Why so expensive?
It’s what we usually hear from the C level executives in the budgeting period that IT is a huge cost. Are we doing something wrong? Are our estimations so bad that the C levels go crazy each time we sit down around the table.
Most probably NO!
But why do we get misunderstood?
Here you can find some answers from my experiences and thoughts on the dilemma of explaining IT budgets to the non-IT executives (especially for manufacturing companies in emerging markets).
Not everyone works in a tech company. Life is easier for those who work in tech since the executives know technology.
For the rest, you should understand that the technological progress is faster than the changes in the traditional businesses. Businesses like manufacturing or finance have evolved throuhout the years but the core processes remained more or less the same. Yes, they are using more technology today but their main processes are the same as they used to be in the past. There is automation, there is AI, they have all the data they don’t even need but they are still using all these technologies in order to do the jobs they used to do, just faster and more reliable.
I would like to point out that those are the 2 businesses that use technology the most, all the other businesses are behind these 2 which most of the economy relies on.
Technology became a part of almost all businesses very fast. Most companies did not even have computers or internet just 2 decades ago and now even the local store around the corner uses internet for banking and ordering goods. Technology is more and more integrated as the complexity and size of the business grows.
But most of these companies are run by executives who did not use computers as a part of their daily routine when they first started working. Some of them were able to be a part of the change and understand the meaning of IT in their business but for most of them IT is all about buying “computers and stuff”.
Today companies need infrastructure and software as well as support but that’s not the end. More business processes evolve with technology so larger companies started to either become tech companies or create tech companies to support their needs.
Outsourcing is an option, it s still profitable especially in the developed markets where the awareness and the level of technology is higher.
What about the emerging markets?
There is a great potential in the emerging markets since they still have a long way to go in their local businesses but on the other hand they are the ones outsourcing the developed markets so they have the right resources.
All they need is to have right strategies to lead the companies (or countries) in the right direction.
How are we supposed to convince the executives that what we are doing is not an extra cost but it is essential to the continuity of the business?
First of all we must all know that “doing what everyone else is doing” will not take us to the lead.
We must do what everyone else is doing and just then we will be on the same level with our competitors. We must look for areas of innovation after this point.
For many years, executives expected IT departments to miraculously take the company to another level when they wanted to invest on IT processes. They thought this was continuous improvement (or Kaizen if you are working in a Lean environment).
Let’s agree on something; being ITIL compliant or ISO 27001 certified is not something that will make you a star, it is the baseline. Whatever you do after that point will take you to the other levels.
Make sure that your executives are on the same page with you on this. Make sure that the IT standards are the baseline that you need to comply with, not a magic wand.
Form a compliance team to ensure your organization meets the baseline.
And now we can talk about innovation.
Internet of Things (IoT), Industry 4.0, Digital Transformation, Big Data, Artificial Intelligence and all those great areas of innovation is now ahead of you.
But again, doing what everyone else is doing is not going to get you to the lead so plan your projects accordingly.
First, start with baby steps: draw your technological baseline. See what everone else is doing and pinpoint the problematic areas to catch up with the baseline.
Form a team for innovation, do not overload the team with the routine, let the other teams handle the daily routine while the innovation team builds your future.
Keep it simple.
Use the power of iterative development.
Set achievable targets and manage the innovation.
And the world is yours once you pass the baseline.
There is one more thing to remember: yesterday’s innovation is today’s baseline.
So, improve continually!
Now it’s the Kaizen time 😉