Delivering Efficiency and Cost Reduction: Long Terms Tactics Wrapup

In the last several posts we have covered how you should deliver IT cost reductions with long term tactics that also enable you to build capability and capacity.  If executed well, you will also yield some longer term benefits such as a better workforce balance or elimination of redundant or low value systems. These tactics require relentless leadership and focus by you. You must keep them in the forefront and ensure you are progressing on them everyday. Your patience and influence are required as well. You must obtain business support for efforts that often have a longer cycle than the business team is used to supporting.  If you are both consistent and persistent in your approach, and employ these tactics, you will make a material difference, in some cases a massive difference, that will make your business far more competitive and is simply unattainable through other approaches.

We discussed that these long term tactics are executed by first laying a groundwork for sustainable improved cost through quality. Second, you build a highly productive and well-balanced team in order to meet a world class cost profile. Throughout you leverage metrics-based, transparent framework with continuous process improvement that enables you to progress and achieve world class performance. A concurrent effort with building a high performing team is to migrate to a modern, consolidated infrastructure and well-architected core systems. We will discuss this effort today and wrap up our efficiency discussion.

Nearly every IT shop that has quality or cost problems has a proliferation of archaic systems and fragmented, legacy infrastructure. The causes of this are myriad but generally result from: poor or shifting business vision and sponsorship (e.g., when you have 3 different sales executives in 4 years, IT delivers 2 and 1/2 application systems trying to match the business variances and results in multiple systems that never do what was needed); an inability of the business to invest in a steadfast manner (e.g., IT projects run out of funding, or funding shifts, thus every year projects are half completed resulting in the old systems staying in place with the new systems going in); a stagnant IT team with poor best practices and leadership that allow multiple mediocre solutions where one good solution would suffice.

As the IT leader, you must tackle the business causes first before setting out to fix this area. Draw up a compelling vision of what the systems should provide. Research and gather the facts on the costs, time to market impacts, business productivity, feature loss and quality issues due to the current multiple mediocre systems. Map out a new process and authorization where you get the multi-year business support and sponsorship to execute the vision. Going from three mediocre overlapping business systems to one well architected systems with better quality will enable efficiency and productivity gains across the board — in your shop and in theirs. This is a vision that you should get everyone to rally around. Ensure there is a investment process that enable multiyear funding and review of major projects and conversions that also tracks to ensure the benefits are delivered. The CFO should be your partner in this. It is in his interest to see that everyone meets the costs reductions and other benefits promised. And it is in yours as well, because often you accumulate the layers of barnacles by only doing 80 or 90% of a project and not doing the final steps of decommissioning the old systems. By having a multi-year project process with benefit review or scorecarding in place, there will be far more impetus to ensure projects are completed and old systems removed.

Assuming you address the business sponsorship and project process issues, you must also address poor leadership and implementation on your side. First and foremost, IT cannot be a place for ‘hobbies’. That is, you need to ensure that all those pet technology projects and explorations that are not absolutely critical to a business capability or technology implementation that has real, near term benefits, are killed. Otherwise, they are a distraction and a multiplication of your technologies and thus costs.

Second, require every major application area and infrastructure component to map out current world and a future world where they are consolidated and at best practice. Then sit down with each team and your architectures and lay out the trajectory to get from today to best practice. Estimate the benefits from the transition. Ensure you capture the gains from your productivity and quality improvements. Then pick the top 3 to 5 areas and target them as major transformation initiatives for investment and turnaround. Garner the business support, get the approvals, make it part of your IT goals and communicate the importance to your team. And of course execute them. But also, in the other areas that mapped out their trajectories, work with them to come up with ways to make progress without major funding. Identify and execute the quick ROI projects that enable you to save within the year or almost within the year. Work with vendors to come up with creative ways to overcome the investment hurdle to move your technology to a best in class platform. And every time you can come up with efficiencies or savings elsewhere, turn around, pull the next best consolidation and replatforming project off the queue and get it going. As these projects execute and land, it will drive a virtuous cycle of additional savings and quality that will enable you to more rapidly transform as well as to shift, over time, more and more resources to the point of the spear where you are attacking the business problems and needs.

The long term tactics will take 9 to 12 months to achieve some results and 18 to 24 months to yield impacts, but once you really start executing and implementing, the compound gains can be enormous. Given IT can be a very large cost center within a corporation, IT can often one of the top contributors to cost reductions. And given IT systems availability and quality drive customer service, IT improvements can be the biggest push behind improved customer satisfaction. These are huge wins for you company. So, as you are faced with cost efficiencies demands of todays environment, leverage the near term and long term tactics described to put you and your company in a winning position.

So, we have spent nearly two months covering the very important topic of cost efficiency in IT. Every IT shop today is faced with these demands. You now have the tools to drive this far more effectively. Let me know where things have gone awry or where more detail is need to handle the complexity of your situation.

Best,

Jim

 

About Jim D

Jim has worked in the IT field for over 25 years and as a senior leader for over 15 years. He has successfully turned around a number of IT shops to become high performing teams and a competitive advantage for their companies.
This entry was posted in Efficiency and Cost Reduction, Vision and Leadership and tagged , . Bookmark the permalink.

3 Responses to Delivering Efficiency and Cost Reduction: Long Terms Tactics Wrapup

  1. Jean O says:

    I recently came across your blog via Information Week, great stuff.

    In the spirit of efficiency and change management, it would be interesting to get your perspective on how to move an IT organization from a grass roots, silo’ed entity, to a top down, vision driven entity with cross divisional implementation. (if it is not too late to comment on a Nov posting, tks)

    • Jim D says:

      Jean, Glad you are finding the blog useful. I could provide some very good insight in how to approach and get it done as well as what are the key corporate advantages to such an improved structure. I will see if I can post something within the week on it. Enjoy the other material! Best, Jim

    • Jim D says:

      Jean,

      In my most recent post (today’s 🙂 ), I think I have covered how you move from a siloed shop to one with cross-divisionnal integration where appropriate (the hybrid model). I have not covered yet how to tackle a reactive, details only shop to a vision-driven and proactive shop — this piece I will try to cover over the next few weeks. I do hope that today’s post provides some of the insights you were looking for.

      Best,

      Jim

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