The primary role of the information technology group within a company is to support the business objectives of the organization. Although this may seem obvious, all too often technology decisions are made using other criteria, leading to projects with bloated budgets that fail to meet their objectives.
With new offerings constantly coming to market, it can be hard to make smart, strategic IT choices. Not only do various solutions take different approaches to solve the same problem, but they are also built on independent financial models, so normalizing your options against each other becomes a challenge. Our recommendation is to always evaluate your choices on three separate axes: technological, financial, and operational.
Before bringing a solution to the business, it is important to look at the technology options available that may meet your needs. Some questions to ask include:
- What are the features?
- How do they solve my business problem?
- What is its position in the market – is it a mature offering with many reference customers or a newer product tackling the solution in a new and innovative way?
One of the most important questions to ask is if the solution you are evaluating meets the need, just falls short, or is more than you need. This last one is the hardest to acknowledge in an industry where “more” is sometimes considered better. It is important to not spend time and money on a product with 17 features when you only need three of them.
Lining up your options in this way will allow you to narrow the field to those offerings that offer the “right” fit for your need, have a maturity level that matches your technology risk tolerance, and provide enough features to give you the business agility you are looking for without being overly complex.
The second axis is cost. This feature sometimes takes a larger portion of the discussion than it should. It is important to note that acquisition is usually not the largest portion of the total cost of ownership (TCO) of any given solution.
When cost is the first (or only) motivator, the best technology choices are not always made. This is not to say price is not important – it should be given at least equal weight to the other considerations. However, you should be thinking about the relationship between your technology investments and the business value derived from them.
A primary challenge with cost is to normalize the TCO among the various offerings. In a traditional purchase, this is a straightforward exercise – you can line up the costs of the hardware, software, and services against each other. In newer consumption-based solutions this becomes more challenging. You are projecting what you “think” the spend will be, but you will not really know until you have consumed the solution for any given month.
Whether looking at a traditional capex purchase, or one that is opex-based, do not ignore the downstream costs associated with the solution. These include platform costs (on-premise, cloud compute and storage infrastructure), network costs (in particular charges related to the movement of data) and software costs. Over time, these items often cost the company more than the upfront investment itself.
The impact of software costs on a technology choice cannot be overstated. We have spoken to numerous customers who made a decision to deploy an environment and months later they realized the software impact on the OS, database, user, or security licensing was not what they anticipated. This sometimes occurs when software is a centralized purchase, but solution decisions are made by individual business units. The effects of ignoring this aspect of the selection can be devastating; ensuring that all stakeholders are aware of these downstream effects is of paramount importance.
The third area to consider is the operational side of your technology decisions. Today’s modern IT worker spends a significant amount of their time maintaining the systems that are already in place. “Keeping the lights on” often distracts these highly skilled resources from being able to work on the more strategic initiatives of the organization. As new solutions are brought into the company, this unbalance between the maintenance of the environment and adding value becomes a not-so-virtuous cycle.
When a new solution is purchased, there is often a lot of assistance in getting it implemented. External services are part of almost all IT projects at this point. It is important, therefore, to focus on the post-project state of the environment:
- Will the provider who helped install it help you maintain it?
- What is the role of your staff in keeping the environment healthy?
- How will you maintain availability, patching, grooming, and growth?
The personnel costs associated with the overall investment are often larger than the solution costs and most times increased headcount is not considered, even as more and more technology is deployed. Thankfully there are ways to mitigate this impact by always including staff training as part of the deliverable, automating processes as much as possible to reduce time spent on rote work, and leveraging third party resources (as appropriate) to augment your operations team.
With the pace of technological change increasing, making IT decisions has become complex. It is important to keep the focus on the business problem you are looking to solve, and grounding in that as you sift through your options.
A balance is required to ensure you are reviewing your choices through a few different metrics. You will need your engineering team to vet the technology itself, your financial team to validate the TCO and ROI and your operations team to ensure the solution continues adding value once the initial implementation is complete.
By taking this thoughtful approach to decision making you will find that worthy projects get approved and are adding the value your company needs to survive and thrive.