Right size or wrong size, elastic or fixed cost: What does this all mean for IT and productivity?

In 2012, size has mattered. When margins are squeezed and growth is hard to find, businesses are forced to assess costs.

Costs are directly aligned to the size/scale of the business. Overspending in any area is a no go. Investing in talent or infrastructure for the future is a risk most business decision-makers won’t commit to at the moment due to cashflow protection preferences.

So getting scopes and budgets right and getting the right solution at the right price is essential. Gaining productivity has to be important to every service or production business out there. New buzz terms like “right sizing” solutions or teams have hit the street.

We want elasticity i.e. service on demand but without the overheads of slack resources. We don’t want management overheads in our businesses nor do we want over-skilled people being overpaid to do low-level work. Elasticity implies the ability to reduce costs as income decreases, but it also allows us to increase capacity in small increments as needs increase when large orders or new growth occurs.

The new financial year means it is crunch time as our new cost/investment budgets are typically smaller than they were last year. Therefore the demand for productivity gains has never been higher. Fortunately, productivity gains are achievable through cultural change and this is being greatly assisted by new technologies such as mobility, personalised devices, tablets (rather than PCs or laptops) and instant access to apps and data storage. All of which represents a perfect storm for transformation within the IT operations of a business.

Of course the technology world has solutions to these problems with virtual servers, virtual desktops and virtual teams. These can be provided with cloud solutions and outsourced IT services in ways that just could not be done a few years ago. Conservative businesses are re-inventing themselves and these previously frowned upon solutions are becoming essential components in a competitive landscape.

Cloud solutions sold on per user/per month basis give very modular costs to our applications and storage needs. Many of the cloud software companies recognise that this elasticity leads to attracting new clients seeking elastic cost models. They know full well that when the market picks up they will not have to revisit the client to sell more seats. They also know their market place is growing so fast that they will not notice a few users cancelled when some companies reduce the number of licences they hold.

Similarly, hanging on to people in the IT department who are not performing the entire function required is no longer a viable option and it is time to ensure the right resources are available on demand. Many companies are realising that the virtual IT team available through outsourcing to local support organisations offers fixed cost solutions tied to company size and so the cost of support becomes totally elastic in a tightly controlled manner and offers better diversity, capacity and capability.

Are you in control of your IT expenditure and is it elastic enough to ensure you survive now and continue to thrive in the growth phase?

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth.

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