Whether it is finding and retaining IT resources, paying for cloud services, or purchasing and maintaining on premises infrastructure, let’s not kid ourselves, technology is expensive. Software critical to the good functioning of organizations are largely SaaS products licensed per user/month; $3 here and $12 there, an administrator has nothing to worry about until every employee in your organization has 10+ licenses of various SaaS products. With technology costs eating up more of the budget, eventually the leadership team will decide that it is time to find ways to cut costs. I want to use this blog to discuss the nuances around ensuring your organization gets the most value from its IT spending, and avoiding the cost cut spiral.
The worldview is dramatically different when organizational spending is classified as a cost versus an investment. Classic school of thought would be to minimize costs through negotiating better terms with suppliers, substitution, or the pursuit of more efficient uses of input resources. Input resources are acquired, then value is added to them through your organization’s core competencies, however the mindset with costs is that exchange is zero-sum. The cheaper we can source inputs, the greater the return for us.
But ask yourself, is IT spending at your organization a cost or an investment? When we invest, we are performing the same action, but our expectations can be dramatically different. There is a generative mindset, where investment represents enablement, fostering growth beyond a simple value exchange. Applying a cost cutting mindset to an investment would likely lead to a result where there is a lack of resources preventing the initiative from generating a return. There is a complicated system at play here; if an investment lacks the required resources, proceeds to fail or struggle and there is now an even greater incentive to cut the losers and redirect resources. But if technology forms a critical backbone to your organization’s function, one must be very careful of the second order impacts when “investment” is cut. Has anyone experienced IT staff cuts or limited training? What follows is usually a major transformation push, only then to see the initiative get abandoned.
Managing technology assets is not easy, but hopefully I can provide some warning signs to be aware of and a better guiding worldview.
Individuals, or a collection of individuals within an organization, cannot be experts in everything. Adoption of any new platform takes time and resources, scaling exponentially with complexity and business importance. Organizations are a mix of people, processes, and technology.
Now applying the cost cutting mentality to any of these pillars, (insufficient staff training, little change management or process redesign)
it should be obvious that the investment in technology is not going to return value.
Focus on return on investment over total cost. Treat IT spending like one would with an investment in a company, a critical piece of equipment, or real estate. Investments are viewed as generative. The last six months I have been neck deep in Power BI,
a business intelligence platform.
It is free to use, but Pro Licenses are required by users to view reports shared on the Power BI service. At $12 per user/month for every user in the organization can be a tough sell initially. I look at that $12 not as a cost but as a way to generate time savings. If an application like Power BI cannot save all employees 15-30 min of time per month or create a better decision that returns equivalent value, then it is not being used to its full potential. Repeat the same thought experiment with every other system in your organization.
It is counter intuitive, but the better your organization can use its technology assets the less it will spend on them in the long term. Fewer big bang replacements, fewer critical failures, less downtime, and fewer engagements with outside consultants. Growth and improvement come from an investment mindset, not cost cutting.