes, including hosting, networks, hardware and software.
This overall approach, rather than a ‘line item view’ of the IT budget produces the best results, sometimes reducing IT expenditure by 25% plus. In today’s integrated world of IT, costs can reduce or increase in the different areas and move between them.
Decisions around whether to store in the cloud or on-premises, or whether to choose software-as-a-service (SaaS), or installed software, can have knock-on effects to cost and efficiency.
Specialist IT sourcing and procurement is essential to making sure needs are clearly defined, the best approaches are in scope, the best vendors are considered and the best possible prices obtained.
Experienced implementation and ongoing service management of new IT initiatives is another critical success factor when the objective is to get the most out of IT investment.
Organisations often have a deficit in the skills and expertise required to deliver the level of procurement and implementation management required to ensure you get the most for the investment made in IT. Even larger organisations can have temporary gaps or a need for some impartial, external input at the right time.
For more information, please contact us.
Article by: Michael Hully