Tough Times and Three Unequivocal Standards of IT Agility
Written on 10:48 AM by Right Click IT - Technology Services
Michael Hugos/Blog: Doing Business in Real Time
So the CEO and the CFO are telling you to cut IT expenses - tell them for the good of the company you can’t do that. Tell them you already run a lean operation and saving another 10 percent on the IT budget is small potatoes compared to using IT to save 10 percent on the operating expenses of the whole company or using IT to grow company revenue by 10 percent.
As all eyes around the table turn your way to see how you are going to recover from that jaw-dropping bit of unexpected impertinence, in the stunned silence that follows, drive home your point. Propose that instead of cutting IT, you’ll work with the CEO and the COO and the VP of Sales to create strategies to deliver those savings in company operating expenses and attain those increases in revenue. Seal your offer by publically committing to power the resulting business strategies with systems infrastructure that meets three unequivocal standards of IT agility: 1) No cap ex; 2) Variable cost; and 3) Scalable.
Commit to the standard of no cap ex (no capital expense) because it’s the order of the day in business. Revenue and profits are under pressure and credit is harder to get, so there is less money for capital investments. Also, because we’re in a period of rapid technological change, making big investments in technology is risky because it might result in your company investing in technology that becomes obsolete a lot faster than expected. So smart IT execs learn to get systems in place without a lot of up front cost. That means using SOA and SaaS and mashups and cloud computing to deliver new systems.
Committing to the standard of a variable cost operating model is very smart because it’s a great way to protect company cash flow. Pay-as-you-go operating models (like what the SaaS and cloud computing vendors are offering) mean operating expenses will rise if business volumes rise, but just as important, operating expenses will drop or stay small if business volumes contract or don’t grow as big or as fast as expected (you only pay more if you're making more and you pay less if you're making less). In this economy where it is so hard to predict what will happen next, and where companies need to keep trying new things to find out where new opportunities lie, variable cost business models are best for managing financial risk.
Committing to scalable systems infrastructure enables companies to enjoy the benefits of the first two standards. A scalable systems infrastructure enables a company to “think big, start small, and deliver quickly”. The CEO and COO and VP Sales can create strategies with big potential and try them out quickly on a small scale to see if they justify further investment. Start with targeted 80% solutions to the most important needs and then build further features and add more capacity as business needs dictate. Companies don’t outgrow scalable systems; they don’t have to rip out and replace scalable systems.
Making such an offer to your CEO might sound pretty bold and risky but then consider this: If your plan is just to cut your IT budget and try to keep your head down, chances are excellent you won’t survive anyway. That's because if you dumb down your IT operations and IT is seen as a cost center instead of part of your company’s value proposition, then your CEO and your CFO are going to quickly see that a great way to save an additional six figure sum will be to fire you. Who needs a highly paid person like
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