Terry White

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Doing More With Less

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Terry White

  1. 1. Lean and mean, or thin and angry? Terry White CXO-Advisor
  2. 2. Agenda <ul><li>Lean and mean, or thin and angry? </li></ul><ul><li>The dilemma of do more with less and the unintended consequences </li></ul><ul><li>Decide what few things you’ll do well and fund them fully </li></ul><ul><li>Stop doing everything badly – it leads to random failure </li></ul><ul><li>Thoughtful cost management </li></ul><ul><li>There’s no such thing as a cost centre </li></ul><ul><li>Cut the outputs not the inputs </li></ul>
  3. 3. Agenda <ul><li>Lean and mean, or thin and angry? </li></ul><ul><li>The dilemma of do more with less and the unintended consequences </li></ul><ul><li>Decide what few things you’ll do well and fund them fully </li></ul><ul><li>Stop doing everything badly – it leads to random failure </li></ul><ul><li>Thoughtful cost management </li></ul><ul><li>There’s no such thing as a cost centre </li></ul><ul><li>Cut the outputs not the inputs </li></ul>
  4. 4. The dilemma of do more with less <ul><li>Do people expect more of IT than it has resources to deliver? </li></ul><ul><ul><li>Rob Peter to pay Paul </li></ul></ul><ul><ul><ul><li>Everything comes in late </li></ul></ul></ul><ul><ul><ul><li>You are seen as unreliable </li></ul></ul></ul><ul><ul><ul><li>You don’t sleep well </li></ul></ul></ul><ul><ul><li>Cut corners on quality and take unadvisable risks </li></ul></ul><ul><ul><ul><li>Reputation for shoddy work </li></ul></ul></ul><ul><ul><ul><li>You don’t sleep well </li></ul></ul></ul><ul><ul><li>Demand more from your staff </li></ul></ul><ul><ul><ul><li>Your best people leave </li></ul></ul></ul><ul><ul><ul><li>You don’t sleep well </li></ul></ul></ul><ul><ul><li>Divert from training, innovation and process improvements </li></ul></ul><ul><ul><ul><li>Skills, infrastructure and products no longer competitive </li></ul></ul></ul><ul><ul><ul><li>You don’t sleep well </li></ul></ul></ul><ul><ul><li>Mid-year unfunded mandate comes along </li></ul></ul><ul><ul><ul><li>Take it out of your budget </li></ul></ul></ul><ul><ul><ul><li>You don’t sleep well </li></ul></ul></ul>
  5. 5. Doing more with less <ul><li>If you have a reasonably tight organisation... </li></ul><ul><ul><li>People can’t do more with less </li></ul></ul><ul><ul><li>They do less with less </li></ul></ul><ul><ul><li>Less input </li></ul></ul><ul><ul><ul><li>Less output </li></ul></ul></ul><ul><ul><ul><li>Less quality </li></ul></ul></ul><ul><ul><ul><li>Less training </li></ul></ul></ul><ul><ul><ul><li>Less time </li></ul></ul></ul><ul><ul><ul><li>Less judgement and common sense </li></ul></ul></ul>
  6. 6. Doing more with less <ul><li>Cut by 10% across the board </li></ul><ul><li>Who thinks this can work? </li></ul><ul><ul><li>Putting the judgement of “what not to do” on individuals – they make better decisions in isolation? </li></ul></ul><ul><ul><li>Reconfigures priorities – Strategies go out the window? </li></ul></ul><ul><ul><li>Assumes everything is equal (ROI, Effort, Input) – This is communism without the central control – anarchy? </li></ul></ul><ul><ul><li>Denies dependencies – No dependencies – no value input? </li></ul></ul><ul><li>Failure becomes random </li></ul>
  7. 7. A simple equation The money The engine The deliverable Less money Same engine Same deliverable? Less money Smaller engine Same deliverable?
  8. 8. Cost cutting and stupidity <ul><li>Across the board cuts </li></ul><ul><ul><li>Assume equal dependence </li></ul></ul><ul><ul><li>Equal efficiency </li></ul></ul><ul><ul><li>Equal effectiveness </li></ul></ul><ul><ul><li>Equal cost / profit ratios </li></ul></ul><ul><ul><li>Equal NEED </li></ul></ul><ul><ul><li>Equal chances of success </li></ul></ul><ul><li>Examples </li></ul><ul><ul><li>Cut by 10% </li></ul></ul><ul><ul><li>Cut all training </li></ul></ul><ul><ul><li>Cut all consultants </li></ul></ul><ul><ul><li>Cut all travel </li></ul></ul><ul><ul><li>Cut all overtime </li></ul></ul>Thoughtless (and stupid) cost cutting!
  9. 9. Inject yourself with a virus! <ul><li>The results </li></ul><ul><ul><li>I cut something that you need the outputs from </li></ul></ul><ul><ul><li>I annoy my staff (with my referred stupidity) </li></ul></ul><ul><ul><li>I ask you to help me, you tell me to @#$%! off </li></ul></ul><ul><ul><li>I withdraw the drawbridge </li></ul></ul><ul><ul><li>My stovepipe! (Not yours @#$%!) </li></ul></ul><ul><ul><li>Breakdown of trust – increase of cost, decrease of speed </li></ul></ul><ul><li>Everyone is doing it! </li></ul><ul><li>And this is GOOD for the organisation? </li></ul><ul><li>Setting up for failure </li></ul><ul><ul><li>Now random </li></ul></ul><ul><ul><li>In the future because we’ve slashed and burned everything </li></ul></ul>
