Cutting the cost of IT: Myths and Realities

SourceforConsulting seminarMargaret Smith11th June 2009

Work Biography: Margaret Smith • 40 years in industry

• Worked for British Gas, Woolwich and latterly L&G• CIO at L&G twice (1989-1994 and 2000-2004)• On the L&G UK Board (1989 – 2004) • Set up and ran the L&G direct business• Set up and ran the e business for L&G

• 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

Agenda

The wrong expression

The difference in this recession

Feedback from some CIOs

Obstacles

Risks to the organisation

The wrong expression and the myths surrounding cutting IT costs

Don’t 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

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

Who is cutting and who isn’t....

Few businesses are recession proof Businesses in dire straits cut

operational and transformational spend

Virtually all are cutting investment Payback has to be <6months McKinsey research on cost cutting

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 Don’t need to re-platform / refresh

so frequently Cloud means no need of capital

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 (Moore’s law) Ownership of benefits realisation

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

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

Questions?

Cutting the cost of IT: Myths and Realities

Source for Consulting SeminarMargaret Smith11th June 2009