Leveraging the Organization

During times of cost reduction, it is an excellent time to look at the IT resources across the company to determine if IT is organized properly and leveraged. There may be IT resources in the business units or they may be decentralized. Ensure there is a valid business reason for this structure. Consider if you can leverage resources across the organization to reduce overall costs. Ensure you do not have duplicate functions in other parts of the organization. By leveraging enterprise-wide competencies and skills, you can reduce staff who are unnecessarily embedded in the business units.

Top Tip 1: Span of control

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"To reduce costs, flatten your management team and increase the span of control of managers. Ideally I like to see 6-8:1, but 15:1 is possible for one to two years if necessary."

—Dave Brady
Starkey Laboratories

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Top Tip 2: Shared services

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"Although it can save money, creating a shared service environment is a tremendous culture change for an organization. If you are coming from a distributed environment with organizations geographically dispersed, proceed with extreme caution. The obstacles in both IT and the business are huge."

—Lina Shurslep
Navarre Corporation

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You can also leverage skills in the business. For example, during an implementation the business often develops super users, or individuals with a knack for technology and the business. You maybe able to leverage these valuable resources and it may save you from hiring a business analyst. In another example, a company uses a pull system rather than a push system for report generation to reduce IT labor. The users were instructed to get reports and information on the Intranet rather than sending reports and clogging up e-mail in-boxes.

Evaluate if a shared services model would save costs. Bringing IT resources under a single point of control reduces waste created by policy differences and nonstandard operations. However, proceed with caution because moving resources out of the business units can be a political challenge. You have to guarantee service will improve rather than become less than the current level.

Delayering and Streamlining | ORGANIZATION STRUCTURE

Management streamlining or delayering of the organization can be a rich vein to tap when it is time to reduce costs, especially in large IT organizations that have not been changed in awhile. Consider changes to flatten the organization. Rather than having one person manage six or seven individuals, have them manage 10 to 20 individuals. This change is easier and more viable with a senior experienced group. If you attempt this with less experienced individuals, or in an environment with a lack of procedures, you could actually lose productivity by increasing the number of individuals under a supervisor.

Top Tip 1: Hire and keep good resources

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"We save money in how we hire people. It is always cheaper to hire one really good resource rather that two mediocre individuals. We are careful in who we hire and hire smart business people first and good technical people second. The soft skills are important when looking for quality people. Low turnover is important to keep costs down."

—David Kaiser
SFM Mutual Insurance

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Top Tip 2: Manage people at all levels

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"We reviewed the organization. Instead of two managers, we had one with broader responsibility so we didn't give up coverage. We took out some redundant skills and used contractors to cover the risk if needed. We also reduced some staff due to project cancelations."

—Greg Hayhurst
Tennant Company

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Make sure the management structure is not too deep or redundant with leads reporting to supervisors, managers, senior managers, directors, and vice presidents, unless the organizations size warrants it. Consider moving to more collaborative, team-based models rather than inflexible hierarchies.