There is a system or an application out there for every digital business need. For every technology-related issue, a business user can seek out a software solution and ask the IT team to implement and manage it. But the resources and cost required to acquire and manage multiple systems – in some cases 10, 15 or more! – is overwhelming and inefficient.
CIOs are grappling with the challenge of rationalizing systems, figuring out how (and whether) to integrate them, and identifying those that add the most value (ie. generate revenue or reduce cost), versus those that are becoming redundant.
A CapGemini survey of 1,116 CIOs and senior IT executives found that nearly half (48 percent) of respondents said their companies have more applications than required to run the business. Yet the IT spending continues to grow, as 59 percent overall said they would spend either "more" or "significantly" more on applications in the future.
Facing a fast-approaching data explosion and the challenge to maximize the value of your company’s data, how can you minimize the number of systems you need to maintain, and ensure that the systems you do have are contributing sufficiently to the company’s bottom line?
What Technologies Contribute to Revenue Growth and Business Goals?
Unfortunately, it’s not possible to have one single system that does everything your business needs. So what is the right number and type of technology solutions?
According to a recent article published by McKinsey, “success depends on the ability to invest in relevant digital capabilities that are well aligned with strategy—and to do so at scale.”
To determine whether a system is aligned with your business’s data strategy, consider the following questions:
1. What Does the System Do?
What is its functionality? Are you using it to its utmost potential? What business problem(s) does it solve, and what are the alternatives to solve that same problem?
2. Does the System Contribute to Business Goals and/or Revenue Goals?
If the answer is no, it should be an easy decision to let go of that system. However, if a system is integral to achieving business and/or revenue goals, the next step is to assess how much it contributes? Can you assign a value to the contribution in order to determine ROI?
3. Does the System Enable Your Business to Reduce Costs (Operational or People Costs)?
Increased efficiency is as important as directly contributing to revenues. Consider how your business could resolve the same problem in other ways – is this system the most efficient and effective solution?
IT Systems Are Driving an Increase in Competitive Pressure
At this moment in time, technology systems are a primary driver of increasing business competition. “It really is getting harder to outpace the other guys… a central catalyst in this shift is the massive increase in the power of IT investments,” stated an article in the Harvard Business Review.
To keep pace with the marketplace, it is critical to assess your current IT systems, identify which systems are contributing directly to business goals and growth, cut yourself free of inessential systems, and develop a digital business strategy for future IT investments and process improvements.
The last post in this four-part blog series will look at how to use your IT systems to continually improve business processes, and incorporating automation to take your efficiency to the next level.