Latest / The DEX Show: A Show for IT Change Makers / Reality Bytes #45: The Investment Paradox (Spending to Save in IT)

Transcript

Reality Bytes #45: The Investment Paradox (Spending to Save in IT) · The DEX Show: A Show for IT Change Makers

0:01
Welcome it, change Makers to the Deck Show with Tim Flower and Tom McGrath.
0:07
Let's get into it. Hello, change Makers, we're back. It's
0:11
Reality Bites. We've got the full crew today, and look, we hope
0:15
we are now out of May officially, at least when you hear this,
0:19
we will be out of May officially. And we hope you really did enjoy
0:23
ours, our month of Next Think and Dex anniversary celebrations during May. But
0:30
you know, look, if you also think enough about Next Bink already,
0:34
that's also fair enough listeners. And we will Tim and I on the Deck
0:39
Show and here on Reality Bites be turning our attention once more outward to the
0:44
wider world around us and the wider space. So we've got some amazing,
0:48
amazing guests coming up, so keep your eyepeal for that, and we will
0:52
be turning our attention to slightly less Next Think specific topics as well here on
0:57
Reality Bites. Which leads me to today is discussion topic, which is about
1:03
the question of value in it quite a forny one, Tim, don't you
1:08
think, But you know, just value in general. As a marketeer,
1:12
I think it sometimes makes me nervous. I don't know, Yeah, as
1:19
an IT person, it makes me nervous too. I've lived either on one
1:23
side or the other of either justifying value to purchase or justifying value to sell.
1:27
And it's a tricky, tricky conversation, indeed it is. And Yeah,
1:34
I don't think we necessarily going to run into too much controversy, but
1:38
it's an interesting topic looking forward to getting stuck into it. It was brought
1:42
to us by you, Arianna, and I think the fem occurred to you
1:47
because you've been speaking to some customers about that tension between and we do hear
1:52
about this a lot actually, between investment and the need to cut costs,
1:57
the paradox of spending money to save money effect. So set this up for
2:00
us, please, Ariana, what are the customers you've spoken to encountering right
2:06
now? What are the main fault lines in this discussion look like? Yeah,
2:09
I've had some really interesting conversations and heard a number of great perspectives on
2:15
this recently, and so I thought it would be fun to discuss. I'm
2:19
sure all of us are super familiar, perhaps even really tired of the refrain
2:24
of doing more with us that people have been hearing. I think a lot
2:29
especially in recent times with organizations feeling pretty significant financial squeeze and therefore some demands
2:38
to cut costs. But one of the things that I've heard in speaking to
2:43
customers is that it's never just about cutting costs, right, It's about how
2:47
do we reduce our spending in smart ways without creating greater costs down the line.
2:53
How do we keep the bigger picture in mind and also invest in ways
2:59
that will help our organization to succeed. And that balance, I think is
3:05
really a significant tension for a lot of organizations. I've heard from a number
3:10
of people that there are organizations facing significant challenges as a result of downsizing and
3:17
then having not enough resources for the types of goals that they want to accomplish.
3:25
And then, of course, how do you figure out where to invest
3:29
more effectively? Do we hire more people, do we reassign people? There's
3:34
upsides and downsides to all of these strategies. Right, Hiring costs money,
3:38
Reassigning people requires reshuffling resources. There's some benefits sometimes when you want to give
3:46
people room for growth internally and they may have relevant experiences, they may know
3:51
your organization, but there are still challenges to cross training as well as upskilling,
3:57
and then there's of course hiring tools right there, tools that will film
4:00
the gap. Will this tool increase our efficiency, help us meet our goals,
4:06
or will it require more people resources to implement? To figure out how
4:11
to get that into place, Right, there's getting people up to speed,
4:15
and then there's getting tools really running and setting up processes around them. So
4:19
everything takes both money and time, and so figuring out where to do that
4:26
and what will be effective is I think a really major challenge. And then
4:30
the last component that goes along with all of that that I've heard a lot
4:32
about recently in particular, is communicating with stakeholders. So when it comes to
4:38
making these decisions, there's a lot of big questions people have, right like
4:42
will this fill in a gap? What resources will require, whether that's training
4:46
a person or implementing a new tool or process, And then how do we
4:53
not just evaluate that anticipate that, but how do we communicate that to everybody
4:57
who needs to be involved, whether it's people on the business the side,
5:00
who holds the financial decision, things like that. So I think there's so
5:04
many different elements. Right there's the technical implementation, there's the communication and selling,
5:11
pitching, a particular solution, and all of those are required always a
5:17
balance between these competing goals, absolutely, and tim is that balance as old
5:25
as its do you think? Or or is it something it obviously is a
5:31
dynamic that has existed as long as it as existed, I suspect, But
5:36
is it something that's intensified over recent years? And if so, why I
5:42
think it's changed? And I think intensified is probably the right word I think
5:46
to start kind of I'm just trying to figure out how to put this in
5:49
some kind of a logical order. But I think we can start by saying
5:54
that, you know, we tend to group IT as just one group,
5:57
one team. When we look at the operations, the teams that are tasked
6:01
with keeping the lights on, they're not a revenue generator. Typically they're overhead.
