Tuesday, 10 December 2013

The adverse impact of cost reduction strategy

I'm sure many of you will have come across one of the 750,000 who suffered embarrassment or frustration as a result of the RBS system failures on Monday, 2nd December. Customer perception of RBS took a nosedive. While it didn't appear clear what was the specific cause of the failure, the chief executive was clear that the route cause was a flawed cost reduction strategy and lack of investment in IT.

I've been thinking about this for a few days. The CPO should be concerned with future costs and whole life costs in particular. The CIO and CFO should be concerned with the IT investment strategy. But should the CPO have a role in raising the risk of a lack of forward investment, its impact on customer and shareholder value, and its impact on future costs? Its very similar to the procurement option appraisal of planned/preventative maintenance as opposed to reactive maintenance. I really can't make up my mind on this one and its not something I have ever personally been involved in.

What's your experience?  What do you think?

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