“Could you trim down your costs?” this has often been the response to many CIOs when they present their budget for the economic year in their company. The pressure to deliver value in the organizations cannot be any higher than it is with each passing day, but even greater is the pressure to decrease the cost of CIO’s department and cost of output. So how does the CIO handle this pressure and still have their head above the waters that threaten to drown him/her? Managing your budget could just be the answer to your crisis. There are managers who have walked this path before you and are operating at less than half the industry metrics in terms of the budget and yet they deliver exceptionally to the point of being asked whether they are being properly funded! You can get there. In this blog we recognize the challenging times in which you operate in and also seek to share the wisdom shared by many CIOs who are walking above the tide.
The situational analysis for CIOs is familiar with most of us. Technology gets obsolete sooner than your first thought; this leaves you wondering whether to go for the top class technology or have a cost effective solution? Should you go for deployment of long-term solution systems or go for an easy to deploy system that will deliver results immediately? All these have cost implications as well as impact on the quality of performance for the CIO.
One of the key areas that organizations look into for greater performance in the CIO’s portfolio is how technology can be leveraged to attain greater productivity and output in the broader organization. Thank goodness the shifting times in technology have brought with them ‘good perks’ that if discovered in good time and if well explored-not only with the organization benefit, but the CIO and his team are likely to feel the greatness in finding satisfaction and enjoying the best of your career. An example of technology perks for leveraging include the cloud and deployment of IT automation tools.
IT should shift from being cost centers to centers which generate greater returns on investment
The use of cloud and IT automation tools have been found to greatly enhance quality of output while greatly reducing the cost that come with it. Research has found that many CIOs have a higher operational cost than a capital cost in their business.
Whereas it is true that the days when you were ‘mighty’ is when you had the biggest budget or head count are gone, there is also need to be true to quality and output. Over the years we have realized that one can get a service with the least of cost that they offer. But the difference lies in the quality and kind of service that you will receive. The longevity of a CIO in an organization lies solely on the quality of impact with which they impact the organization’s vision, mission and goals.
So here are some of the strategies that will see you having the best approach to managing your budget:
Seek to Know; the organization, its products, people, customers, your role, the industry
The CIO can no longer sit on the fence and watch the leadership hustle with how to get the business to the next level; you may find yourself out of the business sooner than you thought. Every CIO has to know the business, the product, the people, the places where the business operates, the prices and just as much knowledge as possible concerning the organization. Secondly it is important that you know thoroughly well what your role is. Often people who know well their roles tend to attract confidence, adoration and friendship from the rest of the organization. With the knowledge of both the organization and your role, you are better placed to find ways through which you can use your role to bring about solutions to the needs of the organization and its clientele. That knowledge is critical to your success in presenting your budget. Know just how you spent and on what. What new areas can you explore to bring about positive change but at a lesser cost?
Align your budget to business’ major initiatives and priorities
It is important to align your budget to the major priorities and major initiatives that are in your business. What are those top 5 metrics or objectives that the senior executives have on their targets for the year? When your budget is important to the business and its plans, then it becomes important to the leadership. Sometime a CIO was presenting their budget and since it was not clear, the CIO took the board to the operations room, “you see this gadget (or software)? If it is not there then all the operations are crippled and we can as well just go home!” This was critical even for management. The CIO had his budget approved.
Ensure your organization’s ROI is aligned with business impact metrics
Set goals on how much you want to generate for the organization in terms of qualitative and quantitative returns on investments. There have been major shifts in the IT world from just ensuring that you are supporting effective operations to participating in bringing solutions to the customers. Your budget should be able to reflect just how much-either qualitatively or quantitatively-you will be impacting the business in your organization. My experience together with those of other leaders often reveal that management will often approve of whatever budget that seeks to bring more returns on investments. Make use of the cloud to expand business horizons, shorten customer response cycle, capture more innovative ideas for new products and effective monitoring, evaluation and growth of employees. These are just some of the many ways through which you could qualitatively increase your returns on investment in your organization.
Benchmark and invest in research and development
IT keeps evolving and with every passing day there is a lot that develops in the IT industry. Much of these are for the better of an organization. Always seek to know your industry and the best practices-then go for the cut above the rest! A little wisdom here and there, add to your own and come up with an original master piece that will spur the organization to the next level.
Try to be on spot with your budget with regular reviews and revisions
Many organizations do their budgeting once a year-but the rate at which IT is transforming may not much once a year. It may be important to keep reviewing your budget on a quarterly basis at a minimum. Have a fund that will cater for whatever other necessary expenditure that you may have along the way. Along the way, you should always be measuring the value you are adding to the organization to consider in ROI metrics and business evaluations.
Look for cost effective ways to implement your strategy
Somehow you have to come up with cost effective ways to reduce on your cost (apart from use of cloud and automation). Try to review all your expenditures and identify recurring charges which could be bought and reused for the various stages of strategy implementation. And even if they cannot be reused, when they are bought in bulk, you would often find a discount. You could also reduce on your expenditure through the use of outsourced services. Freelancers are great options for such services. Do not outsource your core functions. Always remember to have the outsourced people have the same fire and burden for your mission so that you deliver the very best.