Posts Tagged ‘cost cutting’

How Too Much Acceleration Can Cause CIOs To Crash

Wednesday, January 5th, 2011
Image Credit Going Fast Is Great, But Don't Do It For Too Long…

Going Fast Is Great, But Don't Do It For Too Long…

We’ve all been there, done that: pushed hard to accomplish some goal. This type of “acceleration” is something that every IT department ends up doing at some point in time or another. As CIO you’ve got to love the results of a “push” like this: everyone works harder and a lot gets accomplished in a short time. However, there’s a real danger that if you keep accelerating your IT department everyone’s going to burn out and you’re going to end up crashing…

The Need For Speed

The reasons for the CIO to press on the acceleration pedal can be many and varied. In my experience, this type of ramp-up in the pace of an IT department is more often than not a reaction to some change. The change can be external – a competitor makes a move that puts your company in jeopardy, or it can be internal – customers start to leave because of some billing / ordering / support failure and IT has to step in and correct the problem.

Although everyone can work harder for awhile, we can’t work harder forever. This is where the problem starts to show up: CIOs enjoy pressing on the acceleration petal so much that they forget to take their foot off of it after awhile.

Why Too Much IT Acceleration Is A Bad Thing

Drs. Heike Bruch and Jochen Menges have taken the time to study firms that over-accelerated their workers. What they found is that there are 3 patterns of what they called “destructive activity” that showed up after too much acceleration had been done for too long:

  • Overload: I’m certain that we’re all familiar with this one – IT staff are simply overloaded with too many requests to perform too many activities. The end result is that they don’t have the time to get things done. This can be a major contributor to individual IT employee burnout.

  • Multiloading: As though overloading employees wasn’t enough, multiloading occurs when employees are asked to do too many different types of activities. Employees may appear to be able to “pick up the slack”, but the truth is that they are now unfocused and unable to complete goals because they are too spread out.

  • Constant Change: Change is supposed to be good, right? Well, yes but too much change is not good. One of the reasons that we like a bit of routine in our lives is because it allows us to recharge our batteries. When there’s too much change, this recharging doesn’t get a chance to occur and so we quickly start to feel run down.

How CIOs Can Break Free Of The Acceleration Trap

Yes it feels great to have an IT department going full throttle. However, it’s not so great to have everyone walking around feeling burned out and then leaving. CIOs need to take the following steps to make sure that they are not over-accelerating their IT departments:

  • Stop Unnecessary Work: just because everyone in an IT department is busy, doesn’t mean that what they are working on is important. There are projects that were started awhile ago that are probably no longer necessary. What folks are doing needs to be reevaluated and the work that is not needed needs to be dropped.

  • What’s Our Strategy?: Ultimately everything that an IT department does needs to be working towards accomplishing a single goal. This goal has to be what your IT strategy is based on. Making sure that everyone know what the department’s strategy is can be a great way to make sure that only the important work occupies people’s time.

  • Announce That The Acceleration Is Over: Tell everyone that the IT department is no longer in an acceleration period. Just this simple act can take an enormous burden off of everyone’s shoulders and will allow them to mentally get ready for the next time that you decide to press on the acceleration petal.

What All Of This Means For You

Every day is not like the previous day. Sometimes a CIO needs to step on the acceleration petal and push the IT department to accomplish more in less time. However, if that petal gets pushed too hard for too long, burnout and lower productivity can occur.

Overloading, multiloading, and constant change can impact an IT department that has been accelerating for too long. CIOs need to stop any unnecessary work, make sure that everyone understands the IT strategy, and simply let everyone know that the acceleration push is over for now.

Just like with a high performance racecar, IT departments are built to be able to run fast. They just can’t run fast forever. CIOs who know how to both press on the acceleration petal and then how to back off will find that they are the ones who can get the IT department over the finish line in first place.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: How long do you think a CIO can push an IT department to accelerate its activities before burnout starts to occur?

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What We’ll Be Talking About Next Time

As CIO one of your most important jobs is to get as much out of your IT department as is humanly possible. You’d think that that best way to do this would be to always be pushing harder and harder. However, researchers who have been studying this very problem have come up with a different approach that they say can yield better results: go slower…

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Posted in motivation | 3 Comments »

What CIOs Need To Know About Doing Offshoring In 2010

Wednesday, March 24th, 2010
Image Credit Offshoring Decisions Are A Lot More Complicated These Days…

Offshoring Decisions Are A Lot More Complicated These Days…

The Way That It Used To Be

Remember when using offshored resources as a part of an IT department was such a big deal? These days it’s hard to find an IT department that doesn’t have at least some portion of its work done off shore. When you become CIO, offshoring is something that you’re going to have to deal with. It turns out that things aren’t as simple as they used to be…

When IT departments first started using offshoring there was really only one reason why they were doing it: it provided staffing cost reductions of 40% or more. It all seemed to be so easy: an IT department could move lots of low-value IT work to low-cost locations such as India and the Philippines. Let’s be honest about this: outsourcing was really cost cutting by a different name.

When you become CIO you’re going to be inheriting a different world. The favorite site of IT outsourcing has been India; however, India is changing. One of the biggest changes is that salaries have been going up rapidly. In India, annual raises of 15% have become common. On top of this, in the last year India has suffered from currency fluctuations, terrorist attacks, and financial fraud. When you become CIO you are going to have to be looking beyond India for locations to house your outsourcing.

