Common Drivers of Opportunity

Virtually every IT group possesses some level of opportunity to reduce IT spending without sacrificing technical capability, capacity, or quality. However, certain characteristics lend themselves to greater opportunities for increased efficiency. Organizations with significant opportunities for reducing undesirable IT spending frequently possess one or more of the characteristics summarized below.

Highly Decentralized IT Operating Environments

A fundamental characteristic of organizations possessing significant opportunity to reduce their level of investments in IT are those that use a highly disparate, segmented, or decentralized approach for providing IT services across the organization. An organization that uses multiple IT groups, each with different organizational structures, budgets, technologies, processes, and/or decision-makers across locations or sub-organizations is typically missing substantial opportunities to cut IT spending based on economies of scale, increased utilization of technical and human resources, and standardization.

Few Well-Defined and Documented Business and Technical Policies and Processes

Another major characteristic of inefficient IT organizations is a lack of well-defined policies and processes for IT acquisition, implementation, and management. If individuals or sub-organizations can approach IT in any manner they wish, including following their own security policies (or ignoring them), service levels, or development methods for example, then savings opportunities likely exist. Additionally, if these policies and processes are not enforced systematically as controls within supporting systems such as procurement or IT service management systems, the value of their existence on paper is often questionable based on the level to which they are actually adhered to.

A Lack of Centralized IT Spending Control

If the responsibility for acquisition of IT hardware, software, and services is dispersed across an organization or handled by individuals who do not specialize in IT procurement, it is highly likely significant opportunities for savings exist. A decentralized IT procurement approach often results in poor visibility into IT spending reducing an organization’s opportunity to identify economies of scale or areas of duplication.  The approach also frequently results in a lack of adherence to product and service standards (if they exist). In cases where general procurement resources are responsible for identifying sources and negotiating with IT vendors, significant opportunities often exist to reduce acquisition costs from the use of resources that specialize in IT acquisition processes and techniques (see Volume 3: Tactical Activities).

Reactive Approaches to Customer Needs

If IT resources always appear to be in fire-fighting mode, racing from one emerging requirement to the next, often relying on heroic efforts of one or a few resources to problem solve, there are likely opportunities for increased efficiency. Emergency requirements do come up, but the best IT organizations have well-defined paths of escalation for such requirements. Additionally, heavily reactive approaches do not typically embed the ‘longer view’, resulting in an increasing reliance on point solutions to address end-user requirements rather than leveraging more efficient enterprise-wide solutions and approaches.

A ‘Unique Needs’ Culture

If an organization is populated with various sub-organizations that contend they possess IT requirements that are different from other groups, efficiency opportunities are likely to exist in a variety of areas. An organization that has addressed a unique needs culture by employing separate IT groups or point solutions has frequently failed to embrace a number of core IT delivery concepts including ‘classes of service’ and platform standardization.

No Individual Possessing the Span of Control Necessary to Implement Efficient IT

In cases where the responsibility for all IT investments and delivery management do not ultimately roll up to a single individual, additional efficiencies are likely available to the organization. Of course this concept of unity of command has its limits, especially in loosely coupled operating structures, such as global conglomerates. However, in most organizations where no one individual possesses the ability to affect enterprise-wide management and change, there is likely missed opportunity to increase resource leverage, reduce duplication, and pool acquisition volumes.

Low Levels of Technical Project Management Skills across the Organization

If technical projects are frequently behind schedule, over budget, or not delivering the intended benefits once implemented, money is being wasted. Perhaps second only to highly decentralized IT environments, poor technical project management skills account for some of the most significant waste events in IT organizations. Across the lifecycle, from planning issues such as failing to use existing standards or not collecting useful requirements, to implementation issues such as poor change tracking, a lack of solid technical project management skills can result in significant wastes of time and money for an organization.