April 2009

Working with IT to grow

By John F. Hill

The current economic climate is causing executives in just about every organization to take a hard look at spending, strategy, and how to weather the storm.

This leaves decision makers in a tough spot. On one hand, they are pushed to identify spending areas and immediately cut costs that are not deemed mission-critical for the business. On the other hand, cutting back in certain areas may jeopardize the company's readiness to thrive when the market improves. Doing nothing in the face of this economic downturn is a recipe for failure. As with most times of challenge, it is essential to actively reduce costs while also identifying opportunities that can have a positive impact on the business.
Information technology tends to be one of the larger spend areas in most organizations, which means chief information officers and chief technology officers may find themselves having to defend projects and/or make difficult choices. The previous economy's continuous growth allowed more latitude for investment, and the rapid pace of that growth increased the risk of non-strategic IT investments. Under today's very different economic circumstances, IT spending should and no doubt will come under scrutiny.

How can IT leaders support their business in a way that improves the organization's ability to be responsive to the current fundamental economic challenges? How can they strike a balance between decreasing costs and increasing business through IT?

Look at options

The first step for an IT leader is to look for every possible way to aggressively reduce the cost of IT services in support of the business. Some successful approaches include simplification, consolidation, the elimination or replacement of outdated systems and processes, and outsourcing.

To simplify your IT environment, and thereby ease the management burden and boost productivity, try standardizing your systems and applications and automating tasks that currently must be performed manually. Look beyond the immediate low-hanging fruit with regard to automation. For instance, companies stand to make tremendous productivity gains by implementing technologies such as Microsoft Office SharePoint Server 2007 to automate complex workflow processes and streamline business operations such as HR approval processes, employee on-boarding, and so on.

Finding ways to be more efficient is the name of the game in today's economy. Virtualization is a trend that supports organizations' efforts to make their IT departments more energy efficient and environmentally responsible. But virtualization is more than a feel-good strategy-it comes with bottom-line business benefits.

Companies that invest in virtualization stand to significantly reduce costs by curtailing their energy consumption. Not only can they utilize their server assets more effectively, but many forward-thinking companies also are beginning to employ desktop virtualization to achieve similar benefits. According to Gartner, the total cost of ownership (TCO) of HVDs (hosted virtual desktops) can range between 2% and 10% lower than comparable desktops. and they have the additional "soft" benefits of offering solutions for remote access, better physical security, and compliance fulfillment.

Virtualization helps IT departments allocate their time more wisely as well, since they can condense the number of servers they have to manage and minimize the time it takes to deploy additional servers to support new business needs. With virtualization, getting the right IT tools in place takes hours instead of weeks, which can have a dramatic effect on businesses seeking to quickly respond to market pressures and opportunities. If a company needs to launch a new web application to support a promotion or bring a new product to market ahead of competitors, it can do so with far greater speed and agility when its environment is virtualized. Virtualization helps organizations swiftly respond to customer needs and bring the right resources to bear on the most important business challenges.

Another way to make smart IT decisions is to first consider all the legacy software and hardware that has built up over time. Chances are there are unused or little-used systems hiding in a data center or back office somewhere. You are not alone; they exist in nearly every IT department. Often, these legacy systems remain intact because people are not sure exactly what they do and fear that turning them off will have negative ramifications.

One of the most valuable things you can do is to commission a rigorous inventory and review of your IT environment, with the goal of eliminating old and marginal hardware and software that no longer adds business value. Remember, those legacy systems are consuming expensive resources (power, IT staff time, etc.), and they bring very limited benefits. By identifying and either removing or upgrading these systems, your IT department can concentrate on the technology that truly supports the business.

Often, companies can reduce their IT spending by taking advantage of economies of scale through outsourcing. More and more, companies are making the most of software-as-a-service offerings that allow them to focus on their core business and let an outsourcing partner worry about keeping IT systems and applications up and running smoothly. Outsourcing and hosted applications enable companies to maintain a consistent IT spend, spreading out their IT investments over time and freeing up potentially scarce resources to use for strategic investments elsewhere in the business.

Growth through teamwork

Technology is not the only aspect that organizations should consider when trying to grow in today's economy. Business processes represent another area ripe for examination. Refining your operations-and working with IT-can serve as a transformative agent for an organization.

Thoughtful investments in operations, especially with an idea to rapid returns, can in fact drive productivity, reduce cycle times, extend market reach, and improve overall business efficiency. For instance, ensuring your company executes projects effectively is fundamental to business success.

Companies also should seek to deploy emerging technologies to replace traditional, outdated, and expensive processes. Unified communications solutions-the integration of personal computing resources and assets with telephony-are critical for companies that want to reduce costs and enhance the quality and effectiveness of an employee's workplace experience. Voice over Internet protocol technology solutions are another area where today's investment can deliver considerable short- and long-term cost savings.

Some companies, especially those reaching toward dynamic levels of IT maturity, can benefit from increasing the ease of collaboration through the use of software. Adding a collaboration solution provides a means for information to be readily available to all those who need it throughout an enterprise. Additionally, companies can eliminate (or significantly reduce) business travel and its related expenses by instead relying on technology for web and audio conferencing. Companies that opt to make such strategic technology decisions need to ensure their operational processes adapt to take full advantage of the new solutions. Not only do new solutions and processes help you conserve financial resources, but they also improve the quality of life for employees, which cannot be underestimated in stressful times like these.

Find the right IT partner

It's extremely important, especially in an economic downturn, to identify partners that your company can use to help its IT organization be nimble, cost-effective, responsive, customer-focused, and successful. Look for a company that has a strong record of partnership, capable of  providing services that assist with application implementation, upgrades, and IT transformations, with the opportunity for clients to optimize and consolidate IT assets through virtualization and through the automation of IT processes.

The partner should be committed to providing robust, industry-specific solutions, and it should partner with best-of-breed technology providers. You may need a partner that can provide outsourcing and project-based services, which reduce costs and increase flexibility. The company should focus on understanding its clients' needs and tailoring services to satisfy them, which could involve anything from completely managing an IT environment to consolidating an application portfolio to reducing a data center footprint through virtualization, and so on.

IT leaders need to shift the perception of IT from that of a cost center to a business driver. Enable the business to run and grow by supporting it with the right team of internal and external resources. Put technology systems and operational processes in place to streamline, automate, and increase employee productivity. When you have a leaner, more unified IT organization that better supports its workforce, you are poised for success when you come out the other side of this economic crisis.


John F. Hill is the chief technology officer at Siemens IT Solutions and Services, Inc. His e-mail is john_hill@siemens.com.