25 Ways To Cut İt Costs

By Chris Gonsalves

2008-04-08 Gartner says IT ‘industrialization’ is an opportunity to reduce IT costs and curtail wasteful spending

Gartner analysts say IT executives are frittering away as much as 25 percent of their budgets on unnecessary and redundant customization, and IT departments need to act now to take advantage of cheaper products and services
According to the analysts, wasteful IT spending is on the decline, but IT will still overspend by at least at 10 percent through 2010 Much of the waste stems from the inability of traditional IT departments to realize savings as they shift from buying and building technology to accessing IT as a service
At Gartner’s Emerging Trends Symposium/ITxpo 2008 in Las Vegas this week, researchers are urging IT to note the increasing commoditization of technology products and services This ‘industrialization of IT,’ is nothing short of a third industrial revolution in the form of digital business in the cloud, Gartner says
“No IT product or service is fully commoditized today—as there is still some cost to you in switching suppliers—but many are commoditizing and some are at a relatively advanced state such as desktop PCs,” Brian Gammage, vice president and Gartner Fellow told attendees “As products and services do commoditize, prices should usually fall, but conversely, for most enterprises, one of the biggest impacts of commoditization is overspending
“Organizations need to find new and different ways of being able to scale infrastructure without scaling labor costs if they are to take advantage of this metamorphosis of IT”
“The platforms to deliver the new services may be on the way, but one of the main challenges for IT organizations in adapting to the next industrial revolution will be dealing with the cultural impact—both internally and in the way IT interfaces with other functional areas,” said David Mitchell Smith, vice president and Gartner Fellow, at the event “The culture of ownership and integration will take time to overcome and will impact multiple constituencies within the organization Finance functions, for example, will need to play a bigger part in making strategic IT decisions as financial considerations—such as levels of capitalization and cash flow—become critical to making IT decisions”
*Here are 6 other ways from Gartner to cut IT costs Do they compare?
Managing Spending Cuts
In a separate presentation, Gartner delivered 25 concrete ways to cut IT spending The advice comes at a time when US enterprises say they hope to spend $13,454 per employee on IT in 2008, according to Gartner's 2008 IT Spending and Staffing Survey Given the recessionary economy, however, it’s likely IT will be asked to make cuts, and IT executives will be looking to make the most of slimmer budgets with a minimum of pain
CIOs and IT managers must be proactive and start their cost-reduction planning now, in anticipation of being asked to do so More planning time will lead to more intelligent and effective measures, the analysts said
According to Gartner, here are the best ways to find IT savings:
1) Initially focus on cutting “people costs” Freeze headcount, reduce/eliminate special bonuses, reduce regional support
2) Flatten organization structure Move to collaborative team-based models and change span of control assumptions: For example, change the management to staff ratio from 1 to 7 to 1 to 20
3) Accelerate the progress of centralized and shared services Leverage enterprisewide competencies by reducing staff members embedded in business units
4) Bring a qualified finance person onto your IT leadership team, either on loan or on a temporary contract
5) Maintain or strengthen relationship management roles, such as business analysts, business process and industry experts, account executives and relationship managers
6) Take control of “unmanaged” costs you can measure and cut easily, such as data center power consumption and printing
7) Use invoice verification
8) Eliminate unused software/modules
9) Apply more sophisticated negotiations
10) Use alternative products included in previous deals
11) Introduce competition for existing products
12) Use best–for-need rather than best-of-breed products
13) Use telecom expense management services (save up to 35 percent)
14) Reduce cellular costs by moving to corporate liability and creating and enforcing policies for mobile users (save up to 30 percent)
15) Reduce WAN costs by lowering the reliability target for one of your sites by one “9” (save 30 percent)
16) Combine rich-media conferencing into one premises-based multi-control-point unit (save 60 percent)
17) Deploy IP telephony and VoIP (save 50 percent to 80 percent on maintenance)
18) Reduce access charges by using the Internet as corporate transport (save up to 80 percent)
19) Defer 2008 Windows XP PC replacements to 2009
20) Exploit commoditization
21) Make better use of existing tools by improving process and policy
22) Defer client architecture pilot/evaluation projects
23) Implement thin provisioning and data de-duplication for storage reduction
24) Consolidate and virtualize servers
25) Target two or three areas for zero-based budgeting in 2009