It Metrics It Cost Optimizat 232994

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IT Metrics: IT Cost Optimization: VerticalIndustry PerspectivesPublished: 18 June 2012

Analyst(s): Kurt Potter, Barbara Gomolski

Quantitative and qualitative benchmarking is a necessary ingredient to betterIT cost optimization. This research explores vertical industry metrics andvertical industry trends related to IT cost optimization.

Key Findings■ IT organizations that believe they cannot cut more IT spending are often unsuccessful at

delivering business transformation.

■ To succeed with multiyear IT cost optimization programs, IT leaders must be willing to radicallychange the IT architecture or systems they created over the past decade. IT leaders must alsobecome adept at using IT to grow revenue and cut costs simultaneously.

■ Only 2% of enterprises say they are "done" with IT and business cost optimization. The GartnerIT Key Metrics Data shows that, among those enterprises that are reducing IT spending, thetypical reduction has been 10% a year, or 35% (compounded) since 2009.

■ Cost optimization tactics tend to be similar across vertical industries. In terms of costoptimization, vertical industry differentiation is seen in how enterprises apply informationtechnology to business processes to drive improved outcomes.

Recommendations■ Enterprises should assume that IT cost cutting will occur every year indefinitely.

■ Use the percentages for IT spending reduction in this research as high-level planningassumptions for individual cost optimization programs. However, a thorough planning andprioritization process for cost optimization is the best way to estimate opportunities and riskstogether.

■ If enterprise stakeholders and IT leaders were not satisfied with prior approaches to IT costoptimization, improve IT cost transparency to drive a more successful second attempt.

Table of Contents

Analysis..................................................................................................................................................2

The Status of IT Cost Optimization Programs...................................................................................3

The Facts: Average IT Spending Reductions, by Year and Vertical Industry......................................5

IT Cost Optimization by Vertical Industry...........................................................................................8

Banking, Financial Services and Insurance..................................................................................8

Construction, Materials and Natural Resources..........................................................................8

Energy and Utilities.....................................................................................................................9

Government and Higher Education.............................................................................................9

Healthcare Providers................................................................................................................10

Media and Entertainment..........................................................................................................11

Pharmaceuticals, Life Sciences and Medical Products..............................................................12

Professional Services................................................................................................................12

Retail and Wholesale................................................................................................................13

Technology and Telecommunications.......................................................................................13

Transportation..........................................................................................................................13

Moving Beyond IT Cost Optimization..............................................................................................14

Recommended Reading.......................................................................................................................14

List of Tables

Table 1. Average IT Spending Decline, 2009 to 2012, Among Enterprises Cutting Spending, and

Average IT Spending Change, 2009 to 2012, for All Respondents, by Industry.......................................6

List of Figures

Figure 1. Status of Business and Cost Optimization Programs...............................................................4

AnalysisMany IT organizations are entering their fifth year of cost optimization, while others are taking ayear-by-year approach, adjusting their IT spending levels accordingly. Gartner clients have a keeninterest in what other enterprises are doing in their vertical industry to cut costs — and want toknow by how much. These forms of benchmarking are vital to building the correct planningassumptions around IT cost optimization programs, boosting confidence with IT staff andstakeholders, and allowing more of IT leadership's time and attention to be focused ontransformation and innovation.

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Industry "matters" when CIOs and others are considering the biggest opportunities for "IT" costoptimization. Anecdotal evidence suggests that enterprises with the largest IT cost reduction goalsare often the ones whose strategy, goals and delivery are least aligned with that of the business.Frequently, these same organizations are unable to clearly articulate how their activities contributeto positive business outcomes. These enterprises tend to focus too much on the legacy IT systemsthey manage, as opposed to enabling or transforming the enterprise.

