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IT Cost-Cutting Tactics for Coping with a Down Economy

IT leaders around the globe are asking themselves how they should prepare for tough economic times. In many cases, IT costs will have to be reduced while having as minimal an impact on the business as possible. It is therefore important for IT leaders to develop a fundamental framework for assessing their choices on where to cut, and how deep.

Though faced with tremendous pressure to maintain cost effectiveness and reduce expenses wherever possible, the reasons for reducing IT costs can come from several different directions:

  • Proactive IT cost reduction programs
  • Negative financial or industry performance
  • Budget reductions
  • General economic conditions

More specifically, proactive efforts to optimize and decrease spending is most frequently cited as an influence on cost reductions, ahead of negative economic or organizational factors.

Over the last five years, some industries were more driven by negative financial performance to reduce costs, including healthcare, manufacturing, and wholesale/retail.

Coping with a Down Economy

In 2008, economic conditions became a primary concern for IT. At least half of all organizations feel that recession conditions are somewhat negatively affecting their industry, organization, and IT department.

Whatever the drivers behind cost-cutting initiatives, IT reductions are easier said than done. While many organizations successfully reduce costs across IT operations, this is often a painful experience. It needs not be a chaotic or unplanned experience, however. There are ways to intelligently reduce IT costs.

Reducing Cost-to-Serve Series

The Cost-to-Serve approach is one cost reduction method that not only helps find new ways to cut costs on a service-by-service basis, but also strives to protect the organization's strategic imperatives in the process.

Use these notes to apply cost-savings across your department. Discover cost savings in every aspect of your cost-to-serve expenses, and use the guidance and tools below to start reducing costs today.

Cost-to-Serve Podcasts

Should time constraints be a concern, also be sure to listen to the Cost-to-Serve podcast series. These podcasts are a convenient way to obtain condensed summaries and strategies for cost-cutting.

MeasureIT: Metrics & Benchmarking

Finally, there is no better way to compare your current IT financial state, as well as ongoing cost reduction efforts, to your industry peers than Info-Tech’s MeasureIT benchmarking program. Included in your research membership, MeasureIT is a custom tool that compares your IT department's budget and staffing practices against companies with similar demographics. With over 100 metrics to compare against, results are generated instantly once the surveys are completed.

Bottom Line

For as long as IT exists, the IT leader will always be pressured to reduce costs, regardless of the various reasons for doing so. By using the targeted cost reduction tactics for specific areas of IT operations, the IT leader will be in a much better position to achieve cost-cutting goals in a rational, well-reasoned manner.

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