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At a time when IT teams are under huge cost pressure, the need to innovate has never been more critical. We explore key elements to tackle the conflicting priorities and thrive in the digital economy.
In brief
- In today’s digital economy, the role of the IT function is continuously growing as a driver of innovation
- At the same time, cost pressure remains high and business leaders are conscious of IT spending as well as the generated business value
- An intelligent focus on key factors will drive success and manage spending to increase the overall value of the company in the digital age
Today, as we emerge from the pandemic, the digital economy offers unprecedented opportunities for business growth and new digital business models. For many companies, this period of disruption was an accelerated time of digitalization as IT were forced to move fast to remain competitive in a changed environment. Now the digital economy is here to stay.
IT is undoubtedly a crucial enabler of innovation, which in turn plays a decisive role in growth, diversification and emerging business opportunities. But IT also remains a major cost – at a time where cost pressure is already high on the CIO agenda. The task now for technology executives is to strike a balance between two seemingly incompatible priorities: cost and innovation. How and where do you invest intelligently to drive innovation and get value for money?
We believe that technology leaders who successfully manage the conflict between cost and innovation will emerge as winners in the digital economy. Against this background, IT needs to transform from within. It’s time to reconsider the way it operates – to foster innovation, increase flexibility and reduce time to market.
The function needs to transform its governance to embed an agile philosophy. In addition, it will be important to develop strong relationships with providers and partners, and leverage ecosystems to tap into new opportunities for innovation.
In this article, we explore five critical elements to get right in adopting what we call “the art” of innovation within the IT function – and organization more widely.
These five elements should not be addressed in isolation but adopted holistically, consistently and concurrently in order to create the environment that allows innovation to flourish.
The goal is not to keep the technology spend as low as possible,
but to get the best possible value from IT.
With “the art” of innovation established, we can now move over to “the duty” of containing costs. The goal is not to keep the technology spend as low as possible, but to get the best possible value from IT. Only funds that are allocated effectively create maximum impact. Cost management provides the tools to achieve this in three ways:
- By providing full transparency over IT run and change costs
- By identifying the most effective cost optimization levers
- By effectively charging IT services to business and measuring these against their value
Savings potential
Effective cost management can generate savings of up to 30%.
Cost should never be considered in isolation – they must be compared to the value generated. Armed with this knowledge, technology leaders can make the right strategic decisions. They can also identify which initiatives are most likely to increase the value generated per funding allocated. In our experience, organizations can expect savings in the range of 10% to 30% by buying cheaper, buying less, buying better or seeking to improve IT performance.
Companies that succeed in embracing “the art” of innovation and “the duty” to contain costs will be well positioned to thrive in the digital economy – today and as it evolves.
Summary
At a time when IT teams are under huge cost pressure, the need to innovate has never been more critical. We explore key elements of IT’s transformation journey to tackle the conflicting priorities and be well positioned to thrive in the digital economy.
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