KEY POINTS TO REMEMBER | Cost Reduction Project

Step 1: Establish goals

• Determine the cost reduction magnitude, timing of reductions necessary, areas the reduction must affect, and constraints relative to actions.
• Re-align IT priorities as the business goals and priorities may have changed.
• Communicate the cost reduction goals to the organization.
• Short-term goals may require that you immediately take short-term actions and come back later for the information and analysis steps for more sustaining cost reduction measures.

Step 2: Obtain information

• Obtain information on the budget and spending and information on assets and inventory.
• Obtain or assemble IT information on the budget, business plan, strategic plan, project list, application inventory, hardware inventory, staff inventory, and the organization chart.

Step 3: Analyze

• Consider taking an expense approach, investment approach, asset approach, or services approach.
• Understand the cost drivers and reduction enablers.
• Be careful when using benchmarking.

Step 4: Identify and prioritize actions

• Review all areas of IT for cost reduction opportunities, including business applications, technical infrastructure, processes, and the organization.
• Prioritize actions by identifying short-term, medium-term, and long-term cuts.
• Identify the cost reductions anticipated from each action.
• Communicate the plan.

Step 5: Execute

Step 6: Monitor and improve

• Determine the success of the cost reduction efforts and any negative impacts.
• Review leading indicators.
• Continue to monitor and improve.