Is It Possible to Cut Costs and Innovate Simultaneously?

Apr 24, 2023 | IT Thought Leadership Is It Possible to Cut Costs and Innovate Simultaneously?

It’s cost cutting season

These days it’s hard to have a business conversation without the topic of cost cutting coming up within the first minute. This isn’t surprising considering our current business climate-recession worries, continued inflation, waves of tech company layoffs, and more. There’s a lot of research on the right way for organizations to make cuts that aren’t short-sighted and don’t backfire in the future. In the latest release of CAST Highlight, a new capability called the Portfolio Advisor for Software Maintenance helps organizations leverage cost-cutting best practices related to software maintenance with automated guidance.

Is there a better way to cut costs?

In writing this article I did a lot of research on the many mistakes organizations make when cutting costs, especially in the realm of technology and software. There’s no shortage of research on the topic, but two common themes jumped out at me. First, making cost-cutting decisions without facts and empirical data is a recipe for failure. According to McKinsey & Company, data-driven companies see two and a half times more sales growth on average than their competitors. The second repeated theme is the critical challenge of cutting costs without hindering the organization’s long-term strategy. According to the Harvard Business Review, it’s imperative to stay strategy focused when cutting costs. Gartner identifies two key mistakes often made during cost reduction: slowing down an organization and choking off needed innovation. According to the research, only 9% of organizations create enough capacity to take on the growth and innovation opportunities they pursue.

This all sounds like an impossible task. Is it even possible to innovate while cutting costs? If so, how do you make these decisions based on facts, not opinions or the loudest voice?

Automated advice to optimize software maintenance costs

Let’s consider the scenario of optimizing the costs of maintaining custom software. CAST Highlight is a software intelligence product for performing smarter portfolio governance--it’s like having a control tower for your application portfolio. A key differentiator of CAST Highlight’s approach is that it combines two data sources to produce intelligence. First, it automatically understands application source code to generate fact-based technical insights (e.g., resiliency, technical debt, open source risks, etc.). It then enhances those insights with qualitative information (e.g., business impact, number of development resources, experience level of the development team, etc.) about each application captured via a built-in survey capability.

The new Portfolio Advisor for Software Maintenance built into CAST Highlight combines these different insights to automatically recommend specific actions to take on how to optimize software maintenance resources. For example, it will compare the recommended number of development resources for a given application (automatically calculated using the COCOMO II model) with the actual number of development resources captured via survey. Then it will factor in the automatically calculated health of the application (resiliency, agility, technical debt, etc.) and recommend whether there are too many or too few resources assigned to maintain the software. In this case, leaders can make more informed decisions and decide where to potentially cut resources and where to potentially reallocate them (e.g., a more business critical application that has too few resources and low health). This is just one example of a recommendation automatically produced by the Portfolio Advisor for Software Maintenance. The complete list of automated recommendations and their descriptions includes:

  • Invest Resources: Business-critical applications that would benefit from more development resources (according to the COCOMO II model recommended maintenance effort)
  • Reallocate Resources: Less business-critical applications that are healthy and may have more development resources than necessary (according to the COCOMO II model recommended maintenance effort)
  • Develop Team Skills: Applications with lower Software Health and Open Source Safety scores where team members have less experience
  • Reduce Turnover: Business critical applications with development teams experiencing high turnover rates, representing significant future risk
  • Get Deeper Software Intelligence: Business critical applications with high complexity that require deeper insights using CAST Imaging to centralize application knowledge and better understand software interactions
  • Role Models: Applications with high Software Health, high Open Source Safety, and appropriate allocation of resources (according to the COCOMO II model recommended maintenance effort)

For more on the new cost cutting capabilities in CAST Highlight, click here.