Cost Optimization:

The pressure to remain competitive and invest in digital initiatives is increasing across industries. However, digital initiatives embed information and technology in products and services and are, thus, joint IT-business endeavors. Cost optimization in the age of digital business means looking beyond IT and including business costs in the initiative. It also means that simply cutting the IT budget and taking an approach of waiting until the economic environment is more favorable to make digital investments are flawed approaches to remaining competitive.


Gartner believes that organizations — particularly those in heavily impacted industries (that is, those being disrupted by digital business or under severe economic pressure) — can no longer avoid looking more holistically at cost optimization. IT cost cutting is not a business growth strategy, particularly in the age of digital business.


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What are five key principles to cost optimization?
  • Cost optimization is seldom a one-time event; cutting costs the wrong way will often leads to additional goals and the return of unproductive costs.
  • The ability to optimize costs is directly related to the enterprise perception of IT's ability to delivery innovation and transformation.
  • CIOs seldom have the benchmarks at the time of need to find the right opportunities to pursue while leaving alone the areas where value is being delivered.
  • To cut costs the right way, CIOs often need transparency to defend against disruptive and destructive ventures, like outsourcing, staff cuts and lower service levels for mission critical systems.
  • The goals of "doing more with less" are often achievable, but then CIOs are often asked to "do less with less" unless continuous cost optimization practices are created


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