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Thu, Jul 31, 2008 16:17 EDT
Economic Challenges Present Opportunities for Great CIOs
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Posted by: Brian Flora in Best Practices Topic: IT Organization Management
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A lot of CIO’s are facing the specter of reduced or frozen IT budgets as the US economy slows and pundits toss around the dreaded “R” word. However, a frozen IT budget can actually present opportunities if it encourages a little healthy self examination. Unfortunately, IT divisions are often paralyzed when these things happen. Instead of taking a hard look at processes and asset management, a lot of IT “leaders” exhibit the tendency to simply limp along and wait for the money to return.
Hint: it won’t come back on its own.
In practice, this is an ideal time to implement new processes and streamline existing ones. A hiring freeze is sometimes necessary, but freezing your employee training budget at the same time is a mistake. The right training can help get the most out of each employee, and improve the effectiveness of process implementations. I tend to lean toward ITIL® as a framework for process improvement, but there are certainly other ways to go.
When IT directors take the time to build a business case demonstrating the ROI for these kinds of projects, they tend to get funded. Businesses aren’t really interested in cutting costs for the sake of doing it, they just want to eliminate waste and get the most from every dollar spent on IT services. It falls to the CIO to demonstrate the value of IT initiatives to the business in real economic terms, and to counter the image of IT as a cost center.
Moreover, it makes a strong statement about the value of the IT director to the organization. To quote an old Wall Street axiom, “Everyone is a genius in a bull market”. It’s comparably easy to succeed when business is booming and budgets are fat, but a CIO who can lead change and drive service improvement programs during tough times is exponentially more valuable to the business than one who simply slashes costs and keeps the lights on. Demonstrate a focus on the strategic Return on IT Investments, and you’ll be well on your way to getting the budget you need.
Business Case, CIO, financial management, IT budget, ITIL, training
Brian,
I agree! The approach is one that I see many CIOs and IT leaders attempting to undertake, if they can.
At issue is when their executive peers don't value IT in reality as much as they had said before things got tight. Perhaps that puts CIOs in the same boat as Marketing chiefs or Business Development heads who see their budgets cut when they know the better solution is to hit their target markets harder now that there are fewer competitors. Or worse, they get cut themselves, as the Board looks for greener ($$) pastures.
Developing and demonstrating ROI (vs TCO) should be a tool used throughout the business cycle, not just on the bottom of the curve.
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