Most managers have lived through cutbacks, especially when the economy turns down.
We’re asked to give up 5% … 10% … maybe, in a really bad year, 20%.
What if you were told “half” — give up half of all your spending. “And still get the job done.”
What would you do? Where would you turn?
You’ll need a portfolio of moves to take a cut that large. No one action is likely to generate that much free cash.
You’ll stop all the “looking like we’re moving forward” work immediately, of course: on half the resources you either move aggressively to completion, or you do nothing.
You’ll stop all the “petty” projects, too. There’ll have to be a real reason to do something going forward, not just the usual “every area gets something, no matter how small” thinking of the past.
You’ll accelerate projects that lead to cost savings, because you want to capture those savings sooner rather than later. Three projects with an ROI from actual cash flow savings in the 5-10% range that can be done fast will be worth their weight in gold; a two year project with the promise of 20% if everything works out is a high risk venture.
You’ll start getting very serious with your vendors. No more “we’ve always done business with…”, or “I’m sure that’s the best deal…” — you’ll want to know. The vendor who comes in promising a great price on something you need if you only sign up to also take this other thing you don’t care about will be told, in no uncertain terms, that extras are off the table. Maintenance fees for little-used products will probably turn into licence removals.
You’ll acquire a keener sense of risk, suddenly realizing that it can’t be removed, but only moved around, or kept an eye on.
You’ll realize fast enough that you can’t micro-control everything, and that your processes had better get stripped back to their essentials.
You’ll start to understand how important generalists are: they can cover three or four areas. Twenty-five years of “experience in one area”, on the other hand, might not be so valuable in a crisis.
You’ll be looking to sweat money out of infrastructure, application maintenance, any supporting function. Architects will either produce — fast — or it’ll become a luxury item, to take one example.
At the same time, if you’re smart, you’ll be investing (which means you’ll cut deeper than half to free up monies to make changes). Jumping from an old release of a key package to the most current one probably means no more code modifications, for any reason. Then you can decide whether the new version should be implemented -as-a-service, or onsite. Either way, by getting to “current”, you probably get supplier help to augment your resources (they’re desperate, too, if there’s a broad-based retrenchment going on). So investing to remove mods pays off.
You’ll probably take a good hard look at TCOO (total cost to own and operate) and figure out what minimum number of platforms gives you the best bang for your buck — and get there from here.
You’ll almost surely get more disciplined about achieving AROIO (actual return on investment obtained). Effort will go into better idea refinement (knock it about on paper before it becomes a project to have a pool of good ideas ready to go), better projects (once released, drive to completion), better deployment (make sure the benefits are obtained), and follow-up to know whether the benefits are falling off.
Your people will be expected to seize the day. You’ll stop worrying about nits, and care only for results that make a difference. Much more organizational flexibility will come in.
Okay … so why aren’t you doing these things now?