A Practical Approach for IT Governance

Reducing Fixed Costs

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In the wake of the recent market turmoils, whether mandated from the boss or not, CIOs no doubt will be feeling the urge to cut costs. A simple and well established approach to cost reduction is reducing fixed costs. Take for example, project management. Initial project reviews, user-buy in, planning, resource allocation, project briefing, and de-briefing after the project is completed all have a “fixed cost” component to it. This process becomes very burdensome for small projects. Creating simple IT Governance mechanisms which are apt for the project category will be helpful to develop efficiencies.

These guidelines help in reducing the fixed costs associated with projects:

1. Develop a simplified project management methodology (PM-Lite).

2. Use simple workflows (automated workflows add more benefits) using a portal approach to oversee these “small projects”.

3. If you outsource these projects, use a set of pre-screened and pre-credentialed vendors who are specifically suited for delivering small projects. This is discussed in more detail in this blog.

4. Set limits on the number of deliverables (such as 5 to 7).

5. Keep the distance between each deliverable small (time and technical relationship).

6. Set simple success criteria such as 10% within each deliverable’s costs and schedule as green, between 10% and 25% as yellow, and more than 25% variance as red.

This simple guideline should not be construed as one shoe fits all. For example, risk management, compatibility with enterprise architecture, adherence to standards, and other project management principles also apply, but they should not become onerous and increase the fixed costs of a project.

Written by Subbu Murthy

August 8, 2011 at 8:52 am

Posted in IT Governance

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