Leverage IT to Cut Costs and Boost Business - Page 1

Nov 3, 2006

Richard Anderson

Over the past several decades, companies have invested considerable resources in information technology, based on the promise of enhanced business performance.

Experience shows that in many cases these investments did address immediate problems, but ultimately they failed to meet the organization’s expectations for improved efficiency and effectiveness. And during recent efforts to comply with Sarbanes-Oxley and other new regulatory requirements, the underperformance of IT as a strategic business enabler came under new scrutiny.

In fact, during Sarbanes-Oxley compliance efforts, the IT function was recognized as one of the most costly areas and a primary source of deficiencies. Consequently, many IT leaders are now asking how they can be better prepared to respond to new IT expectations.

IT/Business Alignment

The often-heard answer? Creating an efficient and responsive IT environment begins with aligning IT goals and priorities with overall business goals. Yet many organizations have had difficulty matching these goals, with attempts typically breaking down in several common places. Often, IT leaders fail to communicate effectively with business leaders and sometimes second-guess the needs of business.

Moreover, IT organizations can jump too quickly to technical solutions and do not give adequate consideration to the specific business functions they are setting out to support. Finally, IT organizations may have difficulty defining specific technical requirements and determining the architectural changes necessary to effectively implement them.

When IT is aligned with the business and is given adequate consideration as a resource to help meet business needs, it can help prepare the organization to better respond to change and optimize returns on investment. The approach outlined below can help an organization begin this process.

Step 1: Evaluate the effectiveness of the organization’s IT governance. In determining how to better leverage IT support of future business goals, the first step is to gauge how effectively IT is being leveraged today.

This assessment should include an analysis of the current state of business/IT alignment, decision-making, architectural leverage, change management and program management. Once the organization profiles its current state and sets targets for improvements, it can assess the “gap” it must close to reach the desired level and begin defining the necessary steps to get there.

Step 2: Leverage lessons learned to drive value through IT. Organizations that have faced the initial challenges of regulatory compliance can reflect on the lessons learned in these efforts and determined how to use this information in refining their controls and operational-improvement plans.

Many organizations have identified specific opportunities to standardize business processes, improve controls and leverage both current and new technologies. These opportunities should be carefully evaluated and applied to the processes and disciplines of IT strategy, architecture, change management and governance.

These processes can be greatly improved if the organization focuses on: ·

  • The identification of more appropriate controls designed to provide long-term support to the business. ·
  • Additional controls automation—based on an analysis of the current cost of controls. ·
  • Standardization of processes, controls, applications and databases.
  • Controls rationalization—understanding the right mix and number of controls necessary to meet objectives, considering the organization’s risk appetite.

    In this way, organizations can create more effective and reliable processes, begin to reduce the costs of accommodating business changes, and create an IT infrastructure more responsive to business change.

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