Cutting the cost of IT: Myths and Realities

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Cutting the cost of IT Myths and Realities

• SourceforConsulting seminar
• Margaret Smith
• 11th June 2009

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Work Biography Margaret Smith

• 40 years in industry
• Worked for British Gas, Woolwich and latterly
  LG
• CIO at LG twice (1989-1994 and 2000-2004)
• On the LG UK Board (1989 2004)
• Set up and ran the LG direct business
• Set up and ran the e business for LG
• Sat on Cabinet Office Board for UKonline for 3
  years
• January 2005, CEO CIO-Connect
• 2006 - 2009, independent consultant
• 2008 - 2009 CEO Telenexus, an FS start-up

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Agenda

• The wrong expression
• The difference in this recession
• Feedback from some CIOs
• Obstacles
• Risks to the organisation

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The wrong expression and the myths surrounding
cutting IT costs

• Dont start with a view to cutting costs
• Cutting IT costs in isolation is good
• Operational costs can be reduced with no/minimal
  impact on business
• We can do the same things just for a little bit
  less

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The difference in this recession

• The low hanging fruit has already gone
• Businesses are more heavily reliant on IT
• Even investment is being reduced
• A lot of outsourcing already taken place (cost
  cutting pushed to limit)
• Capital is REALLY tight

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Who is cutting and who isnt....

• Few businesses are recession proof
• Businesses in dire straits cut operational and
  transformational spend
• Virtually all are cutting investment
• Payback has to be lt6months
• McKinsey research on cost cutting

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Some CIOs see the silver lining

• Unique time to build governance
• IT and business working together to get real
  productivity
• Operational costs are great way to find
  transformational spend
• Dont need to re-platform / refresh so frequently
• Cloud means no need of capital

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Obstacles

• IT has always cried wolf
• IT is emotion based
• Projects have always had the space for 2nd time
  right and used it
• The cost of IT is reducing year on year (Moores
  law)
• Ownership of benefits realisation

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Risks to the organisation

• Ascertain the current risk appetite for the
  organisation
• Every cut needs a proper risk assessment
• The portfolio committee needs to make the final
  decisions
• Review the impact post implementation because
  always get some wrong

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Summary

• Businesses are really focussing on the critical
  things
• The way businesses operate can no longer be
  predicated on the past
• There is ALWAYS a silver lining to any cloud just
  need to look hard
• Only way to know what can be cut is zero-based
  budgeting and ABM
• Even the public sector is now aware

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Questions?
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Cutting the cost of IT Myths and Realities

• Source for Consulting Seminar
• Margaret Smith
• 11th June 2009