Three steps to managing enterprise technology spend during a crisis

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Businesses across the globe have been hit with an unprecedented and ongoing challenge. Covid-19 has given rise to an entirely new set of pressures, causing organisations to implement new strategies to weather the disruption. In many cases, this means re-evaluating priorities and workflows.

Headlines focused on event cancellations, production and logistics delays, and immediate nationwide lockdowns are masking the longer-term impacts that businesses must consider, particularly around technology investments. The IT departments responsible for managing enterprise technology are now also supporting their businesses as they adjust to a new normal.

With leadership looking for any opportunity to reduce spend, it’s critical that IT leaders help their organisation find solutions to avoid short-term actions that may have long-term effects. By taking a three-staged approach to understanding the value, role and function of different parts of your IT estate, you can optimise technology spending in a way that mitigates immediate problems, while also ensuring the success of your organisation in a post-Covid-19 world.

Build a complete picture

First, it’s essential to establish a clear view not only of the company IT portfolio, but also the costs associated with it. Gaining a holistic view is easier said than done, however. Often, business units are operating in silos, and have set up their own cloud software and other ‘shadow IT’ without informing the central IT team. Or poor accounting is failing to accurately track where investment in technology is directed. In any case, it’s critical that you understand how much money is being spent and what it’s being spent on, as this will guide strategic decisions around eliminating inefficiencies.

Technology Business Management (TBM), the practice of running an IT infrastructure like a business within a business, offers a useful framework for making these decisions. TBM requires you to assign a value to technology and services. This value accounts for their relative costs and is then aligned to the broader business strategy. This framework puts the IT team at the core of the business, rather than as a separate business unit, or cost base, and delivers strategic intelligence to help avoid impulse reactions.

At times of crisis, pressure to slash cuts could trigger knee-jerk reactions to kill projects. But doing so could come back to haunt you in the future. It may feel like the right time to make cuts but doing this in the wrong places will damage the ability of the business to remain competitive in the long-term.

Make informed decisions on spending and projects

Once you have assessed your technology portfolio and assigned value to each element, you will be in a position to make better-informed decisions about where change is required. Today, the majority of organisations will need to analyse where costs can be reduced. With this baseline understanding, you and your team can support the wider business by providing guidance on where strategic trade-offs can be made and where workflows are best left alone.

As these kinds of cuts occur across the world, it’s important to acknowledge how powerful data can be. As an IT leader, you need this insight to be able to provide the right answers to challenging questions from board-level executives in succinct, digestible and business-ready terminology. Your task is to direct the business to make sound choices on technology, whether that’s scaling down a new SaaS initiative, or consolidating instances in your cloud estate – and you need the numbers to back up those choices.

Reimagine investment and governance

Once decisions have been made on technology spend management, you should consider resetting investment more widely and overhauling your IT governance procedures. Covid-19 will impact the value that IT staff and contractors can deliver on costs, so expectations will need to change, at least in the short-term. This makes it vital that you keep forecasts up to date and that that tracking of your costs is automated. It’s very likely there will be an immediate need to reshuffle your planning.

Responding to this crisis requires flexibility in every business unit, and that’s particularly true for IT. If you haven’t already, embracing agile methodologies will enable shorter working cycles, allowing your teams to rapidly evaluate projected outcomes and pivot if required. In such a rapidly shifting situation, a waterfall-style project system could risk more pronounced inconsistencies between forecasts and results. This isn’t to say the waterfall system is redundant, but you should question what does and doesn’t work for your organization.

Whatever system you select, the main point is to ensure both investment and governance are flexible to unprecedented change. The alternative is an unsustainable level of time and labour going towards regularly remapping costs. The ability to accurately prioritise investments, optimise resources and report back on value is crucial to business continuity.

Gain visibility, make data-driven decisions and increase flexibility

During challenging times, flexibility and resilience are key for any business. These aspects must be integrated into technology cost management processes now more than ever. There is no doubt this is a time of huge upheaval. The businesses that best mitigate this crisis are the ones that are able to quickly adapt to changes taking place.

While the current crisis is forcing us all to make changes, savvy businesses will be able to turn it into a test of the fitness of IT departments to help their companies become leaner, stronger and more efficient.

Henrik Nilsson is Vice President, EMEA at Apptio

Henrik Nilsson

Henrik Nilsson is the Vice President EMEA at Apptio. Prior to Apptio, he was the Regional Director, Enterprise Solutions at CA Technologies.