Why do you think when companies set out plans to reduce their IT cost structure, they end up causing issues in other parts of their business? Trying to reduce cost without understanding your complete cost and business impact, will have consequences.
If you are business leader and/or responsible for IT department of your organization, Issue may be in perspective and your approach to IT/technology
Do you approach your business technology similar to other utility services i.e hydro etc? If your IT department or services are bundled in category same as utility bills, you have invested in IT services but haven’t realized business benefits and competitive advantage with technology.
Do you consider IT/Technology services is unnecessary expense? Something you have to deal with as on-going basis. It usually means that you have only discovered IT Hard Cost (expensive) but needs to invest time to understand impact of IT on business (soft cost).
IT (Technology) is not important to business, I can simply outsource or move to cloud solutions then I don’t have to deal with it. You can outsource IT but you cannot outsource or delegate your business risks and impact of technology on business, which is much higher cost compare to IT/technology cost.
Here’s 3 critical items to consider for IT Department
IT Soft Cost Impact on Business
Being inefficient and unproductive has a cost. Sometimes it’s the result of the employee not having the capabilities to perform the job, but in a large number of cases it’s because the company’s operations, business approach, management and workflow are outdated and antiquated. It’s how the company conducts business that raises its soft costs. Companies that actively try to reduce their soft costs are able to improve efficiencies and productivity. It helps to free up valuable time, conserve company resources and streamline operations so that employees can do what they do best.
Impact on Revenue
Technology can be a powerful engine for revenue growth and increased profitability. According to recent research by Jacquette consulting, data from several other studies, along with their our own observations over 16 years as an IT consulting firm, supports our assertion. In fact, IT investment often pays off better than investment in advertising or R&D. Some of the key impact areas on revenue:...read more.
In order to understand business impact, you need to review of list of technology related items that should be considered when understanding soft cost. Any delay or resistance to operational change will increase soft cost. As a result, higher IT Soft cost means lower profit margin.
- Business process automation
- Increase operation efficiencies, scalability
- Customer service improvement with automation
- Sales process enhancement with technology automation
Impact on Payroll
Most business leaders understand their biggest expense in business is Payroll. Regardless of staff working or waiting for technology issues to be resolved, you still have to provide payroll. All businesses have same hours weekly, monthly or yearly to generate desire revenue. As a business leader, we all want our teams to invest more, if not all of their time on revenue generating items. Consider time spent on following items instead of revenue generating items: ...read more
- Training issues: Employee searching solutions on-line or waiting for answer
- Technology related issues
- Coordinating technology issues/solution
- Business process issues – lack of technology process
- Turn-overs and training gaps
- Lack of documentation for both process and technology
- Approval and ordering process for hardware and software purchases
Top 3 Items required to achieve expected business growth
Process: Most modern businesses deploy IT process to align their technology with business goals as on-going basis. IT process also runs ongoing testing and gap analysis to update IT Strategy, roadmaps and budget. This will support the entire organization’s technology needs, from running the service desk to driving innovation. And IT Process should also eliminate all HR and business risks...read more
IT Strategy: Accidental success is dangerous. Strategy is “how we succeed.” Every organization require a roadmap for IT operations for cost and resource planning. And detailed documented IT Strategy with budget will provide insights to operation improvement and efficiencies. Having a clear understanding of the business is crucial to creating an IT strategy that aligns with, enables, and drives the business forward...read more
Discipline – People: Peter Drucker (borrowing from Marshall McLuhan) wrote that “neither technology or people determines the other, but each shapes the other.” All business improvements start and ends with people. Discipline and commitment to improvement by both leadership and staff is key to drive any improvement. Business success stems from having the right people and the right processes in place.
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