6:08
Right, I worked at an insurance company. In IT, I'm not
6:11
selling insurance. I'm not developing and buying and deploying insurance software. I'm keeping
6:15
the lights on in technology. So any investment that we make in IT operations,
6:20
the returns aren't measured in growth or revenue. They're measured in savings.
6:29
What will I invest to save money? So if we look at it in
6:31
that perspective. You know, in years past software was a perpetual license.
6:41
I would justify it and then I would purchase it and I would own it.
6:45
So it was a bigger commitment and investment and in many cases, well
6:49
I don't know if it's a common terminology, but we used to call it
6:53
throwing bodies at the problem. It's almost easier to bring in contractors or even
6:57
people as employees because they're an operational expense. They can change from year to
7:02
year. It's easier to upscale and downscale people than it is software because you're
7:08
not purchasing it long term. But sas I think software as a service and
7:13
subscription specifically changed the dynamic because now software is almost disposable. I can justify
7:20
it in the short term for a year or two, and then I can
7:24
shut it off because I didn't make a long term investment. So I think
7:28
the value that people get out of software subscriptions needs to look We need to
7:35
change how we think and look at it longer term and not just look at
7:40
it as a year over year disposable asset. Because here's the problem. You
7:46
can upscale and downscale with people and onboard people relatively easily. But changing software
7:54
products, changing what you've implemented on a yearly or by yearly or every other
7:59
two three four years is changing that. It's difficult. You've got to retool,
8:03
you've got to re educate, you've got to reoperationalize. So subscription I
8:07
think made it easy for people to take a short term view. To our
8:13
detriment, I think we've got to look at a longer term view, even
8:16
though the financial commitment is shorter term. That is such an interesting point about
8:22
the growth of SASS and how that impacts the picture. And with regards to
8:26
whether we still say perring bodies things of a problem, I don't know,
8:30
but it makes you sound like a mafia boss, and I think we still
8:33
should say that regardless. But I mean, what is the general the risk,
8:39
as it were, of being too short term orientated? In general?
8:46
I think it's it's it's getting on a treadmill. I was, and my
8:54
leadership team at Hartford as well, we're always really leary of subscription software because
9:01
you're getting on a treadmill, You've got to pay that cost year over year.
9:07
It's you get into this place where you're tunnel visioned on a just a
9:11
one year budget. And when you start cutting, when you start looking at
9:16
that as budget line items as savings opportunities, you're now cutting into the bone,
9:26
right you've got You've brought these these capabilities in to perform, and as
9:33
Arianna said, they're brought into become more efficient, operate more efficiently. And
9:37
when you start cutting your efficiency, you actually spend more money because you're becoming
9:43
less efficient. And at a certain point, there's nothing left to cut,
9:46
right, You can't. We use to say this all the time, you
9:48
can't cut your way to profitability. At a certain point, there's nothing left
9:52
and you've got to run your business. So the risk really is just in
9:56
that turmoil and chaos the year, your justifications, the potential year to year
10:03
change in how you operate, the turmoil and having to continuously do rois and
10:07
justify that budget line item. It's the short termism, in my view,
10:16
is just equates to chaos. Yeah, I can imagine. So, Dina
10:22
honing in specifically on decks, would you describe dex as A as a as
10:28
a technology or an approach in which investment inherently leads to cost savings. Is
10:35
it more complicated than that, where it does provide cost savings with some illinistrations.
