BlogHow Organizations Fail to Measure the Strategic Dimensions of Their Technology Expense Management Programs

How Organizations Fail to Measure the Strategic Dimensions of Their Technology Expense Management Programs

september 13, 2019, Uitgaven

Many organizations today are failing to effectively exploit emerging technologies as a strategic enabler for their business. We’re all too familiar with the phrase “the definition of insanity is doing the same thing over and over again, but expecting different results”. The same idea can be applied here. Organizations that rely upon old technology expense management philosophies may be inadvertently pigeonholing their IT operations as traditional cost centers. Unfortunately, this way of thinking is typically not effectively aligned to the value outcomes their end users or business units expect given their reliance upon technology to maintain a competitive edge and reduce operating expenses. As a result, they may seek alternative ways to circumvent what they perceive as barriers to innovation in order to take advantage of the growing spectrum of disruptive cloud services available (such as UCaaS, IaaS, SaaS and PaaS).

Align to Business Metrics Not Device Counts

With the rising adoption of cloud services, internal clients no longer need to enlist the help of IT to install and enable new technology for them.  While this growing phenomenon, known as “Shadow IT”, offers many benefits to the end user or business unit, it can undermine the organization’s ability to ensure operational security and optimize their technology investments.  The reality is that Shadow IT is often a reaction to an Information Technology Expense Management (ITEM) program that is not properly aligned with modern methods to effectively measure the holistic lifecycle value of interdependent technology investments in terms of realized business outcomes.  Too often technology expense management programs that may initially be embraced as successful implementations are eventually downgraded and viewed as ineffective overhead in subsequent years. This is because organizations continue to focus on achieving greater levels of project-based cost reduction measurements that are not increasingly sustainable over time. Therefore, they lose relevance after their initial objectives have been successfully achieved. Often the “big ticket successes” of these project-based measurements are more indicative of a pre-implementation operating environment where there’s insufficient insight required to make on-going adjustments.

A typical example of the degradation of ITEM programs is the meticulous focus on cost-based Key Performance Indicators (KPIs) relative to each specific technology investment (e.g. cloud versus mobile versus landline).  ITEM programs are often rolled out with multi-dimensional dashboards and are met with great fanfare across the organization because they enable cost centers to baseline and benchmark costs and rates for each dimension of technology relative to their respective suppliers and/or attributes of the organization (e.g. by location, by cost center, by person).  The real foundational value of these measurements is attained by the underlying ability to allow secure role-based intuitive insight for managers across the organization.  Managers can make prompt, yet effective decisions that are not necessarily focused on cost reduction, but rather on substantiating and guiding timely changes in technology investments using facts that correlate to desirable business outcomes – ones that improve revenue, quality or time-to-market for their solutions or services.

Substantiate Value Attainment

ITEM managers need to realize that corporate and business unit executives are not necessarily concerned about the details regarding how much money they spend on a particular technology (e.g. SD-WAN versus MPLS) or a brand of technology (e.g. Apple versus Samsung), or even with a specific supplier (e.g. AWS versus Azure). Instead they are focused on their ability to continually improve their value differentiation and competitive edge.  In the era of digital services, a cost-effective means of adopting cloud services plays an increasingly critical role to help business units achieve their desired business outcomes while improving the operational efficacy of how they achieve their respective objectives.  An effective ITEM program can provide the appropriate multi-tiered insight IT organizations need to help their internal business unit clients continually achieve their annual operating objectives.

In the book “Project to Product”, Dr. Mik Kersten outlines new ways of seeing, measuring and managing software delivery. Many elements of the use-cases discussed throughout the book correlate to the failures of the predominant project-based approach to expense management programs. Through an upcoming blog series, we will expand more on this topic and focus on:

  • How cloud dramatically changes the paradigm for ITEM programs
  • New emerging leadership opportunities as IT organizations transform from heritage cost-center based alignments to IT service brokers
  • How a strategic-based expense management program can help you maximize technology investments
  • Leveraging BI to manage the new cadence of near-time decision making in the era of consumption-based cloud services

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