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13 More IT Cost Cutting Ideas

by Chris Curran on July 27, 2010 [email] [twitter]

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It’s always interesting to me which blog topics generate interest.  Two weeks ago, I asked the #CIO Twitter community to offer their ideas for IT cost cutting and the summary was one of the more active posts lately, especially on LinkedIn groups like the Forbes CIO Network.  I have summarized the comments below.  Thanks to Robert Marchant, Jerry Rosenbaum, Puneet Dhawan, Reuben Thomas, Krishna Pulipati, Curtis Todd and Roger Jennings for their thoughtful comments.

  1. Cancel that cyclic PC Desktop estate refresh and move to a centralized virtual desktop model
  2. Share more services and products among business and IT departments or teams
  3. Make every piece of hardware and software count
  4. Realign managers to technical staff ratio
  5. Keep departments 5% under-staffed
  6. Audit decisions and decision makers for vendor and product selection and standards adherence
  7. Encourage employees for self-paced learning
  8. Align team structures and incentives to deliver cost-out
  9. IT teams try to do things which they are not good at simply to maintain a sense of control, eg, an Application services team managing its own servers. This will not be their core competency and they will not be able to focus on driving efficiencies in managing the servers. Have a separate team manage servers and create incentives them to reduce cost of operations.
  10. There are a lot of ideas with those closest to the ground. The ideas may be small, but they can add up to a significant number. Build an environment where everyone in the IT organization understands that cost-out is important. And then ensure they have the resources to execute.
  11. Re-negotiate maintenance contracts based on company margins
  12. Use more open source products
  13. Launch a holistic supplier sourcing and contracting campaign which will provide an overall strategic plan to optimize negotiations and improve vendor performance and costs while reducing risk.

One commenter said it well:

I am reminded of a quote from Grace Hopper. There are two costs – the cost of doing something and the cost of not doing something.
So when trying to save costs, look at all the costs.

The ideas we’ve generated are great.  Another area to consider is rationalizing your application portfolio.  One of our health care clients has over 100 ERP systems.  Talk about cost cutting opportunities!

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  • http://ciodashboard.com/ Chris Curran

    Since I posted this, more ideas have been proposed:

    1. Nobody has mentioned software engineering automation. As the author of a meta-tool that provides rule-driven automation of software engineering tasks involving existing code (written 20 years ago, or just 5 minutes ago), I am very aware of the extent to which it is possible to automate much of what developers do. The available leverage on expended effort can be large. Given the expense of developers and the scarcity of really good ones, this can result in major savings. (from Stephen F. Heffner)

    2. Cutting real estate and promoting virtual communities sounds great and may have immediate impact on someone’s bottom line, but the damage is often felt further down the track. Pushing the individual into a lonely corner at home removes the daily interactions that often inspire people to solve their immediate challenges by having the opportunity to ask questions or seek advice.

    The better solution offered here is the review and improvement of business processes that lead to simplification of the supporting systems. Once simplified we often need less staff to operate and support the business, allowing them to move to more innovative jobs that further expand or improve.

    You need to invest to get returns, not slash assets. (from Owen Martin)

    Thanks!

    • http://ciodashboard.com/ Chris Curran

      More great comments from LinkedIn:

      Your blog says…”There are two costs – the cost of doing something and the cost of not doing something.” So when trying to save costs, look at all the costs.” I agree with this generally, but in practice it is difficult to accomplish. Emotion is most often the culprit. Falling in love with your “best practices” or the “numbers” or your “people” etc., clouds common sense and often precludes rational judgment when costs are evaluated. Bottom line: look at the bottom line! (from Rick Murphy)

      While I was pleased to read a number of suggestions relating to software (and maintenance) costs there are a few other items I’d recommend thinking about…

      1) For many organizations software licensing & software maintenance is the #2 IT budget line item (labor typically #1). However; if you consider the tools and resources we apply to managing this line item compared to others (hardware for example) it falls far behind. If this is true in your organization it might be time to revisit the alignment of your investments to your outgoing costs.
      2) Don’t overlook the potential costs or savings through ensuring your team understands the product use rights of the software installed. For example, Microsoft SQL Server Enterprise clustered in active/passive mode can cost easily $60k less than one clustered as active/active. By having access to pertinent product use rights details your team can avoid making costly mistakes during the planning and budgeting phase instead of later realizing they need to buy licensing to cover what is being implemented.
      3) Avoid a disconnect between those who negotiate the deals and those who are responsible for implementing the technology. Maintenance benefits all too frequently are never passed on to the technologists who can utilize them although the company is paying for these benefits.

