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Resetting your cost structure for the new normal

In a time of economic fragility, rapid technological change and ferocious competition, what company is not trying to stretch its capital and operating budgets to do more with less? In no area is the mandate for intelligent frugality more important than spending on information technology.

Is world-class always best for business?

There is a natural inclination for business leaders or functional owners to presume that they have to be world-class at everything they do. The reality is that’s not true. What helps drive alignment and builds the case for change is having a clear understanding of what external and internal customers care about and how that translates into where you need to be. Does it need to best-in-class because your customers demand it or because it gives your organisation a competitive advantage? Or, conversely, is it a situation where you need to be best-in-cost because it’s just something that has to be done?

Invest in the things you need to be investing in and pull back on the things you don’t.

Traditionally, organisations will try to squeeze everything they previously had into new annual budgets without fundamentally changing the work or the way it is performed in the organisation. Ask yourself ‘what work is required to add the most value?’ and of that work ‘what is the most efficient and effective way in which to do it?

A common presumption is that work that has historically been part of successful organisational process, should continue unquestioned – if it ‘ain’t broke, don’t fix it’.

However, Jason Heinrich, Global leader of Zero-based transformations at Bain & Company suggests that a zero-based redesign can challenge you to investigate more closely the work itself, forcing you to ask hard questions such as ‘do we need this?’ and ‘does it add value to external and internal customers?’. In this ‘clean-sheet’ approach, you consider how removing or redefining unwarranted work might look.

To drive the cultural change around these types of changes and to make sure the cost doesn’t come back over time, a deliberate exercise is required to quantify the change and then drive those new behaviours into the organisation to make them permanent.

Examples of areas where this philosophy could be applied are:

  • Software licensing – Regular audits of software licensing such as Office 365 licensing can reveal potential cost-savings. Simply put, are you paying for licenses you are not using or simply gain no benefit from?
  • Duplication of function sets – Half your team use Teams for online meetings and half use Zoom. Check to see if there are any double-ups with feature sets across your software portfolio
  • Underutilised tools – Before purchasing new applications, look at the function sets already available. Since the arrival of COVID-19, Microsoft and many other software developers have released valuable collaboration enhancements to their software offerings. You may find you already have technical capability for introducing a new process.

Now is the time to review your IT support costs. Consider the following:

  • Is my partner providing my organisation value for money?
  • Can we get more for less regarding our IT spend?
  • Does our managed services partner offer self-service options to improve productivity and our ability to gain faster resolution of issues and requirements?
  • Are our partners helping us to reduce IT friction?

 

By Steve Hurst | 14 July 2020
By Steve Hurst | 14 July 2020

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