With people currently focused on mitigating the effects of COVID-19, managing IT operations is likely not a priority. This is understandable, which is why we want to help you get through this challenging time.
At some point, normalcy will resume, and you will need to respond to the impact of COVID-19 on your business. For example, in the short-term you may be cutting software spend to extend your runway, in anticipation of lost revenue. This may seem like a smart financial move, and it may be. In the long-term, however, it could cause greater challenges for your IT and business operations. Therefore, you will need to consider how you will evolve your IT management strategy as you navigate the current pandemic.
Managing and preparing for the impact of COVID-19
Unfortunately, COVID-19 is going to put many organizations out of business and will make life hard for many others. Therefore, the faster a company can mitigate the business impact, the sooner they can implement steps to survive.
McKinsey & Company summed up the global impact of COVID-19 for this quarter, next quarter, and the future, in its March 2020 Executive Briefing:
“Although the outbreak comes under control in most parts of the world by late in Q2, the self-reinforcing dynamics of a recession kick in and prolong the slump until the end of Q3. Consumers stay home, businesses lose revenue and lay off workers, and unemployment levels rise sharply. Business investment contracts and corporate bankruptcies soar, putting significant pressure on the banking and financial system.”
In response to the predicted impact, companies are executing strategic initiatives to ensure business viability. Among these pandemic response strategies are:
In the near term, there’s a need to spend the available funds wisely. Specifically, organizations need to keep forecasting, more often, in response to changing business conditions. This begins by centralizing all your expenses and operations data in one place. Then look across business units to see where you can improve operations to lower costs, or cut unnecessary spending. Examples of this include redundant tools that are used across departments.
Readying IT operations for increased financial pressures
According to this Market Speed report by KMPG, “80% of revenue growth will depend on digital offerings and operations” by 2022. Restaurants, for example, may need to shift to on-demand delivery, when this service was not previously offered.
For IT departments, this could mean working with the legal department to meet governance standards. Moving to a remote working environment may require encryption of devices and updated policies. Therefore, you will need to update any terms for the software you’re using such as virtual conferencing tools. Further, you may need to meet certain data compliance standards, including GDPR, HIPAA, NIST, ISO, FTC, and PCI DSS.
Preparing your organization could also mean putting in place new software, which is never easy to do. Regardless of the current situation, there will always be a need for the best people, processes, and tools. Therefore, “now is not the time to turn the spigot off to significant tech initiatives”. Instead, the companies that have the right technology in place, will be the ones who not only survive but prosper.
“Doing more with less” the right way
Just because your organization is cutting back expenses during this time, does not mean you can’t get creative. Instead, consider ways to make the most use of your current tools and services. For example, Equinix CIO Milind Wagle setup a Zoom-enabled, 24/7 ‘virtual tech bar’. By using Zoom to offer round-the-clock support to their customers, in a more casual setting (the ‘tech bar’) this is a wise IT operations strategy – especially if it means retaining thousands or millions of customer revenue.
For your IT organization to successfully spend its budget on the right things, it needs to have a better understanding of what different IT services cost and the value they provide for the whole organization.
Start by creating a service-based cost model that allows your IT organization to better understand, control, and optimize technology and services across your business. It should be a transparent framework within which costs can be tracked and allocated to specific IT services, customers, locations, and business units. This lets you calculate the full cost of your products and services so you can propose a budget that does not just meet your short-term needs but considers future growth.
The service-based cost model also facilitates any decisions related to mandated cost-cutting strategies, as your business looks to reduce its IT spend to better match its available Opex and Capex budgets. Closely matching Opex and Capex costs is crucial for your business as the last thing you want to do is waste your budget. According to the Harvard Business Review, of “$1.3 trillion spent on digital transformation in 2018, an estimated $900 billion was wasted when initiatives didn’t meet their goals”. In times of recession, like with this epidemic, you do not want to be making financial mistakes that could cost you the business.
Schedule a call with us to see how we can help you simplify your IT financial management.