CIOs must embrace smart metering in era of cuts

As CIOs find themselves under pressure to cut costs, Olof Söderblom of Compass Management Consulting argues that they are not the cause of a rising IT bill but heroes of efficiency in need of a new approach to communicate IT costs with senior business managers.

In the last past 20 years, CIOs have led the only business function which has cut unit costs many hundredfold.  In storage, processing and other elements of service delivery, costs have tumbled as managers have taken advantage of improved technology and refined their processes.

In a single five year period, unit costs in client/server decreased by an average of more than 35 per cent and storage costs shrunk by an average of 80 per cent.  Yet instead of overall IT costs going down, they have risen by 20-45 per cent (depending on technology) to cope with an explosion of around 200 per cent in volumes generated by the business.

It is a rare CIO who questions the expensive growth in volume and challenges senior managers in ways that link IT consumption to business processes and business decisions.  Instead, business leaders expect the CIO to accommodate the volume growth, yet continue to question the CIO over ever increasing IT costs.

One recurring reason for the lack of dialogue is a lack of understanding by the business of the IT cost implications of the decisions they take. While business processes are initially rarely designed around the balance between IT costs and business benefit, the initial justification is seldom verified and volume increases not evaluated from a business benefit perspective.   The IT costs of delivering statements within 24 hours rather than 48 hours, for example, may be significant, but of little business value in terms of customer satisfaction.

Moreover, it is not the role of the CIO alone to justify the increases in IT volumes (and costs) which result from business decisions. Nor is the CIO in a position to validate whether expansion represents a good investment that will deliver a return for shareholders or taxpayers.  This strategic allocation of resources is the role of the CEO and the board, not the CIO.

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