Accelerate Growth with Smarter IT Cost Allocation

Take a more strategic, programmatic approach to IT cost optimization and cost reduction

IT cost optimization goes beyond cost cutting

To maximize IT cost savings, IT leaders should pursue cost optimization through both function-specific and enterprisewide programs. Cost optimization is a business-focused, continuous discipline intended to maximize business value while reducing costs.

We’ve compiled smarter IT spending best practices into a customizable roadmap to help CIOs and IT leaders avoid common pitfalls that cause failed cost optimization initiatives and help them plan and execute an effective cost optimization and cost reduction initiatives.

Download the roadmap for strategic cost optimization

Maximize your cost optimization opportunites by successful cost reduction and smarter IT spending

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    The results in the past couple of years have just been amazing. We are two years ahead of schedule on our cost optimization commitments and essentially declared victory on that chapter of the program this year — and the original goal was 2021.

    Dan Krantz

    VP, CIO Keysight Technologies

    How Gartner helps you achieve strategic cost optimization

    Tools

    • Tools to execute your cost management strategy
    • Unbiased advice to rightsize external technology spend through the entire buying cycle
    • Insights on technology spend management, contract practices and long-term risk mitigation

    Research

    • Assess the impact of your cost plans across key decision factors/criteria
    • Evaluate the trade-offs between the benefits, costs, risks and viability of different cost control initiatives

    Experts

    • 2,250 + research and advisory experts who challenge conventional wisdom on cost and growth
    • Wide coverage of the top challenges, trends and priorities across industries and geographies

    Community 

    • Real-world advice from peers in live cohorts and virtual discussion boards
    • Strategic guidance on the trends shaping your function, company performance and personal leadership

    Achieve Your Cost Management Priorities

    Cost optimization questions Gartner can help answer

    Cost optimization and reducing cost are two different approaches to cost management. While a better approach is to move from a mindset of cost cutting to one of cost optimization, there are a few key differences between the two:

    Implementing budget cuts  

    Cost cutting leads enterprises to reduce cost from every part of business (e.g., all budgets will be cut by 15%), often creating a disproportionate impact on capital spending compared to operating spend. Cost optimization focuses on identifying parts of the enterprise that should be cut dramatically and investing in parts that will provide the greatest near-term positive impact (e.g., digital investments).

    Creating business value

    For cost reduction, the objective is to simply implement budget cuts, generally activities that are easier to defer or cut. This approach does not create business value and results in the enterprise being hampered. Cost optimization focuses on key business processes and capabilities to identify opportunities for cost optimization. Enterprises can often achieve more lasting improvements in cost efficiency (and value) when they “optimize” by business process.

    Organizations often cut costs only in times of emergencies and without a clear plan or framework. Worse, leaders optimize costs in silos, isolating adjacent stakeholders who have their own, equally significant objectives.

    Cost optimization helps leaders uphold larger business goals by combining practices and experiences of all business units. It lets you prioritize cost optimization opportunities by value, not just the potential to reduce spending.

    When faced with challenges, CIOs need to determine how to approach cost-cutting in the least damaging way to the medium- and long-term health of the business.

    While Gartner recommends a structured and programmatic approach to cost management, business and market pressure often dictate the pace to be rapid or immediate, more of a “cost-cutting” way.

    CIOs facing immediate or short-term pressures still need to take a thoughtful approach to IT costing and cost-cutting, ensuring that they strive to mitigate the risks and minimize the longer-term impact on the organization.

    As organizations emerge from the economic headwinds of 2020, organizations are adapting their cost optimization efforts to create efficiencies while enhancing value in the following areas: 

    Budgeting and Resource Allocation — How to budget intelligently to maximize staff productivity and modernize functional processes while protecting sources of value

    Growth Investments — How to adopt investment and planning processes that accelerate new capabilities to support the broader organization’s growth and digitalization

    Cost Cutting — Best practices for generating sustainable cost savings and eliminating spending in areas no longer fit for the post-pandemic world

    A $22B global pharmaceutical company spanning seven autonomous verticals recognized the opportunity to optimize spending toward growth and agility. With Gartner support, the client was able to: 

    • Created line of sight into $30-75M in cost optimization opportunity

    • Accelerated rationalization outcomes across all verticals — a company first

    Read the full case study here.

     

    Other priorities Gartner can help with

    Accelerate Your Digital Transformation Journey
    Master Today’s Technology Trends
    Communicate IT’s Business Value

    Gartner is a trusted advisor and an objective resource for more than 15,000 enterprises in 100+ countries.

    Learn more about how we can help you achieve your mission-critical priorities.