Practical Approaches to IT Cost Optimization

It’s easy to think that “cost optimization” is something that has become a recent phenomenon, given our current economic uncertainty. Several of us at ISAM have been around a while and can attest that’s certainly not the case. Time and technology have changed but the focus on cost and efficiency has always been there.             

The challenge is understanding the business objective driving the need for cost optimization and the difference between cutting and optimizing. Unfortunately, in recent times, many companies think only of cutting costs, not optimizing. So, we’ll attempt to clarify and recommend the “optimum” approach.

Cost cutting is often an immediate reaction to missing a quarterly revenue and profit target or in some cases, to “pay for an acquisition” This is traditionally a resource action resulting in loss of staff. Additional cost-cutting actions can be delays in infrastructure spending, project initiatives, or a rigorous restriction of internal purchases and other restrictive actions.

Cost optimization, on the other hand, focuses on improvement and utilizing your resources more effectively, whether it’s infrastructure, software, or people. To do that, you need to have visibility of your total spending. Once you have that, there are several areas to focus on to determine what will give you the best opportunity for cost optimization.

1. Review your current technology. Are you using all the features and functions that are available? Doing so can reduce redundancy, increase efficiency, and eliminate unnecessary manual effort that technology could automate.
2. Are you paying for software that you aren’t using or more than you should be? A good Managed Service Provider can save you millions. That’s right millions!
3. Have you thought of moving to the “Cloud” or have you moved and not seen the ROI that was expected? Some applications belong in the Cloud, some are better on- An application rationalization exercise would help you answer that question.

The Gartner Cost Optimization Decision Framework helps you prioritize cost optimization opportunities by value, not just the potential to reduce spending. Use this framework to:

• Create a prioritized list of your most promising cost optimization opportunities.
• Assess the level of impact of your cost plans across critical decision factors/criteria.
• Evaluate the trade-offs between the benefits, costs, risks, and viability of different cost control initiatives.
• Map cost reductions on a simple grid to show the trade-offs and help build buy-in for your cost reduction strategy
  

We at ISAM Group would love to help you achieve your cost optimization goals!