10:43
Yes, so, looking at DEX generally, X as a concept is
10:48
not new to it right in its application and in the current format. After
10:52
adopting the digital transformation more than before in the recent years, DEX became the
10:58
hottest topic after and the most logical step to adapt to the dynamic world of
11:03
it and the work life integration that we have right now. Like Tim was
11:07
mentioning earlier, we're having applications on prem or just purchasing the applications for life.
11:13
Before was kind of unavoidable, but right now you can have an application
11:20
for one year, two years, three years, and then maybe change to
11:24
another one or even change to another subscription model after that. So can you
11:28
use decks or have DEX in mind that could lead you to coast sivings,
11:33
Yes, for sure, whether it's going to be cost avoidance, coast redistribution,
11:37
or cutting down on the spending altogether. Right, So, based on
11:43
the persona, based on how people are using the applications, how often they
11:50
are using the applications, all of that could be customized. And now looking
11:54
at texts, it could be customer oriented service, not just the technology or
12:00
support that we used to be doing back in the days. So how can
12:03
we save some costs using decks? And I'll just blabber on some examples.
12:09
We can do sustainable it or asset management based on the usage, not the
12:13
age of the device, not the age of the application itself, or how
12:18
famous is the application. Everybody's using X and everybody's using Y, so let's
12:22
just have it. So we can add help and add another layer of let's
12:28
say check point that could help it people to make better informed decisions in real
12:35
time to be accommodating to what the customers are actually or their users are actually
12:41
needing and using the application for we can reuse licenses or do license reclamation of
12:48
the unused licenses from employees who are no longer in the company who are not
12:52
using the application as often turn some of the devices or apps that we are
12:58
constantly using but maybe not on day to day basis with all of the personas
13:01
into hot disks or hot seats, which is going to help us save licenses,
13:07
save devices, and that could be all spun up on a virtual device,
13:11
et cetera. So these are just simple examples on how we can apply
13:15
cost savings in real life right now, and we need to remember what cannot
13:18
be measured cannot be controlled, and with a text focused organization, of course,
13:22
that is possible and really applicable in real life. Excellent nobody. I
13:28
mean, when it comes to what customers are experiencing, Megan speaks to as
13:35
many customers as anybody on the colly, maybe excluding Tim Meghan. He's always
13:39
he's always flying around the world. That's going to say, I think maybe
13:41
Tim might have me Yeah, I think he's got here. That's right.
13:45
Yeah, So I take that back, I take that back, But maybe
13:46
second place on the panel is Meghan Megan when it comes to questions of value
13:52
in it more generally, have you come across any customer stories recently that illustrate
13:58
interesting exams of it to you addressing the question of value in organizations head on
14:03
in terms of their internal communications or measurement. Yeah. Actually, as I'm
14:09
listening to this conversation, especially what Tim was saying about sort of the hidden
14:13
cost of changing your subscription every couple of years because it's not working, it
14:18
did make me think of a conversation I had recently with a customer. Unfortunately
14:22
I can't name by name, but they're in the engineering space, and they
14:26
had this software there's like a project management tool that all their engineers were using
14:31
for two years had been causing huge problems for them like that, I think
14:37
the software just you know, it was bugging out, was crashing, was
14:39
slow, just wasn't working. And they're a slim operation, a lean operation,
14:43
trying to grow their revenue by you know, billions of dollars over the
14:48
next five years. And so these hold ups, this productivity hold up for
14:52
engineers was slowing down product development, it was slowing down manufacturing, slowing down
14:54
the business in a way that I think, you know, business leadership under
15:00
stood like, this is a real problem for us. This is not just
15:01
a piece of software that's annoying, Like they could really see this is an
15:05
issue. So this IT team started looking for solutions and they were considering next
15:13
thing as a possible solution, right to try to figure out how do we
15:15
fix this, because they I think recognized that sure, we could just remove
15:20
this application and look for a new project management tool. But the time it
15:24
would take to train everybody up on a new piece of software, get everybody
15:28
onboarded and as fluent in it as they were in the existing software was going
15:31
to just cost way too much. So they actually identified this as one of
