KEY POINTS TO REMEMBER | Cost Reduction Strategies


Business applications:
  • Look at cost reduction holistically, considering the overall impact to the business.
  • Impact revenue and top-line growth; innovation is better than cutting costs.
  • Make sure the technology supports your strategy and has a valid business purpose.
  • Have an eye on the future and consider long-term structural and strategic changes that will result in lower overall total cost of ownership.
  • Divide large programs into smaller and more manageable projects.
Technical infrastructure:
  • Change the game by using new technologies to reduce costs.
  • Know the impact of business changes and understand the IT impact.
  • Delay costs if you can, providing you do not cause adverse strategic ramifications.
  • Increase risk levels to match the company risk profile.
  • Consider IT investments to improve the efficiency and effectiveness in IT itself.
  • Simplify and standardize to minimize the diversity of technologies supported.
  • Pay only for what you use.
  • Consider green initiatives for cost reduction.
IT processes:
  • Focus on what is important to the business through governance and prioritization.
  • Increase the minimum ROI requirements to ensure projects are worthwhile. Audit proposed savings to verify that you have achieved the projected benefits and cost savings.
  • Look at the total cost of ownership to consider up-front costs as well as on-going ones.
  • Cut the appropriate costs by focusing on nondiscretionary and hidden IT costs.
  • Identify what you are able to eliminate.
  • Leverage IT financing, procurement, and contractual aspects to maximize assets and negotiate better deals.
  • Ensure that definitions are clear and policies and procedures are supportive of the cost reduction efforts.
  • Plan ahead and have a contingency plan.
IT organization:
  • Manage and control IT to ensure cost effectiveness.
  • Reduce hidden costs so that you can manage, leverage, and reduce total IT costs.
  • Consider alternative delivery models and strategies.
  • Reduce service levels to match rather than exceed business needs.
  • Implement a culture of cost awareness that starts at the top.

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