Burning Money on IT

Wasting money in IT

Every company I have ever worked for has had a problem with wastage. They may not have known about it, but the problem was there. Now I deal with companies on a day to day basis helping them get the best out of their IT spend, and it's no secret that IT can be one of the biggest money wasters around. But why?

Here what I reckon: "Requirements". Most companies just don't manage their IT investment based on the effective determination of their actual requirements. They think they know what they want, but do they actually sit down and work out exactly what they need in order for the business to effectively do what it needs to do?

Here's how change often works

"We need some new software. That looks ok. Let's evaluate it and see if it works for us."

OK, somewhat simplified, but in essence it's close to what happens a lot of the time. Product / service selection can be incredibly informal - the "solution" may come from a vendor sales call, a co-worker who knows someone, or an Executive that has looked on the Internet for a solution. Either way, that's just not how you select solutions to your business problems.

And here's how it could better work

  1.     We have a business problem (it's not a software or hardware problem).
  2.     Is that business problem part of a larger strategic issue?
  3.     Let's clarify what the root issue is and address that, and add to our IT strategic and operational plans.
  4.     Define all of the 'must haves', 'should haves', and 'nice to haves' for our solution (a business analyst can definitely assist at this stage).
  5.     What options are available to meet these requirements?
  6.     What are the pros and cons for each of these options, including things like total cost of ownership, and return on investment?
  7.     Choose an option.
  8.     The implementation of that option now becomes a project, so initiate it, work out if it's actually feasible, how long will it take, how many resources, what are the steps, how much will it cost, what are the impacts and risks etc.
  9.     Implement it with someone who knows how to implement change projects to maximise the chance of success, and acceptance of the change by staff.

What happens when you get it wrong

Unfortunately I see this all too often. Companies implement a product or service that doesn't meet their needs, so they become inefficient, it becomes very costly to modify, or worse case scenario - it needs to be replaced. The end result is obviously cost (potentially a lot!), and sometimes risk as well.

Requirements for everything

It doesn't matter what you change in IT - it should all be driven from requirements, and these requirements are typically driven by the business. Good planning will always help to accurately determine your strategic objectives, and no matter what the change, make sure you know what you need, and not what you think you need!

By Michael Ouwerkerk

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