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Applying Pareto to Unlock Your IT's Full Value
When we speak to clients about their IT systems, a common misconception they have is that all their systems and applications have equal value. It's not until we dig deeper and compare their outputs with the company objectives that we start separating the critical from the wasteful.

Applying the Pareto Rule to Business Technology

The path to digital transformation is complex. It’s a journey filled with jargon, obstacles and pushback from stakeholders of all levels. Reverting to basics and looking at time-honoured principles such as Pareto can help you navigate your IT with clear strategy and focus.

The tried-and-tested Pareto Rule says 80% of outcomes are caused by 20% of effort. For example, 20% of your customers account for 80% of your revenue, or 20% of your staff do 80% of the work. If the Pareto Principle were applied to business technology, it would suggest 80% of your technology’s value comes from 20% of your business technology.

In other words, Pareto would claim that as much as 80% of the IT you’re paying for delivers very little in return.

 

Does 80/20 Apply to Your Business?

Are you certain the Pareto principle doesn’t apply to your business’s IT systems? Does most of your IT infrastructure produce low ROI?

Although the figure is unproven, it’s an approach we take with all client IT audits. The Pareto Principle is an observation that most things are not distributed evenly, and it is why we focus on the IT that’s expensive and yields a poor return on investment to ensure that all areas of your IT deliver value for money.

Of course, you must have some IT services and systems that don’t directly contribute to business growth. For example, cyber protection is there to prevent risk and reduce the impact should you be attacked, meaning it gives more of a “protection value” than a financial value.


How Do We Do It?

Reviewing your IT systems identifies ways to optimise your underperforming systems or streamline your cloud infrastructure. One such audit saved one of our clients £300,000 per year in IT costs after we identified systems that could be consolidated and condensed and held underperforming providers to account.

To help you extract more value out of your IT, or reduce your overall spending, by following these methodical steps:

 

1. IT Audit

Comprehensive analysis of all your systems currently in place to identify the systems contributing the most to business growth and understand why they are successful. Then, evaluating the other systems helps us see where they can be improved or streamlined. By optimising and enhancing them by upgrading old technology, improving user interfaces, or integrating systems, we make them more efficient so they can start providing more value to the organisation.

 

2. Business Systems Analysis

Are your systems supporting your processes and ultimately contributing to business success? Many businesses work in silos, with departments not communicating with each other; a BA creates a holistic view of a company’s entire operations. The detailed analysis provides easy-to-interpret data and information that will guide decision-making. Our findings will identify areas for streamlining and improving your overall IT infrastructure.

 

3. Business-IT Strategy Alignment

Your systems may not provide value because they are not properly aligned with the company’s direction. We can review each system to ensure they serve a specific purpose or result that contributes directly to your organisation’s growth strategy.

 

4. Continuous Improvement

By encouraging user feedback and measuring its performance, you can make enhancements and refinements over time. By doing this regularly, your systems can keep up with real-world usage, and will gradually increase in value over time.

 

5. Redefining Success Metrics

Not all systems directly contribute to business growth, but they might provide value in other ways, such as improving customer service, enhancing your brand image, or improving efficiency. We can advise and adjust your reporting metrics accordingly so you can see the full value your systems bring.

 

Our Experience

For 14 years, we have been a technology partner for schools, chartered institutes, membership bodies and commercial firms. With considerable in-house resources, we utilise many ways to review a business’s IT and the value it brings.

Our Business Systems Analysts meticulously review all business processes and investigate how their systems support every process. Based on collaboration with your stakeholders, we establish your core business goals so we can define KPIs and reporting metrics to measure how cost-effective each IT solution is.

Our CTOs have performed IT and systems audits for clients looking for a one-off service having realised they were overspending on IT. The audit includes managed contracts, third-party vendors and internal digital infrastructure. Recently, our findings saved a client more than £300,000 per year in annual IT costs.

Connect With an Agile Technology Partner

PSP IT is a technology partner with 14 years of experience providing strategic IT management and analysis. Our senior management team has partnered with education bodies, chartered institutes, membership bodies and commercial organisations to help them get more value from their IT even when spending less.

For more information, talk with a member of our director-level IT team. Fill out this quick contact form to get in touch.

21st March 2024