In the world of IT, nearly all projects and investments are considered “overhead”. The goal of the revenue-generating side of the business is to spend as little as possible on IT, while maintaining or improving quality of service and increasing margins. So how is an IT department supposed to improve their services with a flat budget year-on-year?
The answer is simple: Self-funding project implementation.
Sounds unrealistic, but it’s easier than you’d think; you just need the right perspective and the right partner/resources.
One aspect of IT projects that is continuously overlooked is the “process” that the technology is designed to run or facilitate. Nearly every time a system implementation or upgrade is budgeted, the expectation is the technology will improve cost, quality, and speed. However, when the process itself is broken or inefficient, much of the time, you’re simply expediting that inefficiency.
The rule of thumb is that there is a 15%+ process improvement opportunity for a process that has not been analyzed for transformational redesign or optimization efficiencies. In many cases this 15+% provides more than enough savings to fully fund your implementation and then some.
Process Improvement Hypothetical Example
Here is a hypothetical example:
A business process costs $5M annually to operate.
Leaning out or transforming the process at 15% would take out $750K.
The cost of the process transformation analysis and implementation is $100K.
The cost of the system implementation or upgrade is $500K.
In this example, the process transformation analysis and implementation will yield enough savings to cover the cost of the system implementation, plus put another $100K directly back onto the books!
Sound too good to be true? It’s not. In our many years of experience with projects of similar size and scope, we average 3-4 times Return On Investment (ROI) in the first 12 months, upon completion of a process transformation initiative. Nearly all of our projects are 100% self-funded, meaning our clients are actually able to put money back in their budget. This can be done in a number of ways, including:
- Closing Open Job Postings
- Removing Contractors
- Renegotiating Software & Maintenance Contracts
- Retiring Systems & Depreciating Remaining Cost
Process Improvement Real-World Example
Here’s a real-world example:
A Fortune 50 client was implementing a new IT ticketing system. Their Level 1 Help Desk was internal, while external vendors primarily supported Level 2 and Level 3. BlueLine’s process analysis identified a number of improvements that facilitated the closing of 20% of Level 1 tickets that would have been escalated to Level 2. As a result, the contracts with Level 2 support vendors were renegotiated mid-year, covering the cost of the process redesign and the system implementation; as well as freeing-up budget for other projects to be initiated.
In closing, if your IT strategy involves new technologies or upgrades to existing, consider evaluating the process first. You might be surprised by what you find. Because, when all is said and done, shiny new technology rarely fixes a broken process but fixing a broken process can result in big savings.