While CIOs and IT decision makers monitor ongoing operations costs, inventory of systems and software tools, they must analyse the current processes to identify inefficacies and redundancies. This enables them to understand the existent situation.
Following this, they must develop a detailed optimisation strategy with specific initiatives to reduce costs. This must also be accompanied by a list of priorities, a list of cost-saving opportunities, as well as set a timeframe and budget for the implementation.
With the cost optimisation strategy in place, one can implement the initiatives. This may include consolidating infrastructure, optimising software licenses, transforming to the cloud, and evaluating potential outsourcing, managed IT services. CIOs and IT decision makers are also advised to consider cutting-edge tools based on AI and ML that provide better observability of applications and infrastructure dependencies.
It is important to monitor and measure results to ensure that such initiatives are effective. This includes tracking key performance indicators, KPIs such as IT spending, operational efficiency, user satisfaction and very importantly, the sustainability goal of the organisation.
CIOs and IT decision makers must promote a culture of continuous improvement within the IT organisation. They should get employees involved and ask them to identify improvement areas while providing them with the resources needed to make changes. The strategy needs to be agile so that adjustments can be made while evaluating the KPIs to ensure ongoing success.
Gartner recommends that organizations take a structured and programmatic approach to cost management. Research shows that organizations that continue to invest strategically in tough times are more likely to emerge as leaders. But sometimes, difficult times demand difficult actions.
Gartner research shows that while most CFOs have been relying on pricing-focused strategies to offset inflation, 39% will zero in on cost cutting if inflation remains persistently high. That will soon turn into explicit demands for rapid cost cutting.
Despite the urgency and pressure, pause and remember that there is little value in cutting or stopping projects or services where costs have already been spent or incurred. Also, you will hurt the organization’s ability to ramp up when conditions improve if you cut in areas where you have already invested or are ready to deliver, and in key initiatives that cannot be easily restarted.