While some industries are known to be more stable and predictable, others are notorious for being more volatile and cyclical. Largely influenced by external forces such as market price and environmental factors, businesses working within a cyclical environment are often faced with unique business challenges. Take the oil and gas industry for example, prices recently dropped from $110 per barrel to $30 per barrel, which substantially increased the need for organizations to scale back on their operating expenses. However, when commodity prices recover (and they always do) those same organizations will be forced to scale back up and employ the necessary resources to effectively meet demands. Although today’s digital influence has been cause for most, if not all, enterprises to adopt a more agile and flexible infrastructure environment, organizations challenged with fluctuating market conditions must ensure that their business strategy and IT are cohesively aligned.
Rethinking IT Delivery
Identifying opportunities where additional operational efficiencies and cost optimizations can be gained will always be a top priority for IT leaders. However, this sort of adaptability is fundamental for CIOs working within a cyclical business environment. The reason being, rather than solely focusing on creating a productive and cost-effective infrastructure environment, CIOs must focus their efforts on variabilizing costs to better reflect the inconsistent nature of their business. To address this dilemma, many organizations have been forced to abandon traditional methods of IT deliver and have completely restructured their infrastructure’s architecture. Meaning, IT organizations are transitioning away from the shared services model and instead are shifting towards an integrated services model.
While there are varying opinions among CIOs in terms of which IT delivery model is best, we’ve found that the shared services model does not effectively support today’s business needs. Essentially, ‘shared services’ is an operational philosophy that involves centralizing the administrative functions of an organization that had previously been performed in separate divisions or locations. Although this model can help an organization to standardize practices and procedures while also realizing significant cost savings, it does not provide the flexibility and agility needed to rapidly adjust to a new business environment. On the contrary, an integrated service model has the ability to dramatically change performance levels when needed; ultimately facilitating huge cost savings, increased responsiveness, and effectively adapting to ever-changing cycle times.
Using Outsourcing to Achieve an Integrated IT Service Model
At the end of the day, businesses competing in more volatile industries such as the oil and gas industry must be able to achieve far greater levels of agility and adaptability than most other organizations. Frankly, even the thought of an enterprise working within this type of environment maintaining the majority, if not all, of its resources in-house is not feasible. However through outsourcing, organizations are able to employ a much nimbler workforce and significantly reduce the amount of resources, like physical systems, that are maintained in-house. Not only does this allow for substantial cost savings due to the lack of overhead needed to operate, but it also facilitates greater operational efficiency and effectiveness. Rather than inundating internal, generalist resources with projects and tasks that typically require a high degree of expertise and specialization, organizations can transfer those responsibilities to an outsourced service provider that actually specializes in the implementation, management, and maintenance of a given infrastructure function. Ultimately, this means that organizations that choose to leverage outsourced IT solutions are able to generate operational and cost optimizations, create a more agile and adaptable infrastructure architecture, and do all of this while increasing levels of productivity and effectiveness.
The complexities and intricacies, especially from an IT perspective, that enterprises face when working in a cyclical environment often create unique business and IT challenges. However, IT management solutions companies, like Windsor Group, are well-versed on the state of the market, and can facilitate the strategic knowledge, resources, and partnerships needed to compete in fluctuating market conditions.
If you’re interested in learning more about the various types of cloud platforms that can accommodate your enterprise’s unique business challenges, download our whitepaper, “Cloud Computing Services: What’s Your Enterprise IT Forecast?”