|
|
 |
|
Viewing report
|
|
|
|
Managing Costs in IT
Butler Group, Feb 2004, Pages: 220
The increasing financial and economic pressures many organisations in both the public and private sectors alike have found themselves facing over the past two years have lead to an intense pressure for IT cost savings. Although the public sector is familiar with these pressures, it has come as a shock to many private sector companies, and quite frankly it is yet another initiative the already overworked IT manager has to face.
Even as IT budget constraints are eased, the heady days of the late 90s cannot be expected to return. It is our belief that IT has matured as an industry, and that the demand for closer alignment between IT and business strategies will see much closer scrutiny of future IT projects. Organisations are no longer willing to make speculative investments in information systems without a clear understanding of the costs and measurement of the benefits.
There are four particular areas of technology that we have identified in order to group the potential IT cost savings: infrastructure consolidation, application consolidation, enterprise management, and managed services. However, we do recognise that technology is only a part of achieving these cost savings; therefore one could almost describe them as the high-level projects that could take place.
When considering the opportunities presented in this Report for IT cost savings, it is important to appreciate that there is no one-size-fits-all solution. Organisations will need to be selective and initially opt for those projects that will achieve the best returns in the shortest time period. However, IT cost reduction will then become an ongoing project in order to ensure that the best value is being achieved from the organisations IT investments. It is simply not practical to read the Report, then set up a large, one-off project in order to achieve these IT cost savings. Although system assessment and planning are crucial as a first phase, these tasks need then to be integrated into ongoing IT management and a continual improvement process.
Big organisations are looking for the leading IT providers to deliver business solutions rather than just technology. This means that particularly the large organisations are not only looking for opportunistic cost savings, but also that these cost savings must be implemented as part of the organisations overall long-term strategy. This must not only apply to large organisations; it is something that Small to Medium-sized Enterprises (SMEs) should also take note of.
When the opportunities for cost savings are identified, it will still require the development of a business case in order to justify each project. All projects that aim to save the organisation money will involve at least some level of investment, even if only of resource. The business case must also identify the long-term effects of the cost saving - again bringing into play the long-term strategy of the organisation. Once again we stress the requirement for true alignment of IT and business strategy.
In developing the business case factors such as Total Cost of Ownership (TCO) and Return On Investment (ROI) will be involved. There are certain cost saving projects that in fact involve the organisation spending significant amounts of money. However, it is important for those approving the business case to fully understand the cost and negative impact of poor quality. Improving the quality of IT in alignment with the overall organisational strategy will drive long-term reductions in the costs attributed to IT. A good example of this is network downtime - investing in a proper and appropriate management tool will cost money, but will lead to less downtime and subsequently the opportunity to achieve better value from IT. In considering all the business issues that apply to IT cost savings, one thing is clear - organisations are finally beginning to gain significant value from their use of IT - something that is long overdue.
When looking at IT cost savings, many organisations will identify their core competencies, and then give detailed consideration to leaving supporting activities to service providers. These supporting activities represent the cost of market participation and therefore do not provide any competitive advantage, or represent a main function, for the organisation. We believe that many larger organisations are increasingly relying upon a group of seven vendors to move their businesses forward - IBM, Dell, Hewlett-Packard, Oracle, SAP, Microsoft, and Sun - and this also applies to public sector organisations. This does not indicate that smaller vendors should be excluded, and in the SME market in particular, finding a strategic partner of the appropriate size is equally as important as it is to the larger organisation. However, we do anticipate that the other IT vendors will look towards the group of seven in order to provide their strategic direction, thus SMEs will benefit a little further behind the bigger organisations.
Report Content
The Report looks at the various opportunities for cost savings in IT. It does not, however, only look at ways of saving money; it also looks at ways in which IT can be more efficient and effective within the organisation.
The report shows:
- IT cost savings are best achieved on an ongoing basis.
- There is no one-size-fits-all answer to IT cost savings.
- Organisations can finally look to achieve best value from their IT investments.
- All organisations should consider outsourcing in order to reduce IT costs.
- Cost-saving projects should be small and incremental.
- IT vendors must now provide business solutions rather than just technology.
Customers who bought this item also bought
Virtualization Consolidation Cost Savings Calculator
Document Management - Cost Savings Solutions
IT Cost Reduction Frame-Work
Cost and Value Management
Best Practice in Green IT: Implementing Green IT in the Enterprise and its Cost Benefits
Nordic IT Cost Control 2005 - Large and Medium-sized Organisations
Systems Cost Engineering: Program Affordability Management and Cost Control
The Top 50 Contract Research Organisations In Europe For Cardiovascular Diseases & Disorders
IT Speaks: Practices and Trends in Enterprise Application Management
Business IT Cost Drivers 2007
Customer Services in Financial Organisations Market Assessment
IT Systems Management: Exploiting the Infrastructure for Business Value
|
|
|
|
