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A Sample Tracking IT Cost Reductions

November 26, 2008

Once you decided to reduce your costs you should track them properly. A useful method for managing and tracking cost reductions is to create a map that contains key IT services ranked by their ongoing cost. An example is shown

Service Cost Avoidance ($k) Cost Saving ($k) Renegotiating or Changing Suppliers? Adjusting SLAs Increasing Automation Re-engineering Business Processes
Data Center Operations 25000 300 Yes No Yes Yes
Global Network Services 200 1,500 No Yes Yes No
PC Help Desk 400 100 No Yes Yes Yes
Inventory Control Systems 0 0 No No No No

For each service, cost avoidance and cost savings can be tracked along with the status of actions that might possibly reduce cost. If updated regularly, this map will provide at a glance the current status and opportunities for cost reduction and serve as an invaluable tool for the IT organization to manage cost reduction in a cohesive, holistic fashion.
In addition to the ways I have identified for managing the IT budget, there are other methods that require a longer-term multiyear time frame to drive cost reduction and typically affect structural issues across the business or IT organization. Changes may include redesigning the complete architecture of the IT infrastructure. Often there will be bubble costs (i.e., non-recurring costs) associated with these multiyear projects, and these costs need to be taken into account when considering the short and long term impact of the structural change

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