By Bob Riddell and Eric Ullman
In the current economic climate, most of us are closely watching our spending. However, if you?ve reduced spending to only what is essential to day-to-day operations, you may be putting your company at a disadvantage. Smart CIOs are preparing for the future now and positioning their IT group and company to come out of the blocks strong when the economy starts to improve.
Now is the time to do the things you are too busy to do when business is booming. It?s the time to rearchitect, refactor, renegotiate, simplify and eliminate. Here are some of the critical things you should be doing now:
1. Simplify, consolidate and eliminate applications. Review the application portfolio with the business. Look at how much each application is being used, do an honest assessment of how well each is performing and determine the total cost of ownership (TCO) for maintaining the application. Eliminate or consolidate applications where the cost to maintain them exceeds the value they deliver?or for which there is a less expensive solution. Wherever possible, consolidate the needed functionality into your core applications.
2. Size, configure and negotiate IT assets. Review your asset utilization. Unused server and network capacity costs you money without adding value. Audit your compliance with software licenses. There may be no better time to negotiate services, service levels and costs. Also check to make sure you are using all the services you contracted for. Could you get by with a lower service level that would enable your vendor to reduce its price? Can you negotiate a lower price for a contract extension?
3. Tighten up your governance process. Reset the bar for project approval to require a realistic business case and assessment of alternatives including TCO. Make sure your team is skilled at creating and evaluating business cases. Establish, or reinforce, IT as the source of objective analysis about the costs and benefits of project requests.
4. Upgrade the capabilities of your team. Evaluate your team and make sure you have clearly defined roles and responsibilities. Don?t organize around the skills of your people; define the skills you need and then develop or hire people with those skills. Define measurable performance objectives that link business goals to IT goals?and, ultimately, to individual performance goals.
5. Understand and articulate IT?s value proposition to the business. Would your business be better served if you spent less?or more?time on IT? Develop a clear understanding of what you do for the business and what it costs. What services do you deliver? Do ser-vices to sales, finance and manufacturing differ? What resources are required for each service: hardware, software, personnel, third-party services?
With this information in hand you can begin to evaluate potential courses of action, from adding new capabilities to reducing services and service levels. Putting the hard questions on the table?questions about what IT is doing, what it costs and what value it creates?will drive critically important discussions about your peers? needs and their perceptions of IT.
6. Plan for uncertainty. The quality of your planning process becomes critically important during times of great uncertainty. Many companies consider technology-led innovation to be key to their post-recession growth plans. The challenge is knowing what moves to make and when to make them. The CIO must be confident that the company is ready to use technology to capitalize on opportunities. Smart planners consider a range of possible conditions so they can move quickly as business conditions evolve.
You must be relentlessly focused on monitoring circumstances and evaluating how your plans are unfolding. If an opportunity doesn?t materialize or an initiative is not meeting expectations, you need to adjust quickly. If a new opportunity comes up that you haven?t budgeted for, you need to quickly prioritize it and shift resources to it, if warranted.
The ultimate objective of this exercise is to make IT as simplified and streamlined as you can. This will free up budget money and will result in a simpler, leaner platform that will make it easier to extend and maintain what you have as business needs evolve.
Bob Riddell is a senior director and Eric Ullman is a director with Alvarez & Marsal Business Consulting, a global firm headquartered in New York that specializes in information technology.