What cost optimization strategies have proven most effective for your IT organization in the current economic climate? Are there approaches you've tried that didn't deliver the expected value?
Sort by:
Thanks, Sarah. I agree with the chargeback model's limitations. However, transitioning to a zero-based budget has been beneficial for us. It ensures visibility and ownership of expenses, allowing us to advise on the best path forward. Skipping the chargeback model might not provide the same influence in discussions about cost management.<br>
Our organization has implemented several effective cost optimization strategies. Being a digital player in the pet food market, operating in 30 markets with a tech team of around 400, we rely heavily on custom software. The Ukraine situation and inflation have significantly impacted supply chains, prompting us to explore tech interventions to mitigate costs. We've introduced Kinexis, an AI-driven supply chain planning solution, and Centero for last-mile delivery and invoice control. Additionally, we've invested in AI data monetization, leveraging customer data to drive growth. To manage run costs, we've adopted a TCO model to rationalize applications and ensure transparency in costs from both product and technology perspectives.
In the first quarter, we eliminated about 40 applications and are continuing this process. It's not just about addressing technological debt but also evaluating historically grown applications that haven't shown a great return on investment. We believe it's time to take necessary measures.
It's not just about technology debt. Some applications have grown historically, and while they might not show a great return on investment, we believe they will eventually perform. However, we need to take measures now.
Similar to Lakshmi, we've focused on simplifying our technology landscape. Upon joining CONMED nine months ago, I identified areas with redundant solutions. For instance, we had both Zoom and Teams. By conducting a capacity analysis, we determined which product best serves our needs and began phasing out the other. Though initially driven by a desire for simplification, this strategy aligns well with current economic uncertainties, allowing us to see financial benefits now.
Those examples resonate with me. In healthcare and workers' compensation, market consolidation and technological advancements like AI and robotics have reduced claims, impacting revenue. Coupled with economic pressures and rising supplier costs, it's challenging to manage expenses. We've utilized Gartner's digital ambition framework to align our portfolio decisions with revenue opportunities, ensuring we have the capacity to deliver minimum viable products when needed. This approach helps us reinvest in transformation and manage rising costs.
When it comes to strategies that haven't worked, one approach was implementing a chargeback model to allocate costs to the business units requesting services. While it aimed to make them more accountable, it didn't reduce overall organizational costs. Now, we're focusing on introducing standards and cost controls to drive down costs across the organization, regardless of where they appear.