Go for damage control in tough times: Gartner

IT managers can't escape the pain of tackling budget cuts in tough times, but can minimise the damage, according to Gartner.

Releasing a nine-point plan (follows this article) on how to curtail IT costs in a slowing economy, Gartner said enterprises resorting to staff layoffs to save money may cause harm in the long term.

Research director John Roberts said now is not the time to jeopardise e-business initiatives and to utilise contract staff.

"The challenge for organisations is to have a skills strategy in place so they understand which skills are most important for them to have in-house, as opposed to those which can be purchased on a casual basis." Roberts said.

QR (formerly Queensland Rail) IS general manager Tony Welsh said his organisation has focused on adding value and exploiting sourcing options such as partnering for 'ad hoc or non-core activities'.

QR's IS workforce has been dropped from 520 to 258 over the last 18 months and contractors have been reduced by 86 per cent.

"Along with service and supplier rationalisation we have reduced costs by millions of dollars," Welsh said.

"It is an ideal time for small-scale pilots and learning; to be cautious and selective by focusing on projects with faster payback options."

Foreseeing the economic downturn, Hoyts CIO Patrick Teh said a major cost-reduction exercise was undertaken in the third quarter of last year.

"Although cost savings were hard to come by it was found in reviews of our utility agreements such as electricity and telecommunications; we just did a bit of shopping around which has put us in a pretty good position this year," he said.

Asked if enterprises looking to cut budgets should look to their technology, Teh said 'we must always look to remove the dead wood in our organisations', but it isn't worth weakening IT infrastructure by cutting costs in that area.

"Otherwise, when the real economy eventually takes off, there will be significant catch up," he said.

Teh said IT managers shouldn't go around 'blowing trumpets to the board on big price tag projects' like CRM, e-business, ERM and others, without clear, objective, identifiable benefits.

"Now is the time for consolidation, clear the cobwebs, improve efficiencies to reduce unit production cost," Teh said.

Gartner has advised IT managers to let business units know IT is an enabler of lower costs for the rest of the organisations.

Gartner's nine point plan to curtail IT costs in a slowing economy1. Consolidate networking by moving all of the enterprise's network services into one contract.

2. Evaluate workplace costs. Facilities represent the second highest cost behind labour. Remote access and virtual workspaces can save enterprises millions of dollars.

3. Measure business processes. To avoid cutting people numbers, measure the business processes to create budget adjustments.

4. Rightsize copiers, printers, fax machines and scanners. Evaluate newer technologies such as multifunction printers and new procurement options including cost-per-page service contracts.

5. Renegotiate better conditions and terms for PCs. Price wars are intense in the PC market, so enterprises can negotiate better deals than ever before.

6. Evaluate server and storage infrastructure. Some enterprises may find a mountain of waste if they do an inventory of systems and storage, and then take a look at use levels.

7. Staff management. Just reducing staff can hurt the enterprise in the long run. Human capital management is key to maximising staff on the most important projects during downturns.

8. Reduce costs and keep operations staff. An operations group that has quantified projects to improve the use of IT resources can deliver short-term cost reductions.

9. Implement a total cost of ownership strategy. Most enterprises with $1 billion to $5 billion in revenue can reduce IT support by $4 millin to $6.5 million by using a total cost of ownership strategy.

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