Managing Costs in IT 2009: Maximising the Value of IT Assets and Budgets

The increasing financial and economic pressures that many organisations have found themselves facing recently have led to an intense pressure for IT cost savings. Organisations are no longer willing to make speculative investments in information systems without a clear understanding of the costs and measurement of the benefits. Today, a new air of realism demands that cost efficiencies must be derived from existing systems, that costs must be firmly controlled, and that new projects must add value.

The corporate focus on IT costs is often driven by the enterprise-wide mandate to ‘do more with less’ and growing demands for compliance and governance-led transparency. Consequently, IT management needs to understand, and closely control, the activities that drive IT costs and factors of demand and supply. It is only through the implementation of formal cost management activities that the IT function can deliver cost-effective IT service provision and maximise visibility into related cost structures. IT cost reduction should be gained through a systematic and holistic approach, as well as being integral to existing IT processes and management, in order to ensure that the best value is being achieved from the organisation’s IT investments.

KEY FINDINGS

• The current situation can be viewed as an opportunity to become smarter in the way technology is utilised, especially by sweating existing assets.
• All cost savings must be identified and undertaken as part of a systematic and holistic approach, aswell as also taking into consideration the impact on risk and quality.
• Key IT cost metrics for both ongoing performance management and the assessment of service improvement opportunities should include both unit and total costs.
• It is not a question of how much is invested in computer systems but the effectiveness of the spending.
• IT governance allied with an architectural approach can provide useful frameworks for controlling cost, providing value, and improving IT capabilities.
• Providing an IT capability is one thing: operating, maintaining, and managing it cost-effectively through its whole lifecycle is another.
• The adoption of consolidation and virtualisation will produce a more efficient and flexible IT operation.
• Organisations must undertake a review of service provision as part of a considered sourcing strategy.
• The days are gone when CIOs could afford to ‘wave through’ renewal of their existing outsourcing arrangements.
• Energy consumption is now a very important cost consideration for the IT manager.