It has become a familiar lament. “Our IT organization is under more pressure to deliver more value without commensurate increases in budget.” Well, in today’s economic environment of fear, uncertainty and doubt, the IT cost management problem has become even more acute. Even before the latest events on Wall Street, Forrester Research reported that more than 40 percent of over 900 executives in large European and North American businesses have cut their IT budgets in 2008. Almost half (49 percent) of North American firms have cut their IT budgets. This compares with 31 percent of respondents in Europe. Forrester, however, predicts that downward pressure IT spending for European IT shops will build.
But demands on IT are not tapering off to accommodate the reduction in resources. Indeed, as organizations respond to transformative shifts in the global economy, CEOs are looking for the IT department to contribute to innovation initiatives that will improve competitiveness, streamline operations and strengthen the corporate balance sheet.
A study out from Computer Economics Reports this summer – featuring input from 200 IT managers in small, medium, and large organization -- indicates that as much as 30 percent of IT spending this year will go toward new initiatives (as opposed to ongoing, "keeping the lights on" spending).
Since budgets are not rising, that means that “innovation initiatives” will have to be funded by cost reductions in the day-to-day management of “core” operations. As a result, enterprises around the world are focusing on new best practices that streamline both costs and processes to divert dollars and technology experts to new projects that result in new revenue generation and cost amelioration.
Simplification, centralization and collaboration
So what are IT managers to do? According to Matthew Holitza, an engineer at IBM’s Rational software division, managers should develop a new mindset toward cost control that revolves around:
Each of these concepts affects the others, and when they are viewed in an integrated context they offer an opportunity to reduce IT costs significantly while actually improving service delivery to the enterprise.
To learn more about how experts at IBM can work with your organization to optimize your IT cost management, please contact IBM.
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