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Nearly a decade ago, FCI’s IT organization had to deal with what numerous companies face today in these weak economic times, and it responded as any IT organization should, with targeted reductions that sustained IT services and eliminated discretionary overhead. However, what makes the FCI approach unique is a sustained multiyear strategy of innovative actions linked directly to planned cost reductions.
With a clear, concise vision and an aggressive strategy of actions to achieve that vision, FCI’s information technology organization successfully imple-
mented numerous innovations despite year-over-year budget reductions. As a result, it has positioned itself to be best in class. Equally significant is the credibility this approach earned within the company, allowing IT to avoid additional budgetary challenges when business conditions worsened in the current economic crisis.
IT leaders constantly seek the next innovative solution to a business problem or the next innovative approach that will differentiate the company from its competitors. Far too often, these same leaders stand in the C-level executive offices holding in one hand the justification for their next innovation: ROI, differentiation in the marketplace, improved services, etc.
Unfortunately, they often hold in the other hand a budget request that will ultimately increase the cost of services to the company, whether for additional software licensing, maintenance costs, hardware or head count. These IT executives may justify the increases based on equalizing or improving the ROI. But a fundamental shift needs to occur: These leaders must ask themselves and their organizations a key question: How do we deliver solution X by cutting
Every IT leader in the organization should be challenged with a reduction in the operational budget. Each must approach that challenge with a mindset that no longer focuses on how to innovate, but on how to innovate by cutting the budget.
IT leaders can—and must—change the culture of their organizations. They can approach this daunting task by taking a multiyear approach and keeping the following points in mind:
• Develop a vision that embraces budget reductions as a driving force in innovation.
• Define a five-year strategy of innovations linked directly to cost cuts; begin with two aggressive years and become increasingly conservative with each successive year.
• Obtain executive ownership. Change is the inevitable outcome, and the business will be the beneficiary. Executives need to sponsor the strategy and own the results.
• Develop and elevate strategic-minded roles. Seek out and champion leaders who innovate while cutting budgets, instead of arriving at innovations with higher budgets.
• Innovate with change. Rethink every approach, methodology and technology; challenge every entrenched solution; and embrace change.
• Never let service levels falter. The goal is innovation and IT improvements with budget cuts, not service cuts.
• Renew the strategy as part of the budget cycle. Every year, renew the strategy for the following five years and target innovations.
• Remain disciplined. Avoid the innovation-buying trap, and remain focused on challenging every innovation with forecast budget cutting.
It is natural to look forward to more prosperous conditions and a return to growth, innovation and stable—if not increasing—IT budgets. In all probability, the next 12 months will see the economy turning positive, and IT leaders will be tempted to stand in the budget lines touting the need for capital in order to align with the business, deliver innovative solutions to drive corporate growth, increase service levels and demonstrate the value of IT to the company.
However, instead of giving in to the competing forces of increasing wish lists and decreasing budgets, information technology leaders should learn from the recent downturn. Technology executives who have not realized their potential to use constrained business conditions and reduced IT budgets to come up with innovative technology solutions should begin evaluating the opportunities before them—and then use those challenges to their advantage.
Scott McDonald is Americas CIO and the global CTO at FCI, a global manufacturer of connectors headquartered in Versailles, France.