ICT in the Credit Crisis: Focus on Cost Optimisation
Gartner has just published an interesting report on ICT in the current economic crisis. The Gartner perspective is that organisations need to focus on cost optimisation not cost cutting in their ICT. What’s the difference? Cost cutting focuses on spending less on ICT procurement and in reducing baseline ICT costs, while cost optimisation focuses on longer-term process improvement to enable organisational restructuring and innovation.
The Gartner cost optimisation framework comprises four levels:
· ICT procurement – Each year ICT organisations spend billions on hardware, software, IT and telecommunication services. The manner in which ICT organisations approach procurement will affect how much they can reduce spending to meet business goals.
· Cost savings within ICT – A priority for many ICT organisations will be to identify opportunities to reduce baseline ICT costs, not just move them to another budget.
· Joint business and ICT cost savings – Consider that the average ICT budget is 3% of turnover, while total operating costs are 80-90% of turnover. If any organisation is looking to reduce costs in 2009, ICT managers should try to join ICT more effectively with the business to reduce costs in overall business operating expense – this may entail spending more on ICT.
· Enabling innovation and business restructuring – As economic uncertain passes, cost optimisation will refocus on efforts to implement long-term process improvement and enable business restructuring and innovation.
The public sector is certainly not immune from the economic crisis. We know that the cashable efficiency savings target for the public sector has been increased from £30 to £35 billion in the current investment cycle through to 2011.
Microsoft fully recognises the need to prove the value of investment in ICT. That is why we have launched a Public Sector value initiative to help you identify the potential for cost optimisation through more effective use of ICT in such areas of operation as:
· Travel, training and telephony
· ICT power and space
· ICT strategy optimisation
· Data and performance management
· Strategic partnerships with ICT vendors
As well as the information on the dedicated Microsoft Public Sector value website, we are also running a series of interactive Live Meetings (webcasts) with industry experts and customers on a range of ICT cost optimisation topics.
The first Live Meeting on Wednesday February 18th, between 10:00 -11:00 AM, explores the Microsoft technologies that enable Public Sector organisations to reduce their overall cost of operations. David Wood, a former local authority Deputy Chief Executive who now acts as a strategic advisor and executive coach in the Public Sector, will be the keynote presenter on this Live Meeting. He will share his experience and outline how he sees the role of technology in supporting the drive for economy and improvement.
Posted by Ian