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Managing information technology in times of economic uncertainty is different from normal IT management and cost discipline. IT needs to quickly realign with new business priorities, but that's not all.
Unfortunately, many companies instinctively look at their information technology departments as an easy place to cut costs. Bain & Company research, however, shows that industry leaders look at IT more strategically in a downturn: as an opportunity to lead the pack while coming out of the recession. They reassess and redefine their IT strategy, ensuring that the IT investments yield quantifiable business benefits in line with strategic goals - and they aim for changes that will have both rapid and long-term impact.
In Bain's experience, leaders identify technology investments, such as data centre virtualization, to reduce the costs of maintaining the status quo. Companies employing this strategic approach save as much as 20 per cent of their IT costs, which can fall to the bottom line or be directed to strategic new IT investments.
Our approach to managing IT to win in uncertainty has five steps:
- Immediately eliminate or defer all unnecessary costs that the CIO can unilaterally enact
- Synch up with business priorities, stop non-mission critical initiatives, make select strategic investments, and re-align resources to match
- Monetize savings through eliminating associated resources or using lower cost resources
- Reshape the IT organization to reflect new priorities and new demands
- Pursue additional near-term cost reduction opportunities
Bain's experience in IT consulting Bain has been helping companies to create IT organizations that enable growth in any economic climate. Only a small number of companies have IT that is truly effective - projects get done on time, on cost - and aligned with the business priorities. But those companies as a group record a compound annual growth rate over three years 35 percent higher than the average, and they spend less. Companies can save hundreds of millions in costs, in some cases, while increasing sales growth dramatically.
Getting effective:
Getting effective requires companies streamline their IT organizations in at least three ways--simplifying systems to reduce their costs, sourcing IT hardware and service from the best location--in or outside the company; and dramatically increasing the business results from IT initiatives.
Complexity management: Bain's role in complexity management is to help organizations reduce costs and deliver value in the existing complex environment and to define and manage the transition to a less complex environment.
Outsourcing & offshoring: Bain can enable clients to ensure sourcing decisions are based on business strategy and to help set up sourcing agreements to deliver value and lower costs now and flexibility for the future.
Value delivery: Bain's role in value delivery is to help clients maximize the business results from IT initiatives, beginning with defining the requirements of a system, all the way to retiring that system. Getting aligned:
Once your IT organization is effective, the ultimate goal is to harness IT to business objectives in a way that enables new growth; a way that allows business units to serve customers in ways that competitors could not. This requires aligning your strategy, prioritizing projects and organizing collaboration between IT to create new capabilities. You'll know you have arrived when:
- The IT organization understands business priorities, supports business needs, and is well staffed to respond
- Business trusts IT capabilities; business actively participates in-and often leads-all IT projects and investments
- IT organization proactively identifies business opportunities
- IT capabilities are a core element of the business strategy
To find out more about Bain's work in this capability area, please contact the practice.
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Downturns create an opportunity to strengthen IT 
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