{"id":44963,"date":"2020-01-17T09:15:36","date_gmt":"2020-01-17T09:15:36","guid":{"rendered":"https:\/\/www.intelligentcio.com\/me\/?p=44963"},"modified":"2020-01-17T09:15:38","modified_gmt":"2020-01-17T09:15:38","slug":"10-ways-for-cios-to-quickly-reduce-it-costs","status":"publish","type":"post","link":"https:\/\/www.intelligentcio.com\/me\/2020\/01\/17\/10-ways-for-cios-to-quickly-reduce-it-costs\/","title":{"rendered":"10 ways for CIOs to quickly reduce IT costs"},"content":{"rendered":"\n

Chris Ganly, Senior Director Analyst, Gartner, talks us through 10 ways CIOs can quickly reduce their IT costs. CIOs can follow these 10 rules when faced with the need to cut IT budgets quickly.<\/em><\/strong><\/p>\n\n\n\n

It\u2019s\noften said that \u2018you can\u2019t cut your way to growth\u2019 but you can cut your way to survival.\nFrom natural disasters and terrorist attacks to a tanking economy or an\naggressive new competitor, there are many reasons why an organisation\nmay need to make immediate cost savings simply to stay in business.<\/p>\n\n\n\n

Gartner\nrecommends taking a structured and on-going approach to cost optimisation.\nResearch shows that organisations\nthat continue to invest strategically in tough times are more likely to emerge\nas winners. But sometimes, difficult times call for difficult actions.<\/p>\n\n\n\n

\u201cWhen\nfaced with the challenge of immediate cost savings, CIOs need to determine how\nto approach cost cutting in the least damaging way to the mid and long-term\nhealth of the business,\u201d said Chris Ganly, Senior Director Analyst, Gartner.\n\u201cDefine the consequences and risks of cutting costs and communicate them to\nstakeholders, despite the urgency and likely short lead time.\u201d<\/p>\n\n\n\n

Cutting\nor stopping projects or services where costs have already been spent or\nincurred are of limited value. Cutting things that can\u2019t be restarted, that have\nalready been invested in or are ready to deliver will hurt when the organisation\nis ready to accelerate again.<\/p>\n\n\n\n

10\nrules for rapid IT cost reduction<\/strong><\/strong><\/p>\n\n\n\n

Assess your IT cost reduction options with these\nrules in mind.<\/p>\n\n\n\n

  1. Target immediate impact.<\/strong> Eliminate, reduce or suspend items that will\nimpact in one, six or even nine months, not in years. Examples include expenses\nthat are incurred and paid monthly or quarterly on a \u2018pay as you go\u2019 basis,\nrather than annually. <\/li>
  2. Reduce, don\u2019t freeze. <\/strong>Focus on costs that can truly be reduced or\neliminated, not just frozen for the current period, only to reappear again\nfurther down the line. <\/li>
  3. Cash is king.<\/strong> Target those items that will have a real cash\nimpact on the profit and loss statement rather than noncash items like\ndepreciation or amortisation. For example, cost savings in cloud services have\na real cash impact, as opposed to reducing on-premises software licenses or\nowned assets like hardware. Selling and leasing back assets can provide real\ncash savings as well. <\/li>
  4. Target unspent and uncommitted expenses.<\/strong> Unless payments (or commitments) can be\nrecovered or prepayments returned the most immediate impact will be on unspent\nor uncommitted payments. Evaluate contracts for renegotiation and termination\nclauses. <\/li>
  5. Address OPEX and <\/strong>CAPEX<\/strong>.<\/strong>\nTypically, operating expenditures (OPEX) are the easiest to impact, but capital\nexpenditures (CAPEX) can also be reduced. Gartner\u2019s IT Key\nMetrics Data shows that 25% of the average IT budget is spent on capital, so\nensure that the complete range of IT spend is considered for rapid reductions. <\/li>
  6. Plan to do it once.<\/strong> Most organisations don\u2019t cut deeply enough the first\ntime, which means they often need to revisit costs and do it again. This creates a destructive and unproductive\ncycle of uncertainty, effort and lost productivity. This is particularly\nrelevant for staff cuts, where cycles of on-going reductions can be especially\ndangerous. <\/li>
  7. Consider sunk costs.<\/strong> When it comes to saving money, it is commonly\nsaid that \u2018sunk costs are irrelevant\u2019 meaning that future spend should be\nconsidered without relation to past spending or \u2018sunk costs\u2019. From a rapid cost\nreduction standpoint this is true, but it\u2019s still worth considering whether the\nsaving will be more than the benefit that can and will be delivered by\ncontinuing. <\/li>
  8. Address discretionary and non-discretionary\ncost.<\/strong> Discretionary\nspending, such as for new projects, additional capability or services, is often\na seemingly easier place to cut. However, even non-discretionary\n\u2018run the business\u2019 expenses such as IT infrastructure and operations can be cut\nby reducing usage or service levels. <\/li>
  9. Tackle both variable and fixed costs.<\/strong> Fixed costs are expenses that remain\nconstant, regardless of activity or volume, such as office rent, subscriptions\nand payroll. For fixed costs, focus on elimination. Variable costs change with\nactivity or volume, for example, telecommunications, contractors and\nconsumables. For variable costs, focus on both reduction and elimination. <\/li>
  10. Inspect accounts.<\/strong> Work with your finance partner to obtain a solid\nview of the expense level detail, such as expense accounts and the key balance\nsheet accounts, including expense accruals and prepayments. Use this view to\nidentify specific cash reductions that will immediately have an impact.<\/li><\/ol>\n","protected":false},"excerpt":{"rendered":"

    Chris Ganly, Senior Director Analyst, Gartner, talks us through 10 ways CIOs can quickly reduce their IT costs. CIOs can follow these 10 rules when faced with the need to cut IT budgets quickly. It\u2019s often said that \u2018you can\u2019t cut your way to growth\u2019 but you can cut your way to survival. From natural […]<\/p>\n","protected":false},"author":18,"featured_media":44966,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5307,4955,139,809,9961],"tags":[674,11116,155,202,5929],"class_list":["post-44963","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-cats","category-industry-expert","category-more-news","category-thought-leadership","tag-budgets","tag-chris-ganly","tag-cio","tag-gartner","tag-opex"],"acf":[],"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/posts\/44963","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/comments?post=44963"}],"version-history":[{"count":5,"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/posts\/44963\/revisions"}],"predecessor-version":[{"id":44969,"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/posts\/44963\/revisions\/44969"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/media\/44966"}],"wp:attachment":[{"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/media?parent=44963"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/categories?post=44963"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.intelligentcio.com\/me\/wp-json\/wp\/v2\/tags?post=44963"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}