In times of crisis, CEOs tend to forget the potential value creation of IT. Instead they often asking their CIOs,  'how can we reduce our IT costs and by how much?'. 

To address this question, all consulting firms have developed, for many years, IT cost reduction approaches leveraging benchmarks, zero-based Budgeting and lean management techniques.

Although these approaches are effective in reducing costs, they overlook two important characteristics of IT:

  • IT is not a classic general & administrative function. The quality of IT services and assets has a direct impact on the effectiveness and efficiency of each component of the company's value chain.  How many companies have found that their IT function, after a severe cost reduction program, was no longer mastering their application landscape and was unable to contribute to the company's prosperity?
  • IT skills are no longer the exclusive domain of the IT department. Employees are no longer simple users of systems, but have experience with data query analysis tools, and sometimes have developed forms and procedures using "no code" tools. Rethinking the IT Management's “Do it by yourself” policy, involving the business staff in the "last mile" of IT can reduce costs and simultaneously improve the company's efficiency and agility.

Looking beyond simple cost reduction and seeking to "increase the business value of IT while spending less and better on IT" is challenging but can be achieved through:

  • A pressure test on the project portfolio, to ensure the materiality of expected benefits, check the level of business and IT commitments, the "just required" dimension of the projected solution and the accuracy of planned costs,
  • Redefinition of the “Do it by yourself” policy and set up an “ad-hoc” governance,
  • Identification of business improvements achievable with the current Information System at “no cost” (i.e. financially attractive on the target time horizon),
  • Sizing skills required internally to ensure the IT agility expected by the business in each technical and functional area.

If you have similar experiences, please share your comments !