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Focusing on across-the-board cost cutting to indiscriminately minimize costs may cost you more in the long and short. Companies that take a very different perspective and seek to maximize value at the lowest achievable cost, in part by reallocating spending from technology infrastructure to application management benefit more from not only their IT department but from the technology and tools that are being used. Research shows that indiscriminate IT cost cutting has a negative impact on performance in other functional areas.
Companies obtain the greatest possible return on their technology investment by maximizing the value of information assets to end-users through data standardization, rich metadata, online information access, analytical capabilities, and alignment of the information architecture with business initiatives such as enterprise performance management. This is also an area where a investment can lead to significant ROI—provided you do it well, says Erik Dorr.
“Really (it’s) leveraging the wealth of data that typically already exists but focusing on the data management side of that. It’s very complex but that also means there’s a big opportunity. And if you are a little better at this than the next guy, then you have an opportunity to get a better return and that’s what we see” in world class companies, said Erik Dorr.
The Five Key Strategies To Drive The Maximum Value from IT:
- Outsource Selectively
- Standardize and Consolidate
- Focus on High-Return Opportunities
- Don’t Indiscriminately Minimize Cost
- Maximize Value of Information Assets
The companies that streamline and simplify to ensure maximum ROI take the critical step of standardizing master data definitions as they reduce the number of ERP systems and other applications. Companies who reduce spending through standardization and consolidation can increase their focused spending in areas that generate greater strategic return. These companies are also more likely to have greater success when outsourcing simply because they have not unnecessarily driven out a lot of IT costs. They have in fact cut a great deal of costs and improved the effectiveness of their IT if they do it correctly.
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