How CIOs can find real cost savings across the organisation

CIOs must focus on decision-making, identifying inefficiencies and cross-department collaboration to fix process pain and save costs, says former CIO and HotTopics contributing editor Laura Dawson.

Introducing the Four Horsemen of the Apocalypse

How we deliver services has changed:

Figure 1 - diagram showing how governance of technology has changed since the 1990s and the rise of customer direct interaction with technology. 

How CIOs can find real cost savings

1. Tackling the process pain
2. Who are the four horsemen?
3. The CIO’s guide to managing unwieldy process 

In the last 35 years, the role and accessibility of technology for business has changed. It has moved from ‘the processing of administrative tasks by an agent acting on behalf of a customer’ to ‘the customer directly engaging with the back-end systems via web-enabled or app-enabled services’ (see figure 1). 

In reality, the picture for many organisations is far more complicated, with administrative activities automated or presented to customers for some parts of a process, but other activities either openly or less visibly moved on by human intervention. 

But that is not how it is...

Figure 2 - diagram showing the reality of technology and digital with multiple handovers, frontends and connections that customers now seem to have to navigate in order to get services. 

Today, software companies will sell you layers of technology, each one promising to make you more efficient because it will remove the need to fix what you already have, negating the need to deal with those processes. But each layer adds more complexity, not less, with each one baking in hidden cost.  

In this article, I will introduce you to the main cost leeches in organisations that seem difficult to shift, and why buying software ‘Donkeys of the Apocalypse’ is never a good idea. However, first I want to talk about why no-one seems to be looking for them: the current tools of cost reduction and efficiency.

Tackling process pain

Many years ago, I changed jobs and within the first three months, the Chief Finance Officer (CFO) asked for an £800,000 ($1m) reduction in IT spend as part of “salami slicing” across the organisation. 

Whilst I had only been at the organisation a short while, it astonished me that the CFO was considering so small an overall saving, when bigger prizes and reductions could have been gained across all the processes in the organisation.  

This is where we meet the four Horsemen of the Apocalypse and their equine buddy, the Donkey of the Apocalypse. 

Pretty much everywhere across the organisation there was duplicated effort, rework, reconciliation and manual handovers. All of which adds cost into any process and introduces significant risk to any data-driven decision making or customer satisfaction. 

Processes grow organically, with increasing levels of governance and scrutiny on top to try and prevent mistakes from happening, but rarely taking a step back to optimise. Teams scrabble to automate their part of the process, driven by the need to be locally efficient.  They can, and do, buy tools to help them, often with no real visibility of the upstream or downstream pain that will cause.  These local solutions are the Donkeys of the Apocalypse, so-called, for those in the know, donkeys are difficult to shift when they don’t want to.  

So, either organisations are unaware of just how much manual intervention and effort was going on to do even the simplest things, or they are aware but the thought of the kind of cost saving required and the necessary change to staffing is unpalatable. Whatever the reason, there is clearly little appetite for tackling this.  

Back to my example above. There were some obvious indicators that there was a problem. The most obvious was that data was being corrected by database administrators in the central technology team, at the point it was going to be used rather than at the point it was entered. That often required multiple runs of the overnight process to identify and then correct the issues.  

This was putting the IT function in the crosshairs for the failed process. But there was no feedback loop and definitely no accountability for good data. Equally, a system had been put in quickly, with zero thought on data validation: all the hallmarks of a donkey.  

Other indicators included the long lead times to process applications for membership or donations, really hammering customer satisfaction and potentially increasing the attrition rate of donors, for those working in the non-profit sector. 

Of course, any suggestion to address this was met with “every penny spent on computers is a penny not spent on: insert ‘objective of organisation’”. That statement always made me cringe; partly the assumption that computers can solve bad processes and partly the fact that the desire to try and be properly efficient just was not there.  

We need to face up to how we tackle cost saving and efficiency.  

Don’t get me wrong, there are some things that could make the old salami slice work. Things like good communication between team leaders or roundtable reviews of how it is going and being transparent with each other, honest appraisal of project work-in-progress and introducing scheduling to projects. But back to the four horsemen.

Who are the four horsemen?

When I talk about the Four Horsemen of the Apocalypse I usually mean: manual handovers, reconciliation, duplicated effort and rework.

Manual handovers are anywhere where data is being transcribed between one system or another by a human, while reconciliation is where someone is comparing the output of one system usually with their own ‘local’ solution and very often believing their local solution is right and the central one is wrong.  

Duplicated effort is where the same actions are being carried out multiple times, and rework is where a process of a transaction has to be repeated because it failed, usually again because of bad data controls but often also human error either in the transaction itself or in the way the software was developed. Manual workarounds are often in this camp too.

They exist and they are super frustrating, all of which is exacerbated by the continued pressure to buy spot solutions to fix these issues, but inadvertently just add to the kludge.

The CIO’s guide to managing unwieldy process

So what do you do? As the CIO, you have got this herd of horses running round your organisation. They are pounding the ground hard (the mass of systems and integrations) and it feels like there is nothing that is going to shift it. 

The first and most important thing is to establish your authority. This doesn’t mean being aggressive. This means being clear on decision rights. Who gets to decide what? The book “IT Governance: How Top Performers Manage IT and Decision Rights for Superior, by Peter Weill and Jeanne W. Ross, is your friend here.  

This will not be easy, especially if there is a feeling of winners and losers, but it is really important to establish how decisions get made and who makes them.  

The next step is to start to identify and measure the inefficiencies. Tools like Value Stream Mapping will help here but it is vital you have access to skilled practitioners, and they have the authority to challenge the loudest voices and dispel the quiet dissenters. Sometimes you have to paint the picture and show the prize, for the accountants amongst us to see what needs to be done. Knowing where those horsemen are, how big they are and just how much money they are costing will be illuminating. 

Build a coalition of the willing. This is the hardest part, but it is essential. I suggest working with your HR colleagues, but getting the executive layer (and the layer below) to act as one team (the team they are in, not the team they lead) is so important. If you and your peers are not together, not aiming for the same goals and are not brought together frequently as a team, then looking at processes and automating them holistically is pretty much impossible. 

Paint pictures, use examples and analogies, but repeat everything a lot. Communication is the key skill. You want to get to a point where the words you are using are being used back to you, naturally.   

In one organisation, the term I used was “Freedom within a Framework”. I was so pleased when members of my exec repeated it and even more so when one who had left nicked it for their next gig.  Another was “building a strong operational core”, which was repeated by my boss in a number of meetings. This all helps – it shows connection and purpose, can set the mission and is something people can hang their hopes on. 

But whatever you do, please don’t fall for the next layer of technology that will negate the need for fixing those processes.  

Join the HotTopics Contributing Editors Network

HotTopics Contributing Editor Laura Dawson is a Fractional CIO, Trustee, Non-Executive board member and a global technology executive with over 30 years of experience in digital transformation and technology for good roles. She was formerly the CIO at London School of Economics and Political Science and CIO at the British Council.