Over the last couple of days I have been counting the amount of times that I had a conversation with a colleague around the financial crisis and how to deal with that. The result was a stunning average of three times per day! So I decided for myself that this definitely a hot topic that I have to write a post about in my blog (and of course also to justify towards my boss the time I spent on these conversations...). And voila, here it is...

So what were these conversations about besides cost reduction, job cuts and travel restrictions? Right, the impact of all these decisions and actions on business outcomes. And guess what, from these conversations I learned that probably not many organizations have true control over their business outcomes (read: that service providers are able to manage their services) to the level that they can predict what the impact will be.

Another general consensus that I extracted from these talks, is that there will be a clear difference between A) organizations that make the right decision by having a well-organized management system and know exactly where to cut cost with low risk and predictable output from B) organizations that just take resources and capabilities out without knowing what the effect will be or even if they will survive on the long run...

Now this is probably good news for those of you who have already implemented a service management system leveraging e.g. ITIL v3 and/or other standards and practices. You still need to be careful in making decisions that do not break the system, however you have a bigger chance of surviving from the financial crisis stronger than before.

However if this is not the case, then you may find yourself in trouble now (or very soon) in making decisions on where to cut cost. A short term approach in this case might be to stop/delay investment that has to do with innovations/projects and focus on making sure that your (service) operations delivers as promised and expected. On the long term you might shoot yourself in the foot with this approach as it might undermine your competitive differentiation. This might also not be the best option when your customers need you to be (very) responsive to changing business needs. So perhaps you should keep only 1 or 2 projects running with an adjusted set of resources, deliverables and timelines...

Another option is to focus on automating standard changes in your data center which ultimately helps you to save personnel cost. This is done with small implementation projects focused on a particular data center resource to be automated (e.g. servers, storage, network, etc). The projects must have a short duration and provide a quick return on investement (let's say within a couple of months). Don't include complex integrations, worry about that later. If the budget is a problem, then finance it e.g. with a lease construction. Another advantage of this approach is that it not only solves a short term cost cutting need, but also provides a good set of ingredients for building an ITIL based service management system on the longer term.

Finally I also want to mention consolidation of resources and capabilities, such as e.g. organizational units, processes, applications and/or infrastructure as an option to reduce cost. Be aware that it also requires an investment (at least in effort and most likely in money as well) to make this happen.

Let me stop here as it is getting quite late in the evening and I want to see the latest TV news on the financial crisis....Any other suggestions?

Regards,
Jeroen Bronkhorst