Reining in the Cost of IT Services

Michael Vizard
Slide Show

Reducing Application Maintenance Services Costs

Short and long-term tactics to reduce service costs associated with application maintenance.

One of the things that IT organizations do during tough economic times is to centralize their purchasing in the hopes of leveraging volume with a single supplier to get better pricing. But most of that activity is confined to the acquisition of products, even though IT services is probably the single largest item on the IT budget.

Against that backdrop it's interesting to see Hewlett-Packard announce its HP Strategic IT Advisory Services, which is a broad effort within HP to make it easier for customers to not only navigate all the services that HP offers, but also create an opportunity to centralize the acquisition of those services around a single vendor.

HP, of course, is positioning HP Strategic IT Advisory Services as a vehicle through which IT organizations will be able to reduce the amount of time IT organizations need to get value out of their IT investments, which is an initiative that HP refers to as "Instant-On Enterprises."

The effort is also the latest manifestation of HP's efforts to compete more aggressively for services revenue against IBM and a host of other IT service providers. As part of that effort, HP has already developed a reputation for being fairly aggressive when it comes to services pricing as part of an effort to gain market share in an industry segment that the company sees as being critical to its future success. According to Brad Bonsack, vice president and managing partner for strategic IT services in HP's Technology Consulting Group, this latest initiative is also intended to make HP easier to do business with. That has been a longstanding issue for HP because over the years the company has always tended to operate as a set of independent business units that never really coordinated their sales efforts.

Senior IT leaders are routinely dismayed to discover how much money they spend on services as a percentage of the overall IT budget. Efforts such as the creation of HP Strategic IT Advisory Services essentially create an opportunity to re-examine and, in many cases, re-negotiate those costs. And the best way to go about doing that is to always see what the hungriest company is willing to offer.

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