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Managing IT spending cuts: Don't take the easy way out, CIO advises

Linda Tucci, Executive Editor
Rick Roy, CIO at Madison,Wis.-based CUNA Mutual Group, returned to IT this year after two years as senior vice president of customer operations, committed to IT value and facing

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all the challenges of running an IT department during an economic recession. With IT spending cuts and IT project prioritization among those challenges, Roy took to the task with careful analysis and discussion with business colleagues -- something some IT executives may be loath to consider.

Rick Roy
CUNA Mutual, with $3 billion in revenue and $13.2 billion in managed assets, is an insurer for cooperatives and credit unions, Here's how Roy used his business acumen to steer clear of some types of cuts while endorsing others to keep the company on keel during the economic downturn.

You have said that upon return to the CIO position, you had to cut BI projects. Why?
Roy: Simplification. I am a huge proponent of business intelligence and the power it can have if it is used correctly. With that said, when I came back in the seat, we had 22 BI initiatives. I killed all but two of them, which was a little disruptive. And I did it very fast when I came [back] in [to IT.] And the reason I did it was the two that stuck were so important to the business I wanted to be sure we focused 100% of our time on getting those two right.

Have you been given a percentage-cut goal from business -- 10%, 20%?
Roy: We haven't driven to a specific percentage, per se. My sense is that the end percentage is really going to be driven by a combination of things I can do within IT and things that really cross those bridges between IT and different product lines. We've tried to avoid the peanut-butter approach -- spread it all evenly -- which, actually, I'm encouraged by. We're being much more deliberate about pulling back in some areas and in fact investing more in others.

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In your view, is there a first area in the IT budget that can usually be cut in tough times?
Roy: The first area I look to is the project portfolio. Now, the only caveat is that it assumes that you've done the basics: rationalized your management spans of control, you've got some variable labor force going. As a new leader coming in, if I didn't know those things had been done, those are the places I'd look.

But once you've done that, the first place to look is the projects. Are we burning project dollars, which will be IT dollars but also dollars beyond IT -- and capital that is very real to the business in areas that we shouldn't be right now?

If you're truly delaying or starving something you should be doing in your infrastructure, it will always catch up
with you.

Rick Roy
CIOCUNA Mutual Group
What I have seen is that a lot of organizations do the opposite. The first place they look is their infrastructure. They think it is easier. They think, "If I delay server upgrades, I don't have to go interact with business leaders to get buy-in on that. I can drive an expense savings. I can do it behind the curtain. And I don't have to affect their project."

If you're doing it for efficiency -- let's say, something like virtualization -- that is good IT management. But if you're truly delaying or starving something you should be doing in your infrastructure, it will always catch up with you. You end up with that outage or a slow recovery time if you have a disaster or partial disaster scenario, and that is an untenable place to be because the CIO usually ends up before the board trying to explain how in the world that happened.

But with the advantage of your stints in operations, you have no fear of the business. Right?
Roy: I don't know about that. Our CEO, Jeff Post, is a car guy. He loves automobiles. The analogy I use with him is, it's like not changing the oil in the car. You can get away with a little bit, but if you starve your infrastructure, that is your engine and at some point your engine is not going to run so well. In fact, it may just stop, and that's really bad. Our businesses are so dependent on technology.

Are you investing in any area of IT infrastructure at this point?
Roy: We are investing in our disaster recovery capabilities. We tied that to a new storage strategy we put in place. We are continually investing in security and the network infrastructure around security. That is the just the reality of being a financial services company these days.

This concludes our interview with Roy. To read part one of our conversation, visit "CIO returns from two years as operations SVP ready to drive IT value."

Let us know what you think about the story; email: Linda Tucci, Senior News Writer


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