Exco Technology

How to transform IT from cost centre to strategic partner

Value driven AMS

This article discusses the shift from service-level maintenance to value-driven management and how it helps IT to transform from a cost centre to a strategic partner of the business.

The revenge effects of Application Management Services

The history of business is filled with stories of new ideas that come back to bite companies – unintended consequences that can ricochet through the value chain like bullets. They’re called revenge effects – and you can find them all over the outsourcing marketplace.To the extent that you’re supporting applications through a low-cost labour pool that’s isolated from the business; you can expect huge opportunity costs. Performance improvements in efficiency, knowledge transfer and automation can all suffer. Inertia can swamp agility. And you can sacrifice the value of innovation.

The problem usually starts with low expectations. Traditional AMS can create a divide between applications support and the rest of the world. Even worse, the support function gets moved to denominator of the value equation, where the measure of success is cost reduction through labour. So, when you finally do get around to looking for improvements, the people and resources aren’t in place to deliver. Organisations then end up shuffling talent, hiring consultants, relearning and rebuilding. And the practical knowledge needed to respond quickly to changing business demands is hidden in the heads of a floating labour pool, out of reach except at prohibitive cost.

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If you have any questions or require a more detailed discussion on the content of this article, feel free to contact Glen Krynauw at gkrynauw@deloitte.co.za and Sharryn van Tonder at svantonder@deloitte.co.za.

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David Graham

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