Smart Approach to ASM to Improve Business Efficiency and Performance
Technology today has permeated every aspect of our lives and businesses. Consequently, the intensity of competition in the technology sector has seen exponential growth. As common to every dynamic sector, interesting trends that shape services and products are being observed. In the IT industry, we have witnessed a paradigm shift from the hardware-ruled world to a software dominated landscape.
A recent Gartner report titled IT Metrics: IT Spending and Staffing Report, 2013 (by Jim McGittigan, Kurt Potter, Jamie K. Guevara, Linda Hall, Eric Stegman published on 1 February 2013) found that application spend accounted for over one third (35%) of IT budgets in 2012. As mobility technologies become increasingly integrated into enterprise IT, this spending is expected to see an even further hike.
The challenges
It is often seen that a huge chunk of the overall cost of an application goes into its support and maintenance. As a result, Application Support and Maintenance (ASM) is quickly becoming an IT agenda, but probably not for the right reasons. Though it is not as much of a trend as Big Data or Mobility are, the fact that ASM is consuming such a large proportion of IT budgets is a major cause of concern. At a time when IT leaders around the world are faced with the challenge of creating incremental value for the overall IT spend, ASM represents a significantly large chunk of IT spending for a very low value return- in its current form. A majority of the clients we spoke with were only adopting a procurement strategy to reduce the ASM costs year on year. Moreover, only 20 percent of all organizations have an application services strategy, leading to overspending and under performance. Traditional ASM often turns out to be a hindrance to a company’s growth by taking up a large share of the overall IT budget.
Conventionally, the skills of ASM are used to ‘keep the lights on’ for a business rather than being used to empower business transformation. This has some implications:
The changing role of CIOs
IT today has a new focus on innovation and business transformation. The CIO’s are yet again faced with the dual agenda of impacting the growth of the company, while trying to reduce the cost of running the existing IT. This can only be achieved by changing the spend mix between Run the Business (RTB) and Change the Business (CTB).
The board and the CIOs, being aware of how critical IT has become to the functioning of a business, now expect it to positively impact business performance. There are now practical ways to reduce the RTB spend - through Cloud and Virtualization - which can then be used for CTB initiatives. These initiatives can impact the business due to the technological evolution achieved by Big Data, Analytics, Mobility and other disruptive technologies. Therefore, CIOs have an opportunity to impact the spend mix, thereby establishing IT as a strategic function.
Within all this, there is a spend area which has kept increasing over the years and the only efficiency that has been derived so far is through off-shoring and heavy negotiations, leading to the lowest level of skills being deployed to perform Application Support. This spend area is Application Management. However, when it comes to the application of ASM, CIOs are asking five important questions:
As a result, ASM has reached a crossroad. The gradual shift towards SaaS has blown its cover. It is about time that the traditional ASM is neutralized and a completely new approach is sought.
Thankfully, companies now have a new solution, in the form of ALT ASMTM. Unlike the traditional ASM, ALT ASMTM can organize teams on the basis of a business model in order to drive efficiencies at a fundamental level. It can provide support services to clients and vendors and can be used effectively for both large and small-scale projects. Most importantly, it can reduce the RTB spend and provide business benefits. Therefore, this solution can be the gen-next approach that can drive company performance and not limit itself to driving cost out of their operations.
About the Author
Vijay B. Iyer is the Senior Vice President & Global Head for Consumer Goods, Retail & e-Commerce. He has over 23 years in the industry, including the past 13 years providing professional consulting services to clients around operational improvement, business and IT strategy development, and technology integration. He has played a key role in the creation of Enterprise Application Services & Enterprise Transformation Services lines of business with HCL. His functional specialties include manufacturing, consumer goods, retail, sales, supply chain, production planning & customer service processes. Prior to his work with HCL, Vijay was the CIO for a large manufacturing & distribution organization.
