Tactical Advice

Cost Cutting at the Expense of Productivity

From aging hardware and outdated software to inappropriate equipment and tools, overzealous cost cutting can severely affect your organization's bottom line.
This story appears in the July 2009 issue of BizTech Magazine.

Reducing direct costs is an easy way for IT managers to demonstrate their value — there’s nothing a board of directors likes better than a list of savings, especially in times like these. But when cost cutting is taken to an extreme, it can affect productivity, crippling an organization's ability to compete effectively in the marketplace.

With more data at our disposal than ever before, we’re able to make better informed decisions. But unless IT systems work quickly and effectively, it can take longer to make those decisions. To improve productivity, technology needs to allow users to do more in less time.

One example of an attempt to improve productivity using IT is Microsoft’s recently launched website Bing, which the company has called a “decision engine.” Bing’s focus is to help users make decisions, rather than just gather information, by quickly presenting relevant data in useful ways to minimize the time it takes to find needed information.

Even small companies store large amounts of data that employees can access to help them make informed decisions, but if the hardware and software infrastructure is outdated, or otherwise not fit for the purpose, productivity suffers considerably.

Home-Grown Solutions and Indirect Costs

Having worked on the front line as a support technician, I have seen firsthand how outdated equipment can affect productivity. I was often asked to assemble desktops and notebooks from discarded relics that had made their way to the IT department’s computer graveyard. These devices were four or five years old and had some working components that could be resurrected to construct new machines at little or no direct cost.

Not only did I put these machines together, but I also repaired them a few months later when they inevitably failed. Support requests were frequent and time-consuming. Users would complain about speed and reliability and the affect on productivity — for instance, having to wait several minutes for simple operations to complete — and they were often as baffled as I about why such equipment was being used.

None of that mattered, however. The IT manager was happy. The board was delighted. There were no problems, and money was being saved. It looked great on paper. However, had the business stopped to measure the affect on productivity and employee satisfaction, they would have seen a different picture.

The Affect of IT Systems on Productivity

Quantifying the affect of new equipment on productivity is not easy to do. “You can see the computer age everywhere but in the productivity statistics,” writes Nobel Prize–winning economist Robert Solow, an expert on economic growth. While the productivity of a factory worker can be calculated by the quantity of units produced per working hour, measuring the productivity of an information worker is not so clear-cut.

A reliable IT infrastructure — and that includes PC hardware and software — is crucial to an organization’s success. Research by Gartner suggests that the total cost of ownership for a PC remains constant for up to six years of use, but after three years indirect costs such as lost productivity start to add up. Extending the PC lifecycle may also result in more diverse hardware and software across the enterprise, increasing support costs.

A study by IDC on the hidden costs of information work shows that an organization employing 1,000 knowledge workers loses, on average, $5.3 million annually if users can’t find the information they need, and that users spend an average of 13 hours a week using e-mail.

Measuring Productivity

System performance is only one aspect of IT that affects user productivity, and it’s difficult to create metrics that give meaningful results for this. While products such as Knoa’s Experience and Performance Manager (EPM) provide data about end-user performance, asking users for their opinion is a quick and simple way to gauge productivity in your organization.

The User Business Productivity Assessment on Microsoft’s Dynamics website measures usability, familiarity and efficiency, and then compares the results with an organization that uses Dynamics (Figure 1). Even if you don’t use Dynamics, the questionnaire could form the basis for a productivity assessment. IBM also has a computer usability satisfaction questionnaire that could be adapted for your organization’s needs.


Figure 1

A useful exercise, which can be combined with training, is to find out how quickly users can complete a set of standard tasks on two different machines, one of which is obsolete. Routine operations such as searching e-mail take considerably longer if there’s no inline search capability or if the hardware is not up to par. While not a scientific experiment, this exercise can demonstrate beneficial affect that updated hardware and software can have on productivity.

More adventurous tests might involve measuring how long it takes to complete entire business processes. Test your organization’s line-of-business applications to see if users might benefit from updated software or hardware. While operations such as booting a computer or launching an application are not necessarily performed regularly, they could be included as variables.

It’s also important to consider how effective your systems are compared with your competition, not just within your organization. Outdated systems will put your business at a disadvantage, hampering response time, innovation and competitiveness.

Russell Smith is an independent consultant based in the U.K. who specializes in Microsoft systems management.

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