Green Shoots? Cost Cutting...

A recent CIO Jury article asked whether there were signs of green shoots appearing in industry. The jury voted "No". I was part of the "No" vote and like many IT leaders, I am still looking at my costs and continuing to trim even though now the bone is starting to show through. Unfortunately I don't see the pressure to reduce costs easing at any point in the near future.

So, in these times of continuous cost reduction, what can be done to preserve appropriate service levels? IT is still seen by many as the a high-cost, low-value area where savings can easily be made, particularly if it's not understood or trusted by the board. Immediately cutting costs at the request of the board shows weakness and that homework was not done. Instead being transparent over costs, how they are incurred and providing a variety of options for reducing costs along with the impact of cost reduction in terms of productivity, business risk and revenue generation will help show value as well as provide options for the board to agree where costs should be cut further.

It is also a time when the partnerships that have been grown and carefully nurtured with other departments in the business can be exploited - having a director of another department stand up for technology and the services it provides demonstrating how their department is enabled through technology to do the work that directly increases revenue is invaluable in putting forward a case to manage further cost reductions.

Additionally, ensuring that all parts of the organisation know exactly what they're getting for the IT budget is important. Acknowledgement that the service level is appropriate and that further reductions would impact their ability to deliver will help strengthen any case to keep services at existing levels. However service levels appropriate a year ago may be way out of line now and they should be flexed accordingly.

When reviewing and adjusting service levels, senior management also need to understand any changes to the level of risk the business is being exposed to and what additional risk might be present were further cost savings to be made. Not having out of hours cover for the email system may be one thing, but not supporting the on-line portal 24/7 may well be seen as too much risk to revenue streams.

So, publicise those service levels, ensure they are appropriate and demonstrate business acumen by managing business risk appropriately. Provide intelligent, thought through options for further cost cutting, but make sure the board understands the consequences of such cost cutting. Then the exercise becomes a well thought through, inclusive process rather than a series of random cuts in services with not a lot of thought for the consequences.