Managing IT costs and IT performance in a normal year is tough enough. But in recessionary years this causes even more stress on IT decision makers, especially because business growth and IT investments are usually closely linked.
Serving these opposing objectives requires IT leaders to put on their sleuthing hats and identify areas where budgetary bloat has gone unchecked. Start by reviewing contracts and suppliers, where possible, with the view to reduce the running cost of IT. Most contracts tend to be renewed year-on-year with a simple, cursory review.
Every IT leader need to be looking more closely at the usage of services they run and the contracts that sit support these services. Be cautious with license allocation and scale down on unused licenses. This exercise will uncover services where the cost to impact equation is difficult to justify.
Another option is to look at service contracts. Do you really need a high-end support contract? There can be a significant difference in costs and often, if a solution is running long enough, your in-house IT resources will have built up technical competence to address most occurring issues themselves.
SAP research has shown that business priorities include leveraging IT solutions to cut operational costs while simultaneously lowering the cost of IT investment. Last year, SAP found the highest priority for executives was increasing process efficiency and visibility, as it had been in the previous year. However, lowering the cost of IT operations saw a significant rise in prioritisation, rising from 36% in the previous year to being a priority for 50% of respondents.
Existing SAP on-premises ERP customers who wish to move to the cloud over time, modernise their processes and take advantage of cloud qualities are prime candidates for RISE with SAP. GROW with SAP is designed for mid-market customers who want to adopt the benefits of cloud ERP and industry best practices. Executives from Endava, SAP, ServiceNow responded.
Helena Nimmo, CIO at Endava
Because of inflation, supply chain disruptions, currency fluctuations, and looming threats such as the global chip shortage, the cost of IT solutions has been on the rise. And yet, with mounting economic pressures, the do more with less mantra continues to ring out loud, and IT leaders are being asked to keep costs as flat as possible.
And of course, they are being asked to do so without compromising the pace of digital acceleration, which often means continuing to invest in innovative technologies.
Serving these opposing objectives requires IT leaders to put on their sleuthing hats and identify those areas where budgetary bloat has thus far gone unnoticed and unchecked. They can start by reviewing contracts and vendors, where possible, with the view to reduce the running cost of IT. Most contracts tend to roll on year-on-year with a simple, cursory review.
However, this year, every IT leader should be looking more scrupulously at the usage of the services they run and the contracts that sit behind these services. Being prudent with license allocation and clawing back unused licenses after a determined period is one option. This exercise may even uncover services for which the utilisation is so low that the cost to impact equation becomes difficult to justify.
Another option is to look at service contracts. Do you really need a platinum-level support contract, or is the gold or even silver option good enough? There can be a significant difference in these costs and often, if you have a particular solution running for long enough, your in-house IT resources will have likely built up the technical competence to address the most frequently occurring issues themselves, or with minimal support.
A third option is to look at SaaS storage. Many SaaS providers charge a premium once you go over a certain storage limit. It is worth examining if you really need to store a document in the SaaS environment itself, or if a link to the document would suffice.
All of this does require a bit of detective work, but with some time spent on careful review, these activities usually reveal some surprising opportunities for cost savings, as well as some invaluable insight into how the services we buy are charged.
Sergio Maccotta, Senior Vice President, SAP Africa, Middle East South
With rapid advancements in technological capabilities over recent years, the role of the company CIO has transitioned from that of a technology provider to operating as a strategic advisor, business partner, and enabler of new business models.
Recent changes in companies’ operational circumstances and IT investment priorities are also significantly impacting this role. With supply chains facing unprecedented disruptions, employees working flexibly, and the pandemic having radically altered the commerce landscape, businesses are focusing on IT solutions that increase visibility and efficiency.
SAP research has shown that business priorities include leveraging IT solutions to cut operational costs while simultaneously lowering the cost of IT investment. Last year, SAP found the highest priority for executives was increasing process efficiency and visibility, as it had been in the previous year. However, lowering the cost of IT operations saw a significant rise in prioritisation, rising from 36% in the previous year to being a priority for 50% of respondents.
Given this focus on increasing efficiency and visibility, combined with the imperative of lowering costs, it makes sense for CIOs to expand their cloud presence and concentrate on the integration of systems so that they can operate as an intelligent enterprise. Better integration helps with processes and data visibility, while cloud computing, AI, and machine learning can assist with priorities around lowering IT costs and supporting new business models.
The shift from the capital expenditure model to an operational expenditure model has proven to provide greater flexibility and scalability. For this reason, we are seeing more adoption of cloud-based solutions and managed services to reduce upfront costs and manage ongoing expenses.
In the case of SAP, customers are transitioning to the cloud with SAP S4HANA as their enterprise resource planning solution. SAP supports CIOs to transition mission-critical systems to cloud computing with minimal risk, regardless of size, industry, cloud readiness, customisation, volume, or departure point. RISE with SAP and GROW with SAP, help companies accelerate their end-to-end cloud transformation with all necessary tools and products in one package, under one contract, and with built-in industry best practices.
Existing SAP on-premises ERP customers who wish to move to the cloud over time, modernise their processes and take advantage of cloud qualities are prime candidates for RISE with SAP. GROW with SAP is designed for mid-market customers who want to adopt the benefits of cloud ERP and industry best practices.
Mark Ackerman, Area VP for Africa, and Middle East, ServiceNow
Global Business Services, GBS is an evolution of the shared services model where support was provided across geographies from a single department. GBS brings together shared services such as IT, HR, finance, and customer service, into a single organisational structure that eliminates the silos between these departments, and others, and supports everyone regardless of function or location.
A recent survey across GBS-oriented organisations in 45 countries showed 88% had reduced costs, 78% had achieved their standardisation and efficiency goals, and 63% had added business value.
GBS is about process standardisation, automation, and operating efficiencies. To deliver this, silos must naturally dissolve, and a new business paradigm will emerge to take their place — one of end-to-end alignment and collaboration. When technologists connect processes via automation and integration, users across departments get access to common back-end systems of record.
No matter where anyone works, or for what department, speedy access to the right data makes them more effective, freeing them up to focus on higher-value tasks.
Process connection starts with merging services into regional hubs. This is followed by adopting global end-to-end business processes managed by global owners. Quick wins are most found in procurement and finance followed by HR and IT, although this may vary from organisation to organisation. All moves should be governed by a global GBS team that thinks and acts holistically.
Cross-departmental visibility allows teams to work more intelligently and be able to continuously spot opportunities for improvement that can reduce operational costs and deliver higher service quality. When measuring the returns on GBS, it is vital to allow for non-financial benefits such as net promoter score, NPS. Some old processes will have no post-implementation twin with GBS, so it will be necessary to allow shared visibility across all service cases to deliver a clear impression of the value delivered by global business services.
This visibility also translates into better governance and compliance and tighter controls over sensitive company and customer data.
By implementing a culture of low-code application development editors and citizen experience builders, the newly formed GBS organisation can build applications across portal, mobile, chatbots and others. It can scale back-office operations for better business outcomes. It can create superb EX, connect systems and departments, and extend service delivery to new use cases.
Click below to share this article