Why do so many IT savings start with a large IT cost?

How many times have you been involved in a large IT project where extensive savings are promised in the long term?

 

First, a long implementation project is required. Then the organization must be adapted, integrations built, and working methods changed.

 

The cost comes today – while the savings are expected to arise sometime in the future.

 

The same logic is often used in major changes to organization and working methods:

 

“During the first year, we may have longer lead times, but in the long run we will be faster and more efficient.”

 

But how often is the original estimate actually followed up? And how often can it be shown that the investment has actually led to lower costs or shorter lead times?

 

Big changes are hard to predict

Large implementation projects and core system replacements often end up being significantly more expensive than planned. That’s not really surprising.

 

These types of projects are extremely difficult to estimate. No matter how carefully you plan, there will always be dependencies, special cases, and old solutions that no one knew about when the estimate was made.

Sometimes the investment is necessary. An existing system may no longer be maintainable, able to meet future demands, or able to support the changing needs of the business. In such cases, the option of doing nothing may carry even greater risk.

 

But many major change initiatives are instead motivated by an expectation of lower costs and higher efficiency down the road.

 

The introduction of SAFe, for example, can be described as a path to better prioritization, fewer handovers and faster deliveries.

 

When asked how this will concretely result in shorter lead times, one often gets answers like:

 

• We will develop the right things in the right order by prioritizing according to WSJF.
• We organize ourselves into value streams and reduce the number of handovers.

That sounds reasonable in theory. In practice, the effect is much more difficult to measure and separate from everything else that is happening in the organization at the same time.

I’m not going to go into more detail about why this often happens – that’s a topic for another article.

 

My point here is that major and disruptive changes involve uncertain investments. The cost is tangible and immediate. The returns are further down the road and are based on a number of assumptions that may never be met.

Does all efficiency improvement have to be a high-risk investment?

Compared to the stock market, many large IT investments are like trying to find the next Nvidia. You accept a high risk and a large initial investment in the hope of a very good future return.

 

But not all investments have to work that way.

 

You can also choose something more stable that provides immediate returns.

 

That is the principle we have based our selves on when we built Sinos.

 

Sinos helps insurance companies capture, compile and deliver medical information faster and more cost-effectively. The savings do not require the customer to first change core systems or carry out a comprehensive implementation project. The value is created from the first case.

 

Using the stock analogy, one could describe Sinos as a direct-return service: the cost decreases when the service is used, not only when a future transformation is completed.

 

Integration when it creates value

Sinos can be introduced in two ways.

 

Client Handled

The customer integrates their existing system directly with Sinos API. The own integration is then the technical investment required to start using the service.

 

Sinos Managed

The customer works in Sinos Customer Center and receives the results through our Integration Hub. It delivers the information to the customer’s secure file area, which means the customer does not need to build any of their own integrations to get started.

 

With Sinos Managed, the customer’s initial integration cost is zero. There is also no need for a long implementation project before the first case can be handled.

 

The customer can start on a small scale, measure the actual outcome, and then determine whether deeper integration creates additional value.

 

Start with the benefit

I don’t think major IT investments will disappear. Many of them are necessary and sometimes absolutely crucial for the future of the business.

 

But every improvement doesn’t have to start with a big investment, a long project and a promise of future savings.

 

Sometimes you can start with the benefits.
 
 
And get returns from the first case.

 

 

 

 

Author: Peter Ehrling, Sinos Solutions 2026