Main Image

The IT cost reduction conundrum

Many organisations are under intense pressure to cut IT costs, but many are struggling to do so without impairing future business. Over the last few years there has been substantial investment in IT infrastructure on the basis that expansion would continue for the forseeable future. Now the credit crunch has put a stop to all of that and many IT projects will be put on ice.

Recession busting ideas

Virtualisation is seen by some as the panacea when it comes to IT cost reduction. But it is far from being a no-brainer and you should be careful as you could end up paying more money in extra software licences than you save in server consolidation.

Sourcing IT more effectively is often overlooked when it comes to finding a way to save money. Thousands, if not millions, of pounds can be saved by simply improving the way organisations source IT products and services. In many organisations, individual departments often buy the IT equipment they need on an ad hoc basis, without looking to see what other departments already have. As a result businesses can waste money on extraneous IT equipment and software licences. Centralised purchasing will stop this waste by consolidating purchase requests and by buying more effectively.

Find cash releasing projects. Some older equipment may cost a lot more to run than buying new equipment which will often come with long maintenance-free warranty periods. Many organisations also have huge assets tied up in data centres; you could look at outsourcing them to bring cash into the business and to reduce on-going costs. Focus on immediate return projects; don't engage on any new projects unless they have a fast pay-back. Shrink the number of your IT partners; the more wallet share you give to an IT supplier, the more likely it is that you can negotiate better discounts and drive down your total costs.

Subscribe to the Negotiation Power Forum, and leverage the knowledge of other purchasing professionals to improve your vendor negotiations.