During an economic downturn, typically CIOs are expected to cut costs in order to reduce the overall costs of the business. Seldom are they asked if they can help reduce the overall costs of the business through automation, optimization and new business models that would otherwise be impossible to achieve without technology. CIOs must ensure any reduction in IT expenditure doesn’t cripple the future prospects of the organization. It is critical to ensure that organization is in a position to quickly scale up when business improves.
It is also better if the CIO can proactively make a plan to optimize expenditure rather than waiting for stakeholders to push him into a corner. For that matter, cost optimization should be a continuous affair to ensure more value is realized through the right mix of process interventions, technology changes, technology support models and outsourcing.
Very seldom do CIOs have clarity on how much it costs to provide a particular IT service to the business. That is a critical metric that needs to be measured to be able to identify variation in costs and to be able to compare with competition and outsourcing partners. One of the first steps is to build a service catalogue. The services listed in the catalogue should be mutually exclusive, collectively exhaustive and individually obtainable. For ex: internet is a service that can be listed in the service catalogue but LAN, WAN, Service Desk, Datacenter etc. are not individually obtainable by the business.
The next area the CIO has to focus on is to bring about repeatability in activities which is only possible with well-defined processes, measuring identified metrics and people trained to operate those processes. The regular measurement of metrics provides us with invaluable data that can be used to identify cost saving opportunities, reallocation of resources and outsourcing opportunities.
Automation of an efficient process magnifies the efficiency and automation of an inefficient process magnifies the inefficiency. Hence it is important to remove the inefficiency and use best practices like ITIL.
Proactive capacity and availability planning along with preventive health checks help the CIO run operations with a lean team. When he is able to plan capacity and availability and use idle time to plan upgrades and perform health checks, he won’t have many surprises. Predictive analysis and self-healing also go a long way to ensure an optimized team can smoothen the work load.
IT Automation is the next frontier of IT operations and is about automating mundane tasks and freeing up employee time. Mundane tasks like active directory password resets, service restarts, automation of SQL queries, monitoring windows logs, daily health checks, shutting down of computers remotely can be automated easily. A five minute saving each day translates into 20 hours of savings every year which is 3 man days of work at the least. Automation can also be used to respond to cyber security incidents and allow for rapid containment, eradication and recovery. Self-service for password resets in a large organization can save a lot of IT help desk time and most times the cost of automation pays itself off in a year.
Deployment of technologies to monitor, alert and support end customers remotely also go a long way in reduction of costs. Proper change and configuration management helps in ensuring changes are smooth and go as planned. Problem management proactively looks for problems in IT and resolving them once and for all.
One of the key benefits of technology is to bring about efficiency and predictability. This is applicable to the way Information Technology operates and is managed in an organization. The CIO, apart from focusing on business automation, should also look at automating the IT organization.
Automation of the IT organization can begin with investment in a monitoring and operations management system which automates IT processes in the organization and focuses on measurement of metrics to evaluate the performance of the IT organization. The service desk is a critical component of such a system however most organizations do not implement all parts of an ITIL compliant service desk.
The monitoring system can be extended to an automation system which can take action based on alerts generated and prompt IT administrators to take action or self-heal. Remote support technologies can help fewer IT administrators manage remote branches and bring about cost optimization. Low skilled employees could be trained to do front end interfacing with end users with skilled IT administrators working with them remotely.
It is also important to simplify IT systems in the organization. Hyper converged infrastructure integrates storage and compute and brings in ease of management. This can be extended to build a scalable private cloud which can be administered via a management portal. Public cloud can also reduce the skills required by the organization and the total cost of ownership of infrastructure can be reduced. The total cost includes space, power, air conditioning, UPS and administration skills including warranties and any other support required to maintain the systems.
Other technologies like virtual desktop infrastructure, wan acceleration technologies can also reduce costs in the long run. Virtual desktop makes an organization agile, pool resources and build in stronger security. MPLS costs can be reduced with the adoption of WAN acceleration technologies providing equal if not better bandwidth.
IT Automation technologies as described in the previous chapter help automate repetitive tasks thus bringing about significant reduction in costs and time spent on repetitive tasks. The CIO should focus on automating repetitive tasks and work towards having high end skills available for strategic initiatives either by hiring resources or outsourcing.
A multi business conglomerate should explore building a private cloud and provide platform as a service and software as a service for common business functions. Building a service oriented entity and charging businesses as per usage brings about immense efficiencies, benefits like agility and consistency in quality of services and security. This also gives IT staff a more attractive career path and helps in retaining talent.
One of the biggest costs in an IT organization is the cost of skills in the organization including the cost of acquiring the skills via an outsourcing services provider. Simplifying IT systems, making it easily scalable and management of all components via one console go a long way in optimizing the skills required in the organization.
All the tools discussed in the technology section help in reducing the number of staff required in IT. A private cloud can help in pooling resources across multiple business units while technologies like VDI can help in centralizing of skills in a multi business environment. Proactive monitoring and health checks also help in smoothening workloads thus avoiding peaks of unexpected incidents. Hyper converged infrastructure combines compute and storage thus the skills required to manage such a technology is merged into one. Adoption of cloud like Office 365 for email removes the need of an exchange administrator in the organization.
Amidst all this, we would need to reskill and retrain existing staff to ensure they are able to stay on top of the changes occurring outside and in the organization.
As you would have noticed, process, technology and people aspects of cost reduction are intertwined and related. A change in an area has an impact on the other two and hence for any initiative in cost reduction to be successful, we have to include all the three aspects of change. A long term plan in cost reduction should be part of every IT strategy along with other initiatives like digital transformation, business process automation etc.