In the C-Suite: Cost jerking
It is not clear to me that many boardroom executives know the difference between strategy and tactics when it comes to cost management. The overwhelming theme I hear from speaking to many CIOs is that the IT budget has been hit both hard and indiscriminately.
This smacks of a knee jerk reaction to the economic downturn. Cost jerking has some short-term benefits, such as quickly bringing costs into line with revenues. Usually such measures are easy to implement and appear to all concerned, apart from the recipients, as action-oriented leadership.
However tactical action rarely addresses the root cause of cost related issues. Perhaps the real issue is the need to migrate the existing business model to embrace the web?
Such tactical action usually takes no account of the associated consequences down the line. But perhaps this is not an issue if the CEO is judged on short-term performance?
Perhaps the CEO is keeping his fingers crossed that an imminent upturn will cloak the problem once reckless spending becomes fashionable again?
Thus shareholders need to discourage business leaders from being a jerk.
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You’re certainly right- the IT budget has been hit quite hard! IT has been a very popular cost-cutting target in this recession.
Here’s a whitepaper on this topic that I think you will find VERY helpful. It has lots of recommendations, beginning with what I see as something essential- questioning the usefulness of the supposed “givens” in your IT department.
https://www.tatumllc.com/perspectives/special-reports.asp (“Recession Leadership: Uncovering Hidden Efficiencies Through IT Cost Reset”)
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Thanks for the comment Lisa and the white paper reference. I have had a look and I would strongly recommend it. It’s to the point and on the money.
I would welcome a whitepaper from the CFO community on how to lever IT to cut costs across the organisation.
And whilst I am on a roll, a white paper that details how the innovative use of IT can be applied to increasing business value that does not use the word cost!