      For more cost savings tips on software, be sure to check out my blog on Software Asset Management . (from Cynthia Farren)

  • http://ciodashboard.com/ Chris Curran

    Since I posted this, more ideas have been proposed:

    1. Nobody has mentioned software engineering automation. As the author of a meta-tool that provides rule-driven automation of software engineering tasks involving existing code (written 20 years ago, or just 5 minutes ago), I am very aware of the extent to which it is possible to automate much of what developers do. The available leverage on expended effort can be large. Given the expense of developers and the scarcity of really good ones, this can result in major savings. (from Stephen F. Heffner)

    2. Cutting real estate and promoting virtual communities sounds great and may have immediate impact on someone’s bottom line, but the damage is often felt further down the track. Pushing the individual into a lonely corner at home removes the daily interactions that often inspire people to solve their immediate challenges by having the opportunity to ask questions or seek advice.

    The better solution offered here is the review and improvement of business processes that lead to simplification of the supporting systems. Once simplified we often need less staff to operate and support the business, allowing them to move to more innovative jobs that further expand or improve.

    You need to invest to get returns, not slash assets. (from Owen Martin)

    Thanks!

    • http://ciodashboard.com/ Chris Curran

      More great comments from LinkedIn:

      Your blog says…”There are two costs – the cost of doing something and the cost of not doing something.” So when trying to save costs, look at all the costs.” I agree with this generally, but in practice it is difficult to accomplish. Emotion is most often the culprit. Falling in love with your “best practices” or the “numbers” or your “people” etc., clouds common sense and often precludes rational judgment when costs are evaluated. Bottom line: look at the bottom line! (from Rick Murphy)

      While I was pleased to read a number of suggestions relating to software (and maintenance) costs there are a few other items I’d recommend thinking about…

      1) For many organizations software licensing & software maintenance is the #2 IT budget line item (labor typically #1). However; if you consider the tools and resources we apply to managing this line item compared to others (hardware for example) it falls far behind. If this is true in your organization it might be time to revisit the alignment of your investments to your outgoing costs.
      2) Don’t overlook the potential costs or savings through ensuring your team understands the product use rights of the software installed. For example, Microsoft SQL Server Enterprise clustered in active/passive mode can cost easily $60k less than one clustered as active/active. By having access to pertinent product use rights details your team can avoid making costly mistakes during the planning and budgeting phase instead of later realizing they need to buy licensing to cover what is being implemented.
      3) Avoid a disconnect between those who negotiate the deals and those who are responsible for implementing the technology. Maintenance benefits all too frequently are never passed on to the technologists who can utilize them although the company is paying for these benefits.

      For more cost savings tips on software, be sure to check out my blog on Software Asset Management . (from Cynthia Farren)

  • http://www.dealarchitect.typepad.com vinnie mirchandani

    Chris, Chapter 2 of my new book The New Polymath which you kindly reviewed has several pages on cost cutting opportunities in 30+ IT and telecom areas…if your readers would like that extract pls have them email me at vmirchan AT att DOT net

    Regards

  • http://www.dealarchitect.typepad.com vinnie mirchandani

    Chris, Chapter 2 of my new book The New Polymath which you kindly reviewed has several pages on cost cutting opportunities in 30+ IT and telecom areas…if your readers would like that extract pls have them email me at vmirchan AT att DOT net

    Regards

  • http://www.cynthiafarren.com Cynthia Farren

    While I was pleased to read a number of suggestions relating to software (and maintenance) costs there are a few other items I’d recommend thinking about…

    1) For many organizations software licensing & software maintenance is the #2 IT budget line item (labor typically #1). However; if you consider the tools and resources we apply to managing this line item compared to others (hardware for example) it falls far behind. If this is true in your organization it might be time to revisit the alignment of your investments to your outgoing costs.
    2) Don’t overlook the potential costs or savings through ensuring your team understands the product use rights of the software installed. For example, Microsoft SQL Server Enterprise clustered in active/passive mode can cost easily $60k less than one clustered as active/active. By having access to pertinent product use rights details your team can avoid making costly mistakes during the planning and budgeting phase instead of later realizing they need to buy licensing to cover what is being implemented.
    3) Avoid a disconnect between those who negotiate the deals and those who are responsible for implementing the technology. Maintenance benefits all too frequently are never passed on to the technologists who can utilize them although the company is paying for these benefits.

