Five Key Principles for Continuous IT Cost Optimization

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Organizations that are able to demonstrate continuous improvement and deliver on the initiatives planned see cost optimization as a discipline and not as a one-off or discrete project. The principle of discipline ensures that cost optimization has an accountable owner and is led from the top (normally by the CIO). It is essential to proactively manage cost optimization and think of longer-term cost targets, with dashboards and metrics to measure improvement, instead of waiting for targets to be handed down from the top management. Organizations that do this well often create a team including professionals from outside of IT to ensure optimization solutions consider business outcomes and constraints rather than purely technical specifications.

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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