Business knowledge and process skills are key to increasing value

Review IT and commercial practices for deeper savings, says David Flint

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Review IT and commercial practices for deeper savings, says David Flint




Cost control has been the top IT issue for the past four years. Surveys done by analyst firm Gartner have shown that where IT budgets have increased, the increases have been for new functions. The costs of existing services have had to be reduced.

In most cases, IT departments have already made all the simple economies they can, such as consolidation of infrastructure and desktop standardisation. Now they will need to increase efficiency by improving their processes.

This has worked in the past. During the 1980s and early 1990s, IT departments automated many of their operations, made helpdesks more responsive and took control of IT procurement.

However, during the boom years of the 1990s many managers neglected the basics of operations in favour of the excitements of e-commerce and online marketplaces.

The time has come for IT managers to make a systematic attack on IT processes. These processes, or ways of working, might include operating a server farm or responding to calls for technical support. They should:

lAdopt a technical framework for defining processes. Models include ITIL, CMMI or Cobit. Detailed explanations of these and other models can be found by searching online

lTake a systematic approach to calculating the cost of IT. One approach is to use calculations of total cost of ownership to identify opportunities for cost savings. The total cost of ownership of a product is the lifetime cost of acquiring, maintaining, managing and retiring that product, including the costs of training people in its use

lDevelop the competencies necessary for process improvement, including abilities to place each process in its business context and to address the human implications of change.

A few IT departments will be so successful at cutting costs from their IT processes that they will also assume responsibility for reviewing the costs of business processes, such as processing a customer order or an invoice. Chief information officers will become chief process officers and will cease to see themselves as part of the IT industry.

Some IT departments, however, will fail to grasp the opportunity to review processes. The enterprise's first response will be to replace the CIO with someone with a business background. If this fails, the IT department will probably be outsourced en bloc (although this would not work well).

The key challenge for IT is to develop business knowledge and process skills: professionals need both to increase the value they deliver. Failure will threaten the jobs of IT people and the firm's ability to benefit from IT.

David Flint is a research vice-president at analyst company Gartner

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