Ten steps to get a grip on your IT spending

Working smarter, not harder is the key to cutting the corporate IT budget. Simplify your department and take on the right projects to reap the financial benefits.

Phillip Everson150

Working smarter, not harder is the key to cutting the corporate IT budget. Simplify your department and take on the right projects to reap the financial benefits.

Do less

Do fewer projects. Work with business sponsors to verify that all current projects are either adding value to the business that someone outside of IT has committed to, or are 100% necessary to continue to deliver existing services. If neither, cancel them.

Do the right projects

Agree an architectural roadmap with the business. Ensure that all of your projects are making best use of existing systems and developments. If proposals or projects are not in line with this multi-year view do not start them, and stop them if they are in flight.

Test more

At least 50% of the cost of most IT departments is in service delivery. The costs here are the costs of failure as your helpdesk and application people fix software that was not tested as well as it should have been before it went live. Higher quality software costs less to run.

Fix root causes

Find root causes and fix them at once. Take the top 10 problems coming in to IT operations each month and have the IT management team investigate the root causes. Do not deal with the consequences of the failure, as many people do, but find what actually caused it. Then ensure someone is held responsible for fixing it.

Reject unrealistic SLAs

Do not accept service level agreements (SLAs) from the business that are too high. If they are too high and you fail them most months, IT management will be constantly firefighting and resolve nothing.

Set SLAs so that you expect to fail a small number each month; get IT management to find out why and fix the root cause. When you have few failures, increase the service levels.

Also, do not accept SLAs that are too low. If they are too low, there is no motivation to improve. Without a focus on better quality and doing things better, costs will inflate.

Tighten up licensing

Ensure you are correctly licensed and that your software contracts are negotiated in a commercially aware fashion. Make sure that you have the right number of software licences and maintenance agreements for all of the software you are actively using, and no more. Many enterprise-class software licences sit on people's desks unimplemented.

Do an infrastructure audit

Know how many servers you actually use and ensure they are on appropriate levels of maintenance. Track the payments back to individual invoices. Most organisations have more servers on maintenance than they use and often cover more servers than they actually have.

Fight for simplicity

It is in the nature of many IT organisations to produce over-engineered solutions. Simplify them to reduce development costs and limit support cost increases.

Introduce time reporting

Ensure that you know who in development is waiting for the next project. Having some staff waiting for the next project ensures IT can react to business needs in a sensible period. But make sure you know how many people this is and that it is not too large.

Without time reporting, the natural approach is to staff more people on projects where they are not 100% effective. Then, when a new project arrives, there is no resource available and consequently there are demands for more staff to be hired.

Review your sourcing strategy

Do you have the right balance of permanent, contract, outsourced and temporary staff? Review what all of the people are costing on a fully loaded cost per day basis. Are they adding value at that level?

Phillip Eversonis is partner in consulting at professional services firm Deloitte

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