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Trimming IT costs: What are the best methods?

I’ve noticed that our readers have a penchant for a list-based story now and then, and Linda Tucci’s report from the Gartner Symposium/ITxpo 2008 in Orlando was no different. Her list of 25 tips for cutting costs in IT, via Gartner research vice president Ellen Kitzis, provided a lot of solid, applicable advice for CIOs and IT executives looking to trim organizational fat.

A few “favorites” from the list jumped out at me:

1. Focus initially on cutting “people costs”: Freeze headcount, reduce/eliminate special bonuses, reduce regional support.

Kitzis said 37% of an average budget is spent on people costs, including money paid to contractors. According to Gartner, companies were planning to spend $13,454 per employee, and that is already down $200, or 1.7% per person. Painful to talk about, this area is a big target — but use a scalpel. Keep people who ensure the greatest transmission of business knowledge.

You keep hearing the “scalpel” versus “hatchet” debate between the presidential candidates, and it’s true in the IT arena as well. As difficult as this is, you must consider staff cuts, and look to remaining employees and/or outside contractors to fill some of the gaps.

2. Flatten organization structure: Move to collaborative, team-based models.

More people are working in virtual teams, and the model is reducing overhead administrative costs, Kitzis said. It’s not unusual for managers who oversaw seven people to now manage between 15 and 20 people.

To continue on this point, fostering teamwork and offering the option of telecommuting can bolster employee satisfaction, so you’re not as likely to lose the good people you choose to keep on board.

7.      Use invoice verification.

The industry has seen a slew of acquisitions. Big vendors have snapped up small fries with 1,000 customers apiece. It’s easier for them to apply their boilerplate policies to inherited customers and wait for the complaints than it is to review contracts individually. You can save 5% to 10% by correcting those invoices or play hardball when you agree to a new contract.

Maybe it’s the perpetual bargain hunter in me, but this sounds like a no-brainer. Don’t wait until a series of invoices rolls in before you raise your concerns with a vendor. Everybody is looking to come out ahead, and compromise is key: If the vendor is refusing to budge on the price, perhaps you can inquire whether it’s possible to throw in any additional services in exchange. 

12.  Use “best-for-need” rather than “best-of-breed” products.

You could be paying as much as a 50% premium for best of breed.

Sure, it’s nice to be able to boast that you have the latest and greatest in technology at your firm. But this isn’t the time to be showing off. Purchase and maintain the items that fit your needs, and apply the savings toward other areas in your company.

13.  Move to corporate liability for wireless services (save 15% to 30%).

Who’s responsible for the bills of individuals, what devices they use? The enterprise should take control and set standards, Gartner analyst Phil Redman said.

Delineate your policies clearly, so you don’t have employees knocking on your door asking why their iPhone isn’t being covered or how many work-related text messages they’re allowed to send per month.

What did you think of the suggestions on the list? Have you tried any of these? Do you have any to add?

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Nice article. Thanks. :) Eugene
Hello Linda, I am sorry that I have to agree only about: 19. Defer 2008 Windows XP PC replacements to 2009. Three-year-old PCs and 2-year-old laptops might be able to go another year, but you should be mindful of the maintenance costs, Gartner analyst Michael Silver said. This is the main purpose of our products: Delaying replacement of computers, but we claim to know when to replace any specific computer or server due to the need to replace it. It is all about the fragmentation level of the disks which makes them "old" and candidates for replacement. We concentrate on two issues: 1. Do not replace any computer automatically. If it is capable of doing the work, do not replace. 2. Apply preventive maintenance to computers according to the needs, either automatically or administratively when an alert is accepted. You are invited to see our product LaceWatcher-PRO which implements the concept. Thank you for your article. At least you are among the few who points this out. Koby Biller, CEO Disklace