Economic downtime is the right time for CIOs to focus on few important things…

“Cost Cuts” seems to be the global mantra and IT is no exception to that., Hold on hiring, Travel cuts, and also a significant slash in the number of projects being kicked-off – The clear message is “Slow down almost everything that is humanly possible”.

The economy is slowing down, and in its wake there is a widespread “AXE” phenomenon. In these turbulent times, when everyone is particularly focused on leveraging all the possible opportunities to cut cost, one must also keep in mind that – Cost reduction can also be influenced by making small and focused investments. Following are some of the areas that could be leveraged to achieve the same:

Cost Rationalization Programs
Cost-Rationalization programs are gathering increased impetus in the recent times. These programs are usually geared towards realizing quick cost reductions by detecting and eliminating the inefficiencies within labor and non-labor part of the IT environment. Along with the short-term benefits using rationalization, CIOs must also look at IT process improvement opportunities for long-term benefits. These opportunities are placed by:

• Cost-avoidance practices such as better requirements management for the IT projects/tasks to avoid scope changes and cost/schedule over-runs

• Efficiency-gains such as productivity management/improvement to deliver more with less.

Cost rationalization programs focused on IT process improvements are more conducive to enable long-term cost benefits compared to those which are targeted only to leverage immediate cost-savings by cost-cutting.

Increased Focus on IT-enabled “Business Process Improvement”
In these uncertain conditions, CIOs are forced to reduce IT cost but at the same time IT is expected to deliver more results to the enterprise. Cost-reduction programs with IT process improvement will help CIOs win half the battle but in order to deliver more value to the enterprise, CIOs must also aim for business process improvement.
“If you cannot measure it, you cannot improve it”. Hence Business Performance Measurement is a natural pre-cursor to Business Process Improvement. The challenges usually are to prioritize & choose the set of processes that have the highest potential to bring in the business improvement. Once the business processes are selected for driving improvements, the next challenge is to ensure you have the right set of KPIs to monitor the performance, to be able to detect the improvement areas. Technologies like Business Process Management, Business Activity Monitoring and Business Intelligence form the basis of business process improvement. Right use of these technologies will make the business processes more robust, agile & transparent.

“Measuring Business Value of IT”
Most Business Processes are supported by a host of underlying IT systems. Any Business Process Improvement initiative will need to thoroughly examine these core systems for their relative contribution to these business processes. These building-blocks to an efficient business process are often overlooked and become stumbling blocks that impede the improvement programs. Hence this dimension needs very precise investigation. There are many methodologies available for measuring the business value of IT. It is important to identify the methodology that fits in with organizational, process and technology landscape and adopt the one that gives credible results. One can start with the very basics - Measurement to compute the TCO of the underlying system, followed by the tangible/intangible benefits and subsequently the imposed risks. Compute the ROI for every new and existing investment to ensure that it is contributing the right value to the business. This type of scoring metrics should be used to determine if the benefits are worth pursuing at the given TCO. This is the right time to start this discipline. Think Big, but start small. The key is taking those baby steps in the right direction.

Enhance your IT Governance
Brining in IT & Business process improvement demands robust IT Governance practices that will help one induce this discipline in IT. Establishment of the following IT Governance processes can help enterprises bring about these improvements quicker and maintain them consistently: 

• Project Portfolio Management

This constitutes one of the key elements of IT Governance and it will enable organizations to evaluate, approve, fund, prioritize, and monitor IT investments. It is however pertinent to ensure that appropriate scoring metrics are defined to measure business value of each IT investment that will foster right decision-making.

• Application Portfolio Management

This IT Governance process enables owners to plan, run, monitor & support the IT applications & its related changes. Application portfolio management is a key to build a simplified view of the entire IT applications landscape. Having the application portfolio management in place will help CIOs to find out how much time and money is being spent in maintaining each of the application. This level of visibility will help them to plan and control their budgets effectively.

• IT Service Management

Automating the key IT processes to make them enforceable and repeatable reduces the opportunity for errors and drives greater efficiency of IT operations. IT services must be managed according to business and end-user impact. Special attention must be given to improving the quality of service of IT operations. This requires an integrated approach to lifecycle management from application development and deployment to production and change management. Using an integrated lifecycle approach, enterprises can truly optimize their IT services.

Setup the Platform for Transformational Programs
Once the IT Governance process is set, it becomes the platform to monitor and control the entire IT landscape to bring in the improvements. e.g. Once the application portfolio management processes are established, it will help you identify redundant or overlapping functionalities that exist within the IT environment. This information can then be used to run a quick top-down assessment of applications to detect the ones that are not delivering a significant value and leverage application rationalization to generate quick cost-savings. Tracking such level of information will accelerate the application portfolio rationalization initiatives which can result in modernizing the technical infrastructure that uses lower cost and delivers better performance. Though businesses may not be ready to make such investments upfront, they would in the long run when funds are available, have the homework done and be ready for it in record time.