Secret CIO: Expense Cuts Put Everyone To The Test

Once again, I'm proud of our IT organization. When the CEO tells you to cut your expenses and leaves the room without softening the blow, it doesn't do much for your morale. Having to break the bad news to your hard-working and dedicated team makes you feel even more dejected. It isn't their fault the company isn't making the kind of money the big boss has promised to the industry analysts.

Our group had met its budget goals--financial and operational--and now we had to reduce expenses by the same arbitrary percentage as other departments. I listened to my direct reports vent their shock and anger; then I told them it was time for us to pull together to make intelligent decisions so that we, not less competent outsiders, would control our destiny. I asked each of them to make two separate lists: those activities planned or under way critical to our operation and those directly affecting the success of any specific business unit. I figured that it was best to recognize up front that what will improve a particular staff outfit isn't always the highest priority to the company as a whole.

My first priority was communicating what we faced. I wanted as many people as possible to hear the news directly from me. With everyone, I provided what I knew about company plans, solicited input, and asked what I hoped were probing, but helpful, questions to clarify ideas and concerns.

At the end of the week, my direct reports and I got together to merge our lists and prioritize them. It was a long day. Every bit of the personal trust and camaraderie that had been built up over the years was called into play. I was very glad that when choosing people for jobs, I had always placed integrity as the first criterion.

On Monday, we met again to figure out what to do to meet our key objectives while reducing the less essential (for now) activities. We wanted to keep as many of our staff employed as possible. I never had much respect for executives who treat people as disposable ciphers, to be hired and fired as the mood strikes. My attitude is that if you show loyalty, your staff will return the favor by working hard and producing results.

We took a look at what we were doing for business units--projects and everyday support. Assignments were made to talk to the business leaders to reaffirm value. Was there a specific goal? Was it still relevant? Would the business resources still be available to make it a success? We weren't going to spend our resources on activities that were no longer key to business goals.

Next, we took a look at what we were doing in our own shop. What would improve if we continued on a project? How valuable were the results? What options did we close off if we didn't do it now? We reviewed our software and hardware contracts. Did we need all of the maintenance? Could we negotiate lower prices? Did we really even have all of the stuff for which we were paying? Finally, we took a look at increased outsourcing. Could we do things cheaper, faster, or better with a greater emphasis on outside services?

It was a good plan. People had worked together to get every penny of savings we could. It wasn't fun and we did have to cut back on staff, but the losses were much less than we had anticipated. I just hope that we don't become dependent on expense reduction as the way to boost profits.

Herbert W. Lovelace shares his experiences (changing most names, including his own, to protect the guilty) as CIO of a multibillion-dollar international company. Send him E-mail at [email protected].