10 ways to stretch IT budget

Companies should be proactive, not reactive when planning IT budgets, which helps ride out economic volatility and avoid unnecessary cuts, observers say.

As the shadow of economic uncertainty looms over Asia-Pacific, companies may be tempted to freeze or even slash IT budgets, but market observers note that this can be minimized with pre-emptive steps.

According to Lionel Lim, Asia-Pacific president for CA Technologies, the outlook for the region was still unclear. He pointed out the Asia-Pacific is home to many strong domestic markets, and not necessarily dependent on overseas customers. This meant that budgets could well be revised upwards or downwards later in the year as trends became clearer, he pointed out in an e-mail.

However, in case things take a turn for the worst, Sam Wong, advisory partner at Ernst & Young, advised that companies reexamine their practices as early as possible to help themselves ride out future storms.

John Brand, vice president and principal analyst of CIO group at Forrester Research, also emphasized a proactive stance when managing and maximizing IT budgets. He said organizations must first determine what they will need in the future to determine where they can reasonably cut costs now.

"Organizations need to be constantly placing themselves in the best position to reduce costs, and not wait till market downturns occur. Cutting costs should never be a reactive position," he highlighted.

Here are the top 10 ways Asia-Pacific companies can stretch their IT budget dollar to boost their efficiency and agility.

1. Work it out with vendors
According to Brand, most organizations are hesitant to directly approach their suppliers and ask for a better deal. "The old adage, 'you don't get what you don't ask for', is particularly true here. He added that organizations often see centralization or consolidation as a panacea to lowering costs, yet having a few so-called strategic partners may actually introduce greater costs with few quantifiable benefits.

Hence, organizations should constantly reevaluate the market and seek alternative providers which can deliver similar services at lower prices. Even though they may not be selected, having information about potential alternatives can help with contract negotiations in competitive situations, Brand said.

2. Get best of breed
Lim said companies should seek to assemble best of breed by looking for technology or vendors that can bundle the most efficient and available resources from different IT environments. Existing systems may have overlaps in management functionality, service deliveries and other redundancies that can be eliminated through this exercise, he pointed out.

The added bonus is that this shift ensures user satisfaction can be easily addressed, productivity improved, and maintenance costs potentially reduced as well, he said.

3. Move to mobile, BYO
Remote or mobile working and bring-your-own device initiatives can help reduce the investment in assets owned by the organization, making a significant impact on the bottom line, Brand noted."The whole point is to remove as many enterprise IT assets from the balance sheet as possible. It can also reduce the load and cost of providing associated support."

4. Commit to and cross-train IT staff
Wong said upgrading the skills of IT personnel makes them more effective and easily redeployed.

Brand noted that it was not uncommon that training programs were the first costs to be cut in any organization, though this can be "entirely self-defeating". With lower-skilled staff, an organization is inevitably putting its longer-term future at risk, he cautioned. Instead of reinvesting in training programs, companies can lay out a clear roadmap of skills required by staff, which may help motivate them to find and fund their own training, he noted.

Brand added that companies can move IT staff into more business-oriented roles. As the role of IT evolves, and businesses start to make more technology-related decisions themselves, some IT roles can be subsumed or reassigned back into higher-value business tasks, he explained. "[This] doesn't always cut overall business costs, but it does remove IT headcount from the balance sheet and helps gain more value from what you're paying for," he said.

5. Be platform-agnostic
Lim said: "Considering there are not many, if any, data centers with homogenous platforms, it is sensible to look for technologies that enable flexibility and productivity." This will allow businesses to shift resources across platforms easily to achieve greater innovation and growth, rather than stay siloed and bogged with maintenance and operations, he noted.

6. Simulate before you spend
Lim advised: "Before you request-for-proposal (RFP) and request-for-quotation (RFQ), do a simulation [and ask] what exactly are you solving and/or offering?" From the onset, the company must think about optimizing the design and effective deployment of applications and services. This can be done through modeling or simulating what their performance, integrations, security, capacity requirements and costs before any actual investment is made, he said.

A company will then be able to identify the strengths and weaknesses of proposed applications and services without having to need to develop software that must be tested and refined before they go live, he added.

7. Spring clean, and come clean
Companies must look how they allocate their IT budget between purchasing new technologies and maintaining existing ones, Lim said. "Over the years, you may have lots of legacy hardware and software just taking up space or chugging along. Take a good, hard look at what you have. Very often, you may not need to buy more, but manage the existing infrastructure better. Pay for only what you need."

Wong similarly advocated that companies carefully evaluate their IT procurement. This would mean comparing fixed and variable costs. "Does the company really need its own data center? This will call for a decision to buy or lease, and in-source or outsource," he noted.

8. Consider open source alternatives
Companies can also think about using open source alternatives to defray costs, although the reality is that some open source products will suit some companies more than others, Brand said. "Not every organizations will reap the benefits and cost savings from open source, but they should always consider it."

9. Cut down on low priority projects
According to Brand, this is not strictly cost-reduction but cost effectiveness. Organizations may have a long list of strategic and tactical projects, many of which are reprioritized throughout the year, increasing costs and introducing significant business delays. He suggested that by concentrating on only the core business requirements and projects--and sticking to them--costs can be avoided or at least minimized.

10. Try cloud
Wong suggested that companies review their hardware mix and configuration during their next technology refresh cycle, and consider leveraging on virtualization and cloud computing.

Lim agreed, noting that infrastructure-as-a-service (IaaS) cloud services can be one way of gaining more storage or compute power relatively cheaply. In addition, software-as-a-service (SaaS) cloud services can ensure a company uses the latest versions of software applications.

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