As the economic crisis continues, technology leaders are faced with the challenge of considering how best to trim the fat out of their budgets. While some steps are obvious and necessary, others can be like a diet you’ve been cheating on, which you know what you should be doing, but you don’t always follow through. Here are 10 ways CIOs are doing more with less in tough economic times:
10. Cutting human resources. We’re experiencing it in our offices and reading about it in the news. It’s painful, we don’t like it, it affects our ability to meet service agreements – and it is not always the best choice. Less systems support can continue to hurt the business. Although some think this would be a great time to “upgrade” resources, hiring managers are finding it difficult to find such resources. Those who can are staying put as they are fearful of moving in this economy. So although cutting human resources may achieve quick cost savings, C-level management believes access to and retention of key talent is the single most important issue for sustaining long-term growth.
9. Stop buying storage. It appears there is an abundance of storage everywhere. In historical comparison, storage has become so cheap we keep buying more and don’t trash anything. Disks will continue to perform at greater than 50% capacity. New approach: clean up your files, clean out your e-mail, let’s stop hoarding and clean house. And while we’re at it, let’s take a look at server capacity. Does every application really need its own server? The answer is no.
8. Increase IT expenditures. Done right, spending your money in the right place today can save you elsewhere now and in the future. Spending money on tools that will ultimately allow management to immediately cut certain expenses, such as travel, can result in a quick payoff. Investing in high-quality conferencing tools will facilitate workers to do more with less and collaborate efficiently. As business travel declines and use of external resources rises, conferencing can help bring in identifiable cost savings to companies who deploy it.
7. Improve IT governance. When asked to cut, don’t ask how low, ask what? We all know best practice is for IT to be in sync with the business. Yet, business stratedgy is changing due to macroeconomic challenges. In order to prioritize for core business initiatives, CXOs are working together to rigorously scrutinize projects and priorities. This effort is resulting in monetary savings, better utilization of resources, and a better understanding of the strategic direction of the organization.
6. Renegotiate with Vendors. Everyone is trying to stay in the game, so it can pay to visit the table again and create a win-win scenario for all involved. If you have vendors you are happy with, don’t try to wean down the number of vendors to save money. You are working with the different vendors for the skills or services they bring to your organization. Vendors are not necessarily substitutes for each other, so before cutting the number of vendors, try cutting with each individually. It may work best for both of you.
5. Smartsourcing and BPO. Stop doing business that is not your business. What is your core business? Define it, stick to it and invest in it. Where are you spending time, money and resources outside of your core? Find an organization whose core business is one you could partner with, one that will reach economies of scale you may not be able to reach. Done right, organizations can save a great deal with this approach.
4. Consolidation of Systems. The consolidation of systems is a greater area of investment right now due to mergers and acquisitions. Even before the pressure of the current economy, many organizations were addressing the sprawl of systems developed over time by consolidation. More consolidation is being considered across lines of business, as similarities between products become the focus instead of differentiation. These initiatives can be costly and it’s important to be aware that end-users and the technology team can become emotionally attached to their particular system, which can create a closed mindedness that may prevent the success of the initiatives. However, there is also the anticipation of future savings from these efforts.
3. External Collaboration. Share, share, share, just like your mother taught you. Share desktop support personnel with the unit across the hall, on another floor, the building across the street and even your competition. Share a network, a server room or a geothermal system. Share a Bloomberg terminal, a printer, or share a relationship with a vendor for better pricing on volume.
2. Open Source. Much of it is prime time: Operating systems; Web servers; application development tools; DNS; Desktop Productivity Tools; Database and Management; Infrastructure Management Tools – the list is almost endless. Do your research, talk to people and companies employing the open source you are interested in, and move forward with these viable alternatives.
1. Architecture – Do it right. Yes, organizations are achieving savings, quicker time to market, scalability and redundancy with Service-Based Architecture (SBA) and Service-Oriented Architecture (SOA). No, it does not have to be a huge and costly initiative. The SBA / SOA approach has achieved savings done piecemeal, via small reusable components. Prioritize new core business components, services for underperforming applications and for systems with costly maintenance. Some organizations are finding SBA pays for itself over time.
So no more cheating on your diet. Managing technology in this environment means strict adherence to strong leadership, solid business partnerships, prioritizing for core business objectives, sharing and leveraging resources, and continuing to develop and deliver technical solutions in the most cost effective way.
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