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Many organisations are currently implementing cost reduction strategies, but a lack of understanding about the broader implications of these decisions is jeopardising many businesses, argues Richard Pharro, chief executive of APMG.

CIOs and CFOs are under more pressure than ever before to drive down costs and squeeze greater value from IT assets whilst supporting rapid business change; however a lack of insight and understanding is seriously jeopardising the quality and stability of organisations, particularly in the public sector.

According to the UK National Audit Office, the UK government is unlikely to meet its £35bn spending reduction deadline next year, with departments lacking the proper data to measure the cuts. The NAO investigated five large departments due to deliver £2.8bn of the savings. It found that while 38% of individual savings targets were sustainable, 44% were uncertain, and 18% ‘significantly overstated’ their realistic savings potential.

This lack of certainty regarding the implications of change is a burden to private and public sector alike. The issue is not only poor information upon which to base these critical decisions but also the confusion that arises between individuals and departments working to different objectives and using different terminology.

If organisations are to minimise risk and derive the required value from IT, there is a clear need for a better way to document and model the interactions between people, processes and technology across a business. The ability to simplify business complexity by highlighting business assets, analysing their interdependencies, and create a visual map of the business will provide a common business language upon which both day-to-day and strategic decisions can be both based and delivered.

Common language
With the pressure now beginning to show, especially in the public sector, there is a real need for a common language to support relevant cross business discussion and analysis.

If IT is to realise its potential in delivering value to the business, organisations require a framework and method for capturing, illustrating and modelling the relationships, dependencies and dataflows between business and IT assets and resources in a business context.

Mapping dataflow
A formal and structured way of communicating the logical and physical relationships and dependencies between IT assets and resources (ownership, business processes, applications, systems, hardware, and infrastructure) can define the business services of a modern enterprise in a way that can be understood by individuals in every role across an organisation.

The key to this approach is that business resources and IT assets are regarded as providers of data, consumers of data, or the conduit through which the data can flow. This enables the creation of a diagrammatic representation based on dataflows across the organisation, providing a common, intuitive and easily-understood diagram that facilitates relevant communication and decision making.

With this big picture, or corporate DNA, organisations have a clear picture of how the business interlinks and the implications of change. The business can then establish a delivery platform to ensure changes are implemented effectively and quickly.

Reducing risk
The corporate landscape remains challenging. Every business is faced with optimising resources whilst supporting a fast changing environment, from growing compliance demands to escalating merger and acquisition activity.

However, organisations cannot afford to make these decisions based on gut feel; the risks are simply too high. The effects of such strategy is plainly visible in the numerous failed projects and initiatives of the past 15 years, many blamed on a lack of thought and misunderstanding as well as poor delivery programmes.

One way to minimise risk and deliver the consolidation and cost cutting required in today's economy without fundamentally jeopardising corporate performance is to achieve true, accurate and trusted communication across IT and the business. It is with this common language and intuitive, cross functional approach that IT can truly fulfil its role as business enabler.