Alastair Pooley, CIO at Snow Software:
The biggest mistake is making short term changes which, in the long run, weaken your technology estate and will lead to bigger issues. Invariably, you may need to make short term cost savings such as extending the lifecycle on hardware by 1 year or cancelling projects which have the potential to generate benefits in the future. However, it’s important to consider the long term impact and how it will affect the ability for the business to be successful in future.
What makes this mistake so potentially awful?
It can become a vicious cycle, for example, you cut investment in digital marketing technology and keep the sales team using older laptops. Less leads come in, the salespeople are less productive as they suffer equipment failures so you generate less revenue. This forces more cuts in spending and you impact productivity further.
Is there a better way to address the issue?
It’s better to be intentional around what you can afford and focus on your priorities. There is always some application duplication, for example, I’ve seen one firm using OneDrive, Box, Dropbox and Droplr without realising it. That overlap where different teams have all taken on related but similar tools leads to application sprawl which wastes money and makes it harder for your employees. If you can examine your technology estate and identify that duplication and waste and start removing it, you get to save cost and increase standardisation. I’d also advise people to look carefully at both their cloud costs (both SaaS and IaaS). All too often, I talk to CIOs who find excess licenses and underutilised resources both which can be tackled while causing little disruption.
How can an IT leader tell when a cost-cutting initiative has gone too far?
Staff morale and attrition rates can be a good indication, particularly in the IT function. If you can’t persuade your own team that you are making the right choices, then it’s unlikely the business will approve either. You have to get people on board when seeking to deal with financial pressures. If the business needs to take action, then it’s better that there is a shared understanding of the pressures which are being experienced.
Is there anything else you’d like to add?
Engage your team. It’s a tough balancing act between keeping them motivated and willing to stay through cost-cutting versus creating worry and increasing your attrition. I’ve spoken to CIOs who had to make some dramatic savings during the earlier part of the pandemic when their revenue was disappearing, and their feedback was that managing staff expectations through that period in an attempt to retain key skills was absolutely critical.
