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In today’ s dynamic world, managing IT Economics right is much more than keeping TCO under control. More importantly, if it is managed smart, it can have a significant positive leverage effect on the business. The 1+ million dollar question is, what are the key actions to drive down IT cost and to increase IT enabled business value.

92 CIOs and IT manager provided their perspective on IT economics in the 2013 edition of the CIO surveyTCO & IT Economics“. The survey has been conducted in a collaborative effort between the German speaking SAP user group (DSAG), the CIO work group “TCO & IT Economics” and SAP. Key objective was to get the CIO perspective on TCO & IT Economics and analyze the potential and relevance of selected best practices to reduce TCO and increase IT enabled business value.

This blog is the first in a series to provide insights about IT Economics and discuss survey results. In Part 1 I discuss the Top 10 Key Messages from the CIOs feedback.

  1. Increase operational efficiency as well as increase business value are top CIO priorities.
    Managing TCO remains important, however managing demand and supply to get most out of any dollar spend in IT to add value to the business has become equally important.
  2. Mobility technology innovations (platform/ solutions) are expected to have the highest economic impact, according to the surveyed CIOs.
    44% of the CIOs see potential to increase IT enabled business value and/or to reduce IT costs with mobility.
  3. Companies, consistently implementing the surveyed levers and best practices, have significantly lower IT costs.
    Example: Organization with a consolidated application portfolio have up to 61% lower IT spend as percentage of revenue.
  4. The capability to manage complexity is a “must have“.
    CIOs top 3 levers: System Landscape Consolidation, Master Data Harmonization and the Return to Standard. 4 out of the top 10 measures to reduce IT cost are complexity reduction measure.
  5. Good IT management starts in the business – the alignment of Biz & IT and smart business demand management, focus on a critical root cause for high IT costs and unsatisfied business users.
    Top lever: Joint Biz-IT Planning, Joint IT-Biz Project Portfolio Management
  6. (Infrastructure) Virtualization remains the number 1 measure for IT cost reduction and has been heavily adopted by most IT organizations.
    Many new projects are
    planned.
  7. Measures regarding Sourcing Optimization have become less important in 2013 compared to 2012. However, >50% of CIOs have planned measures.
    With an increasing number of SaaS offerings and cloud solutions the role of the IT department will change from a supply and delivery centered role to a much more orchestration and IT supply chain driven role.
  8. Quality pays off!
    The top 3 measures to increase the IT enabled business  value are: End User Training, Skill Management in IT, Quality
    Assurance
    .
  9. The evaluation of IT projects based on (quantitative) Business Cases is becoming the standard.
    73% of the companies have planned related projects for the future.
  10. For many companies Design Thinking is still a new topic.
    However, many
    case studies, workshops und SAP experiences with customers are showing an increasing interest.

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3 Comments

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  1. Matthias Haendly

    Christian,

    thanks for sharing your latest insights and the results of the most recent survey results. While I agree that Design Thinking is not widely used, I would also supsect that there is still a long road ahead showing how in-memory technology like SAP HANA will significantly simplify IT Landcapes of the future. A highly promising and dynamic topic – stay tuned here.

    Regards, Matthias

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    1. Christian Jaerschke Post author

      Matthias,

      Thanks for your view. In my opinion, the go-to technology is in-memory like SAP HANA. However, the starting point and hence the best-fit transformation roadmap to adopt SAP HANA might vary from organization to organization. Even if an IT department does not consider to implement HANA short term, I encourage every CIO to think about a HANA scenario when planning new IT target architectures.

      Regards,

      Christian

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