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From IT complexity to clarity

Business models have been stood on their heads by cloud services and the digital transformation. The way ICT services are sourced and delivered and where their costs are incurred have all changed radically.

Herein lies something of a paradox. An in-depth understanding of cost drivers and the ability to effectively manage IT costs are now both more important and more fluid at the same time. The business of IT is getting more complex.

Why does this matter? In part, it’s because it leaves IT decision-makers flying without the information required. Their financial systems throw little light on spending by application, cloud provider or business unit. Neither do they provide the insights required to make value-based decisions. Finance and IT staff attempt to bridge the gap by building complex spreadsheets, only to find themselves devoting enormous amounts of time to manually updating data, making changes and creating different views for ad-hoc information requests. Even then, they invariably discover that their intricate spreadsheets have limitations.

This lack of visibility impacts higher up the food chain, too. CIOs often find their conversations with business stakeholders are around costs rather than how digital solutions can grow the business, improve the customer experience and inform investment priorities. Their teams operate in a reactive mode and their reputations within the business are eroded.

None of this is theoretical. The Voco team recently worked in an organisation with a shared services IT function which had little visibility of what its cost base was made up of and what was driving year-on-year cost increases. We introduced standard categorisation and allocation of costs which quickly gave the team a good understanding of its cost drivers and identified opportunities for savings.

Result: the IT team was able to have informed conversations on cost reduction opportunities and the business units on the IT support costs. The discussions shifted from “IT is too expensive” to “What drives the cost and where can we invest to get better business value?”. A far more productive conversation, you’ll agree.

Why do we mention this? Our work at the coal face of enterprise IT has made it clear that there is a crying need for this kind of IT cost transparency and cloud management. So we’re partnering with Apptio, a leading provider of Technology Business Management applications, to make this kind of goodness more widely accessible to New Zealand and Australian IT teams. Expect to hear more about Apptio very soon!

To discuss the topic further, please get in touch with the author, Vaughn Woods, on 021 996 685.

 

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