The IT organizations that have been the most successful at meeting IT cost optimization targetshave been willing to radically change the architecture or systems they created over a decade or so,because these legacy environments are no longer appropriate, given the economic environment orbusiness model shifts. Every enterprise and industry changes over time, and failure to accept thesechanges can often be traced back as the root cause of enterprise decline, unwanted mergers andacquisitions, and lower profit margins.

To help the enterprise change, IT leaders and organizations must be willing to change as well, anddeliver the new benefits the IT organization needs "now" or three years from now. Delivering thebenefits of the past will doom the enterprise to low market share status within its vertical industry,and guarantee that changes will be imposed in the form of across-the-board cuts and new ITleadership. Although the IT organization is almost never solely to blame for the inability to cut coststhe "right" way and deliver the innovation and transformation the enterprise needs, a leadingindicator of effectiveness is the ability to cut costs when the business needs to. IT organizationsthat are able to cut costs when the business requires it are the same enterprises that can deliverinnovation and transformation as needed. Simply put, if you can't cut costs by a lot, you can'tdeliver innovation by a lot.

For some enterprises and vertical industries, market conditions make successful cost optimization(as well as innovation with IT) more likely. Specifically, higher revenue growth and profit margins insome industries make it acceptable to take more risks, fail with more investments and still prosperas an enterprise. The financial services industry, for example, has traditionally enjoyed high profitmargins and high risk latitude regarding IT investments. Additionally, those industries with higherprofit margins also tend to spend more on IT, meaning that IT cost optimization can often take placewithout cutting "essential" resources.

This research includes data from Gartner's IT Key Metrics Data that shows, by vertical industry, theaverage IT spending (operating expenditure [opex] plus capital expenditure [capex], no depreciationor amortization) cuts for the past four years among those enterprises that were cutting IT budgets.We also provide examples from our work with clients as to how large enterprises cut IT andbusiness costs, and other analysis by vertical industry. Many of the IT cost optimization techniquesare not unique to a vertical industry; they may be used as best practices in cost optimization acrossall industries.

The Status of IT Cost Optimization Programs

Since the dramatic economic changes that occurred in 4Q08, few enterprises around the worldhave been exempt from some sort of IT budget reduction, and many organizations have beencutting IT budgets each year since then. As shown in Figure 1, few enterprises are "back to normal"

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or experiencing the benefits of an expansion economy. In a recent Gartner webinar poll, 52% ofrespondents said they have completed IT cost optimization, and are now shifting their focus towardbusiness optimization; while 46% of respondents said they are just getting started with IT costoptimization. Only 2% of enterprises stated that they are done with IT and business costoptimization, which suggests that "optimization" is taking hold as a continuous program, regardlessof enterprise or industry.

Figure 1. Status of Business and Cost Optimization Programs

Done in IT and business

2%

Done in IT; moving to business optimization

52%

Just getting started46%

Source: Gartner (June 2012)

The 2% of enterprises that stated they are "done" with IT and business cost optimization may beenterprises that have "stopped moving" due to cash-flow crises. This is not to say that costoptimization is the sole indicator of enterprise virility. However, we believe that enterprises that willbe successful in the future are those that can grow revenue and cut costs simultaneously. Waitingfor a critical enterprise or economic event to "optimize" is no longer an option, given the pressurefrom competitors, investors, customers and other business stakeholders.

CIOs who believe they are leading a completely optimized organization should bear in mind thatdata collected from thousands of Gartner Consulting benchmarking engagements suggests thatthere is still a large cost gap between best-in-class performers and average performers across allareas of IT. For example, in the storage domain, our data shows that there is a 44% difference inthe cost per terabyte of storage between best-in-class and average-performing IT organizations.So, unless IT leaders are confident that their organization is best-in-class across all areas of IT, theyshould assume there are still opportunities for cost optimization within IT.


