6 Common IT Budget Blunders
1. No agreed IT strategy or plans
No IT strategy means “the IT guys” will come up with a new way to spend money every week. And no clear plans means that everything is an unwelcome surprise. The IT team won’t know how to explain why something is worth investing in. It feels like they’re going off in the wrong direction because there is no agreed direction.
2. Allowing suppliers to tell you what you need
Given the opportunity, your suppliers will be very happy to tell you what you need – and they will make a great argument! They have things to sell and targets to meet! Don’t talk to suppliers without understanding what you want to achieve and why you’re talking to them. Shop around. If it’s a serious decision then organise a serious tender process based on what you need, rather than what they want to sell you.
3. Overrunning Projects
A seriously overrunning project can torpedo your IT budget. And the most common causes of overrunning projects are companies who buy products they don’t fully understand; suppliers who don’t have the capabilities they claim; and projects that lack direction and aren’t adequately managed.
4. Just renewing a contract because it’s the easiest thing to do
There’s value to be had in doing a benchmark exercise if nothing else. Look around, talk to some other companies. There may be lengthy notice periods so start the renewal process early enough that you have time to consider alternatives without missing the deadlines. Let the supplier know that you’re doing that. Prices will tumble, service levels will improve. Just renewing means the supplier is only making more profit from you, nothing more.
5. Buying products you don’t need or can’t use.
We see plenty of clients who’ve spent money on things they don’t use. Amazing but true! If you’re buying something make sure you understand the value it will deliver, make sure you understand the full effort and cost necessary to deliver that value, and make sure a senior member of the team is on the hook to deliver this entire journey.
6. Not agreeing service levels and key performance indicators
Spending money without checking you get what you’ve paid for is just bad business. All IT services, whether they are insourced or outsourced need to be monitored and a simple set of KPIs should be the main dashboard. You must define what you want in terms of service levels and KPIs and, for external suppliers, bake this in to the contract.
Finally, remember that you can bring IT costs under control, but that doesn’t means much if your IT isn’t delivering real value and contributing to your business objectives.
Freeman Clarke is the UK’s largest and most experienced team of part-time (we call it “fractional”) IT leaders. We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.
5 Ways to Create Competitive Advantage with IT
1. Optimise your mobile teams
Properly equipped and trained mobile workforces can be fully integrated with business processes, utilised effectively all the time, and working efficiently wherever they are. Your business systems should enable them to handle issues and queries on the spot rather than relying on follow-up processes run back at the office. As a result, your customers get better and faster service which means your offer is no longer just about price.
Managers and professional fee-earners can review or approve documents between off-site meetings, collaborate with colleagues whenever and wherever they are to improve their efficiency and reduce frustrations. If mobile workforces are able to properly work when remote, then expensive office space and overheads can be reduced and the business can be more flexible and agile.
- Have you really invested in good quality mobile & remote access technology and got it working well?
- Are processes designed so remote workers can genuinely get things done on the spot?
- Are managers trained and equipped to work away from their desks and do they set the example?
2. Get smart about prospects and clients
Ensure your marketing team have a detailed database of your market to support their campaigning. Use tools to analyse sales data to understand cost per acquisition and profitability by channel, product, client etc.
Integrate and rationalise all customer data so that sales, operations and finance systems and reports are consistent and accurate.
Create dashboards for managers throughout the business so you can delegate authority to them and scale up. Directors can spend less time managing and people on the ground can use their initiative to direct time and resources to where it’s worthwhile, and to respond to sales opportunities and client situations intelligently.
- Do you have a proper CRM system, that is genuinely well-used and kept up to date?
- Do you incentivise staff for accurately using systems and maintaining data (for example, do sales staff get their bonus even if they don’t bother with the systems!)?
- Have you designed out process and system issues or are their “fault lines” between your departments?
- Do you really understand what information managers need to make good decisions?
3. Quicker, cheaper, better
Consumer expectations have been reset by online retailers who offer next day delivery and slick services directly from simple apps. All year mark-downs are the norm. Traditional high street buying cycles are ever more unpredictable and discount-driven.
Many businesses are entrenched in ways of working based on accidents of history and complicated by the limitations of their systems. Modern IT allows clients to radically re-engineer their business to significantly cut cost and time; to reduce cash tied up in stock; to closely integrate with their suppliers or partners; to offer personalised services to their clients; and to create new routes to consumers.
- When was the last time you took the same journey your prospects and customers do?
- Do you honestly compare yourself with the best in your market?
- Does your ecommerce solutions need a complete overhaul?
- Great technicians rarely create great user experiences – do you really put the necessary resources into giving your customers an outstanding online experience?
4. Create digital opportunities
Companies with effective supply operations, strong brands, loyal customers have great opportunities to expand through ecommerce. Other traditionally offline activities, from coaching to consulting; from training to travel planning, are now provided online or in blended online and offline services. Younger consumers expect products and services they can consume on their mobiles and don’t have established loyalties to other providers.
Disrupt your market by offering your products and services online before another company decides to do this!
- Do you understand how your market is changing; how younger demographics will expect you to work; and what new competitors are doing?
- Have you really looked at how you work with your partners and suppliers, and how you supply your customers to see how you can “go digital”?
- Where you are digital, do you work on all devices, and is the “buying experience” clear, easy and simple?
5. Monetise Intellectual Property and data
Many companies, especially in professional services, have processes, data or ways of working that are valuable. If these can be manifested as software then there are new opportunities to scale, to create new revenues, to deepen connections with clients, and create new barriers for competitors. Companies that have gathered momentum can apply innovative AI software to reduce costs or find entirely new opportunities.
The value of any business with scalable, IP-based revenues is significantly enhanced as they are no longer “just people businesses”. Are there aspects of your business that could be turned into online services to supplement your existing offering, make you stand out in the market, or create entirely new revenue streams?
- Have you identified the things you do that are special and whether you could make this valuable by turning it into software?
- Review your data and ask: How could my customers benefit from this data? Would they pay for it?
- Get an understanding of what Artificial Intelligence could mean for your business, particularly if you’re in Professional Serices.
Freeman Clarke is the UK’s largest and most experienced team of part-time (we call it “fractional”) IT leaders. We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.
