What To Do When the CFO Says, “You Need to Reduce Costs”

Your Chief Financial Officer (CFO) is responsible for the financial health and prosperity of the company. In very simple terms, the future of the company depends on more income and outgoings.

These days IT is a major cost center, underpinning many aspects of the business. So if the CFO comes to visit, thumping the table to reduce our IT costs – what can we do?

What Options Do We Have and What Should We Do?

In an ideal world, all of our IT costs would be closely aligned and paired with the IT services they enable.

Each of our services would be quantified in terms of value, and the components parts required to deliver the service (partners, services, people, assets, and so on) would be measured and quantified against the value they deliver.

In this case, when the CFO says cut costs, we can reply and say “what services do you want cut or reduced?” Reducing the number or quality of services would theoretically reduce costs.

So Much for IT Management Theory…

Back down here on earth, IT management is not usually that closely aligned or organized, and many organizations lack the maturity and management controls to manage value closely.

If your IT Value and IT Services are not yet aligned, the best target to aim for – to reduce IT costs in this short term – is to identify WASTE.

Here are three tactical projects to eliminate waste and save money. These projects are ‘low hanging fruit’; they can be acted upon even when your company is not spending big money on new projects and growth.

They just need a bit of planning, perseverance, and people power!

• Focus on renewals, maintenance, subscriptions, and lease agreements. Even when an organization has a financial lock down on new projects – it still has many on-going financial commitments in terms of maintenance agreements, service contract renewals, and other on-going subscriptions. A quick win is to assess all renewals and agreements and analyse which of them can be reduced or removed. Maybe the project is no longer active, the service was retired, or people have moved on. It takes some investigative work but is worth the effort.
• Avoid new software purchases. If you receive a new software request, try to fulfil it by removing an unused copy from another user. This cost avoidance technique can save millions. It does not necessarily mean deployment of tools – it just takes investigative work and perseverance.
• Avoid new hardware purchases. Hunt for all the hardware you can to hold as stock. Hold an amnesty at the office to bring out old hardware that’s sitting in dusty cupboards. As staff leave or move roles, don’t allow managers to hold desktops and laptops in their drawers, claw them back to be used to fulfil new hardware requests. This is another cost avoidance technique to freeing up budget for other projects or to demonstrate savings.

By working on these tactical projects IT staff can free up IT budget and demonstrate savings. This can build momentum for longer term IT Asset Management initiatives and efficient IT spending.

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