Creating Value from IT Spend - and Protecting Its Worth
By Hugo Britt | July 26, 2022
As a rule, the business case for investing in IT is well-understood. Technology is essential for spurring growth, creating efficiencies, harnessing innovation, and staying competitive in the digital era.
But without a watchful eye on IT spend, ROI can be rapidly eroded by avoidable costs caused by issues such as shadow IT or auto-renewing contracts.
Creating value from IT spend
Organizations are creating value from IT spend in three key ways that contribute to top-line growth:
- Investing in back-end systems and infrastructure to support business operations with automation, Cloud hosting, AI, Machine Learning, data analytics, and more.
- Business-wide digital transformation of enterprise systems that modernize and automate processes and boost performance.
- Investing in innovation to create a competitive advantage and enable new capabilities.
Take IT in procurement as an example. Investment in procurement technology provides the opportunity to centralize your spend data, boosting visibility, reducing risk, and (crucially) enabling spend analytics.
In turn, this opens the door to huge cost savings through the identification and management of maverick spend, supplier consolidation, and the ability to spot patterns and extract insights that will lead to better purchasing decisions.
Procurement IT can also be leveraged to automate processes from contract management to tactical purchasing, payments, and spend analytics. Efficiencies can be captured through manual work minimization, faster response times, and increased accuracy, while business value is generated through improved forecasting, better demand management, and freeing up time to focus on strategic initiatives.
Eroding value from IT spend
What should you look out for in terms of factors that will erode the value generated by IT?
Without a user-friendly tool, it can be difficult to keep track of auto-renewals, particularly in large organizations with multiple software subscriptions. This can lead to a set-and-forget situation where the business is paying for subscriptions it no longer needs, or paying outdated prices that do not reflect the current market.
Monitoring auto-renewals provides better visibility of when a contract is due to expire and gives IT and procurement the option to rethink or renegotiate the deal with the supplier.
Most people who have worked in a large office are guilty of contributing to the problem of shadow IT. This refers to software and systems being purchased without the approval of the centralized IT team.
For example, the central team may use Google Drive as the official Cloud storage solution, but an employee may have installed DropBox instead, purchased with a company credit card. Having multiple, unmanaged, unapproved subscriptions increases costs, security risks, and will mean the organization fails to get the full value out of approved software.
Failing to make full use of system features
Modern enterprise systems come with multiple modules that touch on every area of the business, from recruitment to finance, HR, procurement, marketing, and more. While not every module will be needed, value erosion occurs when people in an organization purchase additional software that does exactly the same thing as the existing system.
Every IT purchasing decision should involve a check that current systems do not already possess the required capability. IT should also consider whether they prefer a monolith or tech-stack (best-in-breed) approach.
Data migration, integration, and quality
Finding the data needed to feed your IT investment can be challenging, with information scattered across multiple departments, hidden in outdated systems, invisible in email attachments, lost in spreadsheets, or even buried in a paper filing cabinet.
Data then has to be moved with care from older systems into the new IT solution, at which point the organization will inevitably encounter quality problems, multiple formats, and other inconsistencies.
Tracking the value within IT spend
Una has solutions for organizations looking to create, track and keep the value created from IT spend. As a GPO, our team has access to thousands of technology vendors and IT spend contracts designed to save money and reduce risk.
Join Una for free and take advantage of our technology savings platform that offers a way for members to benchmark their current tech spend, compare services, or find better technology solutions from over 3,000 tech vendors.
Contact us to learn more.
Get in Touch
Do you have questions about group purchasing? Wondering how a group purchasing organization works to save you money, time, and effort?
Una’s team of Sourcing Advisors is here to help. Contact us to learn more.