Indiscriminate Cost-Cutting Hurts Innovation

More IT departments could be more successful if it weren’t for the mindset of the people managing them, according to Ilya Bogorad of Bizvortex Consulting Group, located in Toronto. “I often encounter situations where I can’t help but feel that an IT department could be a runaway success within its organization if it weren’t for the beliefs that their leader seems to hold,” he says.

Ironically, some of the ideas holding down IT (and one suspects other parts of the organization as well), seem on the surface to simply make sense. But Bogorad encourages organizations to examine these ideas at a deeper level. Here, for example, are three of them:

1. We are under-resourced.

“This is a universal complaint,” Bogorad says. “You can never have enough time, staff or money if your priority system is out of order. The key is in using the resources you have in such a way that they produce the best ROI possible.

2. Projects must save costs or generate revenues.

“If you merely concentrate on the financial side of costs and benefits and require that all projects have a positive immediate ROI to be pursued, you’re killing innovation in your organization,” he contends. “Think about it. How innovative would you want to be if every suggestion you make is immediately evaluated in respect to financial benefit?

3. In difficult times, we must cut costs

“Prudent financial management is a must at all times, good and bad. But consider this: it’s impossible to become successful by pinching pennies,” Bogorad warns. “It just doesn’t happen. The best value generated by an IT department today does not lie in trivial and often mindless cost-cutting but in innovation, business alignment and strategic thinking.”

Bogorad has this advice for executives in these difficult times: “Invest – not cut – time, money, and executive support into business-critical projects, while completely abandoning projects that are no longer relevant. You must constantly challenge your people to critically examine the ways you do business and to improve them.”

For more of Bogorad’s observations and ideas, visit his column at TechRepublic.

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