Welcome to part two in our series on IT cost optimization. As promised in part one, I will examine the principles outlined in Gartner’s recent white paper “IT Cost Optimization Principles,” beginning with the first principle, which I summarized as:
IT Service Support and Service Delivery need to align around a common philosophy that places the stakeholder first. In doing so, everyone who delivers technology should serve as a fiduciary.
The concept of being an IT fiduciary has been gaining momentum over the past few years, as the shift to ubiquitous cloud services has transformed the role of IT departments. It is not uncommon for a modern digital worker to rely on a half-dozen cloud services. IT’s most important function for the enterprise today is as an innovation and business enablement hub, providing expertise to help clients maximize their technology investments.
In order to practice effective IT cost optimization, we first need to understand the changing role of IT in cloud-powered enterprises. IT organizations are cutting costs and achieving economies of scale in a world of never-ending technological disruption by externally sourcing support services and infrastructure as much as possible. This includes the full spectrum of XaaS services, such as IaaS, SaaS, PaaS, UCaaS, CPaaS, and CCaaS. The result has been a paradigm shift, where end consumers are relying less on IT to provision and maintain technologies, and more on leveraging IT for its subject-matter expertise. IT must now help connect and enable an ever-growing and diverse digital workforce with the appropriate suppliers, human experts and nonhuman agents.
However, this shift in the role of IT demands new skill sets and approaches. IT providers need diplomatic and experienced negotiators with strong business acumen, who can navigate and govern an ecosystem of suppliers and partners, and who can independently collaborate with financial and legal experts on behalf of their client. They require real-time insight into how their clients are consuming technology services, while continually identifying opportunities to help them optimize their investments, which may include providing recommendations on right-sizing and configuration.
The goal of modern IT management is to establish an appropriate balance of invention, experimentation and optimization. Many organizations are already leading the inevitable change from a centralized and hierarchical directive role—where IT managed and owned all aspects of the technology, budget, delivery and support—to a more decentralized one, with IT supporting self-organizing teams which are funded and guided directly by the needs of the business units.
The success of future IT leaders will also no longer be predicated on extending the life of capital assets one more fiscal year since cloud-based services are operational expenses. Right-sizing recommendations and configuration decisions need to be made in near real-time to avoid unwanted expenses.
The role of an IT fiduciary is to assume the responsibility of a trustee to all clients who receive technology services. This relationship is centered on the philosophy of placing the stakeholder consumer first. Such a philosophy is predicated on the IT experts possessing the appropriate knowledge and experience of their client’s working environments, including competitive challenges and business priorities. This is creating completely different career paths for people in IT. To develop the necessary skills, expertise, understanding and empathy of business challenges will inevitably require nonconventional career role changes, including embedding with client environments for extended periods in order to operate autonomously.
Being a technology expert is no longer sufficient. IT leaders need to have a deep understanding of:
With that understanding, they can determine the most cost-effective way to support their business activities.
In the next blog post of our IT cost optimization series, I will focus on Gartner’s second principle: Optimizing costs requires effective financial transparency across all aspects of the IT management lifecycle. In case you missed the first blog of this series, you can check it out here.
Ready for more? Here’s part three of our series: Providing Transparency Across the Entire IT Lifecycle.