Lorne Tappa | VP of Finance and Administration at NRC
2020 has thrown a wrench into the plans for many companies as challenges with financial gains and losses are leaking into 2021. These challenges amplify the typical hurdles faced by CIOs when working to optimize their department’s spending in a new year. 2021 continues to be an even more uncertain forecast than previous years due to the pandemic. In an ongoing effort to eliminate waste and ineffective projects, CIOs need to make important decisions such as postponing projects or cutting resources.
In 2020, many CIOs demonstrated the importance of Information Technology by quickly pivoting and moving to a virtual workforce while maintaining data security. They helped to keep virtual teams collaborating while ensuring security for the organization. The pandemic highlighted the strategic importance of IT as a force that keeps the organization operating in a virtual environment. CIOs have proven the importance of IT to the organization and need to keep the momentum going. Spending time and money researching and implementing the tools that support the remote workforce, as many companies choose to keep working remote well into 2021.
Top Areas to Review for Tight Finances
When attempting to get revised budgets in line, everything is on the table. The IT departments need to review each line item and use the zero-based budgeting model to achieve lower costs and disciplined execution. The largest gains can be made from the largest line items, such as labor, software licensing, infrastructure, etc. Furthermore, a full review of all software licensing and other related expenses can be a worthy exercise. Software reviews often identify products that are not needed or could be non-essential. This process also helps to note if any past staff members (no longer with the company) have paid licenses or if there are people who no longer need their software subscriptions. Additionally, this could be a time to renegotiate some existing contracts to move favorable terms.
Areas to not Tamper with Financially
When considering where to cut fiscally, CIOs must be careful not to remove vital aspects to the running of an organization. For example, you do not want to lose your top performers. Make sure to communicate often during tense times to keep the rumor mill to a minimum and instill as much confidence and optimism as possible. This will help to prevent high churn of top talent. Other areas that should not be interfered with are anything supporting clients and critical internal infrastructure.
Optimizing a Limited Budget
Often expenses have some levels of waste. It is a healthy exercise to dig in and root it out. This is also not a one-time exercise. If you find pockets of waste, they will grow again. Make it a quarterly or minimally annual exercise, do not wait for the finance group to do it. Finance sheets should also be updated quarterly to ensure the smooth running of the IT shop. While keeping an organized finance sheet can be a challenge, it is worth the effort to optimize performance in the company.
Move Forward Confidently
To take 2021 in stride it is important to communicate with other leads in your company. IT supports business operations, so if the other leads (sales, marketing, etc.) are getting bullish, then IT should be bolder in ramping up. If you are fortunate enough to be in a sector that is doing better during the pandemic, I suspect not much has changed relating to the above. If you are in a lean situation, that will not last forever so be aware of your surroundings and reemerge when it makes sense.