Posts Tagged ‘IT budget’

Need or want? A simple metric for your IT projects in tough times

April 13, 2012

Recently, news and government statements on the state of the economy just confirm what all businesses already know: growth is slow; economic recovery will take a few years; all excess must be cut for survival. Although organisations nowadays recognise the importance of IT for the day-to-day business processes, they are struggling to secure investment in IT as is often not considered a priority. Often, as a result the IT Service Desk is the first destined to suffer, and with it, potentially, operational and business efficiency.

Any investment in IT, however small, can still create efficiencies if any project is carefully assessed against a very simple metric: is this a ‘need’ or a ‘want’?

A clear example of this would be a desktop refresh. Even if mainstream support for  Windows XP operating system is ending, they might find it more convenient or cheaper to pay for the extended support and postpone purchasing the latest version for another couple of years, when the company might be in a better position to deal with the disruption and changes to applications. In this scenario, Windows 7 becomes a ‘want’ rather than a ‘need’; by delaying the move, the organisation can get some much needed breathing space, or is able to invest their reduced budget in something more critical.

To evaluate a ‘need’ an organisation must focus on their core processes, main business-generating areas and IT-related risks. Do you need a certain application or technology for any user or a team in particular, say the sales team or customer relations? Is encryption vital across the whole organisation, or just the finance department? Do you need to enlarge your IT service desk team now or can you use home-working contractors to help at peak times until the market has settled?

Another smart approach to create cost-efficiencies is to invest in better management of the resources that are already present, which could involve some consultancy advice. Reducing head-count and cutting down on all IT expenses creates a false economy – yet companies still expect to have the same efficiency and quality of service. Reviewing the use of resources can allow better utilisation of existing staff, e.g. identified recurring issues can be resolved by 1st line support instead of it continuing to devolve to 3rd line, getting the business back on their feet faster and allowing for a more efficient use of existing resources. Other possibilities may be: cutting down on 3rd line analysts and using a cloud service provider to manage their servers; using automation software to deal with repeat incidents can allow the organisation to use less 1st line analysts; managed resources can also improve efficiency and save money, with a service provider in charge of staff management, training and best practices for a fixed monthly fee.

Smaller spending capacity can prove a great opportunity to look seriously at what is essential and what is not, with wiser short-term or far-seeing choices and clear objectives. This period of uncertainty is a challenge that successful organisations will take with a specific goal in mind: to remain successful and retain efficiency despite any difficulties this economic climate might present, and prepare their business to grow and flourish as soon as the economy is on the rise again.

Jennifer Grant, Service Deliver Manager

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The tricky business of justifying IT expenditure

October 20, 2011

How to prioritise IT projects and budget spend?

As a result of the recent financial crisis, the constant fear of a double dip recession or, at the very least, an uncertain and unstable economic climate where long-term commitments are not convenient any more has led organisations to become more careful with where they spend their money and what they want for it. This means that it is now even more difficult for the IT department to convince Financial Directors to invest in their projects or assign a bigger budget to them – the finances always seem to be needed elsewhere as a priority. And even when the business does concede a budget to IT projects, it normally covers the bottom line – hardware or software that is urgently in need of replacement – while Service Management is kept at the bottom of the priority list.

But if this can initially make sense from a practical point of view, it may have a negative outcome if not backed by the appropriate Best Practice processes and instead of saving the company money, might result in added unforeseen costs which could have been avoided with a smarter budget allocation. Take a move from Windows XP or Vista to Windows 7 for example, operation which many organisations have been undertaking this year. Although it is still a Windows Operating System, there are many differences in the new version for which some of the applications used by the company, especially in-house software designed for that specific organisation, might not work at all. If the appropriate Change Management process is adopted and the issue is dealt with in a timely manner, which includes adapting or changing the application before all the desktops across the organisation are updated, continuity can be guaranteed. But if this is not the case, users will find themselves unable to work and clients unable to use the company’s services – with financial and reputational loss as a result.

A Financial Director can understand the importance of having processes in place, as they have their own procedures to follow in their work. But to understand the value of processes within IT, and therefore of putting money towards improving the way the IT department carries out its functions, their view has to shift to a new concept of IT as a ‘service to the business’ – where every other department in the company is their client and will benefit from improvements to the service they provide.

In any case, figures published by Gartner suggest investment in IT is increasing more than expected: IT expenditure is predicted to grow by 7.1% this year, which is higher than the 5.6% previously believed. Just two years ago, the growth was -4.8: organisations are either taking risks again, desperately in need of replacing old systems and devices, or investing in new technology believing it will save them money in the future. Computer hardware is at the top of the list for expenditure with a growth of 11.7%, although it has decreased from the previous year where it reached 12.1% growth. Software expenditure has instead increased from a growth of 8.4% in 2010 to 9.5% in 2011. Finally, IT Services has more than doubled its growth rate: if in 2010 it grew by 3.1%, in 2011 this is up to 6.6%

These figures speak for themselves: not only Financial Directors are spending on IT again, they are changing their priorities: software, including Service Management applications, is becoming more important than shiny new hardware; more importantly, the use of services such as consultancy has increased. Buying ‘knowledge’ and ‘expertise’ in just the right doses needed for their projects and seeking guidance to carry them out in the best possible way is the new winning strategy for many organisations.

Businesses have perhaps become smarter in the way they invest their budget, finding new ways of reaching cost-efficiency: mature Best Practice processes, guidance from external experts and treating IT as a service to the organisation being at the top of the list. In this way, they get a good ROI – they can enjoy an improved IT service and, as a result, a better chance to increase their business success.

Jennifer Norman, Technical Consultant

This article appears on Director of Finance Online: http://www.dofonline.co.uk/content/view/5739/115/