The CIO Imperative: Do More, Spend Less

By Phil Garland  |  Posted 2011-07-28 Email Print this article Print
 
 
 
 
 
 
 

The IT organization has to continually lower costs while adding business value. The good news: Smart IT leaders can do both.

It’s a rare CIO who hasn’t had to repeatedly ratchet down costs for information technology during the recession. And it’s a rare business leadership that doesn’t expect IT to continue to deliver cost efficiencies each year.

Yet businesses want more from IT than ever-cheaper operations: They want technology to help grow revenues, gain customers and add top-line value.

IT leaders who focus only on driving costs out of IT and ignore the top-line demands could be putting themselves in a precarious spot. At some point, their companies will wonder why they can’t have both technology efficiency and innovation.

At PwC, we increasingly hear this plaintive cry from CIOs: “But they want it both ways!” Delivering better than “five-nines” reliability at lower cost, while also helping the business evaluate and deploy new technologies, sounds like an impossible dream.

Fortunately, leading CIOs have devised ways to drive down operational costs while maintaining operational quality and investing in business initiatives. And the CIOs who think the most strategically are the ones who work the efficiency imperative to enable top-line investments.

The key approaches these CIOs use to eat their cake and have it too include the following:

 • View operational efficiencies as a piggybank holding both money and time to invest in new technology efforts. IT departments usually can’t keep all, or even most, of the monetary savings derived from lower technology costs, but many get to keep some. The money and time returned to IT for use on top-line-oriented initiatives provide direct, personal motivation for the technology staff to identify operational efficiencies.

Likewise, the business units can target their own operational efficiencies to free up time and funding for innovation programs. By working together, IT and business units multiply this effect and achieve more.

• Tap business units’ staff members as deputy technologists. Encourage these individuals—in a structured, governed way, of course—to explore technologies such as big-data analytics, cloud services, semantics apps, social networking and mobile content delivery in collaboration with IT workers.
Not only does this approach help break down the wall between IT and the business units, it also keeps business gains front and center and helps IT identify where technology can truly benefit business goals—which also helps get funding approval.

That’s a more fruitful approach than tasking internal IT to discover the high-potential technologies and then trying to sell the findings to the business. Both IT and the business units should collaborate on looking for useful innovations.

• Be rigorous about standardization. Exceptions and special cases cost money and time. Each business unit sees the world through its specific lens and pushes IT to deliver technology that is specific to it. In fact, most operational activities aren’t, and don’t have to be, unique—and neither do the technology implementations that enable them. Eliminating the added complexity of unnecessary customization reduces costs, helps IT be more agile and frees up your people to look for more business value.

When it comes to avoiding customizations that detract from enterprise value, it’s important that the CIO not be seen as the party of “no.”  Smart IT leaders encourage CEOs to appoint business leaders as “process harmonization czars” so IT is not accused of poor support for individual business units.



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