ZBB for IT Series: Why 2021 is the year to accelerate ZBB as a technique to managing your IT department’s costbase?

After an estimated reduction of 6.5% in 2020, IT spend within the EMEA region; @Gartner estimates an increase of 2.8% from this baseline to an anticipated total of $1.075 trillion in 2021.

With the recent good news on the imminent availability of vaccines, many organisations are preparing their growth plans for 2021. As COVID-19 evidenced the criticality of IT to increased business revenues and lower costs, many organisations are embedding “digital thinking” within their 2021 plans.

It is becoming increasingly apparent to several IT departments that 2.8% isn’t a lot once you factor out inflation – some of this inflation is legally binding within long-term contracts and thereby unavoidable.

This creates quite a few challenges for IT departments as they struggle to meet the lofty expectations and demands from the Front & Middle Office and Corporate Support functions.

In anticipation of this situation, some IT departments are proactively driving cost reduction initiatives. While this approach addresses some of the short-term pain, such one-off initiatives tend to result in cost creep after a few quarters due to a lack of ongoing control measures.

The adoption of ZBB – Zero Based Budgeting – in 2021 could enable IT departments to not only address short-term measures by “weeding out” costs but adopt a continuous management technique that implements ongoing control processes to invest in evolving the Operating model to align to corporate strategy and in growth initiatives.

The key facets of ZBB for IT,

  1. Driving IT Cost Transparency
  2. Define KPIs and value and align spend to these metrics
  3. Embed ongoing control measures such as category ownership

enable IT Departments to better support Corporate Strategy.