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How to Reframe IT Cost Cutting into Customer Impact

Nick Heudecker
Written by Nick Heudecker

July 22, 2021

Demands to cut IT costs typically come from the top down, and they can hit overworked IT teams like a depth charge, leaving IT leaders scrambling to respond. When IT leaders detail the impact of cutting costs, they often scope things in terms of impacted service level agreements (SLAs) within IT. They don’t take a wider view into how the business will be impacted and put cost cuts into a perspective the business will understand. This is a critical mistake.

Let’s say the CFO sees that the current round of cost cuts reduces the amount of observability data SREs and SecOps teams can store by 15%. On the surface, the CFO is fine with the reduction because it saves money, but the negative impact across the business is much higher than the dollars saved. Infrastructure and application performance problems become harder to diagnose, leading to unhappy customers and lost sales. Security breaches, always a concern, also become more difficult to detect because teams are working with less data. 

There Is a Better Way

There are two things IT leaders need to do. As I mentioned above, they need to scope cost cutting initiatives as a business impact. Don’t stop at detailing the impact of an IT-centric SLA. Tell a bigger story. What’s the impact to customers, both internal and external? Is there a danger to business continuity? Those are the impacts to talk about. 

Next, get creative. Cost cuts are a fact of life in IT, but you still have to deliver a high quality of service. If you don’t, business executives will wonder what they’re paying for and the cost cuts will get more vicious next year. Find better ways to cost optimize, like by better managing the flood of observability data flowing into analytics systems. Justify these types of purchases by starting with the cost savings story, but don’t stop there. Demonstrate how these new technologies can drive new business value through improved customer experience and engagement, and better infrastructure and application optimization. 

When Cuts Go Too Deep

IT leaders can tell when cost cuts have gone too far when people outside of IT are complaining about not being able to do their jobs, or customers are complaining about your service, product, or support. The ripple effects that start in IT impact entire companies. It feels trite to say it, but every company is a technology company today. There are no applications that aren’t mission critical. Cuts that go too deep can make companies bleed out. 

We’re All Marketers Now 

If you’re an IT leader and you’re still viewed as a cost center within your company, you need to take decisive action to change that perspective. Think about everything in the context of contributing to business growth. Publicize your wins and how your team contributed to successful launches and ongoing customer successes. Always focus on communicating the value IT brings to business strategy. 

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