Over the past five years there has been an ever-increasing pressure to reduce the IT cost base. Many organisations have sweated existing IT assets, reduced or in some cases completely eliminated IT investment spend. Although it's clearly important to keep IT spend under control and drive best value, we are now seeing a situation where organisations are falling behind in their IT: both their internal systems and their customer-facing services look and feel antiquated compare to a smart world of iPhones apps and social media. They now have to catch-up with their competitors and new market entrants to remain competitive in the marketplace. Indeed, our 2011 PA / Harvey Nash CIO survey confirmed that 74% of Global CIOs believe they need to innovate to avoid losing market share.
While innovating is crucial, simply catching up can seem a daunting prospect. After all, an athlete who hasn’t trained for a while cannot suddenly go back to their previous fitness regime. You might find yourself struggling to keep pace with the pent-up demand for improvement across your organisation. Or you might find yourself without ideas, as people have stopped thinking about what they would do differently. Working with clients, our experience is that you’ll most likely find a combination of these extremes – some vocal stakeholders demanding investment and others (perhaps more valid) remaining silent. Catching up effectively will need clear vision with leadership and understanding of the commercial model of the organisation. However, by applying a simple approach you might find it easier than you expected.
Start by reviewing your IT portfolio and categorising the outlook for each area as “commodity” or “competitive advantage” against your products and services with your senior stakeholder community.
For the areas where IT is a commodity, reducing spend makes sense. There is no point in paying more than you need to if it's not going to result in competitive advantage. For example, do employees really need the next state-of-the-art laptop? Or does the latest update of the Enterprise database need to be applied if the rest of the estate hasn't change? Planned reduction of the IT cost base was a pragmatic response to the global economic downturn and helps prevents organisations just repeating the same spending patterns year on year. Any investment in your “commodity” area must be made in the context of longer term cost reduction, for example by ridding your organisation of obsolete technology that is no longer cost-effective.
For the areas where you see potential to achieve competitive advantage, this is where you should explore exciting opportunities for investment. Challenge your team to look at technology and market trends and encourage the organisation to submit ideas on how to exploit them. We know from the technology foresight activity of our IT Innovation Unit at PA that the transformational possibilities of technology are great. For your organisation it could mean making better use of social networks to engage with your customers, applying the latest analytics tools to become “smarter” or taking advantage of the ever-developing features of the latest mobile devices. Once you have assembled some candidate ideas, maintain momentum with a quick qualification exercise – so that you can identify the priorities and press on, building your innovation capability as you go.
At PA, we have experience of helping all kinds of organisations identify and implement the right technology for their future – everything from smart metering solutions for major utilities, through to cloud migration for a global pharmaceutical, to state-of-the-art mobile applications running on the latest handheld devices.
To find out how PA can help you catch up on technology, contact us now.