How to make your IT family happy

EVERY company's technology situation has unique aspects, yet most companies share a common trait: No matter how much they spend on technology, executives are often disappointed with the results. This creates a tension similar to how Leo Tolstoy described families: "All happy families are alike; each unhappy family is unhappy in its own way." And with technology spending expected to grow at 3.1 per cent annually over the next five years, information technology (IT) leaders feel intense pressure to deliver better results.

This is particularly true at companies embarking on broad digital transformations and searching for effective and efficient ways to self-fund the expansion of their digital capabilities. How companies achieve cost savings and long-term sustainability depends on their starting point. We find that most IT organisations fall into one of three types: neglected, indebted or gold-plated.

These three archetypes can be helpful as IT leaders think about where to focus their efforts in managing technology spending. Regardless of the starting point, IT leaders should ask three salient questions:

Gold-plated organisations may have the hardest task as leaders will need to place limits on contractors and suppliers that may have run unchecked. Departments accustomed to feeding their own demands may need reining in by senior executives who can prioritise the top two or three companywide initiatives, then allocate budgets to lower levels, where teams can spend with some autonomy and ample accountability.

Companies that have neglected IT may need to overspend for a while to bring their technology capabilities up to par as they put governance in place to balance new investment in basic infrastructure and services with investment in new business capabilities.

Gold-plated organisations, meanwhile, can root out bloat by tracking a set of everyday activities through the organisation such as how a new environment gets provisioned or how application security handles access management.

In IT organisations that have not kept pace, a good first step is to take an inventory of capabilities to uncover strengths and weaknesses, which helps executives prioritise areas for investment.

Poor architecture raises the costs of operations and new development. For most companies, the solution lies in protecting some portion of discretionary spending for long-term housekeeping and the evolution of architecture, and not allowing the urgent impulse to build something quickly to overshadow the need to build it correctly. Neglected IT organisations should investigate the potential of non-proprietary, open-source software as well as cloud computing.

Efficient ways to reduce short-term costs without harming long-term prospects include rationalising demand, seeking concessions from suppliers, and limiting work by contractors and other external support. Focusing on these opportunities while protecting top business priorities ensures a healthier and more stable IT function.