In the wake of COVID-19, CIOs and I&O leaders may be forced to make difficult decisions due to shrinking budgets. Despite an overall increase in IT spending of 1% in 2019, spending is expected to fall by 8% in 2020 due to the pandemic, according to Gartner. The outlook according to IDC is slightly brighter, with IT spending predicted to drop by only 5.1%, but this is still a stark contrast to the trends of previous years.
To fit within tighter budget constraints in the IT department, leaders may have tried a variety of tactics. Some may have been forced to make the difficult decision to temporarily furlough, decrease hours, or even lay off much of their IT staff in an effort to quickly save funds. This can lead to increases in spending in the long run as a solid IT team can be the key in keeping the entire enterprise operational.
We know all too well how critical IT is to business performance. The NFL draft was successful due to IT teams’ remote draft setups. Recently released movies available to stream have been edited by remote post-production staff. What was at one time deemed impossible, remotely processing, editing, and color-grading hundreds of terabytes of media with real-time director feedback, has been solved by IT. So, the balance between business impact and cost optimization requires difficult decisions and creativity.
Leaders may have also sought to cut spending on hardware, software, and other assets, as well as “non-essential” programs. However, with so many companies experiencing adjustment pains, eliminating programs and hardware spending may not be the key to fitting the budget into tighter parameters either.
Instead, leaders are being forced to think outside of the box of traditional budget cuts, finding areas to optimize. This may be an experiment in shifting firmly held ideals, but it is a worthwhile one.
Obvious and Not-So-Obvious Opportunities to Maximize IT Budget
Although budget cuts and decreased spending often come with the negative idea of eliminating important processes, programs, or people, it can instead become an opportunity to optimize your department and your budget for years to come. The push for change and action affords leaders the freedom to audit current spending and processes to assess what may be outdated or outgrown in your organization.
Budget challenges can also become a catalyst to push IT teams to grow and continue learning and employing new best practices or technology, rather than allowing complacency with old processes and stagnant procedures.
To help leaders begin unpacking the best budget changes, we have identified six opportunities to optimize the IT budget.
Opportunity 1: Invest in Automation
Although it seems counterintuitive to suggest investing in something new when looking at budget optimization, ITSM automation can help increase productivity and ultimately decrease cost. ITSM automation can include AI technology, like chatbots, or self-service, and can be integrated into a full enterprise solution across a platform of services.
ITSM automation can provide improved ticketing and workflow for IT and non-IT departments, a better employee experience, elimination of repetitive tasks, and greater flexibility in user experiences (among other benefits).
Additionally, if a reduced budget requires the elimination of weekend or night-time staff, ITSM automation can push tickets for serious issues, like systems going down, to management so that they can log on and resolve the issue. Similarly, lower priority outside of business hours issues or requests can be resolved by a virtual agent.
It is important to note, especially when considering an ITSM automation software under tight budget constraints, that the total cost of ownership (TCO) is key, including how many employees are required for software administration and maintenance. Additionally, if the software requires admins to code or outsource professional services resources to maintain or deliver new functionality, the cost may be higher than initially considered.
Opportunity 2: Revisit Shift Left
A shift-left strategy can address your organization’s needs to decrease the costs of supporting employees and customers while increasing satisfaction. Shift left refers to moving work from higher levels of support toward Level 1 and moving repetitive work out of Level 1 into Level 0, or self-help.
With a successful shift-left strategy, organizations can potentially see a significant ROI, including savings on monthly and annual costs, and increased efficiency within the service desk. The employee benefits are also significant, due to the financial impact, improved productivity, reduced turnover, and increased satisfaction.
Overall, the Shift-Left Strategy works by freeing up agents and eliminating busy work, like password resets, which chip away at overall time spent handling high level tickets. This is also supportive of a more positive work environment for service desk agents, which is a bonus especially when the budget may be reduced significantly.
Opportunity 3: Implement IT Financial Management Software
It is hard to talk about budgeting without first discussing the dollars and cents spent on each IT asset. For example, what are you spending to deliver service? How much is spent on hardware and software assets? Can you integrate these IT financial processes with other ITIL processes and ensure service and asset management are always taken into account?
That is what IT financial management software can do. Successful IT financial management software can help you run IT as a business, which takes coordination, visibility, and insights. This can all be done within the IT department without involving other teams (like financial services, for example), and will give leadership the insight to make financial decisions including budgeting as well as prove value to the business departments IT supports.
Opportunity 4: Implement an Asset Management Strategy
IT Asset Management (ITAM) and Enterprise Asset Management (EAM) have profound implications. Do them successfully and you will be ever aware of your IT and physical assets, from budget to current use. IT asset management answers a few important questions, including: What assets are depleted or stock is running low? What do those assets cost? Are your warranties intact?
When trying to reduce IT spending, ITAM can provide necessary information to help leaders make decisions on what software can be retired, any subscriptions that can be cancelled, and can keep track of hardware that needs to be replaced before a major interruption. ITAM can be integrated with IT financial management software as well as ITSM for a one-stop-shop solution.
Opportunity 5: Create a People-Focused Initiative
When optimizing an IT budget, investing into the team should be a serious consideration. This may seem counter-intuitive, but investing in people can have several positive impacts to the bottom line. We are all working through a highly stressful time period and mental health must be proactively addressed.
Studies show that when a company invests in furthering training and opportunity expansion, employees have higher levels of engagement and commitment toward their work.
This snowball effect leads to increased employee retention, higher engagement, and better productivity, which all lead to as much as a 24% higher profit margin compared to companies who do not offer employee betterment. When employees are empowered to problem solve and are continually engaging in education and receiving ongoing support morale can remain high, even in a team that has been reduced to a skeleton crew.
In addition, although it goes beyond simple budgeting, focusing on the overall wellbeing of employees, whether at work or in their personal lives, is something that IT managers should consider prioritizing. This will lead to a better ROI for every member of the IT team.
Opportunity 6: Define the Scope of IT Projects and Modify SLAs to Reflect it
With the use of self-service and ITSM automation, it is important to define the scope of what the IT department will work on and what will be moved to self-service. Subsequently, you will need to modify the service level agreement (SLA) to reflect these changes.
By defining the parameters of what the service desk will complete and setting clear expectations and timelines for implementations and completions, you can limit the amount of unnecessary interactions that decrease efficiency and impact the amount of time (i.e. money) being wasted, which ultimately leads to budget optimization. Modifying the SLA will also serve to keep everyone on the same page with expectations of the service desk, which reduces overall frustration.
Finding the New Normal
Although 70% of interactions between Gartner and CIOs in 2019 focused on cost optimization, the number may be even higher in 2020. However, this does not mean that all solutions should be short term. By focusing on long term solutions, goals, and ultimately implementations, leaders can optimize their budgets in a post-COVID landscape.
To learn more about how to optimize your budget, get a demo with one of our ITSM experts!
