Technology is fundamental to how our companies run, whether it’s the platforms we use to manage our internal systems, customer-facing applications, or behind-the-scenes infrastructure.
This reliance means ongoing investment is critical, so how do you make sure your investment delivers maximum value while avoiding potential waste?
In my December article, I examined financial resilience, including how to stabilise, standardise, and optimise technology costs. In this post, I will explore potential opportunities for cost reduction within your organisation, focusing on six areas to consider.
Balancing IT Costs With Employee Productivity and Experience
While this article will focus on managing the costs of your technology, it’s essential we don’t lose sight of employee experience and productivity. With the Gallup State of the Global Workplace report stating that “62% of employees aren’t engaged at work, and it’s taking a toll on productivity and customer satisfaction”, it’s key our IT systems engage and support our people. So, as we explore these opportunities for cost reduction, we’ll also consider how these might impact employee experience and productivity.
Application Rationalisation
As organisations grow and change, it’s not unusual for systems to expand, too. For example, when new applications are introduced to address local issues until company-wide solutions are provided.
You might even find teams across your organisation using multiple applications to perform the same function. The first step in addressing your IT costs is to rationalise these applications:
Inventory all your applications to understand how they are used within the business.
Create a strategy to get rid of redundant applications.
Plan for your ideal target architecture, liaising with the teams using applications and systems to make sure they have solutions that work.
Properly investigating and understanding your IT ecosystem might seem like a time-consuming project, but in addition to saving money by offloading unnecessary applications, you may discover cheaper and more effective solutions can be sourced, benefitting your bottom line, productivity, and employee engagement. Don’t lose sight, though, of why this growth happened in the first place - it’s essential to make sure your people have the tools they need to be productive.
Cloud Migration
The way some technology experts talk, you might think we should be putting everything “in the cloud”. It’s true that cloud migration can bring significant benefits to organisations, including savings of 15% or more on spending, but you’ll only see returns like this if such a project has been effectively planned and executed.
Evaluate the cloud readiness of your applications to understand what can be migrated and what options are available for those that can’t.
Consider your migration opportunities and make a plan.
Calculate the ROI of migration and accelerate the move where appropriate.
As well as the cost savings, cloud migration is likely to yield other benefits, including increased flexibility with storage requirements and accessibility and productivity improvements for your people.
Technology Planning and Budgeting
You’ll probably already have spotted a trend in the first two areas we’ve looked at. Maximising your technology investment starts with ensuring you have a clear understanding of your current ecosystem before making changes.
Firstly, you’ll need to have a complete picture of your current infrastructure and the costs associated with it, right down to the application level.
Use the data available through your current systems to identify immediate cost-reduction opportunities.
Create a plan for short and long-term transformation goals.
This kind of essential review and restructure will identify opportunities for further rationalisation or investment while also providing digital experience efficiencies. Again, it’s crucial that reviews like this include input from the teams using the technology in question to ensure their needs are considered.
Technology Vendor Management
Reviewing your vendor services is essential, allowing you to take control of these relationships and make sure your spending reflects the business value being delivered.
Assess every vendor service, the quality of the service and criticality to the business.
Track application usage, as you will have done through previous stages, and consider what you find against the contract cost.
Having reviewed these insights, use what you have learnt in your vendor selection conversations with data-informed negotiations.
Accurate data is essential for reviewing vendor relationships. The first step is to have a clear picture of your needs to ensure your discussions have the correct focus - the return on your investment.
Project Portfolio Management
IT projects need to be managed effectively, and a portfolio-level view allows for clear consideration of project purpose, value, and required resources.
Make sure all projects adopt documented methodologies and best practices for effective delivery.
To ensure the right projects progress, the value of any project should be considered against the risk prior to kickoff.
Further review should be done throughout execution and after project delivery to encourage continuous improvement.
Effective project delivery is clearly important for everyone, with the alternatives - project failures and overspends - causing frustration across organisations. While most will already have guidelines for project management, reviewing the effectiveness of these consistently will make sure you stay on track.
Technology Risk Management
As with so many of the previous areas, having a clear picture of your application landscape is the essential first step to ensuring regulatory compliance and managing your IT risks.
Ensure the accuracy of your data and the visibility of your data lineage and interdependencies to reduce risks.
Analyse and track IT component lifecycles to identify and manage any obsolete technologies.
Create a plan for the retirement of appropriate technologies.
As technologies age, organisations risk performance degradation, compliance, and support issues. Lower productivity and even fines will have cost implications, and we also need to consider users' frustration with outdated applications.
There are many considerations while managing and developing your IT infrastructure, and costs are high on that list. Within any organisation, I recommend that a clear understanding of your current position is the first step—from which any future development will start.
Hopefully, this article has shown that this starting point allows you to consider application rationalisation, cloud migration, planning and budgeting, vendor management, project management, and risk management - all to support your organisation in reducing costs.
How is your technology positioned to deliver maximum value while avoiding waste?
About the Author
I'm Terry Chana. I am an innovation strategist that connects customer, employee and brand experiences. My passion lies in building ecosystems to solve business problems by combining creativity and technology.