While the magnitude of the economic recovery from the pandemic can be debated, it is clear that the impact has varied across industry sectors. What is also clear is that the pandemic has accelerated digital transformation trends.
We believe that companies, in the near-term, will use cost savings in different ways:
- Firms that adapted their models for remote work, limited on-site customers and expanded their online presence with easy-to-use customer-facing functionality, may channel cost savings to fund the stabilization, extension and integration of new capabilities with their core systems and processes.
- Firms whose business functions have been very negatively impacted by the pandemic will use cost reduction efforts to release funds to tide them over until the economic recovery takes hold and to jump-start their digital transformation in anticipation of such recovery.
The current environment demands aggressive action to reduce costs while supporting business priorities. However, most IT organizations have already made cost reductions, but additional cost take-outs are required. How does one deliver these additional cost reductions without eroding IT capability and crippling the organization in the long-run?
Cost reduction goals are not necessarily incompatible with improving IT effectiveness. To meet both objectives requires a comprehensive approach that addresses several systemic, technical, process, and structural changes. Some areas may be improved quickly. Other optimizations and enhancements will require additional time and effort; however, these should be self-funding.
A high-level view of possible strategies to consider as part of a comprehensive approach to achieving a lean-IT operating environment is shown below. An organization’s IT maturity and technology adoption profile will determine the specific approaches and the sequence in which they must be implemented.
| IMPROVE Analyze spend & opportunities to capture immediate cost reduction | OPTIMIZE Optimize key IT capabilities in support of further cost reduction | ENHANCE Fundamentally restructure IT operating model to reduce costs | |
|---|---|---|---|
| Strategic Transformation | Project & Portfolio Rationalization | Digital Transformation Strategy | Digital Transformation Roadmap & Execution |
| IT Operating Model | Demand & Supply Management | Local & Global Capability Optimization | Restructured Digital IT Operating Model |
| Service Delivery & Execution | Services Orchestration & Agile/DevOps Adoption | End-to-end Process Refinement & Automation | Services Process Redesign & Intelligent Automation |
| Supplier Ecosystem | Supplier Performance & Contract Management | Supplier Process Refinement & Automation | Supplier-Enabled Digital Transformation |
| Technology & Architecture | Standardization, Consolidation, & Accelerated Cloud Adoption | Selective Application Modernization & New Technology Adoption | Microservices Architecture, AI/ML, Elastic Infrastructure |