“Do more with less – and do it better, too!” Federal CIOs are all too familiar with this edict. IT efficiency and cost reduction are both uppermost in importance these days and CIOs must figure out how to achieve them. However, IT efficiency isn’t just about getting better productivity from resources. It’s about making sure those improved returns contribute to the mission success of the organizations, too. Controls for IT efficiency and cost reduction must, therefore, be designed to work together from the outset.
IT Governance, then IT Policy
While CFOs may be pushing to cut IT expenses, directors, HR, public affairs and other managers want IT business advantages. Proper IT governance from the organization is the first control, clarifying business needs and setting expectations and boundaries for IT. CIOs can then apply IT policies as further controls. Areas to consider:
- Standardization and convergence – Standard, commodity hardware helps to reduce costs in two ways. The hardware itself costs less and fewer IT staff are needed to support it. Converged architectures offer better and cheaper application availability and business continuity.
- Virtualization and consolidation – Running several virtual machines (VMs) in one physical machine and being able to port those VMs from one physical server to another means further savings on infrastructure.
Prediction and Prevention
The better you predict your IT needs, the closer you get to buying just what you need to meet business requirements and avoid budget wastage. Prevention is also better than “a cure” when it comes to achieving high-performance, yet cost-efficient IT operations. Ways to achieve this include:
- IT predictive modeling and analysis – You can map out IT needs from business needs utilizing resource consumption trend lines, or from more sophisticated models that mine the data in your systems and logs.
- Process improvement – Use lean principles and controls to cut out waste in processes. DevOps is an example, helping to eliminate wasteful “ping-ping” between development and operations by having the two groups work together.
- Process automation – Controlling your processes through automation for higher speed, greater reliability and fewer errors brings IT efficiency and cost reduction.
Changing Your IT Cost Structure
You are no longer obliged to buy your own IT equipment or wait for it to be built, delivered, commissioned and deployed. Also, you are not necessarily obliged to foot the bill for providing IT services to other departments. Ways to change your cost structure include:
- Cloud services – Infrastructure, platform and software for which you pay as you go can let you control costs better than on-premises servers running at only 20% of their capacity.
- Chargebacks – This is becoming an increasing practice within the government. By running your own IT services and tools (e.g. private cloud), your organization can provide IT services to other agencies and branches, giving you an opportunity for greater budget allocation or billing for those services. Make sure you control efficiency and you can look forward to the costs controlling themselves.
Ongoing Monitoring and Tracking
Once you’ve prepared and put into action the kind of controls described above, use appropriate indicators to track efficiency and costs, so that you can intervene if needed. Consider the following:
- IT management systems -These range from simple spreadsheet style reports to fully customized graphical dashboards to show you at a glance whether you’re within budget or out of bounds.
- IT capacity management -Tools for capacity management can alert you to situations that need resolution now, as well as helping you plan for future needs.
- Cost accounting – In its simplest sense, it shows you how much you are spending on which parts of your IT operations. Compare this breakdown with the business value you get in each case. You’ll soon see where your IT efficiency and cost reductions should be concentrated.
Slow and Steady Wins the Race
Start from the top and work downward to control IT efficiency and reduce costs. Resist the temptation to “slash and burn,” because you may unwittingly destroy resources that are vital to your enterprise. Instead, understand your business needs and put appropriate IT policies and controls in place that make sense across the board.