simplification

Cost Optimization – It’s The Principle Of It…

Groucho Marx once joked “Those are my principles, and if you don’t like them…well, I have others.” This is great for getting a laugh, but decision making without guiding principles is like a ship’s captain navigating the wind and current without a compass.

The same can be said about an IT organization’s approach to cost optimization. After years of one-off tactical cost cutting, many businesses are facing the challenge of ongoing and continuous cost optimization. For many, this is no longer the exception but the new reality.

The usual approach to cutting costs is the purely tactical. Problem is, when the clear cost culprits have been identified and reduced or eliminated, future optimization initiatives can become more arbitrary and problematic. Even the low-hanging fruit that appears to be an obvious candidate for reduction to some may not be to others—like your business clients.

In a recent Gartner survey, CIO’s were asked, “What are the main barriers preventing organizations from achieving continuous optimization of IT costs?” Sixty-five percent of the respondents indicated that it was a matter of mindset—that is, creating the environment necessary for all resources to work together, move in the same direction, and agree on the same strategy.

We agree. TransAccel believes there’s a better approach to determining cost optimization decisions—one based on four “Guiding-Principles.” The benefits of using this method include a more consistent alignment with the company’s strategic drivers, a consensus among business leaders, a long-term framework for ongoing cost optimization initiatives, and a correct way to maintain what is most important to the organization.

The Four Principles are:

Transparency – IT and business leaders need to explicitly agree on what IT provides the business, and what the business needs from IT. Often, basic cost optimization
[ Read More ]

Increasing IT maturity: “You have HOW many Severity 1 problems?”

During a recent call with a prospective client, he informed me that his organization has had 15 Severity 1 problems sitting in a queue for over 90 days. From what I know about this IT organization, and because it tracks its incidents, problems and duration, I would peg it at just over a level 1 IT maturity, where some foundational services are installed but not fully implemented.

Classically, an organization operating at, or just above, a level 1 is focused on “keeping the lights on” activities, as well as “putting out fires.” What’s broken rarely gets fixed because no one has the capacity to diagnose the problem (i.e. root cause) and then implement a change. Likewise, the demand for “getting it done” outweighs the need to do it right.

Here are some other indicators of an organization operating between a level 1 and 1.5 maturity level.

Nothing is tracked well. One former client’s company paid millions of dollars in penalties due to an over-allocation of software licenses because no one in IT was keeping track of the number users during a period of high employee headcount growth.
Documentation is sketchy. Another client’s organization had loads of initial process/software/configuration documentation but didn’t have the discipline, change control, and quality practices to maintain the knowledge as the environment evolved.
IT manages noise. My favorite anecdote is about a senior director who held a one-hour operational review meeting EVERY morning with all her senior staff just to understand what happened over the last 23 hours in case her peers or boss called.

Organizations between a level 1 and 1.5 usually have a myriad of problems across multiple dimensions. Assessing these issues can seem overwhelming. In fact, it’s often the hardest thing for an
[ Read More ]