Costs reduction initiatives: Retain resources – incubate value innovation

Why is it that technology is always perceived as being too expensive? Do organisations really understand the underlining value technology brings to the business as a foundational enabler? If the answer is yes, then why the continued pressure on Technology Executives to reduce cost? It is interesting that when it comes to cutting cost, business and financial leaders always look at cutting technology resource head count instead of seriously evaluating opportunities to improve productivity and efficiency through value innovation.

In accounting terms there are only two main actions to improve the bottom line – increase Revenue and/or reduce Cost. In technology business operations these two factors can be influenced by several initiatives of which reduction of staff is one option. This should be the last resort, in my view. Despite the known facts that cutting heads in IT, in essence, is cutting intellectual property, knowledge and experience that resides within your team, is it still at top on the list for CFOs, other Executives and Board Members when the cost reduction discussion comes up!

Before we look at reducing the workforce delivering the technology services and products forming the enabling foundation for any organisation, surely we should look at viable alternatives, value innovative initiatives, forthcoming from our staff. Empower your staff to be an incubator for innovation.

Technology operations are all about providing services at a specific level as defined in SLAs (Service Level Agreements) for example:

  • IT infrastructure hosting email, website, file depositories and intranets,
  • Software Development of products the organisation sell to clients and/or use in-house,
  • Implementation, Integration and Customisation projects where software products are deployed,
  • Help/Service Desk supporting IT end-users, etc.

These services are all provided by technologist, by people, and People Come First (Read more…) Focussing on a professional, efficient and happy team by understanding the needs of every individual, goes a long way in ensuring the appropriate initiatives are forthcoming from your staff to make technology more proficient.

One of the key responsibilities of a technology executive is the efficient management of the resources. This is especially important when technology companies/departments are delivering services where the resources are the biggest expense on the technology P&L (Profit & Loss account or Income statement – Read more…).

Resources, as a high expense, reinforce the importance of proper Resource Management in business governance. Resource Management is not only about ensuring the right staff numbers with the right skills sets are available to deliver to business expectation and demand, but it is also about creating the right environment and support to ensure your staff flourish, grow and freely contribute. In my experience are ‘Resource Managers’ far too undervalued by business leaders not understanding the value of the role. Business leaders should work closely with the Resource Managers to ensure their staff is not seen as major expense but as a key asset contributing not only to current business operations but also future business growth and bottom line improvement initiatives.

Business are investing a lot in building teams of highly skilled and motivated people that feel valued and part of something special. These people are driving a clear and larger than themselves vision, that delivers results leading to recognition and self fulfilment. These people are full of innovative ideas on how to improve the business value proposition.

When it comes to resource management, incubating value driven innovation:

  • Ensure you have the right staff. Optimise your recruitment process to ensure that you have a robust framework for bringing the right people for your organisation onboard.
  • Keep your staff happy, mentally stimulated and intellectually engaged in all business processes and services. Make sure they are informed and are actively participating in the decisions driving the business forward.
  • Give them opportunities to learn in their delivery. Good people has a natural urge to continuous improvement – facilitate it.
  • Create communities where staff can learn and share knowledge on a formal and informal basis.
  • Plan your resourcing levels better. Ensure you have the right staff capacity with the right skills to deliver the services to the business demand and expectation.
  • Use flexible resourcing models combining permanent, temporary contracted and outsourced resources.
  • Continuously capture task and productivity data.
  • Utilise analytics, mine the productivity information to give your insight in areas/services costing the most and why. Act on these insights!
  • Build a framework you can use in planning resource capacity forecasting. Work closely with the business to understand the sales pipeline and product development strategy to ensure you optimise your resource capacity with the demand. There is nothing more disruptive to any organisation than constant resource level fluctuation (increase/hiring and decrease/firing) due to poor strategic and project planning.
  • Identify your key resources and nurture them, retain them at all cost – they are the knowledge keepers of your IP (intellectual property). It is cheaper to implement initiatives to retain staff than it is to replace them!
  • People want to feel part of something and if they are happy in their community contributing to a future and in the process they are improving themselves, they are much more likely to stay. Recruitment fees, where staff retention % are low, are a large contributor to cost.

Any cost saving initiative has a fundamentally key measure that needs to answer true: “What is the value to the business?” Revenue and cost do not always define the true value…

What is the true value your staff bring to the success of your business? Have you asked them and really involved them to work with you on ideas to improve business value through innovation rather than cost cutting?

One last point – when you have done your value analysis and it does come to letting staff go, remember this: treat them fare – you never know when you will need them again.


Are you under pressure to cut cost? renierbotha ltd specialises in the fine tuning IT operations for optimum business value – Make contact!

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