Africa Business Communities

Cost reduction at the heart of ICT procurement strategy

Deliberate and focused intent to reduce cost of operation and ownership of ICT infrastructure is still the driving force behind any ICT procurement and integration strategy today.

The decision maker has a great deal to consider when devising and implementing an ICT strategy for the organisation. Not only does this strategy have to meet with the core requirements of the organisation and its objectives, it also has to adhere to regulation and good corporate governance.

Once this criteria is met, the strategy must then hold its own in terms of existing and emerging trends. Aspects like social media, mobility, cloud-based services, Bring Your Own Device (BYOD) and unified communications all have a bearing on whether a strategy can sustain the business or not.

Is the strategy linked to- and able to leverage off opportunities that exist within these trends? What needs to change in terms of how to adapt the strategy to suit the current market? And, essentially, what is the cost to company?

The focal point is to drive costs down – including the cost of ICT infrastructure acquisition and implementation, maintenance and support, as well as ongoing cost of ownership.

Aside from the immediate costs associated with ICT infrastructure, the price tag of new communications infrastructure is based on having the necessary technical knowledge and product expertise to extract maximum benefit. Upgrades to new technology and migrations onto new systems requires capital and the economic scenario at the moment does not lend itself to frivolous IT spend. There are no budgets for this type of approach.

Businesses are more savvy when it comes to the procurement of solutions and how to get the very best deal possible, for as little as possible. :Products are evaluated on how much functionality is integrated into the business and how resource-intensive they are.

It is not by chance that the ICT department is working a lot closer with Financial Directors. The two business silos are more in tune with each other’s objectives and requirements.

Whereas in the past there was a tendency for decision makers to throw money at technology investment to address key requirements and challenges, today there is a lot more restraint and scrutiny because managers do not simply want technology for technology’s sake.

In the current marketplace a stayed approach based on careful understanding and appreciation of technology is the order of the day. Another reason for this calm and collected attitude to the acquisition of technology is because there are more options available to businesses.

The advent of cloud services and unified communication means that any sized organisation has access to infrastructure and critical ICT-based services that would have previously been out of reach, cost-wise.

Infrastructure as a Service, Software as a Service, amongst other facets of virtualised service provision means that a business can hand over the responsibility of technology infrastructure maintenance, support and governance to a service provider, knowing that the scenario is managed ‘in the cloud’. IT is run and maintained virtually, based on a ‘pay-as-you-use’ model.

Aside from the peace of mind in knowing ones infrastructure is being handled by experts, offsite, the scenario also makes sense from a cost perspective. The pricing model adheres to the principle of paying only for what is used, when it is used. There is little or no room for ‘hidden’ or unexpected costs.

The model makes sense from a business development point of view in that it is flexible and ensures that capital expenditure fits in line with- and actually supports – the growth of the business.

There are other options. Co-sourcing and outsourcing remain credible alternative routes, depending on the level of control that is required by a business.

Another way in which companies are reducing cost is by making the most of resources. For example, workers are empowered with mobile solutions to ensure that they have access to data and other tools to make them far more productive. Mobile solutions like smartphones and tablet PCs mean that workers can literally perform their duties, for the most part, from any location at any time.

The business case for this is basically that if workers can do more in the same- or less time, then they are automatically more productive. If employees can perform their duties with more efficiency and accuracy, then there are less mistakes and the process is therefore more productive.

In business more productivity equates to more efficiency, which, in turn, means a higher return.

An investment in mobility for the workplace is an investment in a more efficient workforce. That is the reality of the business world today.

Essentially, when it comes to managed ICT services, the technology acquired/ outsourced or ‘rented’ and the service provider partnered with must conform to a streamlined, cost-cutting approach. If not, it is time to look elsewhere.

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