    For more cost savings tips on software, be sure to check out my blog on Software Asset Management (http://software-license-management.blogspot.com/).

  • http://www.cynthiafarren.com Cynthia Farren

    While I was pleased to read a number of suggestions relating to software (and maintenance) costs there are a few other items I’d recommend thinking about…

    1) For many organizations software licensing & software maintenance is the #2 IT budget line item (labor typically #1). However; if you consider the tools and resources we apply to managing this line item compared to others (hardware for example) it falls far behind. If this is true in your organization it might be time to revisit the alignment of your investments to your outgoing costs.
    2) Don’t overlook the potential costs or savings through ensuring your team understands the product use rights of the software installed. For example, Microsoft SQL Server Enterprise clustered in active/passive mode can cost easily $60k less than one clustered as active/active. By having access to pertinent product use rights details your team can avoid making costly mistakes during the planning and budgeting phase instead of later realizing they need to buy licensing to cover what is being implemented.
    3) Avoid a disconnect between those who negotiate the deals and those who are responsible for implementing the technology. Maintenance benefits all too frequently are never passed on to the technologists who can utilize them although the company is paying for these benefits.

    For more cost savings tips on software, be sure to check out my blog on Software Asset Management (http://software-license-management.blogspot.com/).

  • fred64

    Opportunity exists in the area of helpdesk, NOC and office desktop/application support. Companies certified by the MSP alliance have fully functional NOCs, teams of tech support folks and the ability to remotely service local office environments and workers. They can repair PCs, answer app, mail and browser questions, provide level 1 support to vertical apps, office devices, servers and proactively monitor performance, local networks and operational status. For problems they can’t resolve immediately, most can integrate with your existing ticket system to escalate or forward issues.

    These vendors provide flexible services, billing, and integration solutions to relieve your IT of the burdens of trivial level 1 incidents. They can simplify or eliminate your help desk, Network Operations Center and even some monitoring and incident detection tools.

    You can formulate a custom solution that compliments your operational and support environment, reduces internal workloads and services your customers quickly with competent, certified and bonded remote techs.

    For SMBs large MSP vendors like IBM or HP(EDS) can be too expensive or rigid. Local MSPs can be hit or miss, especially if your offices are spread out geographically. Best bet, Google the MSP Alliance, check out their list of Accredited Master MSPs. Some like The Utility Company specialize at servicing SMBs from central locations, provide a local contact and can also provide local support across north America at reasonable cost.

  • fred64

    Opportunity exists in the area of helpdesk, NOC and office desktop/application support. Companies certified by the MSP alliance have fully functional NOCs, teams of tech support folks and the ability to remotely service local office environments and workers. They can repair PCs, answer app, mail and browser questions, provide level 1 support to vertical apps, office devices, servers and proactively monitor performance, local networks and operational status. For problems they can’t resolve immediately, most can integrate with your existing ticket system to escalate or forward issues.

    These vendors provide flexible services, billing, and integration solutions to relieve your IT of the burdens of trivial level 1 incidents. They can simplify or eliminate your help desk, Network Operations Center and even some monitoring and incident detection tools.

    You can formulate a custom solution that compliments your operational and support environment, reduces internal workloads and services your customers quickly with competent, certified and bonded remote techs.

    For SMBs large MSP vendors like IBM or HP(EDS) can be too expensive or rigid. Local MSPs can be hit or miss, especially if your offices are spread out geographically. Best bet, Google the MSP Alliance, check out their list of Accredited Master MSPs. Some like The Utility Company specialize at servicing SMBs from central locations, provide a local contact and can also provide local support across north America at reasonable cost.

  • Foxdavid763

    NHS Savings:- A Hospital a appointment,GP appointment should require a small deposit,say £5, returnable when attending.
    The role of deputy manager should be abolished. Any manager should have the ability to make sure his department runs smoothly when he is absent.
    Education Savings:-Abolish the scam of retired heads returning as advisors on contract.
    Dave

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