Technology value optimization

What is technology value optimization?

Technology value optimization (TVO) is the practice of increasing the return on IT investments for your organization. By evaluating the current hybrid IT landscape and understanding connections and contributions to business goals and objectives, technology initiatives can become better aligned with your broader business strategy. TVO enables IT, finance, procurement and cloud teams to gain deep insights into cost saving opportunities and compliance risks. IT leaders achieve rich intelligence about each business service in their complex environments, which in turn accelerates decision making and provides proactive management of technology costs and risk.

Important factors for TVO efforts include:

Challenges of TVO

Typical challenges in driving optimization for technology investments are centered around the complex nature of IT, the broad implications of technology within and outside of the organization, and the variety of stakeholders involved. Common challenges for technology value optimization include:

Stakeholder, strategy and measurement alignment

Ensuring technology initiatives are aligned with broader business goals and objectives can be difficult. If technology decisions are not closely tied to your organization's strategic priorities, it can lead to misalignment and wasted resources. Stakeholders may resist adopting new technologies or changing existing processes, even if the changes are intended to improve efficiency and value.

Decision making at the stakeholder level often can become complex, especially in organizations with diverse requirements and limited resources. For this reason, communication across stakeholders is essential to effective prioritization. Inadequate communication between technology teams and business stakeholders can lead to misunderstandings, unrealistic expectations and misaligned priorities.

Additionally, measuring the return on investment (ROI) for your technology initiatives can be complicated, especially when the benefits are not immediately quantifiable. Determining how to measure and attribute value accurately can be a significant challenge and often requires foundational data that can be agreed upon for building business cases.

Evolving technology landscape

The rapid pace of technological advancements can make it challenging to select the right technologies that will remain relevant and beneficial in the long term. Investing in technology that becomes obsolete quickly can result in unnecessary cost or tech debt. Integrating new technologies with existing systems and processes adds additional complexity, including compatibility issues, data migration and additional potential disruptions that can hinder implementation.

Navigating existing technology in your hybrid IT estate requires integrating new technology with legacy systems, which can cause considerable inefficiency. It also requires managing relationships with technology vendors and partners—however, challenges can arise when expectations, deliverables or support don’t align with the organization's needs. These are essential steps toward technology value optimization. Innovation relies on balancing the adoption of innovative technologies against maintaining stable, reliable systems, and existing vendors often play a large part in this process. Rapid adoption of new technology can lead to instability within the organization and for external solutions if not managed properly.

Investments and prioritization

With an aim to demonstrate immediate results, focusing on short-term gains rather than long-term value can result in solutions that provide immediate benefits but lack scalability or sustainability. This can be exacerbated by technology projects that sometimes exceed their budget due to unforeseen complexities, scope changes or other factors that lead to cost overruns. Managing costs, while focusing on and staying within budget, is crucial for optimizing value.

Data privacy and security

With increasing concerns about data breaches and privacy, ensuring the security and compliance of technology solutions can be a significant challenge. Safeguarding sensitive data requires careful planning and execution that is possible only with a full understanding of the IT environment in which it is housed.

Keys to successful TVO

Addressing the above challenges will go far toward improving the success of measuring the ROI of your technology and developing optimization processes. Important key factors for addressing these challenges include:

  • Communication and transparency: Including cross-functional collaboration within technology teams and between IT and relative departments or stakeholders. This also includes addressing challenges around change management with effective and transparent training and communication
  • Clearly outlined objectives and goals: Aligning to business goals goes hand in hand with communication. If stakeholders understand the outcomes, they can better prepare to reach those goals collaboratively. Leveraging reliable data on your IT estate is key to supporting these efforts

While these strategic organizational elements are key, data is the ultimate indicator of successful optimization across technology spend. Organizations estimate wasted spend across software, data center, SaaS and cloud to be above 30%. In order to rein in that waste, businesses are implementing stronger IT asset management practices and combining efforts with burgeoning cloud centers of excellence (CCEOs) or FinOps groups to cover an evolving hybrid estate.

Ask yourself these questions in order to build effective TVO:

  1. Do we know exactly what’s in our IT estate?
  2. Are our software licensing costs in control and optimized?
  3. Can we manage our SaaS costs?
  4. Are our cloud costs clear and in an ideal state?
  5. Are there opportunities to improve cloud migration efforts?
  6. How can we leverage our current investments in IT service management (ITSM) and IT financial management (ITFM)?
  7. What are the costs of the status quo?

These seven essential questions will help you create the framework for developing strong and efficient technology investments.

Additional considerations for technology organizations:

  • ITAM and SAM professionals should build strategies for sharing data and skills to help a broad set of processes ranging from FinOps to security
  • As SaaS and cloud usage and their associated costs eclipse those of on-premises software, ITAM professionals must continue to increase their expertise and involvement in CCOE/FinOps teams. Additionally, cloud teams must leverage ITAM to ensure that software licensing is incorporated into cloud cost planning and deployment
  • Building high-quality data on IT estates improves the performance of other platforms and teams, including security, enterprise architecture and configuration management databases (CMDBs). As you increase your use of transient assets such as cloud instances or containers, you must reassess your IT asset tracking procedures to ensure CMDBs don’t become bloated with outdated and irrelevant entries
  • Focusing use of ITAM tools with improved usability, which provides deeper insights into your hybrid IT estate, will help decrease time spent supporting costly audits
  • Factoring for cost and performance are vital in finding the most appropriate place for workloads in cloud; the old “lift and shift” mentality can drive costs and/or effort

What does TVO allow organizations to do?

The importance of TVO cannot be understated. Implementing TVO best practices will allow your organization to:

  • Get rich intelligence about the technologies in your complex hybrid IT environment
  • Make better-informed, data-driven decisions that have cross-organizational implications
  • Do more with existing resources through efficiency gains
  • Proactively manage technology spend and risk
  • Enhance investments in ITSM and ITFM, increasing the effectiveness of these existing solutions with a complete, comprehensive view of your IT ecosystem

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