Can you really cut 25 per cent from your IT spending in just 10 steps?

Analysts reveal how...

Analysts reveal how...


With money still tight, CIOs need to find ways to reduce IT spending, and reductions in infrastructure and running costs provide the biggest potentialPhoto: Shutterstock

Psst - want to make your boss' day? How about cutting your IT budget by a quarter?

According to analyst house Gartner, CIOs can reduce IT infrastructure and running costs by as much as 25 per cent in three years by following a 10-step process.

1. Hold back on non-critical projects

CIOs should think about postponing infrastructure projects that aren't critical. As well as saving money on a short-term basis, there could also be a long-term impact if technologies decrease in cost over time or upgrade cycles are able to be skipped.

In deciding which projects to prioritise, CIOs should choose initiatives that will support important business objectives, lower costs in the near future or cut the chance of major outages or severe performance issues.

Hardware upgrades, particularly smartphones and other mobile devices, are an example of projects that can often be postponed without threatening business objectives.

2. Renegotiate network costs

The largest potential savings come from reductions in networking costs, Jay Pultz, vice president and distinguished analyst at Gartner, told

"Savings can usually be gained by renegotiating contracts with carriers like BT and AT&T and others. The market is very dynamic. Renegotiating contracts doesn't take a lot of investment - it takes investment in time but not necessarily in buying a lot of new stuff," Pultz said.

Network costs form a large portion of a business' IT running costs and with nearly half of network expenses going to telecom service providers, CIOs could make big savings by renegotiating with their current provider or looking for cheaper suppliers.

According to the Gartner report, savings can also be made by improving network design - so CIOs looking to cut costs should re-examine if their comms setup can be improved.

3. Consolidate IT infrastructure

CIOs should begin by consolidating datacentres if they haven't already done so, and then progress to consolidating storage and networks - typically "taking a bunch of small computer rooms and taking all that equipment and relocating it to one larger datacentre," Pultz said.

4. Virtualise your IT infrastructure

Virtualisation can improve server utilisation by fourfold, reducing the number of physical servers required to achieve the same workload.

Hardware and energy costs can therefore also be reduced by at least half after virtualisation has been adopted.

5. Use more energy-efficient datacentres

Money can be saved by...

...using a datacentre with enhanced energy efficiency.

According to Gartner, many datacentres built in the recent past waste energy on cooling expansive areas of "pristine white floor space" which mostly remain empty.


CIOs should consolidate data centres and push ahead with server virtualisation to cut costsPhoto: Shutterstock

6. Keep a lid on storage growth

"The number of terabites used is growing by about 50 per cent per year - certainly an exponential rate," Pultz said.

Although storage capacity is growing rapidly, growth is far outstripping cost declines so while CIOs can provide the business with more storage, they should think about other solutions such as storage virtualisation.

Pultz also advised CIOs to consider cheaper storage options which might not provide access to the data as quickly for information that is accessed on an infrequent basis.

7. Re-evaluate IT support

CIOs should consider putting in place systems to help end users solve their own support queries rather than using the helpdesk.

"Calling the helpdesk costs about 10 times as much per transaction than if [staff] did it on their own," Pultz said.

However, he also cautioned that "there is a cost of [workers] doing it on their own because you have to train them and you have to have a well designed portal that will walk them through the steps quite easily."

"You have to make sure you're getting users to do something they are comfortable with and that they won't mess up."

8. Streamline the IT team

A large portion of IT staff are involved in day-to-day operational processes and so by streamlining these processes, cost savings can be achieved.

"The other area that is large in terms of potential savings is streamlining IT operations - have the right skillsets, the right size of organisation and have what people do be very efficient," Pultz said.

According to the report, one CIO Gartner spoke to did this by reducing the number of IT staff by 10 per cent, making use of offshore providers for back-office processes and reducing the salary grade for certain functions. By putting these changes in place, IT costs were reduced by more than 10 per cent and the CIO reported that the service quality improved.

9. Enhance your IT asset management system

While enhancing the IT asset management system won't in itself cut costs, the information it provides will help CIOs find saving opportunities.

In particular, CIOs may decide to extend the period in which certain equipment is refreshed or switch to a cheaper maintenance and support arrangement.

Trying to make these kinds of cutbacks without the proper information could result in a reduction of service quality.

10. Optimise multisourcing

IT decision-makers should maximise the benefits of multisourcing by making separate sourcing decisions for each infrastructure component, system or function, Gartner said.

CIOs should play to the strength of their current staff using their skills to determine what projects are managed inhouse and outsourcing those projects that would otherwise require significant inhouse training or recruitment.

However, care should also be taken not to source services from too many separate vendors otherwise it could become difficult to manage and require more time than you can spare.