Five Key Principles for Continuous IT Cost Optimization

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In order for IT to be fully optimized, both the supply and demand side must be reviewed. Too often, organizations see optimization as how to best supply the demand for IT. This can create a culture where IT becomes reactive to the business needs and not proactive enough to be able to influence demand. In order for IT to be continually optimized, leaders must take ownership of the futures of their departments. At a minimum, leaders must engage with the business to manage the capacity, features and functions that IT provides. If IT leaders can better predict, with some degree of certainty, the demands on IT, they will be in a strong position to source IT in the most optimal way. One strategy to make the business more aware of its demand for IT is to use techniques such as chargeback and showback.

After years of tactical cost-cutting, many organizations now face the challenge of continuous IT cost optimization after the realization that optimization practices are never finished, according to Gartner, Inc

According to a worldwide survey of 2,053 CIOs, 65 percent of those surveyed stated that the main barrier preventing organizations from achieving continuous optimization of IT costs was related to mindset (that is, the ability for all resources to work together in the same direction with the same goal). CIOs felt that, if organizations were properly motivated and moving to achieve the same goal, they would make a greater impact on savings.

"Organizations don't often achieve the desired results from their optimization initiatives, and costs end up returning into the business," said Sanil Solanki, research director at Gartner. "CIOs should consider incorporating five key principles into their organization's cost optimization practices to form a basis for continual optimization. These principles are geared toward avoiding the danger of tactical cost initiatives, which may seem to generate savings in the short term, but can mean costs returning into the business in the long term."

To continually optimize IT costs and avoid dangers that can be created from tactical cost-cutting, CIOs should incorporate the following five key principles into their cost optimization initiatives to ensure ongoing success of the business.


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