CIO — It’s the big budget Super Bowl. The clock is running out. The economy is down, and spending is tight. The CFO is blitzing you with budget cuts. He’s counting on you to block him with a standard line about how IT is too strategic to be cut during hard times, and he’s looking forward to crushing your argument with low revenue and profit forecasts. Instead, you blindside him with a simple plan that benefits you while telling him what he wants to hear. You say, "I’m going to spend money on making people more productive, not adding computers." The CFO is stunned, speechless, knocked off balance.
It’s a difficult argument to counter. IT is the best?though imperfect?way to force improvements in the ways people do their jobs. "Computers don’t make money. People do," says Paul Strassmann, consultant and IT budget researcher for Strassmann Consulting in New Canaan, Conn. Thinking about technology that way helps you sort out your IT budget priorities when you are approached by a strong opposing lineup of the powers that be. Software upgrades that don’t improve the ways things are done? Cut them from the playbook. New computers and networks that won’t give employees new capabilities? Back to the bench. Got a demand for an across-the-board cut in IT staff? Time out on that one. Technology dollars spent on IT staff have a direct effect on raising sales and revenues (see "Halftime Show: The Case for IT Staffing," Page 76). Spend more on IT staff and your company will make more money.
Judging from a recent survey by CXO Media (CIO’s publisher), "IT Spending and Lessons Learned" (see "Don’t Drop the Ball"), CIOs are being asked to make serious cuts. But they’re learning to deflect the damage. Asked to cut big implementation projects, they postpone them instead. Outsourcing?which has the potential to cripple the IT department while offering limited, if any, short-term savings?can be accommodated in slices.
Make no mistake, the CFO is after you. In the survey, four times more CFOs (26 percent) said the IT budget should be cut during tough times than did CEOs and COOs (6 percent each). Since the majority of CIOs still report to the CFO (35 percent to 40 percent, according to Hudson, Ohio-based research company Hackett Bench-marking & Research), the CIO has to find a way to hang on to staff and keep strategic projects going during tough times. After all, these are the projects that prove IT’s (and the CIO’s) worth to the business. If companies reduce IT spending to the point where it’s only able to just keep the wires untangled and the boxes running, IT will never get the chance to follow through on its promise of improving productivity and raising revenues.
