Taking control of IT costs

Introduction

While the financial crisis seems to have passed there is still increasing pressure on the IT group to contain costs. Being a smart manager, you have already negotiated reduced rates with your suppliers, head count has been cut, travel / entertainment is tightly controlled but the organization still needs to find more savings. While resources are cut, the demand from business for IT services continues to grow unabated.

As organizations begin to exhaust the supply side cost reduction opportunities, controlling consumption and demand offer the next level of cost savings. Kogekar Consulting has helped clients achieve significant cost savings with demand management techniques. Here we summarise key learning from our experience. For more information on this topic please contact us on email.

Executive Summary

The challenge of managing costs means that the IT group must look for cost savings beyond the supply side costs controlled within the IT department. Demand Management aims to control consumption of resources by helping the business understand how their decisions drive costs.  And how IT can help find ways to optimise demand on IT resources.

• As IT has become integral part of the business, demand for IT services and resources, continues to grow. Requests for business process changes, enhancements and procurement of new technologies and e-commerce means the demand for services continues to increase unabated despite business cycles.
• The demand for IT resources appears to be poorly controlled. Most organizations don’t appear to have the right information on the total demand nor credible costs. Appropriate information and incentives for the business to cut the demand does not exist. Two common reasons are:
  • Inadequate IT cost transparency
  • Inadequate responsibility on business heads to control consumption
• While most organizations have processes to control the demand for the new projects; in areas such as applications support, infrastructure operations and help-desks, such controls are hard to find.
• Even when there are controls on the discretionary project initiation, once underway, there is limited control and almost no incentive to terminate the distressed or wayward projects.