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Minimize the Damage of IT Cost Cuts
When IT cuts costs, everyone feels it.
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Contributors
- Jeremy Albritton, Vice President Financial Planning & Analysis, USO Inc.
- Ken Piddington, CIO and Executive Advisor, MRE Consulting
- Joe Evers, Consulting Principal, JcEvers Consulting Corp.
Your Challenge
- Average growth rates for Opex and Capex budgets are expected to continue to decline over the next fiscal year.
- Common “quick-win” cost-cutting initiatives are not enough to satisfy the organization’s mandate.
- Cost-cutting initiatives often take longer than expected, failing to provide cost savings before the organization’s deadline.
- Cost-optimization projects often have unanticipated consequences that offset potential cost savings and result in business dissatisfaction.
Our Advice
Critical Insight
- IT costs affect the entire business, not just IT. For this reason, IT must work with the business collaboratively to convey the full implications of IT cost cuts.
- Avoid making all your cuts at once; phase your cuts by taking into account the magnitude and urgency of your cuts and avoid unintended consequences.
- Don’t be afraid to completely cut a service if it should not be delivered in the first place.
Impact and Result
- Take a value-based approach to cost optimization.
- Reduce IT spend while continuing to deliver the most important services.
- Involve the business in the cost-cutting process.
- Develop a plan for cost cutting that avoids unintended interruptions to the business.
Start here – read the Executive Brief
Read our concise Executive Brief to find out why you should take a value-based approach to cutting IT costs, review Info-Tech’s methodology, and understand the four ways we can support you in completing this project.
1. Understand the mandate and take immediate action
Determine your approach for cutting costs.
2. Select cost-cutting initiatives
Identify the cost-cutting initiatives and design your roadmap.
3. Get approval for your cost-cutting plan and adopt change management best practices
Communicate your roadmap to the business and attain approval.
Guided Implementations
This guided implementation is a five call advisory process.
Guided Implementation #1 - Understand the mandate and take immediate action
Call #1 - Start cost-cutting project and determine the cost-cutting stance.
Call #2 - Decide on quick wins for the project and determine how to report progress to Finance.
Guided Implementation #2 - Select cost-cutting initiatives
Call #1 - Decide on how to determine initiatives for cost cutting.
Call #2 - Review cost-cutting initiatives and select those to be put on a roadmap.
Guided Implementation #3 - Get approval for your cost-cutting plan and adopt change management best practices
Call #1 - Transform roadmap into a finalized plan and engage stakeholders to achieve adoption.
Info-Tech Academy
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Cost Optimization Course
When IT cuts costs, everyone feels it.
This course makes up part of the Financial Management Certificate.
Course information:
- Title: Cost Optimization Course
- Number of Course Modules: 4
- Estimated Time to Complete: 2-2.5 hours
- Featured Analysts:
- David Yackness, Sr. Research Director, CIO Practice
- Gord Harrison, SVP of Research and Advisory
- Now Playing: Academy: Cost Optimization | Executive Brief
Book Your Workshop
Onsite workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost onsite delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.
Module 1: Understand the Mandate and Take Immediate Action
The Purpose
- Determine your cost-optimization stance.
- Build momentum with quick wins.
Key Benefits Achieved
- Understand the internal and external drivers behind your cost-cutting mandate and the types of initiatives that align with it.
Activities
Outputs
Develop SMART project metrics.
Dissect the mandate.
- Project metrics and mandate documentation
Identify your cost-cutting stance.
Select and implement quick wins.
- List of quick-win initiatives
Plan to report progress to Finance.
Module 2: Select Cost-Cutting Initiatives
The Purpose
- Create the plan for your cost-cutting initiatives.
Key Benefits Achieved
- Choose the correct initiatives for your roadmap.
- Create a sensible and intelligent roadmap for the cost-cutting initiatives.
Activities
Outputs
Identify cost-cutting initiatives.
- High-level cost-cutting initiatives
Select initiatives.
Build a roadmap.
- Cost-cutting roadmap
Module 3: Get Approval for Your Cost-Cutting Plan and Adopt Change Management Best Practices
The Purpose
- Finalize the cost-cutting plan and present it to the business.
Key Benefits Achieved
- Attain engagement with key stakeholders.
Activities
Outputs
Customize your cost-cutting plan.
- Cost-cutting plan
Create stakeholder engagement plans.
- Stakeholder engagement plan
Monitor cost savings.
- Cost-monitoring plan
