CIO Wisdom

Cut Costs - Not Common Sense

A less than obvious start is to pull out your Disaster Recovery (DR) Plan and/or Business Continuity Plan (BCP) for a quick review. If you've maintained this correctly, it should outline the key, essential systems for your business. If you think this doc is useless to you at this point, then you're doing those efforts incorrectly. Couple these docs with your Portfolio Plan, and you should have a roadmap of the core systems of your business (today and the near future).

The next step is to avoid making a single, sweeping action of cuts. Do every aspect of your planning with the intent to implement any actions in stages or layers. This will keep you from cutting too deeply, which historically has resulted in the inability to respond to any business needs (good or bad).

In the past, Mandates from on High asked for "across the board" cuts of 10%, 20%, or more. Very few of these mandates came with specifics on where those cuts should be focused. There were too many examples of firms (and CIOs) who simply went through their organization and cut every group by a static, fixed percentage. The bad news is some of those teams were already running lean, and some were too heavy with resources... and the CIO found themselves unable to respond to critical projects (both short-term and long-term) while still carrying resources that were inappropriate for the path ahead. Get an honest assessment of your team strengths from your team leads. Examine your current project list to identify key projects that are "must have" for the enterprise (they had better be identified as such on your Portfolio). Identify those essential teams for ongoing survivability and critical ongoing functions. Draw a hard circle around those forces, and then identify who feeds their progress. Draw a dashed circle around those support teams. That should be your baseline and considered untouchable. Everything outside of those circles have to be evaluated for necessity. Does that mean you should cut everyone else? No, but you'll have a list in your hand that will guide you through the tough choices, should they arise.

Once you move past headcount, you'll start looking at services, hardware, licensing, etc. While these are the logical areas to examine, don't go here alone. Get a key contact within accounting that can be "loaned" to IT to perform a forensic exam of your expenses, contracts, etc... and provide an "audit" report for review. If accounting can't provide a resource, contract one. Match the "audit" list up with the outcome of your headcount analysis (as well as your DR Plan, BCP, and Portfolio). Now you have a framework for making decisions on cost savings, and have a means to communicate to the CFO (in their language). Triage these potential cuts and create layers differentiating "immediate", "difficult", and "only upon last resort".

In summary, you must be clear with the CFO as to the companies objectives in the move to austerity. Let them know you intend to act in waves rather than sweeping cuts. If you're properly managing your portfolio of IT projects (as well as DR and BCP) and can draw a line between every effort to corporate goals, your path to the appropriate steps will be clear. If you've not built of maintained these processes and documents, it isn't too late to create the shell/framework of these materials to guide your decisions. Lastly, any analysis efforts you perform should focus on prioritizing and layering of actions... allowing you to gradually respond to market conditions without crippling your ability to respond on the eventual uptick. And yes, an uptick is coming.