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Sage advice: Ten cost-optimization strategies for enterprise IT

Need to rein in IT costs? These cost-optimization strategies, from centralization to cloud services to BYOD, will turn IT and business leaders into gurus of efficiency.

ORLANDO -- Organizations of all sizes are looking for ways to manage and mitigate the increasing costs of IT resources...

and operations. Cost-optimization strategies aren't a matter of slashing budgets or restricting services. It's about reducing costs for services without reducing those services, and it's a critical notion if a business intends to remain competitive.

Barbara Gomolski, managing vice president at Gartner, disclosed some cost-optimization strategies at the Gartner Symposium/ITXpo held here this week.  

Create a shared-service organization for some (or all) IT services. IT is increasingly seen as a service organization that provides critical business services. However, IT can be fragmented or inconsistent in the way that those services are delivered, which can introduce cost inefficiencies. Establishing one shared IT organization capable of providing all services in a uniform manner can shave costs and improve results.

Centralize, consolidate, modernize, integrate and standardize technologies. IT cost inefficiencies can creep into a business when different services use differing platforms -- often located in different physical places and left to age because the gear is "still working." A comprehensive update program that centralizes gear, increases utilization, deals with appropriate technology refreshes, and deploys consistent gear can save money and improve IT service performance.

"Modernizing is tough to budget for public sector," said an IT manager from a Midwest municipality. "We're always struggling to find creative ways to integrate new technology, but it's always on our radar."

Leverage cloud services. Public cloud providers, including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP), are now well-established and can provide a wide range of IT services that are ideally suited to temporary or short-term use. Organizations can often deploy and scale short-term applications in the public cloud faster and less expensively than a traditional data center -- but cloud deployments also demand careful tracking and management.

Increase IT financial transparency to better manage supply and demand. Part of cost control problems is a lack of insight into what it actually costs to provide IT services, and how much they are really being used. Take the time to evaluate the cost of services and understand the utilization of those services. Then, communicate those cost analyses to business leaders. For example, discontinuing unused or legacy services and retiring or repurposing the related gear can significantly save costs with little impact on the business.

Each division and department has a budget, and each has their favorite applications. We need to make a stronger case [for standardization] to everybody at the table.
CIO at a global manufacturer

Utilize zero-based budgeting on the right cost categories. The idea of zero-based budgeting is that every expense must be justified for the new period, requiring every function or service in an organization to be analyzed for its needs and related costs. Look for some IT services or functions that may be appropriate candidates for zero-based budgeting, which may reduce spend on unneeded categories.

Rationalize and standardize applications. Organizations may fall into the trap of using different applications in different departments to accomplish similar goals. This means IT has to provide more support and maintenance for a greater number of applications -- yet the business really doesn't benefit. Look for conflicting or competing applications and find opportunities to eliminate unneeded duplication to cut costs.

"Politics get sticky when we try to talk standardization," said a CIO at a global manufacturer. "Each division and department has a budget, and each has their favorite applications. We need to make a stronger case [for standardization] to everybody at the table."

Optimize software licensing management and ITAM capabilities. Licensing can be extremely costly, partly because some businesses don't have a clear picture of the licenses that are actually being used. Evaluate software licenses and employ IT asset management (ITAM) tools wherever possible to identify and reduce unneeded licensing, or look for opportunities to negotiate better license terms and costs.

Improve procurement and sourcing capabilities. Identifying and acquiring new hardware and software to support IT services costs money. Exploring and courting new vendors, enhancing negotiation techniques, and making more critical evaluations of technology refresh benefits can all work to reduce the acquisitions and deployment costs for IT.

Invest in "mode 2" capabilities, such as agile and DevOps. Gartner uses the term "bimodal" IT, where "mode 1" represents traditional legacy platforms, mainly to keep the shop open, and "mode 2" represents more agile and risky platforms. Mode 1 activities can be costly in time and effort, so initiatives geared to more agile software development techniques, such as DevOps (mode 2), can potentially save costs for IT.

Re-examine how end-user computing is delivered. Finally, consider the role of alternative user platforms in the business. For example, platforms such as VDI can provide central control, fast spinup and recovery, and greater security for some desktop scenarios when compared to traditional desktop computers with distributed software installations. Similarly, embracing alternate user computing models -- for example, BYOD (laptops, tablets and other mobile devices) -- can possibly offer cost savings for IT.

Stephen J. Bigelow is the senior technology editor of the Data Center and Virtualization Media Group. He can be reached at [email protected] and @DatacenterTT.

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