In the last 4 posts we have covered how you should deliver IT cost reductions in the near term. And if executed well, you will also yield some longer term benefits such as a better workforce balance or elimination of redundant or low value systems. But how do you deliver material improvements in cost and efficiency that are sustainable and material? First, you must put in place long term tactics that you will relentlessly pursue. To make a material difference here, you must be both consistent and persistent in your approach.

First, you lay the groundwork for sustainable improved cost through quality. Second, you must achieve a highly productive and well-balanced team in order to meet a world class cost profile. Third, you must have in place modern, consolidated infrastructure and well-architected core systems. And then finally, by leveraging a metrics-based, transparent framework with continuous process improvement you will achieve and then sustain the world class cost edge.

Cost reduction and efficiency have become a prevalent drumbeat for almost any IT shop in the past 4 years. I think it is important to recognize that just taking short term actions to achieve efficiencies for this quarter or this year are inadequate for today’s business environment. Because your business, regardless of the industry, is becoming more and more reliant on IT to deliver the services, enable the business operations. If you fall behind here because of cost-cutting, you are now impacting the viability of the business. Most importantly though, the technology, almost without regard to industry, is becoming a larger and larger portion of the product. Thus, if you do not build up better IT capability than you impact the future of your business. So, cost cutting must be done such that you build capability while reducing costs, no mean feat.

I think it is important to recognize that in many industries, the technology approach is now changed forever due to several key factors. The impact of consumerization of technology, mobility and smart phones, the growing scope of pseudo-automated workflow and application tools, and the economic upheaval of the past 3 years have changed dramatically how technology can should be applied. I will review these industry inputs and their impacts further tomorrow.

And then later in the week, I will map out the specifics for each of the four elements of achieving a sustainable and material cost advantage in IT over the long run.