Securing liquidity in a downturn by assessing cloud and legacy IT spend

Tom Schröder, Director International Business in the area of Financial Management at Serviceware.Tom Schröder, Director International Business in the area of Financial Management at Serviceware, is an experienced International IT Business Director with a demonstrated history of working in the computer software industry across various disciplines. He is skilled in Enterprise Service Management, IT Financial Management, and Strategic Business Planning. 


 

It has been a turbulent year for all – and with restrictions that could potentially last six months now in place to combat a second surge of COVID, even tougher times lay ahead for businesses big and small. As the government’s three-tier lockdown system continues to threaten a flurry of local measures, recent news indicates that a UK recession is expected to continue until spring – putting even more pressure on businesses, many of which are already on the brink of collapse.

 

The rapid migration to digital technologies, driven by the pandemic, has seen adoption vault five years forward in a matter of around eight weeks. As businesses across the globe looked to shore up their remote working capabilities at the height of lockdown, cloud spending grew 31% to $34.6 billion. In fact, according to KPMG’s CIO Survey 2020, when asked about their top three most important technology investments, 35% of IT leaders agreed cloud was a top priority, for its ability to help modernise customer channels, supply chains and mid-office systems – as well as streamline remote working.

 

Maintaining business and financial resilience during a pandemic

In an uncertain and pressurised economic environment, many organisations will be faced with the challenge of making immediate IT cost savings, whilst still being expected to drive digital initiatives forward. Effectively, leaders will need to achieve more – whilst having fewer resources to do so. It is therefore crucial that businesses leverage strategic cost measures to not only mitigate the impact of short-term pandemic fallout, but most importantly recover and succeed in the long-term. Whilst many businesses have turned to reducing staff numbers as a means of releasing liquidity, this simply isn’t a realistic option. Employees are an organisation’s most valuable asset – and it will ultimately be these workers that are needed to rebuild what has been lost during the pandemic. Instead, businesses must explore where efficiencies can be made when it comes to other costs and spend.

 

How cloud can enable agility while cutting costs

As working from home becomes the new norm, due to ever-changing lockdown restrictions, it is likely that cloud costs will only continue to increase as businesses strive for increased flexibility, scalability and security. In fact, the worldwide public cloud services market is growing faster than ever.

 

Cloud-based services offer a much more scalable and reliable IT infrastructure that is specifically designed to streamline performance and support development and expansion. The technology gives businesses the opportunity to continuously refine and improve services, according to changing demand and business need, whilst enabling them to assess how much is used versus how much is spent. For many organisations, cloud also provides the opportunity to achieve better value for money, as businesses only need to pay for what is being used.

 

With cloud now being the digital backbone of many businesses, cloud solutions will continue to evolve, in response to the changing needs of organisations. However, with this change will come increasing complexities – both in terms of the services available and also the variety of operating models. It is therefore essential that businesses have the right tools to continually monitor and analyse cloud spend (on average 23% of IT expenses) in real-time, and with accuracy. Those who do will effectively pave the way towards growth.

 

Taking a holistic approach to tightening cloud and legacy spend

In today’s current economic landscape, optimising budgets is an absolute necessity; however, traditional ways of managing IT spend simply are not working. The reliance on spreadsheets and various disconnected systems means that data can be skewed by human error, and all too often the critical information needed by CIOs and CTOs is missing. Instead, a clear lens across a whole business is required.

The ability to manage cloud costs will be unlocked by reliable financial management tools, which can empower businesses to truly understand and evaluate cloud spend. By gathering real-time operational, project and vendor cost data, the c-suite will be well equipped to make fact-based decisions to drive down costs – both now and in the future. From our experience, we’ve seen our clients easily shrink their running costs by 5% and reallocate these resources to more appealing and business-driving growth initiatives.

 

"We’ve seen our clients easily shrink their running costs by 5% and reallocate these resources to more appealing and business-driving growth initiatives."

In light of these changes, companies must now take advantage of the tools that will enable them to evaluate the implementation and operational costs of technology to help stabilise business – including cloud, on-premise and even shadow IT. Whilst in theory all software and IT assets within a business should fall under one centralised IT department, providing the CIO with ultimate visibility – the reality is very different. Shadow IT, incurred in part by bring-your-own-device remote working initiatives, has seen a rapid rise during the shift to remote working and Gartner predicts it now accounts for 30-40% of IT spend in large organisations. As such, this is causing an ongoing headache for people who are in charge of technology, security, and compliance, who need transparency across all applications to ensure cost transparency vs value, not to mention security.

 

At a time when the c-suite desperately needs to free up budget to reinvest in digital initiatives for growth, it’s imperative to be able to gain a transparent view of costs vs business value generated. In some cases, this may mean that cloud services are the best solution, whilst in others, in-house legacy systems may represent better value for money. This is where an integrated, high-performance and, above all, flexible solution is needed – to create a holistic overview of business spend, on which decisions (about cost, process, operations and more) can be based.

Businesses that do maintain an end-to-end view across their entire IT portfolio will be able to take back control of their running costs and streamline their budgets towards growth funding.

 

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