IT cost management — play neatly or win?

The way into an offensive move

The dilemma of higher performance combined with reduced costs and maximum availability and security cannot be solved. The repercussions of the financial market crisis for the market and the additional regulatory requirements have been intensifying the pressure on IT for years—and this pressure won’t decrease.
The keyword is “offensive” based on a compelling CIO agenda. This means for the ORG / IT function to become active in order to find a way out of the conflict and to be considered an active partner for delivery capacity and budget feasibility in the company at large. It is advisable to avoid general cost cutting, which is often related to wrong approaches or fizzling out cost effects, and to optimize the IT cost items in a targeted and sustainable way.
The way to success in IT cost management has much in common with a good soccer match:

  • “An early goal is beneficial for the match”—a systematic approach can go hand in hand with quick wins. This sends clear signals for success and gives strength for the further process.
  • “The team matters”—each player can be decisive for the game—however, it is not often the case that a game is won with only one player. This means an increased cost level cannot be handled by means of only one measure.
  • “Use the free space”—analyzing the respective position and anticipating the next moves is also indispensable in terms of cost management.
  • “Prevent counterattacks” —a quick success can become very expensive later on.
  • “Take control of the game”—clearly defined project with requirements and results

This isn’t an exhaustive list—a central and last analogy is, however: “Use the whole width of the playing field”. Intelligent IT cost management can and must cover the entire ORG/IT value-added chain—and derive both short-term as well as long-term and sustainable measures:

  • Manage: Reveal efficient power of management, in particular by means of architectural and project portfolio management, controlling and cost management
  • Plan/Design: Create reach in terms of content and time, e.g. by means of requirement and business process management as well as development plans
  • Build: Achieve higher flexibility and productivity, e.g. by means of simplified provision, optimal internal vertical integration and open standards
  • Run: Maintain performance and controllability, e.g. by means of provider management, adjusted operating models or data center consolidation

Not every dimension is relevant for each bank in the same way. Thus, it is advisable to answer decisive questions in the run-up and to define a suitable project procedure.

The match-deciding questions

The initial situation of all activities of the performance and cost management is to give systematic answers to core questions from a CIO perspective:

  • IT value: Where does IT already create added value? Where is an active conceptual design of processes missing to guarantee flexibility, promptness and ability to act?
  • IT performance: How can the performance capacity of IT be extended despite a reduced or at-best steady cost level? Are adjustments to the IT landscape possible?
  • IT architecture: Can applications and technologies be quickly and flexibly provided for implementing the business models? Can the requirements for performance capacity and sustainability be fulfilled?
  • IT governance: Does the cooperation between IT, ORG and the specialized function as well as external specialized and IT providers run smoothly? Has the model been perfectly set up for future requirements?

The CIO must continuously balance the area of conflict between market support, controllability and budget feasibility perfectly adjusted to his/her bank. The IT / ORG function ensures the implementation of performance and cost goals as power of management, active motivator and central service provider.
IT cost management can be carried out in an intelligent and successful way: adapted to the size and characteristic features of the bank and focused on the fields of action with the largest possible potentials.
However, soccer players significantly differ from the CIO: “I couldn’t care less. What’s with all the questions?”

Feel free to contact us!

Andreas Schick / author BankingHub

Andreas Schick

Senior Partner Office Frankfurt

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