How IS Organizations Can Survive Cost Cuts

Dealing With Application Change

Application changes are all project-driven and project management tools help guide the selection process and balance applied resources for best results. The costs from IS and benefits from the business should be firmly established from the beginning. This is at the core of governance and necessary for the business to fully understand its IT investment decisions, during both expansion and contraction.

Any cost containment decision by the business could mean not expanding new markets or products, and any associated projects would no longer be viable.

However, with the directive to cut costs there is most likely to be a batch of new, cost cutting projects that business units want to execute instead. The adjustment of projects, priorities and resources influences the decision to employ more staff or make redundancies. Job losses and their associated savings feed IS contributions to cost cutting, either internally or externally through external service providers. The business must decide what it needs to optimize its new objectives under a cost containment ceiling. This should also open up a dialogue for the business to decide if it needs to rebalance the amount of cost split between IT operations and business process change.

IT Operations' Service Model Drives IS to Be Price and Cost Competitive

Cost reductions through application change are achievable with the appropriate tools, but operational costs remain incomprehensible to most business people. IT operations are organized to solve technological problems, but they are also part of the service business. Most clients, whether internal or external, do not consider buying bandwidth, channels or CPU speeds. In almost all cases, they want to buy a PC or workstation that works - the rest doesn't matter much.

IT operations should be able to produce about six service delivery offerings that clients can recognize and put a value on - that is, a set price for them and at minimum cost for IS. It may be easy to define IS as a bundle of service offerings, but in practice, it is difficult to execute.