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Right now, every business will be looking at its finances. With volatility in financial markets, it’s time to take another look at budgets and expenditure to insulate your business from the downturn. What should IT leaders do? Cut, cut some more, but don’t cut deep.
If you control budget and expense it’s likely you’re already involved in ‘conversations’ with accountants or Execs on cost, and how to reduce it. This is inevitable in these times. If you’re not, then I recommend you do. Get on the front foot.
All businesses have projects and cost items that are nice-to-haves. Some of these might be to polish the website, and some might be to improve processes. You may have some people around who are involved in non-core activities, like SLA monitoring. Only you know what is essential, and non-essential for your business operations.
So it’s these things, I’m afraid, that you’ll need to look at. When I say look at, I mean ask yourself if you can do without them for a while, or perhaps scale them down. You don’t even need to take the action. My point is, prepare options. At some point in the future, you may be asked to cut costs. So having options, and the impact of these options, thoroughly thought through is your chance to show your commercial acumen and corporate citizenship.
But I think you need to be brave. Who knows how bad it might get (if it gets bad at all!). It’s wise to have options on a sliding scale of severity. So cut your superficial or frivolous spend. You should know in your heart what are pet-projects, and which are strategically important. These things are what you should offer up first, without hesitation.
Then cut some more on reducing headcount in non-core activities, or defer that infrastructure refresh, or hold off on that process re-engineering work. So in this, you’re likely to put more pressure on your people, or infrastructure. But
But don’t cut too deeply. If you cut your core activities then this will have the opposite effect! Don’t lose control of your key assets and core capability. In the long run, this will have a considerably worse effect on the sustainability of your organization. Removing key people at this stage is a false economy! An old friend of mine just told me about a case in his organization where a finance system expert was laid off, but they had no successor in line. Guess what? The finance system went down and noone knows how to bring it back up properly. And the guy that was laid off? He is ignoring their calls. So they’re stuffed. Don’t let that happen! Make sure you have succession planning.
But it’s not just about cuts. Investment in future (near term) cost savings should be requested. So let’s say you have ageing laptops that are costing too much to maintain – then put in a request to replace them. OK there will be an initial capital outlay, but the costs over the next 3 years could be far less overall. Renegotiate license agreements; again you might need to pay a bit more upfront but longer term, you could save. Remember that vendors are feeling the pinch as much as you are, so this economic downturn creates a buyer’s market. Maybe it’s time to invest in virtualization now? Project costs upfront – big savings over time.
So my advice is to have your options thought through and documented. Blend your options of cutting with investment. Build a sliding scale of options by severity, and make sure you articulate the implications. Decisions to cut must be made with the accountability of the consequences.
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