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Fresh Thinking on IT Operations for 100,000 Industry Executives

So we have a sub prime credit crisis that looks like it might turn into a global recession. IT is expensive and highly visible as well as often seen as non core. If you don’t get your budgets cut this year then you are very lucky and very unusual. I thought that you might like to have a list of some of the best ways to find IT savings, courtesy of Gartner with some Hot Aisle additions:

  • Measure so that you can manage. Bring a qualified finance person onto your IT leadership team, either on loan or on a temporary contract.
  • Focus on cutting people costs. Freeze head-count, reduce and eliminate special bonuses, ensure all bonuses are performance related and tied to EBIT, reduce regional support by centralizing teams.
  • 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.
  • Accelerate the progress of centralized and shared services. Leverage enterprise-wide competencies by reducing staff members embedded in business units.
  • Maintain or strengthen relationship management roles, such as business analysts, business process and industry experts, account executives and relationship managers
  • Take control of unmanaged costs you can measure and cut easily, such as data center power consumption and printing.
  • Implement Asset Management and be relentless in getting it right. Ensure all assets are being used and reused. Ensure software assets are fully managed and counted.
  • Use invoice verification and argue if the bills are incorrect. Don’t pay if you didn’t order it.
  • Eliminate unused software modules, cancel maintenance contracts. Look for underused software and migrate away from it.
  • Apply more sophisticated negotiations, leverage bundled deals, ensure there is always competition. (I once introduced competition into a purchase of an IBM Mainframe despite the vendor knowing I had to have one.)
  • Use alternative products included in previous deals that are now at no incremental cost.
  • Introduce competition for existing products, run regular RFP exercises to test best pricing.
  • Use best–for-need rather than best-of-breed products.
  • Use telecom expense management services (save up to 35 percent).
  • Reduce cellular costs by moving to corporate liability and creating and enforcing policies for mobile users (save up to 30 percent).
  • Reduce WAN costs by lowering the reliability target for one of your sites by one “9” (save 30 percent).
  • Combine rich-media conferencing into one premises-based multi-control-point unit (save 60 percent).
  • Deploy IP telephony and VoIP (save 50 percent to 80 percent on maintenance).
  • Reduce access charges by using the Internet as corporate transport (save up to 80 percent).
  • Defer 2008 Windows XP PC replacements to 2009.
  • Exploit commoditization, stop buying branded products and buy on price.
  • Make better use of existing tools by improving process and policy.
  • Defer client architecture pilot/evaluation projects.
  • Implement thin provisioning and data de-duplication for storage reduction. Introduce storage virtualization to enable commoditization of storage controllers.
  • Consolidate and virtualize servers.
  • Target two or three areas for zero-based budgeting in 2009.

 

 

  • amlewis

    Hi Steve,

    I read this article back in July and I knew without any doubt that before long I would have to come back and read it again. Everyone is feeling the effects and the subsequent cascade of clenching so this really is a much needed injection of plain common sense into what is such an overcomplicated and emotional subject. It's such a help to start thinking this way before the demands start to fall.

    Thanks for the subliminal 'gee up'.

    Cheers
    Andy

  • http://www.thehotaisle.com thehotaisle

    In terms of cutting IT spend, I thought that Garner got it just about right. It is important to keep the emotion out of it and focus on reducing costs where that does not impact revenues or availability and spending money where that does drive revenues.

    A couple of overlooked matters are:

    1. It always costs more to do something twice (or more often) so get it right first time even if it is a little more expensive

    2. Take a lesson from Toyota and use straight through flow when delivering service http://www.thehotaisle.com/2008/07/23/i-was-jus… because when you reduce cycle time you reduce costs.

    Steve

  • http://www.thehotaisle.com thehotaisle

    In terms of cutting IT spend, I thought that Garner got it just about right. It is important to keep the emotion out of it and focus on reducing costs where that does not impact revenues or availability and spending money where that does drive revenues.

    A couple of overlooked matters are:

    1. It always costs more to do something twice (or more often) so get it right first time even if it is a little more expensive

    2. Take a lesson from Toyota and use straight through flow when delivering service http://www.thehotaisle.com/2008/07/23/i-was-jus… because when you reduce cycle time you reduce costs.

    Steve