"Self-Funding” to Get the Most Bang from the IT Buck

CIOs struggling to meet business-unit demands that exceed their available budgets can free up and repurpose dollars by improving the efficiency and cost-effectiveness of core IT functions.

istock 1061369956
iStock

Jay Ferro is Chief Information Officer at a large manufacturer based in the U.S. and Canada. In his 25 years as an IT professional, he has held a number of leadership roles, including the CIO position at AIG, Earthlink, and the American Cancer Society.

If you distill the diverse activities and functions of any IT department down to their essence, you reach a universally shared objective: using the available budget to deliver the most value across the organization. That’s certainly the core focus for Jay Ferro.

In his quest to add business value, Ferro faces a challenge familiar to most CIOs: “There’s always more demand than supply,” he says, as business requests for IT services will almost always outstrip the IT department’s budget and staff resources.

To address this imbalance, Ferro advocates what he refers to as a “self-funding” strategy.

“By reducing cost and improving efficiency and effectiveness I can reclaim dollars and repurpose them toward things that will bring the company value,” he explains.

One obvious way to accomplish this objective is by embracing cloud-based solutions, he believes.

Ferro acknowledges that his company’s IT department still has some solutions deployed on-premise and cautions that he doesn’t have a rigid attitude of “it’s cloud or nothing.” But his department has invested in a number of cloud-based solutions, ranging from collaboration systems to software development platforms.

“With cloud, you get the ease of use, the ability to procure additional infrastructure and spin up environments very quickly without all the pain and wailing and gnashing of teeth,” Ferro says. He notes that cloud solutions are often able to incorporate technologies and features more quickly than IT departments are able to do in their own data centers, and also do a good job of rapidly deploying security patches and upgrading protections.

More fundamentally, Ferro says, “There are certain core functions that an IT organization does that are best served in a cloud model, which, ideally, frees up some level of capacity that you can focus on more value-added investments,” Ferro says.  “If there are cloud or SaaS organizations that enable us to do something better, faster, cheaper, or in a more secure way, then we’re failing as CIO leaders to not at least consider them.”

You can’t establish spending priorities without end-to-end visibility

Regardless of whether IT operations are on-prem or in the cloud, Ferro notes, it’s impossible for CIOs to assess the value those operations deliver without end-to-end visibility across both the IT infrastructure and the business operations it supports. Having broad operational visibility is the best way for CIOs to confidently establish spending priorities, and to then get executive-level and business unit buy-in for those priorities.

“It’s so helpful when the CIO and the rest of the organization are working off the same sheet of music,” Ferro says. “When the CEO sees things the way that you do, and vice versa.”

Still, Ferro acknowledges that it’s much easier to identify where money is being spent than to determine the payback of that spending. “Where it gets really interesting to me is when you start having conversations around value versus spend,” he says. “Are we getting what we want out of our investments?

In this regard, one increasingly important topic in the company’s ongoing “value versus spend” conversations is the need to invest in solutions that protect the organization from cyber threats and fraudulent activities. Here as well, end-to-end transparency and visibility are essential.

“Companies that lack visibility into what’s happening in their value chain run the risk of being taken advantage of,” Ferro warns. And, in a world of persistent and sophisticated cyber attacks, the main threats aren’t always coming from outside attackers.

“It may just be somebody taking advantage of a broken process and a lack of visibility,” Ferro notes.

Business Spend Management leader Coupa gives companies the visibility, control, and insights they need to better manage their spend, and in so doing, facilitates IT and business unit partnership. For further information about Coupa’s solution, go to https://www.coupa.com/.

Copyright © 2020 IDG Communications, Inc.