Savvy IT, sourcing and operations excellence go hand in hand

25 February 2016 Consultancy.uk

CIOs today face a number of front-burner issues that either didn’t exist or barely registered on the radars of their counterparts in 2000. Yet at the same time, the more things change, the more things stay the same.

One imperative today is to deliver business agility and competitive edge through technology, specifically through the effective application of analytics and Robotic Process Automation (RPA) to predict and rapidly respond to business requirements. With regards to RPA, enterprises seek to identify the right processes to automate, execute the optimal implementation strategy and effectively manage the fundamental and potentially disruptive change associated with an RPA initiative.

Further agility and flexibility is also delivered through the “as-a-service” model which presents its own set of opportunities and challenges with regard to pricing, contracting, applications transportability, scalability and change management.

Another key is to address a growing plethora of compliance and regulatory mandates. While banking and financial services are particularly affected, these mandates impact all organisations and require a granular level of service delivery oversight and process discipline, together with a data management strategy that addresses ever increasing volumes of data that must be stored, processed, protected, analysed and acted on by multiple business units.

Need for a comprehensive security strategy

Then there’s the need for a comprehensive security strategy, one that keeps abreast of increasingly sophisticated cyber attacks, addresses new technologies such as cloud and considers the broader implications of mobile devices and how to reconcile private use with access to company data.

Commonalities
What do all of these trends have in common? First and foremost, they all cost money. And amidst all the disruption and game-changing innovation we’ve witnessed in recent years, the “do less with more” mantra humming in the heads of CIOs has remained a constant. This presents the problem of where to find the funds to invest in initiatives that leverage RPA, that facilitate compliance to regulatory standards and that ensure a secure environment. The solution often lies in identifying improvement opportunities within existing operations and contracts. In many cases, the opportunities to be found can be surprisingly significant. Let’s look at three areas.

First, the basic economics of the network marketplace and the dynamics of contracting represent a significant opportunity for buyers. Consider: 12 to 18 months after a network contract is signed, rates are often already more than 10 per cent out of line from day one of the agreement. Put differently, the minute a contract is signed, the price for every circuit or service ordered begins its downward slide. In this environment, regular assessments of contracts in the context of competitive market standards can yield significant savings that can support investment in other areas. At a more granular level, periodic audits and reviews of telecom invoices can identify discrepancies in the buyer’s favour – some studies suggest that the average telecom invoice is 8-10 per cent in error if not regularly reviewed. When every dollar counts, this basic responsibility to simply “mind the store” cannot be ignored.

Digital Transformation

Digital assets represent a second area of opportunity. An effective negotiation strategy that leverages competitive market rates and insight into technology trends typically achieves savings of approximately 25 per cent on software negotiations and 15 per cent for hardware purchases. Software rationalisation across an entire solution portfolio often leads to cost and efficiency opportunities. Digital assets, in particular software, offer the opportunity to leverage the latest licensing (SaaS/subscription) and deployment (cloud/hosting) options that can provide direct and indirect savings. Equally important, an asset management strategy is essential to mitigating audit risk related to violations of enterprise licensing agreements, as well as to restructuring vendor contracts during and after mergers, acquisitions and divestitures.

A third area of cost-saving focus is print services. Enterprises today spend millions of dollars on equipment, paper and ink to print invoices, statements, reports and other materials. For a Fortune 1000 organisation, total print costs can range from $5M to $100M+ a year, depending on the industry. Financial services and insurance have traditionally been particularly paper-intensive. Print operations are typically dispersed across a number of different business units, such as marketing, procurement, facilities and IT. As a result, enterprises lack centralised oversight or ownership on how and where to drive improvements and cost reduction. Moreover, because of this decentralisation, estimates of total print costs will vary significantly.

A three-pronged print services strategy that assesses existing print operations, optimises internal processes and applies outsourcing where appropriate can drive cost reductions of 20 to 30 per cent on average. In addition to reducing cost, a print strategy can build a foundation for a transition to digital communications and drive further savings by dramatically reducing print volumes.

Disruptive innovation

While these are certainly exciting and fast-paced times, CIOs face constant pressure to implement high-profile technologies and solutions, often at the expense of tending to the basics. But executives can’t afford to lose sight of the fundamentals of cost discipline, boring as they may seem compared to the bright and shiny objects of robotics, cloud and big data. Truly savvy IT leaders are recognising that disruptive innovation needn’t preclude old-fashioned operational efficiency and sourcing rigour – in fact, the two can work together.

An article from Homan Haghighi, a Director with global sourcing advisory and consulting firm Alsbridge.

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