Be sure your investment strategy has a clear client
focus
Until recently the recurrent theme for most industry sectors was
one of retrenchment, with a consequent freeze or reduction in IT
spending. Now, despite the fashionable argument that IT investment
does not improve profitability or provide competitive advantage, it
seems the brakes are being taken off and chief information officers
are being encouraged to spend in support of business growth.
Although IT directors will have had plenty of practice in
reducing costs, the change to expansion will require new
approaches. They will be familiar with the options for cutting
expenditure, including consolidating disparate support contracts
with a single supplier, developing novel relationships with
suppliers, deferring anything that can sensibly be put off, and
cutting out services and processes which are no longer required.
Insourcing, outsourcing and offshoring may all have a part to
play.
New technological approaches can be tried. For instance, thin
client removing the cost of supporting fully functional PCs on the
desktop.
Overall, this is a thankless task, despite a business driver to
reduce costs, the immediate effects may be inconvenience to IT
staff, business colleagues and external clients alike. Furthermore,
there is the danger of cutting back on essential renewal so that a
business can fall too far behind the curve of technological
progress to catch up easily.
Having seen two periods of excessive technology expenditure in
recent years, it would be foolish to imagine this will be repeated
again, at least not while there are so many senior executives in
place who bear the scars.
Investment challenge
The challenge therefore for IT directors is to propose
investment that is closely linked to business objectives. This
seems like common sense, but it is not something we have
necessarily been good at in the past. The disjunction between IT
and business strategies has been largely to blame: IT staff
ignorant of business drivers have determined the investment
programme, being unchallenged by non-technical executives who did
not understand fully what was going on.
It is this close link between IT and other elements in an
organisation that is key to both growth and, where necessary,
reductions in spending. There remains much discussion about the
need for IT to be “properly aligned to the business”, and in many
commentaries this is presented as a formal analysis whereby the
business strategy is reviewed with subsequent development of the IT
strategy.
The disadvantage of such an approach is that it presupposes the
existence of a formal business strategy at a level of granularity
to determine the IT strategy. Furthermore, there will inevitably be
a delay while the IT strategy is developed. Far better for the IT
strategy to develop in parallel to business strategy through a
close working relationship.
Improving service
Suitable areas for IT investment will be new product
development, improving service to clients, and on systems to
acquire and retain clients. There may also be some opportunities
where technology can reduce costs, though the majority of these
will already have been identified.
There may be differences of emphasis between public and private
sectors, but these are lessening as the public sector focuses
increasingly on quality of service. It will be easier to justify
expenditure that is linked to client-facing or revenue-generating
objectives rather than to back-office process improvements, however
cost-effective.
During the recent periods of restraint most businesses will have
reduced infrastructure expenditure, perhaps to a level that
introduces risks of failure or obsolescence. It is now time to
address this, but in ways that will support client-facing
developments. In this new climate of growth the secret of success
for the IT department is to remain focused on areas that will give
maximum business benefit, while exploiting the opportunities for
essential infrastructure renewal.
A close working relationship with business colleagues will
ensure what is done enhances the business proposition. If this is
successful then this will be good for the reputation of IT
providers, and will go some way towards re-building damaged
confidence.
Ben Booth is chairman of the BCS Elite group and chief
information officer at Mori