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Pay attention to IT to enhance business profitability

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It is well known that better procurement of organisational overheads can significantly improve bottom line profitability.

Information Technology costs can be both direct or indirect and, leveraged in the best way IT can have a massive impact on corporate growth and profitability.

Just as employing highly skilled, higher performing employees in the right areas of the business can improve productivity, customer service, customer retention, margins and overall profitability the same goes for IT. Also, just as there are room for the cheaper, lower skilled and less capable, employees there is also a place for less capable, less expensive IT.

Well chosen, well implemented IT solutions and systems can have a huge impact on organisational performance. The opposite is also true

How do I choose and implement the right systems?

Strong IT Governance will give the best possible change of success. Clear processes to make sure that technology related needs, opportunities and risks are identified, evaluated and selected by the right people and then implemented effectively are important. Having the right ‘technology balance sheet’ of people, skills and systems available to make it all happen is equally so.

To steer the decision making of those involved in IT decision making the organisation’s business strategy and related IT strategy must be clear. Without clarity and acceptance what will be selected will reflect the priorities, preferences and attitudes to risk of individuals and established power bases, not that of the organisation.

How do I get the most from my IT investment?

Organisational IT expenditure can be substantial. As a percentage of revenue varies widely not only between industry sectors (e.g. 1.1% in Distribution to 10%+ in the Financial services) but also within sectors.

In the process of considering, optimising and controlling organisation IT spend, a clear IT strategy is again important but beyond that the most effective approach is to clearly separate out ‘run the business’ IT expenditure from investments that are to improve the business and enhance its capabilities.

A cost management focus can be applied on ‘run the business’ activities. Both goods and services should be considered in any initiative: IT staffing, delivery and support processes, hosting, networks, hardware, software etc. Taking a ‘holistic view’ rather than a line item view of the IT budget can produce the best results, sometimes reducing IT expenditure by 25%+. In today’s changing and integrated world of IT costs can reduce or increase in the different cost ‘buckets’ and move between ‘buckets’ due to many factors including taking a different approach to IT delivery (e.g. Cloud v on-premises, SaaS vs installed software)

Strong, specialist IT sourcing and procurement is essential to making sure needs are clearly defined, the best approaches are in scope (e.g. cloud, on premise), the best vendors are considered and the best possible prices obtained.

Professional, experienced implementation and ongoing service management of new IT initiatives is another critical success factor when the objective is to get the most out of IT investment. It is often quoted that up to 70% of IT centred business change initiatives fail.

Amongst the mid-market enterprises there is frequently a deficit in the skills and expertise required to deliver the IT Governance, IT Cost management, IT procurement and implementation management required to ensure they choose the right systems and get the most for their IT investment. Even larger organisations can have temporary gaps or a need for some impartial, external input. This is the area where ITSS is more than pleased to assist.

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