IT Turnarounds – How to Add Business Value While Reducing Cost
The current pandemic crisis and trade wars are prompting companies to reevaluate their business models, supply chains, and office/remote work arrangements.
Uncertain times lead to opportunities. The current pandemic crisis and trade wars are prompting companies to reevaluate their business models, supply chains, and office/remote work arrangements. Generally, a turnaround is thought of as a financial restructuring or a financial recovery process where profitable assets are kept, and non-performing assets are sold. However, there is another type of turnaround that is typically ignored, even though it is a great source of financial recovery and business value- IT turnarounds.
IT turnarounds are needed in healthy and unhealthy companies. Companies face many interrelated information technology problems. Clear signs of information technology trouble usually indicate problems with reporting/analytics. It could result in difficulty when generating reports, or inaccurate data or delays in creating reports. Other troubling signals are:
- Excessive spending combined with little information technology and business value
- Systematic issues with systems
- Having multiple ERP or CRM systems (think of it as an “IT Candy Store” – bought all the tools in the market but do not use them)
- Unreadable “spaghetti code”
- Late and over-budget projects
- IT staff that is not accountable, and does not have the proper skillset
Business transformation is an important aspect of information technology turnaround for companies. The business drives the efforts with a strategy that uses information technology and places IT in the center of the business strategy. A business transformation could be a supply chain redesign, or an ERP or CRM implementation.
What are the steps to a successful IT turnaround?
The first step is to conduct an assessment and identify the current projects that add value to the business and cancel the underperforming projects. The key is to stop the bleeding and reduce technology costs.
Next, a review of the information technology staff needs to take place. What are the attitudes, business skills, and technical skills? Is the information technology team holding proprietary knowledge that is critical to the success of the business? What are the steps and tools needed to disseminate and document that knowledge? It is important to identify the strengths and liabilities you have in your information technology team. Who are the players that will make the turnaround a success? Where are the gaps? What can you automate? Who will stay and who will go?
The third area to study is the technology and architecture of the organization. The assessment is similar to the one made for the information technology staff. You need to carefully identify the value of the technology resources. Do you want to replace a 30-year system because it is old? Do you need to change it now in the middle of financial crisis? The classic argument for replacing an old system is that it will not scale. Has it been scaling for 30 years?
IT turnarounds are fast paced. The speed and urgency are not a reason for a lack of a strategy and processes. It is imperative to develop a clear IT turnaround strategy, business case, timeline, budget, justification, payback, risk management, metrics, and process playbook. Urgency, clarity, organization, and focus are paramount. The lack of organization is one of the factors that have led to current issues.
IT turnarounds are not for the faint of heart, and it is important that consultants are brought in to help. Our team of consultants will bring in the experience, processes, and tools you need for success. Our team consists of “doers”, who will create a successful IT turnaround. The road ahead is full of risks, long hours, frustration, and solutions. “We will get it done” is the key. You do not want to hear, “In my opinion”.
About the Author
Oscar Perez has over 24 years of experience in developing business strategies, leading complex business transformation projects, program project management, business case development, business process development, and solution software selection. He has conducted project reviews for Goldman Sachs, Bain Consultants, Brown Brothers Harriman, McKinsey & Company, Norges Bank Investment Management, P. Schoenfeld Asset Management, Iconiq Capital, Greencape Capital Pty Ltd, JMI Equity, Coatue Management, The Boston Consulting Group, Altrinsic Global Advisors, LLC, Technology Crossover Ventures, La Financiere de Lechiquier, Platinum Asset Management, Invesco, Guggenheim Partners and private equity firms. Mr. Perez currently serves as a Senior Consultant for NMS Consulting, LLC.