  10. 10. What do you do well? <ul><li>Decide (as an organisation) what you do well and do it. Stop doing what you don’t do well (Just stop it.) </li></ul><ul><ul><li>What you do well </li></ul></ul><ul><ul><ul><li>What’s essential? (Really!) </li></ul></ul></ul><ul><ul><ul><li>What’s dependent? </li></ul></ul></ul><ul><ul><ul><li>What’s profitable? </li></ul></ul></ul><ul><li>The trick is to decide what you do well, and fund it fully </li></ul><ul><li>And stop doing things you do badly </li></ul><ul><ul><li>Non-essential </li></ul></ul><ul><ul><li>Non-dependent </li></ul></ul><ul><ul><li>Non-profitable </li></ul></ul><ul><ul><li>Mmmm... Lots of politics here </li></ul></ul>
  11. 11. Thoughtful cost management <ul><li>Financial Management Maturity levels </li></ul><ul><ul><li>Level 0: TRADITIONAL BUDGETING </li></ul></ul><ul><ul><ul><li>Budget ± xx% </li></ul></ul></ul><ul><ul><li>Level 1: TRANSPARENCY </li></ul></ul><ul><ul><ul><li>Costs are linked to high-level product sets, and the cost model is transparent -- that is, well documented and based on consistent principles. </li></ul></ul></ul><ul><ul><li>Level 2: FAIR ALLOCATIONS </li></ul></ul><ul><ul><ul><li>Products sets are subdivided by client (business unit), documenting utilization as a basis for allocations. </li></ul></ul></ul><ul><ul><li>Level 3: DEMAND MANAGEMENT </li></ul></ul><ul><ul><ul><li>Product sets are broken down into detailed products and services -- specific client purchase decisions -- for the purpose of portfolio management. </li></ul></ul></ul>From: Dean Meyer FullCost – Investment based budgeting and service costing
  12. 12. Thoughtful cost management ...cont. <ul><ul><li>Level 4: ACCURACY </li></ul></ul><ul><ul><ul><li>All indirect costs are amortized to just the right products and services, and accuracy is improved. </li></ul></ul></ul><ul><ul><li>Level 5: RATES </li></ul></ul><ul><ul><ul><li>Costs are portrayed in total for products and services, and unit prices (rates) are extracted from the same data. </li></ul></ul></ul>From: Dean Meyer FullCost – Investment based budgeting and service costing
  13. 13. What technologies? <ul><li>Know what things cost </li></ul><ul><ul><li>Service level costing, chargeback, and GL </li></ul></ul><ul><li>Continuous improvement </li></ul><ul><ul><li>Process, technology, trends, risk </li></ul></ul><ul><li>Outsource? Caveats. </li></ul><ul><li>The usual suspects </li></ul><ul><ul><li>Virtualisation </li></ul></ul><ul><ul><li>Open Source </li></ul></ul><ul><ul><li>SAAS </li></ul></ul><ul><ul><li>Optimisation </li></ul></ul><ul><ul><li>Automation </li></ul></ul><ul><ul><li>Standardisation </li></ul></ul><ul><li>Now is the time to turn the screws – but be prepared to be screwed back </li></ul>
  14. 14. No such thing as a cost centre <ul><li>The IT budget is not there to cover IT costs </li></ul><ul><li>The budget is there for IT to supply existing products and services and fund new products and services </li></ul><ul><li>View your budget as a pre-paid account </li></ul><ul><ul><li>There are xxx funds available to specific business units </li></ul></ul><ul><ul><li>Business draws down on their pre-paid account </li></ul></ul><ul><ul><li>Business decides what to use and when to use it </li></ul></ul><ul><li>If business demands more than you can supply </li></ul><ul><ul><li>“ How do you plan to pay for it? </li></ul></ul><ul><li>“ Cut costs” </li></ul><ul><ul><li>What do you intend not to buy from us? </li></ul></ul>
  15. 15. Cut the outputs not the inputs <ul><li>In summary </li></ul><ul><ul><li>People do less with less </li></ul></ul><ul><ul><li>Across the board cuts set the organisation up for random failure </li></ul></ul><ul><ul><li>Decide what you do well and do it. Stop doing what you don’t do well </li></ul></ul><ul><ul><li>Exercise thoughtful cost management </li></ul></ul><ul><ul><li>Know what “services” cost and where they contribute </li></ul></ul><ul><ul><li>Your budget is a pre-paid account </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul>
  16. 16. Thank You Questions? <ul><ul><li>terryw@ cxo-advisor.co.za </li></ul></ul>
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