15:37
the issues they wanted to solve or look into during their pob with us,
15:41
and through the visibility that next thing gave them that a DEX tool can give
15:46
them speak more ambiguously, they were able to kind of spot the issue and
15:52
that the issue wasn't actually on their side, it was on the vendor side,
15:54
and they took that data to the vendor and finally got the vendor to
15:56
admit, Okay, yeah, this is actually on our side. Vendor updated
16:00
their instance in the back end and the issue went away. And so that
16:04
because that business values their engineer's time, they were able to put like a
16:08
dollar sign to it and say that they saved three hundred and forty thousand dollars
16:11
a year in engineering time, Like that's how much money the business was losing
16:17
because the engineers couldn't work. And I thought that was an interesting way to
16:19
attach value because it wasn't specific like, oh, we we removed as many
16:23
licenses. Each license costs x number dollars, so we saved two hundred thousand
16:29
dollars. You know, it was the business was really willing to value their
16:33
employees' time and saw how the employee's time connected to business productivity, to revenue,
16:40
and so you know, the IT team was able to say, well,
16:42
we fix this piece of software, so it equates to that much money,
16:45
and then they justified you know, buying next men. So I thought
16:49
that was a cool story, and I think it kind of illustrates what Tim
16:53
was talking about about the cost of Like it would have been too expensive for
16:56
them to just get a new project management tool. That was not a solution
17:00
they were willing to consider. And because they were a lean team, to
17:03
Oreana's point, they couldn't just throw more people at the problem because they're not
17:06
trying to hire a ton of people. They want to keep their team small.
17:10
So yeah, an investment in next thing actually led to more savings over
17:14
time. I like it. I like it, Tim, since you are,
17:19
yeah, a real customer king, any any any any kind of you
17:25
know that whole next is Megan describes there in a specific instance between value,
17:30
productivity and technology, any other kind of first hand accounts that come to mind,
17:33
that was sort of, you know, illustrate the same kind of dynamic.
17:41
I think it's a I think it's an ongoing place that I can can
17:45
continue to look at because it has been so inefficient for so long. Right,
17:48
you look at you look at a single product to come in and do
17:52
a single thing, but when there are such diverse use cases, looking at
18:00
problems in other infrastructure rather than swapping it out, look for root cause right,
18:08
look for look for areas in your infrastructure where you can invest and find
18:15
problems in other areas, including how people operate. Right, how do we
18:21
get more efficiency out of our IT teams? How do we allow them?
18:26
Like we said at the very outset of the call, how do we allow
18:27
people to do more with less? It's a great kind of verbal tagline,
18:33
but in practice, how do you actually do it? You need more capability
18:37
to do more with less. So there's plenty of areas to explore in IT
18:44
where you can where you can create efficiency versus just swapping something out. Excellent
18:51
and Sean, we've had discussion already about a question of training and up skilling
18:56
in this area and in IT teams. You, of course Spearhead did be
19:00
deck certifications and wondering thatby in terms of ROI for businesses investing in upscilling their
19:10
teams, what are your thoughts or perceptions in this area specifically, sure,
19:17
yeah, I mean just across the board outside of it. Well, it
19:19
included a couple of stats I looked at from Society of Human Resources Management and
19:25
Glassdoor. It's always better to try to upskill, so the cost to hire
19:30
a new person averages around four thousand dollars versus about one thousand bucks a little
19:36
over one thousand bucks to train somebody or upscale them. Time to hire could
19:41
take as long as forty two days. This is probably longer now in twenty
19:45
twenty four, I've seen cost of replacing an employee can be substantial, sometimes
19:51
to six to nine months of the employee's salary. And you have to imagine
19:55
too for like higher positions, executive positions, those can cost up to two
19:59
hundred thirteen percent of their salary I've seen from a few sources. I think
20:04
specifically speaking to it, this is a group of people who like to geek
20:11
out on certain aspects of their profession. So I almost feel like when you
20:17
can try to upscale, and it's definitely the right people who want to do
20:22
that. I think anyone in general gets bored at a job. If you're
20:26
not, you don't feel like you're evolving and growing year to year. But
20:30
I can understand when you're talking about technology tools and who's going to be able
20:33
to actually use the thing properly and understand it. That's a different problem.
