Zero-based Technology to fuel growth post COVID-19
July 28, 2020
RESEARCH REPORT
In brief
In brief
- Investing to improve IT has always been difficult—it’s even harder amid the COVID-19 crisis.
- Even now, dramatically cutting IT spending isn’t the answer—it chokes growth and ignores reinvestment.
- There is a better way to rotate the cost base to fuel tech-powered business transformation.
- Zero-based Technology (ZBT) generates cash for reinvestment in IT capabilities that drive long-term growth.
In the post-COVID-19 world, companies across industries are feeling intense cash pressures. At the same time, the pandemic has accelerated digital transformation. Consumers are flocking to the digital channel. Employees are working remotely. Organizations are doubling down on scenario planning to respond to events as they occur.
Rotating technology spend to put the right dollars against the right investments is critical today. Uncertainty abounds. Even so, there are no-regrets moves to make—from investing in digital customer interactions and remote workforce tools to strengthening security infrastructures and adopting cloud solutions. But how can you fund these moves?
In a flash, 2020 became 2023 – what we thought would happen in three years happened in three months.
An alternative to slashing IT costs
Zero-based Technology, or ZBT, is a value-based alternative to traditional IT cost reduction. It rotates the IT cost base, freeing funds to invest in technology-enabled business transformation.
ZBT applies a zero-base to all IT spend. It creates efficiencies and optimizes core IT spend by identifying cost levers and modeling savings and investment scenarios, generating cash for reinvestment in capabilities that drive growth.
Develop a new spend profile
Focus on the right IT spend, not the lowest, to make the necessary technology investments to compete in volatile markets.
Create a variable cost structure
Trade benchmarks for value levers for a more flexible approach to addressing and targeting savings potential over time.
Increase value transparency
Assess all categories of IT spend with an approach that views IT costs as a whole through a services lens.
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Actions for the Now, the Next and the Never Normal
In the early days of pandemic response, many companies made wholesale cuts to IT. Now the priority is looking to the longer term and moving toward a sustainable cost base, especially in light of questions executives are asking themselves about the future, such as:
- Where will the economy be in a year?
- What will markets look like?
- Which competitors will leapfrog ahead?
There are imprecise answers to these questions right now. However, IT will figure heavily into companies’ recovery and rebirth. ZBT’s ability to rotate the cost base now will have lasting impact on the business. These are the fundamentals of success.
Spend for lasting growth
Spend based on the disruptive value of technology, business priorities, growth platform, and current and future IT and business needs.
Always refresh your levers
Revisit levers regularly. In such a shifting environment, if companies don’t look at levers often, they might as well never look at them.
Build a strong baseline
Assess all spending categories including Opex, Capex, labor, non-labor and technology spend inside and outside of the IT department.
Balance cost and service
Seize opportunities for material savings with “pain-free” reductions in rate consumption that make sense based on the business need.
Optimize with automation
Take advantage of the step-change efficiencies that result from using AI in the business and intelligent automation in IT.
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Companies will rely on their IT foundation to emerge stronger. Using ZBT, decision makers can get new visibility and control of IT costs, creating a variable cost structure and focusing spending on the right investment for a technology-powered business transformation.
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