In the middle of just about every conference room where budget decisions are made sits a big, fat elephant. People sometimes glance at it or whisper to their peers about it but it gets little airtime. The elephant is named, “Use It Or Lose It.” This is an unspoken business law that drives more business decisions than the grandest of strategies. What is it that everyone knows but no one talks about? If you don’t spend all of your budget this year, it will be cut next year.
I usually rant against IT exclusively but the business is as much to blame for this scenario as any IT department. I’ve never seen an incentive program in place for IT departments that figure out ways to save the company money. In fact, the opposite is true. If a department is proactive and figures out how to save the company money, their budgets (and sometimes staff) are cut. This recipe cooks up one of those dishes that tastes so good you just can’t stop eating. Gluttony at the dinner table is no worse than this sort of IT spend frenzy where large procurement decisions are not made in visioning sessions with the business but instead on golf courses with vendors far away from home office.
This rule is especially true for IT departments where the business has little idea of alternatives to multi-million dollar hardware and software implementations. Business looks to IT for guidance on how to leverage technology to either reduce costs or increase revenue. Something strange happened in the ERP heydays that companies are just now coming to some sort of consciousness about: IT is overhead. Only in very rare cases is IT a part of your core business.
Like most other functions that are not a part of core business, these departments and processes can get outsourced: HR, Payroll, Benefits, Call Centers, etc. Now we can add IT to the list. The once invulnerable IT worker has become a commodity today. This is partly because of the incredible arrogance that has come to dominate many IT organizations. Today IT executives believe that it takes as much money to run their organizations as it does to run the core business. We see where this attitude is leading us, “Sayonara IT department, we’re moving operations offshore!” It’s becoming very simple for CEOs to make this decision.
IT projects have a high tolerance for delays and even complete failure. It’s almost par for the course today. The latest stats from Gartner Research estimate that around 60% of all IT projects fail. Imagine if a pharmaceutical company released drugs that only worked 40% of the time. They probably wouldn’t stay in business very long. Yet this is exactly what happens in IT departments every day. There are very simple actions that can be implemented to reverse this trend. However, this will require grinding up against entrenched corporate orthodoxy. Like any large corporate change it must start at the top. Here are some first steps:
- Overturn the Status Quo: Reward departments (not punish them) for reducing spend and coming up with creative solutions to real business problems.
- Talk to Your Business: CIOs, stop playing golf with vendors and spend more time talking to your clients, the business users. Partner with your business units to understand the challenges they are facing day-to-day.
- Set Up a PMO: Implement and adhere to a strict program management office (PMO) model that enforces budget, methodology, templating, and project management tools.
- Be Creative: explore less expensive software and hardware alternatives.
- Invest in your company’s future: pay to send your people to quality training and stop spending so much money on consultants. You will have a loyal and motivated workforce. Consultants are a solution to a temporary problem – not full-time employees with no benefits.
The status quo must be overturned. The whispers about the elephant are getting louder and people are starting to talk.