IT Cost Reduction Lessons Learned

I recently assisted a medium size organisation in identifying opportunities for reducing their IT cost base. I learned a lot in the process.

Background.
The organisation had a federated business and IT model with only a limited of number of functions operating on a shared basis. Each business unit had its own IT function who was funded by the business unit and operated primarily with its goals in mind. Each business unit and IT unit had its own business and IT head. Given that there were a half a dozen or so business units this made for a lot of stakeholders when you add in the central stakeholders such as the CIO and his team.

The project was ultimately successful but was very challenging. Below are my key lessons learned from the project:

1. Stakeholder management is key. Everyone knows this is the case in any big project, but every so often we need to be reminded of it. Take the time to identify and understand the objectives of each of the stakeholders right at the start of the program. Knowing where they are coming from will give you at least some chance of managing them during the program.
2. Understand that people are threatened by the program. Everyone knows that headcount reduction is a possible outcome of any sort of cost review. It's important to remember this in all your dealings with people.
3. Be able to provide evidence to back up your assertions. If your are proposing that a particular path will save money be prepared to back it up with evidence. You will loose credibility if when challenged you are unable to support your hypothesis. This will also give ammunition to those who wish the program to fail.
4. Set expectations early. Be clear upfront about how you will assess the cost and benefits of any cost reduction initiatives identified. It is important that everyone understands that figures will be derived on a top down or bottom up basis and that further work may be require to fully qualify individual initiatives.
5. Understand the company culture. Be sure you understand the company's culture and work within or around it. Failure to do so can result in unnecessary resistance to your work.
6. Get your financial baseline right up front. Having discussions around today's costs at the end of the engagement is counter productive.
7. Involve finance in the program right the way through. They not only have to sign off on your proposal but they also can be a vital source of information.
8. Perhaps most importantly if you are from outside the organisation, find some within the organisation that is committed to the exercise, understands the organisation's politics and can help you navigate around the inevitable landmines.
9. Use someone external to assist in the program- it is a good source of external ideas, avoids group think and focuses the mind of those involved.
10. Communicate, Communicate, Communicate. Enough said.