|
Page 6 of 6
No. 5: Don't Cut What's Core
A corollary to the previous point—knowing what's important—is not cutting precipitously. The problem isn't just that you may be removing something that will help the business two quarters from now. It's that once you cut a project, even if your goal is just to delay it for a while, the people who were involved tend to write it off. With a technology project, this can be the whole company, since technology projects tend to cut horizontally across organizations.
"When you're talking about these larger transformative projects"—making a significant upgrade to a customer interface, say, or reducing the number of applications after a merger—"starting and stopping them is very disruptive," says consultant Sviokla. "At best, it's seen as a stall; at worst, a failure. When you restart you have to get over that stigma."
Sviokla remembers some research he did when he was teaching at Harvard Business School. The research revolved around a financial company that halted an initiative called "financial dimensions" designed to help brokers get a view of their customers' net worth. The company restarted the same initiative some time later using a new term—"financial profiling." It too was a bust.
"That [term, 'financial profiling,'] was code for an incredibly ridiculous thing that had been an abysmal failure," says Sviokla. If you try to resurrect something like that, he says, "you'll have a very hard time getting any support."
No. 6: Be Ready to Change
Perhaps the most critical thing to keep in mind, as a sort of overlay to other budgeting best practices, is that the requests to cut costs aren't always going to seem sensible and the process for carrying them out won't always be orderly. Bigger companies sometimes have better procedures for making mid-term corrections—but not always. The pressures, quite simply, are different.
When he was a technology manager supporting regional newspapers at the New York Times Co., for instance, Dispatch CIO Gallo says the cost targets often changed monthly based on the level of advertising that was coming in. The pressures stemmed from New York Times being a public company, says Gallo, and similar pressures are making their presence felt at other companies. "The idea of an annual budget is kaput," Gallo says. "The reality is you're forecasting and re-budgeting, maybe not in real time, but definitely quarterly."
The point is echoed by Par Pharmaceuticals CIO Greer, who has been in his position only since May and thus knows a few things about change. "Just because you have the budget in the beginning of the year doesn't mean you're not going to get hit mid-year," Greer says. "These things happen. The budget becomes meaningless."
|
