7 Tips to Make Your Business More Competitive
When cutting costs, tech managers should refocus their IT departments to make the business more competitive, reduce the impact of budget cuts, drive performance improvement and enhance IT value. Surprisingly, there are seven opportunities to achieve these goals that IT often overlooks.
Tue, August 12, 2008
CIO — As the economy tightens and corporate leaders seek ways to reduce costs and squeeze more out of organizations, CIOs are in a unique position to seize the opportunity to refocus their IT departments in a way that makes the business more competitive—both in the near term and for years to come. In doing so, savvy CIOs may be able to reduce the impact of budget cuts on IT and, at the same time, drive performance improvement and enhance the value of IT to the overall enterprise.
The top seven opportunities to enhance performance improvement typically overlooked by many IT departments include:
1. Focus on What the Business Wants—and Needs—from IT
What is the IT group's role in helping the company to achieve its goals? This may not be as straightforward as it seems. When was the last time you seriously thought about the business plan and how IT contributes to reaching the goals of the business? This does not refer to annual planning and budgeting, but rather a serious assessment and discussion of where the company should spend more or less on IT and how that impacts costs, revenues and profits.
The CIO's ultimate goal is to understand the business with sufficient breadth and depth to make specific and meaningful recommendations to the other CXOs about how IT can help to reach overall business objectives. Spend time with your peers and their direct reports. Spend time observing the way the business actually operates. Then discuss what is required of IT. Is reducing IT costs to free up money for their initiatives really the best answer? Do you both fully understand how IT impacts their function(s) within the business?
2. Balance Your Attention on IT with Your Attention on the Business
Technology is simply table stakes in today's business environment. A CIO's strategic value is realized in the ability to recognize and articulate how technology can be used to move the business forward, as well as in leading the improvement initiatives. This requires leadership across the business, not just providing leadership in the technical aspects of a project. Many IT organizations spend entirely too much time making technology decisions—waiting for the business to provide them with "change requests" or "business requirements"—and not enough time figuring out how to use technology to add value. To be relevant to the business, CIOs and IT departments need to think of themselves as responsible for business performance in addition to technology performance.
There is no better way to improve your ability to focus on the needs of the business than increasing your understanding of how the business operates and uses information technology. Many IT managers and CIOs are uninformed about business operations. Even those who have great relationships with other business executives often fail to take the opportunity to roll up their sleeves and observe the details of how the business actually works. Sitting down and watching staff perform their functions and observing tasks that are complex or error-prone are critical to understanding how to truly improve business operations.
3. Prune Your Project and Services Portfolio
This is also a great time to prune your project and services portfolio. Focus on the things that have near-term, concrete benefits, and emphasize projects that deliver real, measurable cost savings in the short term. While it will be painful to mothball strategic projects and it may ultimately cost more money to restart them down the road, it's best to shut down any project that is not critical to improving the health of the company.
Be prepared to make deeper cuts than you first thought necessary. It is better to be aggressive at the outset when cutting costs, even if you have to include costs later, than to make several rounds of cuts. This exercise will also help you and other business leaders recognize critical elements of business operations and those that are extraneous.
4. Tighten Up Vendor Management
As IT shops find themselves outsourcing more functions, vendor management continues to receive increased attention. The reality is, vendors are probably better at managing you than you are at managing them. Does your favorite vendor always drop what he is doing to respond to your calls and requests? If he never says no or never pushes back on a request, it may be an indication that you have not defined his company's responsibilities in sufficient detail and it could also be an indicator that you are paying too much. You should be wary if your vendor interprets a contract to the letter and charges you for even the smallest requests.
