Lundquist's Six Better IT Budget Cutting Steps

The analysts over at Gartner recently said that now is the time to cut the IT budget and they provided six steps to get the job done.

The six steps play off advice offered by the company last fall which said CIOs should prepare two budgets: one that should reflect the numbers handed down from the company execs and another one held in reserve should the economy deteriorate. Gartner has called in the reserves.

So, are you going to chop your budget and offer up the savings without being asked? Has anyone in any corporate position ever done this act of budget hari kari? Not to my knowledge. The wiser move is to accelerate those projects which offer cost savings. I'll offer up a couple of ideas. But first, here are Gartner's six steps.

Step 1 -- Don't Wait for the Cost-Cutting Mandate from Management History proves that many organizations wait many months after a start of a recession to be informed that the recession has begun. Owing to the uncertainty and profound time-lag connected with the start and end dates of a recession, Gartner advocates preparing a cost-cutting team now rather than waiting for official notification.

Step 2 -- Choose the Best and Brightest IT People for the Team Gartner recommends that top performers are assigned to lead IT cost-cutting programs and that all other duties from their day-to-day tasks are removed for the duration of the cost-cutting assignment. Year-end financial bonuses should be based exclusively on the amount of money the team saves in 2008.

Step 3 -- Don't Allow Finger-Pointing or Second Guessing Cost-cutting teams need to assume that everything that was done in the past was the right thing to do at that time and not dwell on earlier decisions. They should identify the target for cost-cutting, perform the appropriate action and move on.

Step 4 -- Enlist an Internal Auditor as Scorekeeper If cost-cutting is to be accurately reflected in the IT and wider enterprise budget, then the appointment of a relatively senior accountant or auditor is crucial. They should ensure that any savings identified by the cost-cutting team not only leave the IT budget but actually leave the expense pool of the entire organization. The auditor's list of savings will also provide an official record of the team's performance.

Step 5 -- Report Results on a Weekly Basis Senior management should not be kept guessing about the progress made on reducing costs. During tough economic times, the IT cost-cutting team should provide a weekly report that depicts savings achieved since the last weekly report along with aggregate year-to-date savings.

Step 6 -- Identify a Liaison from the Legal Department IT cost-cutting teams will almost certainly encounter legal issues pertaining to contractual obligations such as maintenance contracts and penalty clauses. Quick access to legal guidance will be invaluable so that all team members can quickly arrive at cost-cutting solutions without increasing the liability of the company

Now, here are my six steps

1. Get real. You know better than anyone else where are the nooks and crannies of the IT budget. If you are asked to cut the budget, start with the chairman's pet project. When school departments are told to cut their budgets, the first program to get the axe is the football team. Cutting the football team brings all the budget discussion into focus. You don't want to go meekly into that good night of budget slashing. Go cut the social network that the chairman's son is running while collecting a fat salary.

2. Go after the golf game. Which tech vendor always gets to keep the fat contract because they play golf with the CEO? Which tech vendor gets to burden the IT budget because they take the VP of Sales to the Superbowl each year. Start your cutting there.

3. Keep the company lawyers busy. Ask the legal department to give yo a report on all -- and I do mean all -- the tech contracts, warranty coverages and leases your company holds. Tell the budget cutting committee that you can't move forward on your plans to cut the budget until you know all your costs. Legal will never be able to assemble all that information and you should be able to lie low until the recession blows over.

4. Be a Green meanie. Leave nasty stick-on notes on every terminal that is left on after work, on every printer left running, on every copier ready to copy 24X7 and, of course, every light left on after folks head home for the day.

5. Wield your knowledge. Power down the network to a crawl and when people complain you compile a report that shows the amount of Youtube watching, web surfing, eBay selling that is taking place on the corporate computing systems. You will not make any friends but you will instill fear in every secret web surfer in your company.

6. If you have to cut, cut the guys that run the system from 1 a.m. to 7 a.m. Cut the graveyard shift and, most important, give the beeper to the CFO. A couple of 3 a.m. alerts for crashed systems will get you the resources you need.