Page 20 - MetalForming June 2013

Best Practices
By Bob Dobrowsky
Am I Paying Too Much for IT?
This common question from upper management often is fol- lowed by another: “We continue to invest in more equipment and staff for information technology, so why doesn’t the performance and reliabili- ty of our systems improve?”
Determining how much to spend on IT and what return to expect from that investment is a common chal- lenge. Metalformers must consider many factors when analyzing the ben- efit of IT expenses. As a starting point, most analysts and surveys will put IT spending for manufacturers some- where between 1.7 and 2.6 percent of revenue when considered as an average spend over time. Costs generally run higher in years with significant equip- ment and application refreshes and lower in the years after these investments have been made.
The question of value proves more difficult to answer, and depends on the business’ expectations of IT. When we see this question raised, there often is a lack of alignment between the objec- tives of the business and the IT team’s understanding of those objectives.
Here we present some key strate- gies to consider when attempting to align IT’s daily operations with business objectives, with an emphasis on max-
Bob Dobrowsky is a part- ner with the Cleveland office of Plante Moran, PLLC, and is one of the leaders of the firm’s Ohio Manufacturing and Distri- bution practice. He has been delivering profes- sional ser vices to private- ly held companies for the past 21 years. Bob has
authored the annual PMA Benchmarking Report since 2003, serves as a member of the board of directors for PMA’s Cleveland district, and has pre- sented at various district level meetings. www.plantemoran.com Bob.Dobrowsky@plantemoran.com
imizing the value received from IT.
1) Establish performance expecta- tions.
Develop a set of performance expec- tations jointly between key business stakeholders and IT. The business stakeholders should clearly define their expectations of IT, including priorities and metrics. IT staff should clearly understand that performance will be measured against those prioritized expectations and metrics. A lack of clarity with regards to priorities can result in IT spending time and effort on items that provide minimal value to the organization. These expectations can be simple (sys-
3) Competitively quote and negoti- ate IT service agreements.
We often find that businesses of all sizes simply renew existing service agreements or permit them to auto- matically renew. Given the rapidly changing landscape of technology, most businesses can obtain better pric- ing and enhanced services by obtaining competitive quotes. In a competitive process, significant savings can be real- ized (as much as 50 percent) even when selecting the incumbent service provider. This strategy applies to telecommunications carriers, hosting providers, remote monitoring services
tems remain operat-
ing and accessible, for
example) but they
also should be meas- urable—maximum of
only 2 hr. of planned
downtime per week
and no more than 4
hr. of unplanned downtime per year, for example.
2) Establish a detailed budget with IT.
Some businesses avoid crafting a detailed budget, in an effort to mini- mize IT spending. However, a clearly defined and managed IT budget actu- ally maintains control over the amount spent and directs that spending to where it provides the greatest value. For example, allocating funds to upgrade a network from a low-cost consumer-grade solution to managed business-class hardware may seem counterintuitive. But, such an upgrade actually may reduce total cost of own- ership in the long run, as the IT support burden can be less with a business- class solution. Another benefit of the IT budgeting process is a documented commitment to make long-term strate- gic IT investments.
and many other tech- nology-related servic- es. Missing this opportunity is like giving away money.
4) Establish infra- structure monitoring processes in IT.
Many businesses have infrastructure issues that they either are not aware of until they result in a failure, or that they accept as the status quo. Manufacturers fail to use infrastructure monitoring, which would typically reveal these issues, for any of several reasons, including limited investment in monitoring tools, lack of expertise to set up and understand the tools, lack of interest by IT staff and a lack of priority for these items by management. We have conducted assessments that have revealed issues that include failed data backups, equip- ment with failed power supplies or hard drives, and expensive high-capac- ity network connections not being used. Many businesses can equip themselves with reliable monitoring tools for less than $10,000. They then can use these tools to monitor potential issues and to report on IT health to management. Management should use
Most businesses can obtain better pricing and enhanced services by obtaining competitive quotes.
18 MetalForming/June 2013
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