Cutting back the fat

Less can mean more for resource-constrained organizations that want to save on costly IT solutions.

commentary Less can mean more for resource-constrained organisations that want to save on costly IT solutions.

We have already asked why the costs of information technology are inversely proportional to an organisation's size and identified that it is not just the technology but the behaviours that lead to costly solutions.

It follows that for resource constrained organisations (RCOs) no product or set of products alone will address their challenges. Here are four principles RCOs can use to unhinge themselves from the silent conspiracy of inefficient consumption.

  1. Consolidate technology: Central to this belief is the importance of consolidation. Please note that I'm asking you to consolidate technology, not vendors -- the two are not always synonymous.

    Consolidation needs to be a discipline, and not a project.
    Consolidation takes into account the forces of technology commoditisation. It also requires firm decisions to be made as to a strategic platform provider (such as SAP NetWeaver or Oracle Application Framework). All sourcing, operational, and demand-management activities should also be designed to support platform consolidation with variances having clear end-of-life strategies at the outset.


  2. Embrace commonality: At 37 percent of total costs, professional services are the single largest cost component of an enterprise resource planning (ERP) deployment. High-consulting costs are also cited as the largest reason an ERP solution will not be implemented. We at Gartner have discovered that the two largest cost components of ERP deployments are business process re-engineering and custom-code development. Although there are many cases when process re-engineering is warranted, it can be asked if all this re-engineering work creates truly market-differentiating processes.

    A lot of organisations talk about "going vanilla". The key to achieving this is to proactively find your non-differentiating commodity processes and automate them by configuring and not customising vendor's existing implementation.

    It's counter-intuitive for most organisations to think in terms of what makes them the same as their competitors. In embracing commonality you can't forget about things that make you unique. You must get there via a process of elimination.


  3. Salute generalisation: The most significant cost of IT is personnel -- this is projected to grow to 55-60 percent of total IT costs by 2006/07. RCOs can address this significant constraint by seeking generalised versus specialised staff competencies.

    This cannot be done in isolation -- it's intricately tied to the first theme of platform consolidation. For example, the design of many modern business application platforms requires many moving parts -- portals, BI tools, etc. Some vendor selections may result in significant new employment requirements as a result of these discrete components.

    High-performance IT teams cite "complete toolset competency" as prerequisites for every team member to pull fair workloads. RCO's must ensure that they're sourcing technology that makes this possible.



  4. Process uber alles: Application features and functions serve as a way to translate business needs into a form that can be packaged and resold. Businesses operate within a series of processes, and the closer information systems can represent this reality the lower the probability of business meaning being lost in translation.

    Process-centricity must be the foundation for RCO thinking because the processes will be at the heart of future application designs and they establish bridges between business and IT.

Brian Prentice is senior analyst at Gartner and focuses much of his industry research and analysis on the trends affecting the uptake of business applications by organisations with revenues below US$1 billion. He can be reached at brian.prentice@gartner.com.

This article was first published in Technology & Business magazine.
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