“Cost-cutting is a reality for every company in 2009. But some cost-saving measures offer more than just a healthier balance sheet”
With the UK now officially in recession, companies will be scrutinising their budgets and business plans even more closely than before.
Although the temptation to contain costs through cuts will be high, there are ways to reduce expenditure without risking quality of service or market share. Both of which are also vital in today’s challenging trading conditions.
Businesses today rely on IT for much more than ‘keeping the lights on’ They use it to help differentiate themselves from their competitors. And they need it to maintain, as well as improve, service quality. Yet despite this, when times get tough some companies, understandably keen to appease their finance directors, are a little too quick to let the axe fall on IT spending.
It’s frustrating that, while you’d be hard pressed to find an organisation that doesn’t understand the positive link between IT investment and future business performance, IT is still often seen simply as a cost centre. While that attitude persists, its budgets will remain an easy target. The result: IT directors will be under even greater pressure to achieve more with less in the coming months.
But meeting cost reduction goals doesn’t have to go hand-in-hand with cutting back on people, projects or even IT performance.
By optimising existing processes and systems and taking advantage of economies of scale, companies can minimise their IT expenditure and even improve its value to the business.
Adopting the right kind of outsourcing or managed service model enables companies to address all these issues. And more and more companies are recognising this fact.
Since the downturn, we’ve seen an all-time high in business take-on for outsourcing IT infrastructures and related services. Companies sense the time for procrastination is over. Once they see an opportunity for savings, they are keen to act.
These savings can be considerable. For example, Channel 4 expects to save 15 per cent on its IT support overhead by outsourcing the management of its service desk, networks, servers and desktops to Computacenter.
As well as helping to contain costs, selectively outsourcing IT services can also lead to better business agility, staff productivity and competitive advantage. Our IT managed services contract with Marks & Spencer will help the retailer improve time-to-market for new IT systems, ultimately leading to a better shopping experience for its customers.
To ensure companies like M&S can rapidly take advantage of such benefits, we have spent the last few years carefully refining our services, and have recently restructured the company to align it more closely to our customers’ needs.
Using our Shared Services Factory, we identify the approach that brings success and embed it in our processes and customer propositions, so we can deliver our services at a lower cost and with guaranteed results.
We have used this approach not only for our contractual services but also for technology solutions projects, such as server virtualisation, and in developing our software licensing propositions. As a result, customers are able to unlock both financial and efficiency savings.
Speedy Hire avoided £2 million worth of software licensing expenditure after we helped the company negotiate a more cost-effective Microsoft Enterprise and Select Agreement. While Norwich Union will be able to respond more quickly to business and market changes following its server virtualisation project.
Cost-cutting is going to be a reality for every company in 2009. But some cost-saving measures offer more than just a healthier balance sheet. By optimising their IT operations, companies can not only meet their financial goals but also other strategic objectives, such as reducing risk or environmental impact.
IT may well be a cost centre, but it is also a centre of competitive advantage, continuous improvement and customer service quality. All these factors will prove vital as companies battle to survive the recession.
So wield the IT knife with caution. Cutting IT costs indiscriminately will impact more than your company’s P&L, and could do more harm than good.
Mike Norris
Chief Executive Officer
Computacenter
