Managing IT Budget Cuts

The spookiest of seasons

The Halloween season is once again upon us. As haunted houses and horror films strike fear into the hearts of thrill seekers, it’s the slashing of IT budgets that keeps the IT professional up at night. Yet every monster has a weakness; an angle by which he may be defeated by the storyline’s hero. Here are some principles for keeping budget slashing terrors at bay, and fighting this formidable foe with pragmatic prowess. 

Understanding the beast of budgetary scrutiny

Budget cuts can be macro or micro-focused. On the macro front, finance teams may direct each and every department to reduce spending by a specific percentage in order to achieve corporate-level operating expense reduction targets. Alternatively, IT itself may be the focus of budget cuts for a variety of factors; from years of “overspending” to suboptimal perception of return on investment.  

Regardless of how budget cuts commence, we seldom reduce or entirely cut out items of value. Using personal finance as examples: we rarely cut our cell phone plan or kill our favorite streaming video service. Instead, we look to extraneous revenue drains like that kickboxing gift membership or the magazine subscription once intended to keep us abreast of current issues yet has instead become a makeshift laptop stand. Whether value reduces pain or piques our pleasure sensors, the effect is the same: value makes our lives better somehow. Yet when that value isn’t understood, it’s off to the chopping block.

Turning cuts into conversations

The first strategy in fighting budgetary cuts is never to fight at all. Educating and advocating on the value of IT is a sound step in keeping budgets off the chopping block to begin with. Again, the premise is that people refrain from cutting items with inherent value. 

Yet some fights are inevitable, particularly with those unfamiliar with IT value. Cost is typically commensurate with value, so avoid indiscriminate carpet-bombing cost reductions by pivoting to a conversation of trade-offs. Decision makers must understand the implications of cost cutting in practical terms. For example: “if we cut the help desk, we lose after hours support.” 

This may sound obvious. Yet as trivial as it seems, IT leaders often struggle to quickly articulate the loss of value via budget cuts; primarily because service value isn’t quantified. Moreover, prioritization frameworks are often immature, which means deciding which work falls above or below the line of commitment is subjective, and at times, political and/or emotional. Such a bespoke model is neither predictable nor scalable. 

Instead, IT leaders should be able to quickly prioritize work based on well defined and well socialized criteria known to all. By defining the rules of the game, it alleviates painful ambiguity and endless iterations of negotiations. 

It’s important to note that “doing more with less” only works when there’s ample fat to begin with. Trimming already lean meat quickly cuts straight into bone; leaving essential limbs paralized. Therefore, budget cuts must be viewed as a conversation; not an edict. There are consequences to culling funds, and it’s your responsibility as an IT leader to clearly articulate such impacts. 

This budget season, let’s leave the carving to the pumpkins, and keep your IT budget healthy. The company, and your IT staff alike, depend on sufficient IT funding. Make sure the company as a whole understands why.