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Transforming IT from Cost Center to Value Center

Transforming IT

In many organizations, the IT department is seen as a necessary cost center that consumes resources without providing measurable value. It’s an unfair perception that lingers from another era when IT was considered to be “outside” the core of the business.   

In the cost-center model, IT teams are given tasks to do, and they do them, which means they are relegated to being reactive instead of proactive agents for the organization. But forward-thinking business leaders aspire higher. They’re confronting this legacy mindset because they believe their organization’s success increasingly hinges on the IT team’s ability to shift from cost center to value center. What follows are some of the actions they are taking.

Distinguish Between Run and Change Elements

It’s helpful to think of IT budgets as “run” and “change” parts. The running/automation aspect should be aimed at continuous cost-saving projects and optimization. The change aspect should focus on innovation that adds strategic value. Examples would be software development, digital transformation, and initiatives that bring new products to market more successfully.

Most businesses allocate around 70-80 percent of their IT budget to the running aspect. That doesn’t leave a lot for innovation. Flip the script. Instead of tasking IT with mostly repetitive and menial “run” work, challenge them to become:

  • A foundation for scale
  • An accelerant to growth
  • A mitigator of risk
  • An enabler of integration
  • A creator of organizational efficiencies
  • An enhancer of customer experience (CX)

Take Advantage of Automation

Many repetitive, low-criticality processes can be left to automation. Even some medium and high-criticality tasks can be automated to improve the productivity of manual processes, freeing IT resources to be more strategic.

Automation unleashes IT leaders to innovate by empowering them to be change agents proactively making investments that deliver desired business objectives in the present and position the future for optimized enterprise value capture.

Track Everything That Matters

Whether it is marketing data from your website, financial data from billing, or performance metrics from business applications, access to and interpretation of accurate data can enable swift, actionable decision-making to drive more growth and long-term value.

Remember, what gets measured gets managed and optimized. Using robust tools like Baseline IT can put data, instant reporting, project and inventory management, revenue enhancement, financial management, business-wide transparency, and actionable insights at your fingertips.

When was the last time you reviewed data tracking with your IT team? Or asked them, “What aren’t we tracking?” What could you learn and improve if that data were available?

Encourage Departmental Immersion

Being an IT value center emerges from great technology decision making. And to achieve that, it’s vital that IT leaders and C-level stakeholders talk to each other and collaborate. This seems obvious but often IT leaders and teams are siloed from other departments because they are not considered strategic to the business. If IT teams aren’t part of the conversation, they cannot be aligned with their counterparts on a shared vision of outcomes.

IT leaders should participate in meetings focused on new business ideas such as entering new markets, creating new products, and enhancing CX, to name just a few examples. Otherwise, they are reactive order takers when they could be so much more to the organization.

A reactive posture also leads to struggles with shadow IT, which is when departments or individuals purchase and use technology without the approval or knowledge of the IT department. To avoid shadow IT, IT leaders need to be able to anticipate the organization’s needs and provide the necessary technology and resources. They can only do that if they are fully immersed in departmental use cases, goals, and desired outcomes.

Amplix Can Help

We have helped IT departments make the transition from cost center to value center more times than we can count. In most cases, our customer’s IT team does not have the bandwidth to prepare for, initiate and manage the process. We work as an extension of their team to jumpstart and help manage the effort so IT can become a facilitator, differentiator, and value creator.  

For more information about our process and case studies, reach out to your Amplix representative or email sales@amplix.com.

Find out how Amplix can increase your Return on IT