In times of economic crisis and tight cash, it’s helpful to view IT and its budget holistically. Depending on the organization, the IT budget may be as little as one or two per cent of the revenue, or as much as 10 to 15 per cent, said Denis Picard, managing director with the New York-based Alvarez & Marsal Business Consulting LLC. “There is a tremendous amount of leverage to be realized by spending the IT dollars more effectively,” said Picard.
But what IT does with those savings is key. IT can reap “a far bigger payback,” said Picard, if it reprioritizes those dollars and staff to initiatives that will generate revenue or reduce cost. Picard said he’s even witnessed a CIO and CFO negotiate a deal where half of the savings from IT is re-invested in IT, and the other half in the business.
Working capital is a critical issue, said Picard, describing it as a “tremendous opportunity for companies right now.” Savvy CIOs and CFOs can work closely with the head of supply chain, for instance, to understand what is being done to ensure working capital, and to ensure IT projects are prioritized against that.
Specifically, better asset management is a great way to save, noted Picard, especially after a company has downsized and has extra PCs, laptops, cellphones and software licenses.