A Financial Perspective in IT Efficiency
Although I am now an IT executive, my background is on the business and investment side. After 25 years in the financial services industry as a Managing Director for two large institutions, my experience is that IT is an extremely vital and strategic part of almost all successful businesses.
It should come as no surprise that IT is the largest component of Private Business Investment (see Figure)
Sources: Bureau of Economic Analysis, Navvia
There is good reason for all of this. Businesses rely heavily on IT to design and run processes, provide efficiency, promote accuracy and drive productivity.
IT’s Role in Capital Allocation
IT departments are allocating huge amounts of company resources – time and capital. They have to ensure that the money is well spent, and the business is served.
The reality is that many companies waste a lot of money on IT, often getting poor service levels. In addition, many IT departments that are looking for better outcomes become susceptible to the “silver bullets” that are aggressively sold by various vendors to solve their problems. More often than not, this type of experience does not end well.
Most of these types of problems come from a lack of internal expertise in IT Service Management (ITSM). Great companies and organizations are able to bring the best of what they do by embedding their winning processes in all of the tools they use through ITSM.
It is IT’s Responsibility
We believe, from our experience, that the ultimate responsibility for a well-run IT operation lies within ITSM. IT departments within companies need to develop their own culture and expertise around serving their business while best utilizing the resources at hand. In fact, through excellence in ITSM they can actually drive innovation.
We believe that ITSM can be done extremely well within most organizations. The bad news is that it takes time, and the good news is that it does not require a lot of money. In fact, IT departments will end up saving money while providing better service. IT should not rely on software vendors to develop, implement and verify their processes. Core competencies need to be developed internally to reach the goal of efficient allocation of IT resources.
One core competency is the internal ability to engage stakeholders when assessing the organization’s needs and requirements. This ensures that the input for your processes fits what is important to these same stakeholders that are asking you to provide them service.
Another core competency is the ability to design processes that follow that same assessment given by your stakeholders. When this is done effectively, IT has a high probability of serving the business through whatever software they have chosen.
This happens simply because the proper attention was paid to building the right process. Organizations who develop these competencies will avoid, what we call, “lift and shift”. “Lift and shift” is putting the same bad process on new tools, which many clients have told us is a big money and time waster.
Verification is another essential core competency. Verification is the simple ability to know that what you intended to accomplish is in fact in place. Verification is also a great capability to have for compliance and audit.
Although these competencies may sound obvious, our experience has shown us that they are rarely done well in most organizations.
A lot of money is spent on IT. IT is the largest component of business investment, so IT departments must be efficient allocators of a significant amount of capital. To do so, they need to spend the time, but not much money, to be competent in ITSM. When done correctly, ITSM is the engine that ensures efficient allocation of precious resources. Companies who have well-developed ITSM capabilities will save money, and get better service from their IT resources.
At Navvia, we have been helping organizations achieve excellence in ITSM for 14 years.