Typically IT governance processes are focused on decision
rights, compliance, and regulation. Increasingly, however, the
scope of governance is being recognised to include value
delivery,writes Jonathan Wyatt, managing director atProtiviti.
IT budgets are being squeezed as shareholders and others seek to
ensure that discretionary investment funds are properly focused
upon those areas that are most likely to result in early but
sustainable value delivery to the enterprise. At the same time,
enterprises need to ensure that operational costs are optimised,
that waste is avoided and that value is obtained from every pound,
euro or dollar spent
Enterprises must react quickly and in many cases drastically to
respond to the economic crisis and resulting recession. Executives
are under incredible pressure from shareholders to make the
difficult decisions in order to remain profitable. The result is
that significant organisational and operational changes are being
made, budgets are being cut, projects cancelled and headcounts
reduced. The goal of all these painful activities is to achieve a
reduction in costs to preserve or increase the reported bottom
line.
IT departments are traditionally an area targeted for
significant changes. After all, within most enterprises, they are a
cost centre. This year they will have to tighten their belts and
focus on keeping the critical business systems up and running.
Surely we can cut some heads, cancel some projects and make some
big savings without really, genuinely, adversely impacting the
business? Can't we?
Well, maybe. That's the simple truth of the matter. You can make
savings this way. It might achieve the cost reductions you want. It
might even have a low adverse impact on your business in the short
term. However, is this always the right approach? Invariably, the
answer is no. The need for immediate cost savings must always be
balanced with business priorities and medium to long-term
strategies. IT is an enabler for the wider business and therefore
cost cutting opportunities must be assessed and realised in a way
that best supports the achievement of both long- and short-term
goals.
An effective way to do this is first, to understand the
different focus areas for which IT executives typically have
responsibility and accountability; second, to uncover and consider
as many of the related cost cutting opportunities as is feasible;
and third, to make informed decisions to target cost reductions in
areas that have a low impact on business priorities and strategies.
This approach enables the best balance to be achieved and prevents
rash decisions being made and the wrong things being cut.
This is intended to be the first in a series of articles, to be
published monthly, in which we will look at the typical focus areas
of IT expenditure and highlight some of the commonly overlooked
opportunities for cost reductions in each. The focus areas to be
considered include run costs (maintaining core services and
applications), change costs (selecting, managing and optimising the
IT enabled business change agenda), and compliance and regulation
(managing IT risks and controls to achieve compliance with internal
policies and external regulations).
The focus areas and examples raised will highlight opportunities
that could be exploited in your organisation. With a good
understanding of the options available and due consideration of
these in the context of business priorities, the right balance can
be achieved between reducing spend and enabling current and future
strategies.
With this in mind, be aware that there are savings to be had in
all kinds of areas. You will need to consider all the options. You
might yet be able to protect that budget which you really don't
want to touch but are under incredible pressure to cut. Following
the guidance that these articles will provide will also help
enterprises to enhance the communication and partnership between
the IT and business functions as, in the spirit of world class
governance, IT is there to support and enable the enterprise, this
cannot be achieved without a common understanding of the business
and the IT challenges and opportunities that need to be recognised
and properly dealt with.