Business leaders have scrambled to put spend back on the bottom-line through the pandemic, and CIOs and IT leaders have been no exception. 

With the mass shift to hybrid working, robust technological capabilities have never been more important for businesses, but this has come at a time when budgets are tight. 

A recent report by research company Gartner found that in order to adapt to this reality, CIOs are changing their spend strategies to focus on alignment, proactive anticipation, and adaptability. These ‘value frameworks’ allow for coordinated management of resources and investments.

So as CIOs reconsider their cost management, what can these value frameworks offer CIOs and how can they be used to deliver long-term savings?

What is a value framework?

CIOs have traditionally opted for two short-term approaches to manage spend: cost optimization and demand management. 

In IT, cost-optimization involves the standardization or rationalization of developer tools, servers, and storage. Demand management on the other hand works to utilize planning technology to forecast, plan and manage demand for products and services. 

Value frameworks provide a long-term coordinated approach by allowing CIOs to take a sophisticated view of how they employ resources and where best to invest. This allows CIOs to coordinate resources flowing through their systems, empowering leaders to take more measured financial decisions.

Implementing a value framework

Best-in-class enterprises not only employ cost optimization levers but they execute them in a value framework. Ultimately these frameworks should be adaptable and there are four primary considerations for IT leaders: 

  • Alignment – The framework must focus on building on or deepening relationships between IT, bases business, finance, and procurement to ensure greater coordination across departments.
  • Standardization – When standardizing products and services, a common understanding of nomenclature and acronyms must be asserted. This ensures that all projects are able to employ the same measurements in a fast-moving business environment. Base business should ensure these metrics are able to quantify the bottom-line impact and this should be coordinated with finance. Procurement functions must guarantee requests are written in line with value metrics requirements, enabling standardized scoring within the context of the value framework.
  • Consistency – When deploying the framework, it must be consistently applied to all business projects moving forward, enabling a connected and coordinated strategy across the whole organization.
  • Review – Projects which have been integrated into the framework should be measured in the aforementioned metrics and tracked against their variance and project whilst ensuring business satisfaction.

Organizations should not aim for the sky when instigating a value framework – as with any change management program, a strong foundation is required followed by incremental step changes in the framework.

When should IT leaders use a value framework?

Value frameworks are often seen as an alternative to cost optimization strategies, but both solutions have their merits and appropriate uses.

Cost optimization is viewed as more of a quick win that can yield results in uncertain times, whilst value frameworks offer a more overarching approach that will provide improved bottom-line results in the long-term.

Both should be utilized appropriately and CIOs of today should be considering whether their priorities are short-term savings or far-reaching business transformation. Ultimately, organizations that embrace value frameworks will reap the benefits and see continued stronger bottom-line results in the long term.

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