There are four key areas IT departments can cut costs and improve the efficiency of spending, according to Gartner.
But the analyst house also warned against pure cost reduction at the expense of a well-run IT operation, in its new report, ‘The four levels of cost optimisation’.
Barbara Gomolski, VP at the firm, said: “Whether it's due to an efficiency play, response to competitive action, meeting the needs of a powerful customer or dealing with an economic downturn, a sudden, renewed focus on IT costs can sometimes lead to ill-considered management responses.”
Cost cuts “should always be accompanied by measured and intelligent planning for the future”, she said.
Businesses can improve spending in IT procurement and operations, Gartner said, while IT departments needed to work closely with the rest of the business for overall operational cost savings, innovation and restructuring.
In IT procurement, firstly, trusted partnerships meant suppliers should also make sacrifices, not just leaving it to clients to bear the weight of level IT costs when budgets were squeezed, Gartner said. Firms needed to make a careful approach to suppliers in order to reduce their spending, the report said.
Secondly, operational cost savings needed to be carefully targeted for them to be effective, it added.
With IT budgets forming on average three percent of firms’ revenues, and total operating expenses representing over 80 percent, IT managers needed to plan their cost cuts carefully with other business heads in order to play a constructive part in overall savings plans.
Finally, in the long run IT chiefs must remember to continue to improve processes and business structure, to enable growth in the eventual economic upturn, Gartner said.
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