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Four Steps to Redefining the Economics of IT

Four Steps to Redefining the Economics of IT

CIOs need to drive more economic value from their IT investments and projects than ever before. A four-pronged approach is key.

The current economic environment has intensified the pressure to do more with less. Companies are cutting costs and working at becoming more efficient, but at the same time, they need to stay focused on two important goals: driving their competitive edge and building their businesses. These goals are more important today than ever, as companies work to ensure they not only survive the economic downturn, but also can act on market opportunities and emerge strong and thriving.

Increasingly, the competitive edge comes from the effective use of technology. Companies that leverage IT to support the delivery of new services to drive top-line growth and make processes more efficient are the companies that will succeed and increase profitability and shareholder value. Because IT has become such an essential component of driving business strategy and marketplace success, CIOs are in a challenging position.

CIOs need to deal with increased complexity in their IT environments and manage growing service demands, while at the same time facing shrinking budget resources. Compromising the quality of IT services delivered to internal and external customers is not an option. To do so would leave their companies at a competitive disadvantage in the current economic environment and especially when the economy improves.

In other words, CIOs today need to drive additional economic value from their IT investments and projects now. To do this, CIOs should consider a four-pronged approach:

  • Prioritise investments. CIOs need a portfolio view of projects and services that is keenly focused on driving the business. This way, they can ensure their IT investments will help improve revenue growth, efficiency and bottom-line results.

  • Run lean and reduce costs. CIOs can accelerate best practices across all areas of IT by standardising functions, processes and shared-service capabilities, as well as by automating formerly manual tasks. The CIO must ensure that the time-to-value of an IT project is close to immediate.

  • Manage enterprise risk. CIOs can minimise risk by managing their IT assets, ensuring service continuity and compliance, and achieving their operational goals.

  • Become truly customer-centric. CIOs who manage according to the needs of their clients — rather than those of the technology function—will be prepared to deliver critical IT services where and when they're needed.

CIOs who follow this approach will be in position to maximise the value their companies realise from IT. They also will be able to respond strategically to the requests for cost-cutting that typically accompany times of economic turbulence. For example, I recently met with two technology executives, a CIO and CTO, who had been asked by their CFO to cut spending on several IT services. The CIO and CTO were knowledgeable and prepared, and were able to show the CFO how cutting those services would actually hurt the company's bottom line. They also were able to suggest how the company could benefit by redirecting resources from less critical areas. While the total savings would be the same, there would be no overall negative effect. CIOs are faced with challenges like this every day. Some won't rise to the challenge. Others will be able to advise the business on how to best use IT in support of the short-term and long-term business strategy. IT may well be the light at the end of this economic downturn tunnel.


Brenton Smith is the Vice President & Area Manager of CA Pacific.

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