It's incumbent upon CIOs and IT departments to stay appraised of market forces that affect your company and your customers. Looking at today's financial instability, it becomes even more important for IT management to sit down with the leaders of their companies and understand what impact the business is anticipating from the market. This allows the IT organization to stay aligned and respond quickly to fast-changing conditions. In my industry peer group, I see many CFOs and CEOs making potentially shortsighted decisions, cutting IT investments that require specialized resources. If you cut these programs mid-flight and then get the green light to start up again it can be difficult to do so. Many executives feel good cuts and seeing instantaneous financial savings. But six months down the road they have to start over without the experts and resources they let go of. Re-hiring skilled staff takes time. The decision has far bigger ramifications than a line item on a spreadsheet. Many CIOs have the benefit of regularly attending their company's strategy and product sessions. Those are typically informed by current market conditions. So whether the strategy is short-term cost containment or sticking to strategic programmes that have long-term benefits in the face of dismal market conditions, those conversations have to happen with the senior leaders of the company. It's critical for IT to be fully aligned with the business as the market goes through these experiences. When making cuts is unavoidableSo if you do have to make cuts, how do you choose? At Sun, all of our IT initiatives are directly tied to a corporate goal or strategy. I suggest that IT organizations ensure that their larger programmes, which might be a target for financial review, be well-documented and specifically tied to a corporate goal. That way the CFO/CEO can see the ramifications of cutting such an investment. IT projects that don't directly impact revenue or goals can become easy targets in fiscally troubled times. So what can you do? First, take a good look at your IT infrastructure. Look for cost saving opportunities in (perhaps) non-traditional areas. Examine Software as a Service (SaaS) as a way to make operating costs more flexible with the ability to dial-up or dial-down services and costs as market forces and company demands require. What about phone systems? Everyone carries a cell phone, so do you need a desk-side phone as well? Increase the work-from-home capabilities for your employees - and drive a decline in capital, office, and IT infrastructure costs. Wireless voice and voice over IP are some other ways to reduce or eliminate traditional fixed infrastructure. Bottom line, if you're doing something because it has always been done that way, it's a candidate for rethinking. Financial people who supervise our industry love to boil things down to an ROI analysis. But it's difficult to put a simple financial measure on IT investments. IT investments sometimes have a hard return. For example, you might eliminate two or more legacy applications by introducing a new one. You can measure and quantify that. But more often it's impossible to accurately quantify the productivity impact on employees or the operational productivity impact. These are qualitative. You need to be prepared with arguments for both benefits to argue the full impact of your programme. At Sun, if there is an opportunity to defer a capital project that doesn't have an impact on our strategic plans or tactical initiatives, we'll do it. But in many companies there is a Catch 22. When cutting support functions - sales, finance, HR - there is an increased requirement for automation. When headcount gets cut, the need for more systems increases. You can't buy them if you cut the IT budget. So it gets back to my point about ensuring that IT participates in the broader conversations within the ecosystem. The upside: more cost-saving innovationIf there is an upside to a financial crisis, it's that people look for opportunities to be more cost-efficient. Technologies that require lower capital investments such as virtualization, open source, and SaaS offer these kinds of opportunities. Virtualization drives higher consolidation rates to improve productivity, utilization rates, and operational performance, leading to lower cost. At Sun, we've virtualized much of our application stack and have seen a sizable increase in the utilization of our servers and other assets. Software as a service may or may not lower operating costs. But it certainly offers a more flexible cost model because you eliminate the sunk costs of traditional software. SaaS allows you to dial the service up or down as your financial situation warrants. Because the SaaS provider handles the technology research and upgrades, you pay only for what you consume and avoid having assets sit idle. Depending on your company culture, another upside is moving to a mobile work environment, which reduces the real estate and operational costs of keeping offices for employees. Sun shut down an entire campus of 4,000 people and sent them to work from home, saving the company millions of dollars in operating expense without cutting productivity. Even sending people to work at home on Fridays and shutting off the lights and air conditioning can offer considerable savings. Cutting costs and being "green" are no longer mutually exclusive. A key thing to remember is that financial crises and market situations are always cyclical. IT leadership must be ready to respond quickly as approval comes to restart your programs. All of us, regardless of specialty, must be students of the market and have the ability to see upturns coming so that we can re-plan for programess that have been trimmed. Early movers in both directions - up or down - are the winners.
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