In the current economic environment, most of the IT Managers are finding themselves in a very difficult positions – they are asked to reduce the IT spend and at the same time demand for the IT services are growing. It is quite understandable that other functional areas within the organization will need more IT services to reduce their cost. For example, Supply Chain group in one of my client’s organization achieved significant cost savings by automating the booking request/booking response and shipment document preparation processes. Any measures to manage the IT cost should account for the growing demand for the services as well.
There are several traditional ways of managing the IT cost – it starts with renegotiating major contracts to laying-off employees to cutting the capital and operational budgets. All of these options are commonly used by IT Managers to immediately deliver the bottom line reduction. Basically the first option is to curtail the discretionary spending and then see if it can help in managing the overall spend.
I would like to discuss some of the non-traditional ways of managing the IT cost in this post. Although all these options are fairly known to IT Managers but they are rarely used in a strategic way to manage the ongoing operations.
This brings to the interesting topic of finding non-traditional ways of managing the IT cost. IT organizations are traditionally very poor in managing the demand for the IT services. I have seen very few organizations who have established a formal discipline and even less who have mastered the art of for managing the IT demand. Typically IT met the rising demand for services by simply fulfilling it. The demand prioritization process is simply not defined. Building a governance around the demand management process and getting the buy-in from all other business units can help in streamlining the services which will result in significant cost savings.
Another often ignored area is application portfolio rationalization and management. Most of the IT organizations has grown organically over a period of time. Over the years, typical stove-pipe applications were developed to meet the departmental needs. This has created a complex and very heterogeneous application landscape. Most of the organizations have addressed server consolidation and application software standardization over the last 5-8 years. So you can see standards for specific servers, Operating Systems, Databases and application servers. However, few organizations have addressed the issue of application harmonization.
System Integration is another major contributing factor in the IT cost structure. Typically integration is an afterthought in the application development process. This usually results in an “accidental” point to point interfaces which are very cheap to develop but prohibitively expensive to maintain and manage. All of us have seen increasing interest in SOA based technologies. If implemented correctly, SOA-based system integration approach can provide long-term sustainability and reusability of the IT assets.
Renewed focus on demand management, application harmonization, standardization and SOA-based integration approach can provide the needed leverage to build an agile IT which can withstand the vagaries of the economic ups and downs.
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