A Framework for IT Expense Reduction

February seems to reliably deliver two things: New England Patriot Super Bowl wins, and budget gaps being closed. I have used these approaches, both as a CIO and a consultant, to manage challenging IT expense reduction efforts.

Get Organized

Every daunting task is more easily accomplished by breaking it up and delegating work into smaller streams of work. Here are the categories that I have historically used for large cost reduction efforts:

To access a more readable version of the chart, click here. In future blog posts, I will write about successes I have had in these different categories.

Generally, I would be accountable for the entire effort, but I would assign a lead for each of the major categories (labor, sourcing, rationalization, and telecom). There is a lot of overlap, so the leaders need to regularly meet as a team.

Keep Score

All of these efforts require tracking tools to tally the planned savings. Smaller organizations can use a spreadsheet. Larger organizations need a mechanism that multiple people can contribute to at the same time; and enforces complex score keeping rules. Sharing the results frequently will build momentum and create the proper sense of urgency.

For a larger effort, it is a good idea to have an audit role. The people that are good at generating creative IT ideas are not always the best accountants. They need help translating their ideas to actual projected savings.

Execution

Each IT expense initiative is a project. Without regular review and disciplined follow-through, the savings will not be realized. Keep the structure in place until all of the ideas have been implemented. Create a dashboard to show leadership and the team their progress to the goal and changes to the expected savings total. Celebrate regularly.

Good luck. Remember, the money you save makes healthcare more affordable.

[This piece was originally published on Candid CIO, a blog created by Will Weider, CIO at Ministry Health Care. To follow him on Twitter, click here.]