IT costs — where next?

CIOs and IT managers are finding it increasingly hard to cut costs as they have done all the obvious things — cut innovative projects, squeezed resourcing to breaking point and in some instances refused to do any non-critical work. But where do you go when there is nothing left to cut? The way forward really has to involve spending money to find out what IT really costs.

IT and the business seem to have no means of effectively communicating about what technology costs, what options are available and what the real risks involved in making significant changes are. There are so many variables when making enterprise IT decisions that it is often too hard to change anything.

Organisations can get caught in a ‘chain of indecision’ as agreement on the best approach devolves into circular arguments with few facts and no process for resolution.

I recently heard a comment: “We get that for free — it is part of an enterprise licence!” The reality is that nothing is for free and important decisions should not be based on erroneous assumptions. Organisations often pay for a high degree of flexibility and scalability in their solutions and end up never using it. The ‘enterprise’ edition of software is bought in the belief that it must have features an organisation will need. It is not uncommon to hear that a system must be 99.95% available — does the person specifiying this truly understand the cost implications? If this is the ability to have 99.95% availability in the face of any conceivable disaster then the cost is very high (duplicate real-time data centres, separate ISP and power grids etc). However, if it refers to the uptime of the system within a hosting site, without concern for major disasters, then it can be 10 to 50 times cheaper! It’s time for organisations to ask ‘what do we really need’ and ‘what do we currently have’ and to better understand the cost structures in order to facilitate quality decision making. IT and the business need to communicate in plain English about costs, value, risk and change so that business decisions are reflected in true IT costs and can then act as an enabler for decisions, change and long-term cost reductions.

Brett McDowall is chief architect, Object Consulting

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