IT cost optimization, the pillar under a successful digital transformation for every company!
Even before the pandemic, 92 percent of companies surveyed by McKinsey believed their business models should change given the degree of digitization at the time. Covid-19 has only accelerated that timeline, with estimates showing that in a matter of months we have moved forward three to four years in digital adoption.
The digital transformation process that has accelerated for most companies in the past two years requires a significant investment. The choice is often made to finance this investment from the IT budget. In addition, many boardroom discussions typically focus on how technology can improve efficiency and reduce costs. Indeed, efficiencies can deliver meaningful savings that can help meet the ongoing investment needs of a digital transformation. But when it comes to IT costs, It’s Value’s customers don’t necessarily talk about IT cost savings, but about IT cost optimization.
Cost cutting is not the way forward for IT, digitization and technology, as it refers to immediate one-off actions to reduce costs. Optimization is about defining continuous efforts to reduce expenses and costs while maximizing business value. The goal of IT cost optimization is about freeing up money to reinvest in the digital strategy. IT Cost Optimization is a process that creates complete transparency of IT costs throughout the organization, while maintaining a continuous dialogue between IT, Business and Finance to align choices and priorities with regard to cost optimization.
In terms of growth and earnings numbers, companies have traditionally settled for ambitions based on the previous year’s performance plus 5 or 10%. But the pandemic has shown that huge leaps can be made when companies are under pressure. As a rule of thumb, digital initiatives should deliver more than 20% profit even as revenue and profit growth targets continue to rise.
How can this growth and digital transformation be achieved? A continuous process of IT cost optimization as a source of financing is the answer.
How to realize that is the expertise of It’s Value. We provide expertise and services in the field of IT Financial Management and help organizations to get a better grip on the costs, quality and performance of the IT organization. In short, we help IT departments to play a strategic role within the organization in terms of digital transformation, and help organizations to reduce IT operational costs 3%-5% annually to fund investments in digital transformation. By making annual savings of 3% to 5%, the cumulative savings year over year will provide more and more room with a constant budget to autonomously finance the digital transformation of the organization.
There are several IT-Finance topics that, with the right attention, can yield benefits in terms of cost savings and/or quality improvement, such as:
- IT cost transparency throughout the organization on the basis of which considerations and choices can be made,
- Improve cost calculations, budgets and forecasts so that costs can be saved, and processes can run faster and more reliably with less effort,
- Internal reports to show detailed IT costs and even charge them to users, and give the business better insight into the services they pay for.
What are the benefits for your organization? Below is a short checklist of 9 points to review your organization’s current efforts to optimize IT costs.
- Has your company drawn up an IT Service Catalog and has it been coordinated with the customers of the services (the business units) within your company?
- Do users pay for the IT services they consume?
- How much effort does it take to make reports on IT expenses?
- How many financially oriented IT reports do you make monthly?
- Do you know what the total costs per application (infra, management and licenses) are?
- Is the price calculated per CPU or storage GB, for both budget and actual costs?
- How much effort and time does it take to create a Budget?
- Do you use Forecast plans?
- Is Excel the most used application for IT cost management and reporting?
Would you like to discuss this further with us? After a conversation of 1 to a maximum of 2 hours, we can give you a clear indication of where the low hanging fruits can be found and what the possible savings and optimizations are that the organization can realize.
It’s Value is a specialized consultancy firm with a proven track record in value creation in the field of IT Finance. We operate at the intersection of IT and Finance with our experienced consultants and project and implementation managers.
Our customers belong to the big well-known company names in Western Europe. We do this not only for large complex organizations, but also for SMEs. We can help organizations with an annual IT spend from 5 million Euros to over 1 billion Euros.
We would like to invite you for a free introductory meeting about the opportunities, profit improvement points and process optimization options for your organization, which will also directly support a successful digitization process.
Call us, email us or go to the contact form on our website to schedule this free consultation. We will then contact you and send you a more detailed questionnaire in preparation.
For more information about It’s Value go to www.itsvalue.com
It’s Value is the Premier Technology Business Management (TBM) Expert in Europe. It’s Value has implemented ITFM and TBM processes and improvement projects in multiple companies and industries in Europe. It’s Value is a long term Apptio partner and member of the TBM Council (www.tbm.org).
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