20:37
But yeah, my gut reaction is when in doubt, try to work with
20:42
the folks you already have and see if they're willing to evolve and train up.
20:48
Excellent, excellent, an Orianovan. You brought us this topic because I
20:53
think my last word here should go to you, and I'm interested in broadest
21:00
sense. I'm interested in your broadest kind of perception of this, which is
21:04
how should it itv excuse me, how should it be? Defining the idea
21:10
of value in twenty twenty four, I think there are sort of three a
21:15
core challenges and goals that I think when I hear people talking about too,
21:22
I think are most effective, one of which is the transition from operational to
21:27
strategic. And this ties back to what Tim was saying right at the beginning,
21:33
right, So this idea of you can sacrifice in the short term,
21:37
but that can cause problems in the long term. So really understanding, okay,
21:44
what are operational goals and what are strategic goals? What do we want
21:47
to accomplish in the long term, And in terms of defining those goals the
21:51
more sort of long term value, there's this question of measuring impact right and
21:57
again two components to this, which is building the right thing and building it
22:03
for the right people. This is something that we talk about a lot in
22:07
my field, which is you need to make sure that what you're setting up
22:11
works but also that it's working for the right people. So is your process
22:15
really focused on the people who are going to be implementing it and the people
22:19
who are who are supposed to serve right. So when you're trying to figure
22:23
out how to measure an impact, how you're going to define value for your
22:26
organization, you need to look at both of those things none the other is
22:30
both process and results, and coming up with an organizational definition of value needs
22:37
to have goals for both process and for results. And I think the I
22:42
would add one more thing to that, which is a very big challenge with
22:47
defining value at organizations is that often we use the same metrics to understand are
22:55
things working and to set goals and targets. So, for example, is
23:00
this how you're going to get your bonus? And this is always challenging because
23:03
it can create perverse incentives. And I know that this is one of my
23:07
favorite soapboxes, so I want spend too much on it. But I think
23:11
when you define value, you have to be really clear on making sure that
23:15
you are setting metrics that you can measure and making sure that they measure what
23:21
you want them to measure, and not incentivizing working towards the metric. Right.
23:27
So this is sort of this idea of teaching to the test. We
23:33
want to make sure that we are setting goals for value that genuinely incentivize strategic
23:41
impact, rather than creating a situation where people need to make the short term
23:48
decisions in order to achieve whatever benchmarks have been set for them. Excellent last
23:55
words, sor Ryhna, thank you so much for bringing us the topic as
23:57
well, and look, listeners. I know at the top of the discussion
24:02
I did make a slight apology for quite how much Next Think centric content that
24:07
was across the anniversary month of me. But if you did find yourself tuning
24:11
out at all, please please do go back at least to the fantastic interview
24:18
Tim and I conducted with Next Think founder and CEO pedro Bedos which came out
24:23
last week, absolutely phenomenal look at the future of AI and DEX. If
24:30
you're interested in the real nitty gritty of that topic, you will get so
24:34
much value out of that long, very very interesting discussion. So please go
24:40
back and listen to that if you missed it for any reason whatsoever. And
24:44
maybe relevant to the discussion today is the deck certifications the Sean has overseen and
24:52
that I mentioned earlier in the discussion we talk about cost of upskilling on this
24:56
discussion, Well, these are all completely free. B one of the many
25:00
hundreds of people who've gone onto the dex up and taken a deck certification and
25:06
got a certificate and shared it on social media and hopefully learn something and help
25:11
to progress their career free of charge. Also, so just lead for me
25:15
to thank everybody on the panel and yourselves for tuning in and we will see
25:18
you all in two weeks time. Good bye, Bob. To make sure
25:23
that you never miss an episode, subscribe to the show in Apple Podcasts,
25:27
Spotify, or your favorite podcast player, and if you're listening on Apple podcasts,
25:32
make sure to leave a rating of the show. Just tap the number
25:34
of stars you think the podcast deserves. If you'd like to learn more about
25:38
how Next Thing can help me improve your digital employee experience, head over to
25:42
next think dot com. Thank you so much for listening. Until next time,