A recent Gartner report titled IT Metrics: IT Spending and Staffing Report, 2013 (by Jim McGittigan, Kurt Potter, Jamie K. Guevara, Linda Hall, Eric Stegman published on 1 February 2013) found that application spend accounted for over one third (35%) of IT budgets in 2012. As mobility technologies become increasingly integrated into enterprise IT, this spending is expected to see an even further hike.
The challenges
It is often seen that a huge chunk of the overall cost of an application goes into its support and maintenance. As a result, Application Support and Maintenance (ASM) is quickly becoming an IT agenda, but probably not for the right reasons. Though it is not as much of a trend as Big Data or Mobility are, the fact that ASM is consuming such a large proportion of IT budgets is a major cause of concern. At a time when IT leaders around the world are faced with the challenge of creating incremental value for the overall IT spend, ASM represents a significantly large chunk of IT spending for a very low value return- in its current form. A majority of the clients we spoke with were only adopting a procurement strategy to reduce the ASM costs year on year. Moreover, only 20 percent of all organizations have an application services strategy, leading to overspending and under performance. Traditional ASM often turns out to be a hindrance to a company’s growth by taking up a large share of the overall IT budget.
Conventionally, the skills of ASM are used to ‘keep the lights on’ for a business rather than being used to empower business transformation. This has some implications:
- The application support team is not encouraged to think of new ideas or innovations, although they have the knowledge of how the business runs day-to-day.
- The budget consumed by ASM is spent on support & maintenance rather than being used to innovate and experiment with new technologies or being invested into projects that are designed to change the organization.
The changing role of CIOs
IT today has a new focus on innovation and business transformation. The CIO’s are yet again faced with the dual agenda of impacting the growth of the company, while trying to reduce the cost of running the existing IT. This can only be achieved by changing the spend mix between Run the Business (RTB) and Change the Business (CTB).
The board and the CIOs, being aware of how critical IT has become to the functioning of a business, now expect it to positively impact business performance. There are now practical ways to reduce the RTB spend - through Cloud and Virtualization - which can then be used for CTB initiatives. These initiatives can impact the business due to the technological evolution achieved by Big Data, Analytics, Mobility and other disruptive technologies. Therefore, CIOs have an opportunity to impact the spend mix, thereby establishing IT as a strategic function.
Within all this, there is a spend area which has kept increasing over the years and the only efficiency that has been derived so far is through off-shoring and heavy negotiations, leading to the lowest level of skills being deployed to perform Application Support. This spend area is Application Management. However, when it comes to the application of ASM, CIOs are asking five important questions:
- Why am I paying the same for application support each year?
- Why are the number of issues growing each year with increasing complexity of the IT environment?
- Why are IT vendors not innovating in my biggest spending area?
- Why can't this spend impact my business as well?
- In the age of software-as-a-service (SaaS),why do I even need application support?
As a result, ASM has reached a crossroad. The gradual shift towards SaaS has blown its cover. It is about time that the traditional ASM is neutralized and a completely new approach is sought.
Thankfully, companies now have a new solution, in the form of ALT ASMTM. Unlike the traditional ASM, ALT ASMTM can organize teams on the basis of a business model in order to drive efficiencies at a fundamental level. It can provide support services to clients and vendors and can be used effectively for both large and small-scale projects. Most importantly, it can reduce the RTB spend and provide business benefits. Therefore, this solution can be the gen-next approach that can drive company performance and not limit itself to driving cost out of their operations.
About the Author
Vijay B. Iyer is the Senior Vice President & Global Head for Consumer Goods, Retail & e-Commerce. He has over 23 years in the industry, including the past 13 years providing professional consulting services to clients around operational improvement, business and IT strategy development, and technology integration. He has played a key role in the creation of Enterprise Application Services & Enterprise Transformation Services lines of business with HCL. His functional specialties include manufacturing, consumer goods, retail, sales, supply chain, production planning & customer service processes. Prior to his work with HCL, Vijay was the CIO for a large manufacturing & distribution organization.