Using technology to make efficiencies
Exploring the role of technology and effective budgeting in increasing business efficiency.
A single budget for all project expenditure (capital and current) and using technology to analyse the purchasing patterns of customers can make projects more efficient and make businesses more responsive.
Both trends are identified in research published by Gartner over the last six months. The consultancy has identified five tactics to reduce operational expenditure and increase funding for IT investment:
• diagnose the investment challenges faced by your organisation and change governance to improve how they are managed;
• keep a log of ‘nasty surprises’ faced by your organisation in budget management (and plan to detect and avoid similar events in future);
• create a single portfolio view of assets, services and project spending;
• plan asset and service lifecycles to identify when investment is needed; and
• plan for success by agreeing how wider deployments will be paid for (e.g. through chargeback, contingency funding or further projects).
Gartner Vice-President Stewart Buchanan sums up the cycle as follows: “Organisations that overspend on operational activity have little money left to invest in new projects. Without reinvestment, organisations cannot restructure and optimise their operational spending.”
Combining project implementation costs and ongoing operational expenditure can help to overcome the ‘silo’ mentality in organisations. Silos can be also removed by requiring service managers and project managers to work together on business case approvals and using a total cost of ownership analysis.
Budgeting forecasts are often over-optimistic as planners underestimate support costs (where a new kind of service has never been managed before), depend on sole suppliers which then raise costs, and fail to account for shifts in demand.
The value of new projects, and their resulting assets or services, tends to depreciate over time. Data in IT assets, for example, must remain readable for compliance purposes but keeping those systems operating can incur an unforeseen cost. Organisations are therefore encouraged to carry out proper lifecycle planning and allocate funding to maintain older systems.
While a manager may aim to reduce IT spending, a successful project may actually drive up demand, therefore reducing the efficiencies and savings. Managing demand is therefore just as important as managing the project itself.
On the operational side, ‘intelligent business operations’ (IBOs) are emerging through the integration of analytics, social and mobile technologies. This approach goes beyond cost savings and efficiency by using real-time intelligence. IBOs are delivered through intelligent business process management suites (iBPMSs), and can result in better and faster decisions.
Janelle Hill, Gartner’s main specialist in this field, gives catering at sporting events as an example. An iBPMS can measure the number of snacks available at each counter and direct customers to counters with shorter waiting times.
The growth of IBOs is driven by the need to increase staff productivity in service-based industries, an increasing understanding of how social interaction patterns can add value, and the move toward big data and in-memory analytics. However, relatively few organisations have the mature business processes needed to operate IBOs.
“Organisations should not select an iBPMS provider simply because iBPMSs represent the next generation of BPM-enabling technology,” Hill said. “However, organisations wanting to advance their BPM maturity and improve business performance outcomes through process optimisation should consider investing in iBPMSs.”
