Increasing the Value Proposition of IT – Reallocation of Spend

Increasing the Value Proposition of IT – Reallocation of Spend

Following up from my last post on budgeting and reallocation of spending:

If you’re in an SMB, you’re typically asked to manage spending in 3 ways; reduce, control, and reallocate. As IT leaders, we can manage spend in a few key areas: 1. Creating variability in expenses and 2. Contract negotiation.

CFOs are always looking for more flexibility in their operating expenses and that’s especially true in today’s climate. In IT we can do this a few different ways, and all are variations on a theme of services or subscriptions. In software & hardware it’s through software, platform, and infrastructure as services (SaaS, PaaS, IaaS) in staffing (the biggest part of your budget) it’s through contracting personnel vs retaining fulltime internal staff, and in operations its nearsourcing (I don’t know if that’s a real word, but I’m not talking about your typical outsourcing). Nearsourcing to me means having the function handled by an external party, but close enough to be able to meet regularly, manage to KPIs and easily make operational changes when necessary to maintain SLAs. Typically this would be with a group that is within the same geographical region of your operation.

I’ve executed on each of these and believe me there’s a significant benefit to pursuing, and not just for the cost benefit. While the cost savings can be significant (depending on how good you craft the deal), you also gain in competitiveness. One of the biggest challenges as IT leaders is keeping our team’s skills and technologies current. If you have a small team, it may make sense to consider transitioning networking, help desk, or computer operations functions to be nearsourced rather than in-house and focus your in-house talent on competitive advantage (like AI, Data Analytics, DevOps). In the end, it’s all about the value proposition that we provide.

Let’s take the easiest of these as the example, help desk. While it may be the easiest function to consider, don’t make the mistake that many have done and assume that all partners are created equal (for one thing, they need to be a partner and not just a service provider). It’s not just about the cost, but obviously the final deal needs to ensure that the cost is less than you’re paying today and provide your end users with better service. There are many US based companies that do an awesome job of this and you can get them in your time zone. DM me if you’d like some suggestions.

For whatever function you pursue to nearsource, the best outcome will depend on the agreement that you create. Everything is negotiable and don’t assume that the boilerplate offering is the only option. I’ve worked many of these in the past and would be glad to talk with you about these in more detail.

This leads to the next big opportunity to reduce costs and that’s through contract negotiations, which I’ll cover in an upcoming post.

I would love to discuss any insights or takeaways you have and can be reached at garyl@synigent.com