|Research, training, consultancy and software to reduce IT costs|
Project manager required: heroes need not apply
If you want to cut costs, you have to be prepared to descope and cancel projects. You have to avoid heroic project management that battles on against all odds.
To cut costs, start with a simple calculation.
cost = quantity x unit price
There are two ways to cut costs: by reducing quantity, or by reducing unit price.
In IT, we tend to concentrate on unit price. We manage projects carefully. We select technologies with low cost of ownership. We employ skilled staff. We negotiate good deals.
But we do not manage quantity well.
The two main areas of IT quantity are projects, and existing systems. We can cut IT costs by reducing the number, size and complexity of projects; and by reducing the number, size and complexity of systems.
Of course, we can not just abandon all our projects and systems. We need to find a way to reduce quantity but maintain business value.
It is easiest to see how with existing systems. Most large businesses have generations of systems with overlapping functionality, and a lot of functionality that is simply not used. This does not add to business value, but is just "stuff" that we have to operate and support.
The systems and responsibility orientations I introduced last week divide IT into smaller chunks that are more clearly related to business activities. This makes it much easier to identify and remove overlapping and redundant functionality. It helps remove the "stuff" that adds cost but no value.
It is harder to see how to reduce the quantity, size and complexity of projects without reducing business value. But it is possible.
Projects are not black or white. They are shades of grey. Most projects are not complete failures, but neither are they a complete success. Many projects run into problems with a lack of business case, lack of effective sponsorship, unclear scope, difficult change management issues, or a lack of take-up.
Where there are problems, projects do not deliver value. For example, weak sponsorship indicates a lack of business buy-in, and will show itself later by a reluctance to change the business and little effective take-up of the system.
We can reduce the quantity of project work, and avoid some projects completely, if we identify and avoid those parts of the projects that will lead to these problems. Of course, we have to distinguish between things that are difficult but can deliver value, and those which will never deliver value. The responsibility, value and customer orientations I introduced last week do just that. They help cut project costs and deliver just as much business value.
If you want to cut costs, you have to see some issues in projects as signposts to better value. They are an opportunity to revise projects to be simpler and cheaper, and cancel projects that can not deliver any value. But a hero mentality, which sees reductions in scope or project cancellation as failure, and which will battle on against the odds, blinds you to these savings. If you want to cut costs, you have to do without heroes.Next: Systems orientation: understand your IT
Minimal IT: research, training, consultancy and software to reduce IT costs.