Cost-cutting can hit any department, andIT often tops the list. IT leaders are underhuge pressure to demonstrate that they can run an efficient, effective business unit.The silver lining is that this presents them with a clear chance to prove themselves as commercial leaders, writes Steve O'Connor, vice-president of IT transformation at BMC Software.
By taking on an advisory role forlong-term efficiency and staff management, ITbecomes key to the business getting ahead in the recession.
Inefficient IT threatens staff
Gartner highlighted recently that on average 80% of IT's effort is focused on "keeping the lights on"rather than driving business growth. Staff end up firefighting and managing routine processes rather than delivering business value. This brings increased scrutiny on the IT department, often resulting in a knee-jerk reaction from the CFO to slash costs by reducing headcount.
In my experience, this is a risky approach to cost reduction, as the wrong people are oftencut. The CFO does not have sight of where the critical business roles sit and where routine processes that merely "keep the lights on"can be streamlined. This is why you must step up to control the "slash and hack"approach and demonstrate how you can deliver long-term IT efficiency.
Largely driven by this need, there is increasing interest in an ERP approach to IT. It gives visibility of where investment is needed, and where the fat can be cut -from a financial, resource, vendors and compliance perspective. We can dub this emerging trend service resource planning(SRP).
Cutthe fat, not the muscle
This might seem like an easy task to undertake, but it is important not to underestimate the challenge of identifying those IT roles to cut within such a complicated environment. The heightened level of visibility and control across IT functions that SRP offers is absolutely vital.
In the shortterm it enables immediate, accurate assessment of where the critical roles sit and where the CFO can consolidate without impact to the business. In the longer term, SRP gives you a stronger platform to justify investment that ensures IT remains efficient. For example, you may be able to demonstrate where automation tools can be strategically deployed to streamline routine processes, allowing staff to focus on business-critical tasks, thus ring-fencing them from further cutbacks.
Improveyour stake in the balance sheet
Use the data SRP provides to discuss the balance between short-term cost reduction and ongoing investment with your leadership team. Through this data you can assess the long-term business needs and plan toward them. By actively engaging with the board you can build trust, educating them on your role as a business advisor who can not only make recommendations for strategic cost reduction, but also on where investment can ensure long-term efficiency.
This level of onward planning and insight is out of reach for the CFO. As such, SRP opens the door for you to directly control the balance sheet, secure longer-term investment and efficiency, and safeguard your top-performing people from slash and hack cost-cutting.
This was first published in August 2009