For an IT project to be a success, it is essential to get explicit, demonstrable sponsorship for the programme at the highest level possible. This does not just mean a memo from the finance director stating he is "right behind you".
It means active, ongoing visible support for the exercise, lobbying key stakeholders, resolving conflicts, opening up the diaries of busy people and generally ensuring the team has full co-operation and access to people who have the power to make decisions.
Ensure that the budget baseline from which savings will be estimated is absolutely clear at the start of the project, and stick with it. Is it the next financial year's planned budget? Is it this year's actual budget? Does it take account of staff vacancies?
When you say, "This cost reduction opportunity will save 5% in cost centre C326," there must be no debate about the value of that 5%, because the budget baseline was agreed and signed off.
Agree on a minimum total savings target at the start of the exercise and make it the responsibility of the IT management team to identify, and sign up to, the opportunities to meet or exceed this target.
The crucial point here is that it is not the responsibility of the cost-efficiency improvement team to deliver the opportunities, let alone deliver the savings from the opportunities being implemented. Their role is to facilitate the opportunity identification process. They are there to ensure the targets are met with as little pain as possible, and so they are the friends of the IT management team, not the enemies.
Put your best people on the team. In particular, you are going to need people from finance who are "spreadsheet kings" to man the cost models, which can get extremely complex.
Also consider complementing the skills and internal perspective of your internal staff with external consultants who have demonstrable experience of similar exercises. A crucial point, however, is to ensure that any external help you bring in has extensive IT cost reduction experience and a track record of success.
The typical approach adopted by the big consultancies to any cost improvement proposal is to use activity-based costing (ABC) and priority-based budgeting (PBB) techniques to find cost reduction opportunities.
The problem is that these conventional ABC/PBB approaches are relatively ineffectual in what is the one area of an IT function that typically has a large group of staff performing largely homogeneous tasks, since the key cost reduction issue here is the continuing cost justification and scope of the project, not the activities performed to deliver it.
Value-Driven IT Management: Commercialising the IT Function is published by the Computer Weekly Professional Series. To order call:
Key elements of project success
- Make sure senior managers at the highest level in the company are fully behind projects, and use them to deliver access to people higher up the chain of command that you need to get on board to guarantee success.
- Be clear within the department and with everyone else you deal with about where the money for a project is coming from.
- Spell out to all concerned the minimum saving a project should deliver, and be clear about where the responsibility lies for delivering or exceeding it.
- Select your best people for the project team, paying particular attention to those who have proven experience of keeping control of costs. Do not be afraid to bring in external consultants.