Saturday, 24 May 2008

Consequences of under investing

Who has not heard "there is no budget this year for this activity" or "you have to do more with less" or "resources need to be diverted to another area"?

When we hear such edicts, we try and layout the pros and cons of the proposed cuts. How many of you out there have been successful to convince your leadership that the proposed cuts will undermine corporate operations and under-investing in certain areas will have dire impact in the long run? I bet not very many.

It goes without saying that no matter where - even on Mars for that matter - there is waste. It goes without saying that we should work toward rationalizing spending and that we should spend money in an intelligent manner and for activities that add value. However, any organization needs to undertake a set of activities to ensure its business continuity.

A common pitfall of leadership when making cuts, is to make the cuts in service areas and shift resources to operations, without realising that when operations has more money to spend, their demand on services will increase. What ends up happening is a "Catch 22" situation. Services do not have money to cater to the needs to operations, so operations does not get adequate service. The end result the entire organization suffers.

Now, how can we get this very simple and elementary message across to leadership?

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