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12:23 PM Monday August 25, 2008
When downturns hit, budgets are cut. And yet, the IT budget seems remarkably impervious to budget cuts.
There's many reason it survives. First of all, it's mostly fixed - the majority of the IT budget is required to keep the lights on. Also, other parts of the business influence IT budget growth, so to cut it back, you have to affect the behavior of the entire leadership team, not just those who reside in IT.
Third, there isn't much chaff to separate from the wheat. IT costs have been under tight scrutiny in response to the runaway IT spending of the late 90's. Data centers and call centers have been consolidated, contracts have been renegotiated, and services have been off-shored.
Finally and most importantly, reducing IT costs has the perverse effect of increasing IT demand and thereby costs. Many budget cuts hinge on implementing process changes and thereby, require systems changes.
Some eager IT staffers are probably ready to print out and distribute this blog entry to their bosses to show why they shouldn't suffer budget cuts during this downturn. Not so fast. It may be difficult to cut the IT budget, but as they said in the days the California gold rush, "there's still lots of gold in them-there hills."
The key to further, smart, cost reductions is to recognize the fact that, in general, companies spend too much on IT because they are unwilling to say "no" to IT-related requests. The path of least resistance seems to rule the day: Too many projects are funded, too many die a slow death, too much technology is procured, too many quality defects are tolerated, and users require too much hand holding.
As you work this round of IT-related budget cuts, engage senior business and IT leadership in managing these truths that drive up IT costs and institute policy changes that will result in lowering costs and increasing returns (
Click hereto download this chart):
Managing the truths will require more finesse and courage than ever before. It takes wisdom to decide what needs to be done and courage to stick to decisions in spite of the whining that will ensue. The good news is that the disciplines developed during the tough times will pay off in a big way during the good. You may have started this management process because of a downturn, but making better investments and leveraging invested capital never goes out of style.
See the Complete Downturn Survival Guide 
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Susan Cramm is the founder and president of Valuedance and a recognized industry expert on information technology leadership and coaching. She is the former CFO and executive vice president at Chevy’s Mexican Restaurants. Prior to Chevy’s, Cramm worked with the Taco Bell Corporation and held the positions of CIO and vice president of the Information Technology Group and Senior Director for Financial and Strategic Planning.
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Comments
Susan, can you post a link to the source behind the "follow Intuit's lead ... helpless helpdesk calls" entry in the table? Thanks!
- Posted by Bill Payne
August 26, 2008 10:41 AM
Bill - Here's the link to Intuit's support page: http://fi.intuit.com/support/roadmap/
As you will see, they charge for phone calls and incent customers to the self service or email/chat options.
Also, you will note that they indicate that charges "vary" - you can get more information on cnet.com reviews for the individual products.
Hope are you well! Susan
- Posted by Susan Cramm
August 26, 2008 12:16 PM
Great article; a real wakeup call for business and some insight into the murky world of IT management.
The surcharge for "helpless" help desk calls is interesting. But it only covers half the problem. IT procedure and policy is often crafted for the convenience of IT at the expense of everyone else. For example, if my PC is "locked down" to the point where I have to put in a help desk ticket to plug in a USB printer that I could otherwise plug in for myself, the helpdesk needs to be charged for the four hours that I was without a printer waiting for their technician to bless and install the device driver.
If _I_ cause a problem by doing something I shouldn't have, by all means charge my department. But when I wait all day because the helpless desk is taking care of their self-imposed busy work while I wait for the solution to a problem they CAUSED, somebody's gotta pay.
- Posted by DC
March 24, 2009 2:25 PM