CIOs are walking new ground as they seek to improve competitive business advantage in an economic downturn - balancing the pressure to reduce capital expenditures against unprecedented opportunities to increase productivity and stay on the forefront of innovation.

In today’s global economy, IT effectiveness and business innovation are two sides of the same coin. As the strategic importance of advanced technology and best-practices management comes into sharp focus, and the global economy positions itself for a recovery, executives are looking to eliminate wasteful spending and evaluate all IT investments by the amount of productivity improvements it delivers to the business – not just by how much it costs.

But what does this mean on a day-to-day basis? What can CIOs do to help ensure that they invest wisely for sustainability and growth?

The new reality of IT
According Gartner, in 2009, resource constraints were the biggest factor limiting organizational growth for medium sized businesses. As the economy recovers generating demand, organizations are looking for ways in which they can invest for strategic returns. The challenge is that most medium businesses feel that they are already investing a great deal in IT, and in many cases, they are not wrong. For medium sized organizations with technology-dependent business processes, evolution is virtually impossible when 80 percent of their IT resources are committed to legacy systems that do little more than keep the lights on and maintain the status quo—leaving just 20 percent to invest in strategic development for growth. To succeed in the face of today’s economic pressures, executives must change the balance of their IT spending.

Smart CIOs are advocating a fresh approach to enterprise spending – rather than spending more, what if they could do more with what they are already spending? Instead of focusing simply on cost-cutting measures, they are developing new methods to evaluate the business return on their IT investment and the most effective ways to allocate the IT budget following from that analysis.

The pursuit of enterprise efficiency
What could your organization do if you retained all of your talent while gaining the opportunity to refocus it on strategic initiatives? Enterprise efficiency is the key to answering this question. For example, Dell has shown that by freeing up computing resources, cutting capital expenditures, and streamlining employee efforts, medium sized enterprises may succeed in reallocating 30–50 percent of their IT budgets toward strategic development and sustainable growth.

Where to start?
Enterprise efficiency is based on three simple steps that every medium sized business can implement: standardization, simplification and automation.

Standardization is the first step toward achieving these goals. As database workloads outpace aging hardware with demands for higher compute density, memory capacity, and I/O scalability, industry-standard architectures can go a long way toward lowering the cost of doing business and freeing up IT resources that can be redirected to innovation.

Simplification is the second key to unlocking efficiency. It isn’t unusual for a medium sized business to run hundreds of different applications; consolidating onto a smaller number of applications and platforms leads to dramatic savings on maintenance and support.

Automation is the last step toward redirecting IT budgets from maintenance to innovation. By reducing labor costs—which account for a significant proportion of IT spending—automation allows enterprises to work within tight budgets to advance business agility while also facilitating short-term contracts, improving flexibility and scalability, and increasing productivity with self-service IT models.

* Satyen Vyas is the Director of Advanced Systems Group - SMB, Dell India.
* The views expressed by the author in this feature are entirely his/her own and do not necessarily reflect the views of SME Times.