Five Innovative Ways to Cut IT Costs
Every time the economy turns downward, IT shops take a hit.
In the U.S. IT market, Forrester Research predicts that growth in technology goods and services will slow in the fourth quarter of this year, a scenario likely to continue into the first half of 2009. Gartner, meanwhile, is advising clients to hedge, rather than presuming the economy will pick up next year.
The best time to consider cost-saving measures is before the CFO comes knocking on your door to ask -- or demand -- that IT slash its budget.
(Read the InfoWorld features "Is IT recession-proof?" and "Guerilla IT: How to stop worrying and learn to love your superusers.")
"Are we trying to cut IT costs? Yes," says Jon Crowe, director of enterprise technology services at Cabela's, an outdoor equipment retailer. "We're sitting down and thinking how we can be smart about it."
Indeed, several IT execs InfoWorld interviewed for this story are looking to ferret out simple, and often surprising, ways to save money during tight times.
1. Harness Consumer Technologies
Plenty of IT shops are wrestling with how -- or whether -- to fit consumer and Web 2.0 technologies into the enterprise, says Peter Blatman, a principal in Deloitte Consulting. But some are already making it work to their advantage.
Vivek Kundra, the CTO of the District of Columbia, recalls the day he had an epiphany: The technology most users employ at work is kludgy compared to what they use in their daily routines, even though consumer technologies are often less expensive or even free. "It comes down to a philosophical view I have that, for some weird reason I cannot understand, the way we organize ourselves at work is so much less agile than what we do in our personal lives," Kundra explains. "Why not use consumer technology at work?"
That's exactly what Kundra did. "We were spending a ton of money on our portal, and I realized we didn't need to," he adds. So Kundra abandoned the portal and replaced it with considerably less expensive wikis and turned to YouTube videos. Kundra said the moves were relatively easy because IT did not have to train employees how to use the tools.
Echoing those sentiments is Greg Rhoades, senior IT manager of infrastructure services at Panera Bread. Rhoades says his company is also moving toward consumer technologies. "We're taking some steps in that direction. We're also looking at social networking tools because people use them in their personal lives, and we want to leverage the technologies that people already know how to use."
The cost avoidance of not having to train people on new technologies is just one of the areas in which companies can save. "Although the ROI of using consumer technologies is not always clear on an individual basis, when taken as an aggregate, the savings can add up," says Sean Rhody, a principal in Capgemini's technology transformation practice.
2. Get the Business Side to Scope Projects
IT shops all too often shoulder much of the responsibility for investigating technology projects, and even though the proposals come from the business, the cost of scoping projects, conducting research, reviewing architectures, evaluating the requisite technologies, and other information gathering inevitably fall on the IT shop, constituting a significant burden that can eat up weeks of work for each potential initiative, Rhody says.
"When the cost for evaluating a proposal falls on IT, the business side tends to swamp the demand function with excessive requests," Rhody adds. He cites as an example one IT shop that averaged a four- to six-week turnaround for such activities and, ultimately, had to limit how many proposals it would accept -- which led to dissatisfaction with the IT department.
"Pass that back to the lines of business," Rhody advises. "There's immediate savings. When the cost of proposals is born by the business side of the house, frivolous proposals are stopped, proposals are better prioritized, and what is proposed is more likely to have a true ROI to the business, reducing waste and abandoned projects."
Bob Lewis, president of IT Catalysts and an InfoWorld contributing editor, takes it one step further in suggesting that enterprises should "give the rest of the business a direct stake in the health of the IT organization and the company's technical architecture." It's not easy, Lewis explains, but IT treating the rest of the business as a customer and charging back for its services doesn't really work, either, he contends in a Keep the Joint Running post.