The New World Of Outsourcing

You’re going to have to do some serious thinking when it comes time to determine how best to use outsourcing with your IT department. Just before the recent global recession the #1 reason that IT departments were using offshored resources was to accomplish cost cutting objectives.

The global recession is going to be your friend in the short term when it comes to offshoring. Over at the consulting firm Gartner, they are predicting that outsourcing prices will drop an average of 10% this upcoming year. However, as CIO you are going to need to be careful here.

It turns out that agreeing to specific IT cost cutting goals isn’t the hard part, maintaining them is. What many IT departments have discovered is that low hourly rates won’t save much money if the total hours needed to accomplish a given task are higher than you estimate.

Another issue for a CIO to consider will be how long your contract with the offshoring firm should last for. The first generation of outsourcing contacts tended to be last for lengthy time periods: 10 years was common. This was being done in order to “lock-in” the cost savings. However, the need to have the ability to adjust to changing market conditions has changed this – CIOs now want shorter-term contracts.

Of course, nothing is ever that simple. It turns out that for certain IT professional services that require a higher percentage of highly skilled workers, the offshore staffing providers will insist on longer-term contacts because the suppliers say that they can’t attract the workers that they need unless you are willing to sign contracts that cover longer time periods.

On the positive side, although with a bit more complexity, you will now have more options for where you can do your offshore work. Some of the most popular outsourcing destinations in a recent survey of firms that were considering it included: United States (22%), China (16%), India (13%). Also on their list was the Philippines, Mexico, Costa Rica, and Jamaica.

What All Of This Means For You

When you become CIO, you will be offshoring some of your IT work. What used to be a relatively simple decision to send some of your low-value IT grunt work over to India has become much more complicated.

India is still an attractive destination for a number of reasons. However, it has become less attractive than it once was and a number of competitive alternatives have now shown up.

It will take time and effort on your part in order to properly evaluate your options and decide what is correct for your IT department. You can’t go wrong with the decision to offshore some of your IT workload, it’s just making the right decisions on where the do the work that will require all of your CIO skills…

What country do you think would be the best place for a firm to offshore it’s IT work today?

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What We’ll Be Talking About Next Time

When you become CIO you will have a number of tools available to you that CIOs never had in the past. #1 on this list is, of course, Twitter. However, wait a minute, is this a good thing or a bad thing? Sounds like you need to figure this out before you become CIO and make a mistake…

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Posted in outsource | 2 Comments »

Can CIOs Drive Innovation & Boost Quality At The Same Time?

Monday, October 5th, 2009
How To Capture Innovation Without Going Broke

How To Capture Innovation Without Going Broke

How are you at walking and chewing gum at the same time? It’s sorta a classic challenge – do two different things simultaneously and do them well. CIOs are facing the challenge today – cut costs and simultaneously use IT to make the business more competitive. How hard can that be?

Say Hello To Six Sigma

If you’ve been to a book store recently and looked at any of the books in the business section, you may have been overwhelmed by the number of titles that had the words “Six Sigma” in them. Six Sigma is an approach to business that makes use of constant measurement and analysis in order to continue to optimize business operations.

Dr. Sara Beckman has researched this technique and points out that Six Sigma was invented at Motorola and popularized by Jack Welch at GE. If you apply it to how an IT shop goes about doing its work, it can be a great way to drive out costs and boost quality. However, it will do nothing to drive innovation.

Say Hello To Design Thinking

Design thinking is a new set of skills that are designed to drive innovative thinking. The starting point for design thinking is for solution designers (who else?) to start by focusing on what problems their customers are having on a daily basis. Once they understand the problems, the next step is to consider the wide universe of possible ways to solve these problems.

The Problem

Here in lies the problem. If you go out and talk to today’s CIOs you’ll find that they have generally implemented one of these two different solutions (Six Sigma is more popular because it’s easier to understand and measure).

This causes problems. It is possible to focus too much on driving out costs and then lose your way and not be able to provide the innovation in IT that is needed to keep the business competitive – this is the problem that HP is currently facing.

Likewise, if an IT department is too innovative and doesn’t watch the bottom line closely enough, then they can quickly drive themselves and the company out of business. The dot.com fiasco was a great example of this.

What’s The Correct Solution To This Problem?

You may have already guessed it, but the right way to solve this challenge is for CIOs to take the time to find a way to incorporate both the design thinking and the Six Sigma approaches into their IT departments.

The design thinking technique allows an IT department to find ways to explore new approaches to solving the problems that the business is facing. Six Sigma techniques allow an IT department to find ways to improve how they are currently doing things.

Final Thoughts

CIOs can’t allow their IT departments to become too focused on just one approach or they risk failing. Design thinking tries to find out what a good solution to a problem is while Six Sigma assumes that a solution is good and then goes about trying to make it even better.

CIOs who can find a way to reduce costs while at the same time driving IT innovation will be better at finding ways to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

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What We’ll Be Talking About Next Time

The times they are changing. Let’s take a moment and have a talk about one of a CIO’s key survival skills: the ability to successfully negotiate office politics. Specifically, if you could only have one best friend, who should it be: the CEO or the CFO?

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Posted in innovation | 3 Comments »