Why austerity is a dangerous IT strategy 

Prudent spending is vital for IT professionals but is there a tipping point when a reluctance to invest starts to cost the business more than it saves? 

One of the deciding factors in the recent UK election was a rejection of the long-term austerity plan.  A large percentage of Brits appear to have grown tired of government penny pinching and decided that dramatic change is necessary. 

Avoiding the obvious pitfall of starting a political debate, there is a point to be made here about IT investment.  IT seems to have barely altered its defensive spending stance following the dot-com bubble, which has left many organisations lagging badly.  Which begs the question: when does IT austerity become damaging?  

Penny-pinching IT eventually costs much more than it saves

Penny-pinching IT eventually costs much more than it saves

For an example of this look at the recent problems BA has experienced. The bank holiday IT failure which left thousands of passengers stranded will cost the airline an estimated £80 million in lost revenue.  This number may prove to be conservative when you consider the long-term impact on its brand.

It has been reported that BA has increasingly decided that cost-cutting is the way to deal with IT, with offshore outsourcing and cost-cutting rife. 

It’s a familiar story and certainly not exclusive to BA.  A recent Gartner report says that the bulk of government spending is allocated to nothing more than keeping legacy systems operational. On the surface, persisting with legacy systems appears to be financially sensible.  And certainly, building on top of outdated tools avoids adding cost to the balance sheet.  However, such an approach often costs the business more than it saves.

Patchwork, incumbent IT becomes unstable and unwieldily, and therefore very difficult and expensive to manage.  And because it doesn’t deliver the functionality and performance needed, it slows productivity and makes the business work less effectively.  In other words, clinging on to outdated IT delivers a double-hit of financial penalties because it's expensive to maintain and impacts the bottom line. 

If you turn this equation around and invest in progressive IT, you can reduce costs to run systems AND improve the effectiveness of the business.

The service desk is a classic case where under-investment leads to ongoing problems and causes the workforce to suffer.  Today, high-quality service desk software can be delivered at a great cost.  It can then automate processes, deliver faster fixes, facilitate effective self-service and ultimately help the business make better use of IT.    

It’s easy to understand why IT protects its budgets.  But as the saying goes, you have to spend to accumulate and this means that sometimes, austerity is a bad idea within IT.

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