Telecommunications Cost Management: Focus on what is Important

In times of economic pressure, governance is critical. It is the organizational structure and process of making IT investment, project, and resource decisions and prioritization. Governance is usually the responsibility of a small group of IT and business leaders. If you do not have a strong steering committee and project review and approval process in place, establish them now. Although governance is not the sole responsibility of the CIO, he/she is paramount in making sure the governance process is effective or helping to fix it if it is not working properly. The disciplines and processes used in the down times will also be worthwhile in the good times, as making better investments never goes out of style. The governance members need to "Just say no" to some of the IT requests, particularly those that do not add value relative to the costs. Some CIOs often take the path of least resistance and do projects that they know do not add to the bottom line. They may even shortcut the defined governance process. Oftentimes, too many borderline projects are funded, too many projects die midstream, and too much technology is procured and not implemented, all of which cost the company money. It requires more finesse, courage, wisdom, and good communication skills, but a tough line by governance committee members is best for the company at all times.

To help governance members with saying "no," have a financial analysis and project review process for the business to justify the project. Project portfolio tools are useful in the process to help identify priorities. The key is to focus resources on areas that provide the most value for the business. Particularly when reducing costs, scrutinize the sphere of projects more than ever. Figure 1 shows how to focus on projects with the most value to the business. It is also a good time to focus on projects that have value across the entire enterprise rather than departmental benefits, as shown in Figure 2.

Figure 1: Projects with a higher impact on company profitability and goals

Figure 2: Projects with a wider impact on the company

Just because you adopt IT governance does not mean that the process is effective. Like any other function, it is important to strive for continuous improvement. The best way to improve governance is to monitor key measures and target improvements. Some of these key measures might include the following: