Creating a New Economics of IT efficiency

  • Posted on September 12, 2016

IT efficiencyIn our introduction to the pillars of New Economics of IT, we pointed out that one of three central pillars to its adoption is to maximize efficiency. In particular, how creating a new economics of IT efficiency reduces the cost of IT to the business, and makes it predicable – a concept we’ll explore in this post.

But why is maximizing efficiency a core pillar to creating a New Economics of IT? Doesn’t the business really want to be innovating, differentiating & gaining competitive advantage? On the face of things, I admit, it’s a bit counter-intuitive since innovation is supposed to be about doing something brand new. Efficiency doesn’t seem to connect to the goal. But the truth is it does – in a fundamental way.

A New Economics of IT Efficiency Is Key to Innovation

Innovation is a time-consuming, intensive process. It’s also a creative one. Unfortunately, many IT leaders remain stuck in an old mode of doing their jobs, focused on “break, fix,” and keeping the lights on.

When you create a new economics of IT efficiency, a magical thing happens. IT becomes “predictable,” for example, new capabilities like automation that make IT easier to manage, and less of a headache all around. With things like managed services, cloud, hybrid IT and software as a service, IT organizations can become more of a services broker and start to consume services which are not differentiating to their business, creating more time for themselves to focus on what really counts: innovation & competitive advantage.

A second, but equally powerful force driving the need for IT efficiency is coming from the bottom up: your users. Today they have come to expect seamless, quick and easy experiences when using technologies at home, on their phones, and so on. Offering any less to your users today can be fatal to business productivity and staff retention.

Not Simply a Stepping Stone

Still, we don’t want you to think of efficiency as purely a means to an end. While it does certainly give you the leeway needed to build more innovative approaches, it possesses its own unique value in itself.  These should be obvious: fewer costs, reduction of unneeded resources, and doing more with less. The chart below shows how the three pillars all interact with each other, on a continuum, not a linear path.

new economics of IT pillars

3 Ways to Start IT Efficiency

Now that you know “why” maximizing IT efficiency is important, let’s look at a few ways you can begin to do it:

  • Eliminate technology debt: Where can you cut the fat? Find the technologies, applications, solutions and investments that simply won’t work in new, future IT models. Remove these weights, they are slowing you down.
  • Be bold: They say fortune favors the bold and I couldn’t agree more when it comes to finding efficiencies. What is the biggest drain on your time? What is the mother app causing you all your headaches? Chomp down on the big ones first – success here will pave the way for future endeavors.
  • Close skill gaps: Now that you are automating processes, relying on the cloud and leveraging managed services, you need to take a close look at your resources. You need to retrain staff on the skill sets required today to close the gap, as well as educating your IT leaders to intuitively understand the needs of the business, and the approach needed to succeed in the New Economics of IT.

At Treasury Wine Estates, we’ve seen this in action. They realized their dated on-premises messaging system was a drain on time & budget, so instead of creating a new on-premises environment they opted to consume Office 365 Exchange Online. Moving to a SaaS model for messaging freed their in-house IT staff to engage in higher value projects while reducing their IT operating costs & delivering a much improved service to their users.

While IT leaders face a perfect storm for unprecedented change, maximizing IT efficiencies is a key, fundamental priority they should have on their to-do lists. Doing so opens the door to greater agility and innovations. It also has a positive impact on your workforce.

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