Emarticon solves the challenges of new digital business models

THE APPROACH: practice-oriented IT management & sourcing principles
Since 2020, digitization has increased in German SMEs and corporations. Conferencing applications such as MS teams or cloud computing were in the foreground. In addition, the importance of digitally controlled processes increased. AI has been increasingly used, such as chat bots. These trends are continuing this year and will continue to intensify.

 

Firms that make little or no use of these new technologies run the risk of falling behind the competition. At the same time, cost pressure has increased - first from Covid-19, now from inflation and high energy prices.

How can digitization succeed or even be accelerated despite increasing cost pressure?

Efficient IT-Sourcing

Practice shows: IT sourcing is one of the decisive factors for successful digitization

Typical customer testimonials...

"Service providers or software manufacturers do not provide a future-proof best practice solution"

"The project budget exceeds expectations"  

"Follow-up costs for releases are not calculated or too low"

"Productivity increase is difficult to measure"

"The project becomes unnecessarily complex and takes much longer than planned"

"Data quality is insufficient at the start of the project"

Digitization often cannot be achieved without external service providers, and it cannot be further accelerated under any circumstances. However, there is often a lack of an effective and efficient approach to managing these service providers, and IT spending can easily get out of hand. Projects then have to be postponed or scaled down or cannot start at all.

What can the solution look like? So how can digitization be accelerated without increasing IT spending at the same time?

We have developed a new approach from a large number of projects in different sectors.

Efficient IT sourcing guidelines

Our approach, which we call efficient IT sourcing, is based on a few guidelines, similar to agile management:

Many IT contracts are bursting with technical measurement data that is used for billing. But something else is important: How well does IT support your business?

Therefore, key performance indicators are to be selected that take the most suitable indicators in focus.

Have you already experienced this...IT contracts should be as precise as possible, so finer and finer rules are being drawn up and the contract is becoming longer and more difficult to understand. Cooperation becomes inefficient because the contractual partners have to agree on the rules more and more often and everyone is looking for their own advantage.

Instead, leave more room for decisions by employees at the work level in terms of process efficiency and customer relationships!

The system then requires significantly fewer rules, is many times more efficient and you save yourself escalations.

Many IT service contracts are valid for not only 3 years but for 5 years, some even longer. But what should a contract look like when the technologies that will be used during its term are still unknown on the day of its signature?

Make sure the contract provides mechanisms that make change easy! This allows you to react to new technologies or changes in your business.

Many IT service contracts contain very precise price tables, according to which e-mail accounts, storage space and the like are billed. Much of this is required, but much can be done more easily.

Calculate according to what is relevant to you: What overall service does your company receive from the service provider? And don't benchmark individual cost items, but the total costs.

The approach results in having a service provider helping you to save on superfluous software installations, unnecessary data archives and unused but reserved hardware.

The big tech companies like Microsoft, Google, or SAP regularly introduce new, powerful products. Corresponding contracts always include the option to purchase the corresponding services in bundles. That's good, but it can lead to unnecessary costs if the new opportunities in the company are not used sufficiently.

Therefore, before signing a contract and introducing it, always answer the question what user value the new technology will achieve. Estimate the business case for this!

These guidelines and the experience of implementing them create a very powerful tool for keeping IT expenses under control. We were able to reduce our customers' IT budgets by 25-50% without reducing the scope of services and code quality. Two essential consequences arise from the implementation: Firstly, the budget is freed up to accelerate digitization. Secondly, the IT budget is used much more efficiently than before.

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Would you like to take your IT sourcing to a new level?

I would be happy to discuss your specific situation with you and create an individual offer.

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How can the efficient IT sourcing approach reduce costs and accelerate digitization? How are the effects created?

A good example of how the approach works is the principle "good reaction to change before planning and measurement". Of course, technical measurements are important, contract rules must also be observed and planning must take place.

At the IT outsourcing However, a rigid application of rules often prevents the potential of the business relationship from being used. Technological leaps that were unforeseeable at the beginning of the contract then lead to competitive disadvantages instead of advantages. Market leaders, on the other hand, manage to use technologies that were not yet known when the contract was signed.

In case of IT development projects the return on investment at the product feature level is often not sufficiently clear. Agile techniques have amplified this problem by making boundary conditions more flexible. It is therefore all the more important to put IT spend and additional user value in relation. The focus should be on the effect of the development project on the customer's business KPI.

"Good reaction to change before planning and measurement" Therefore, in the implementation (ie "translation") means: Creation and use of contracts, regulatory mechanisms, development environments, project management techniques and decision-making mechanisms that already anticipate roadblocks and changes in boundary conditions. This makes it possible to use levers for cost reduction so efficiently that the effect is increased.

In which steps does the implementation succeed in practice?

Every company has its own special situation. Of course, there is always room for maneuver in upcoming new negotiations. Often, however, development partnerships or outsourcing contracts have been in place for some time. Then it is important to develop new possibilities from this situation.

In both situations, clearly defined steps lead to the goal of achieving efficient IT sourcing:

  • 1. Checking the current situation of IT contracts and IT projects satisfaction and potential for improvement

  • 2. Use of new impulses through Applying the guidelines of efficient IT sourcing – ideally as part of workshops

  • 3. Define by concrete need for action together with all stakeholders
  • 4. Adequate structuring of corresponding contract negotiations or implementing the guidelines within the framework of existing contracts Changed project management, design of regulations, renegotiation and similar approaches
  • 5. Identify clear tasks and track implementation

It is important that these steps are given the right guidance and benefit from experiences from comparable projects.