As the UK enters the worst economic downturn since the
great depression, all industry sectors are rapidly evaluating how
they can protect their profit margin and reduce their operational
risk, writes Ian Jordan, managing director atAvanade
UK.
The natural reaction in such a climate is for the internal IT
department to focus on short term cost saving initiatives, which
whilst necessary to meet the ever tightening IT budget, does little
to support the longer term business challenges around "customer
intelligence" and enabling the business to manage the impact of the
recession on the bottom line.
We see three key themes emerging as being downturn-critical:
- Concentrate on developing services that provide the business
with a rapid business decision making platform
- Prioritise initiatives that enable high value customers to be
identified and retained
- Undertake operational savings initiatives with a strong ROI
within the financial year, but be cautious of the initiatives that
impact long term business flexibility that may ultimately restrict
options when the economy recovers
Support rapid business decision making
In such turbulent times, businesses are beginning to doubt the
relevance of their historical data and question the wisdom behind
'experience based' decision making. Organisations are demanding a
rapid and accurate view of key metrics such as cost, profit, stock,
risk and impact, based upon yesterdays trading figures and require
the ability to quickly model even extreme scenarios with greater
degrees of accuracy.
Some organisations have invested in large data warehouses where
the core operating data is captured and collated from the many
disparate systems. But these organisations can be challenged by the
speed, accuracy and flexibility of the chosen data models and find
it challenging to include new modelling parameters quickly.
Other organisations continue to model and evaluate key business
decisions using spreadsheets, data points and the judgement of
experience. Whilst this often results in quicker results, the
providence of the resulting answer is often in question.
But rather than necessarily investing in large and complex data
warehouses with high initial investment and long implementation
times, many organisations can benefit from the emerging enterprise
search technologies. When correctly implemented, this approach can
allow the diverse corporate data repositories to be interrogated
'real time', potentially negating the need for large intermediate
databases, removing barriers around data quality and avoiding
inflexible data models.
When integrated with flexible business intelligence tools this
allows the business, with improved confidence, to measure and model
current and future trends with a higher degree of accuracy.
Focus on customer retention
Many industry studies have estimated the cost of attracting a
new customer being four to five times higher than keeping a current
customer. But under the pressures of the economic downturn
customers are changing long held buying patterns to take advantage
of cheaper branded items and often surrendering long-standing brand
loyalty to realise significant savings. Organisations need to be
able to calculate the value of a customer and decide which to keep
and which to lose. However, many organisations have evolved their
IT systems organically by channel and product, resulting in siloed,
inconsistent and even broken processing with many hand-offs and
manual workarounds which limits their capability to understand the
customer landscape.
By using the emerging enterprise search engines to integrate
existing disparate corporate customer data with specialised CRM
product suites, a proactive IT department can provide the corporate
sales and marketing functions with the ability to create and
maintain a clear view of customers from first contact through
purchase and post sales. Allowing the business to rapidly identify
high value groups, develop targeted sales approaches and to
maximise these relationships in challenging times.
Reduce operational investment - looking to the clouds?
As with all areas of the organisation, IT programme budgets are
being continually challenged and operating costs squeezed. As a
result, IT departments need to focus on delivering measureable
business results and to reduce the Total Cost of Ownership. For
this reason both business executives and CIOs need to differentiate
between the problem and solution and focus investment in projects
that will impact the bottom line, translating into early benefits,
delivering greater cost accuracy and delivery certainty. However
CIOs should be suspicious of initiatives that take costs out today
but ultimately impact the organisation's long term ability to flex
around changing business priorities, so limiting growth once the
recession ends.
Another significant impact of the economic downturn has been the
corporate mergers and aggressive consolidation of even mature
industries. One of the key challenges facing these CIOs, is how to
rapidly realise cost savings through consolidation without
impacting the service of the customer base.
Consolidation of major business systems is typically
complicated, expensive and risky. Infrastructure consolidation
offers more opportunity for cost savings but lack of capacity,
extended timescales and termination penalties can be prohibitive.
Organisations looking for rapid cost savings initially review their
commodity platforms such as email, portal and communication
technologies that are typically managed in-house and duplicated
across organisations.
Whether it is part of a large multi-organisational consolidation
or an opportunity to reduce the existing investment in commodity
systems, new cloud hosting options such as Microsoft Business
Productivity Online Suite including email hosting through Microsoft
Exchange Online and portal hosting through Microsoft Sharepoint
Online offer a way to offload the support and run costs of managing
commodity business services.
By releasing capital investment, removing existing capacity
bottlenecks and freeing internal IT resources to concentrate on
business differentiating services, cloud hosted services can
accelerate both the financial and business benefits by providing a
consistent shared service both on-premise and securely outside the
corporate perimeter.