The Facts: Average IT Spending Reductions, by Year and Vertical Industry

In a perfect world, IT spending reductions would be identified using a rigorous prioritization processbased on the recommendations of a cross-functional team of IT and business stakeholders.Reductions in IT spending would be made in business services that are least likely to harm theenterprise. However, the ad hoc nature of cost optimization programs has often resulted in costcutting that is neither transparent nor linked to business impact. Table 1 shows the average declinein IT spending per year among those enterprises that cut their IT spending during the past fouryears, as well as the average change in IT spending for the industry as a whole. It's important tonote that this cost-cutting data does not represent the actions of the industry as a whole — just theactions of organizations within the industry that reduced IT spending since 2008. It is also worthnoting that this data captures the majority of IT expenses, but some costs are excluded (see: "ITMetrics: Definitions for IT Spending and Staffing: What's Included and Excluded").


Table 1. Average IT Spending Decline, 2009 to 2012, Among Enterprises Cutting Spending, and Average ITSpending Change, 2009 to 2012, for All Respondents, by Industry

Industry 2009 2010 2011 2012

Four-YearTotal

Four-YearCompounding

AverageITSpendingChange2009-2012

All Industries −11.0% −10.3% −8.6% −10.3% −40.2% −34.6% 2.7%

Banking andFinancialServices −11.9% −11.6% −10.9% −12.1% −46.6% −39.0% 3.5%

Chemicals −10.0% −10.8% −3.3% −5.0% −29.1% −26.3% 2.2%

Construction,Materials, andNaturalResources −11.5% −13.3% −9.3% −11.4% −45.5% −38.4% 3.2%

ConsumerProducts −5.5% −3.6% −11.0% −9.8% −29.9% −26.9% 3.2%

Education −7.7% −15.7% −6.5% −9.9% −39.8% −34.5% 2.1%

Energy −18.5% −10.1% −9.9% −18.8% −57.3% −46.4% 3.3%

Food andBeverageProcessing −9.3% −12.1% −11.3% −8.2% −41.0% −35.1% 3.4%

Government —National/International −10.8% −9.4% −8.3% −10.0% −38.5% −33.3% 1.6%

Government —State/Local −10.8% −8.5% −8.7% −8.7% −36.7% −32.0% 0.9%

HealthcareProviders −9.7% −9.6% −10.0% −13.6% −43.0% −36.6% 4.3%

IndustrialElectronics andElectricalEquipment −15.8% −8.2% −7.8% −10.3% −42.2% −36.2% 0.5%

IndustrialManufacturing −10.1% −11.0% −8.3% −8.6% −38.0% −33.0% 2.5%


Insurance −8.8% −9.9% −6.4% −7.4% −32.6% −28.8% 2.8%

Media andEntertainment −10.7% −7.6% −8.5% −9.9% −36.7% −32.0% 2.1%

Pharmaceuticals,Life Sciences andMedical Products −12.6% −9.1% −8.7% −10.1% −40.5% −34.8% 2.8%

ProfessionalServices −9.9% −10.0% −10.6% −8.0% −38.5% −33.3% 3.2%

Retail andWholesale −2.6% −7.3% −8.7% −13.2% −31.8% −28.5% 3.5%

SoftwarePublishing andInternet Services −12.3% −11.1% −5.5% −6.2% −35.2% −30.9% 4.3%

Telecom-munications −14.5% −12.9% −10.9% −12.4% −50.7% −41.9% 0.5%

Transportation −8.4% −13.3% −8.3% −9.7% −39.6% −34.2% 2.5%

Utilities −12.4% −10.4% −6.5% −15.8% −45.1% −38.2% 2.2%

Note: In 2010, Gartner changed the vertical industry taxonomy for IT spending and staffing metrics. Starting in 2010, the averagesshown are consistent with the new or current vertical industry segmentation. Thus, the 2009 average declines in IT spending arebased on best fit with the new or current vertical industry category.

Source: Gartner IT Key Metrics Data (June 2012)

IT leaders can take the four-year total reduction as the maximum allowable for radical costoptimization programs over the three- to five-year planning horizon. As an example, a hospitalsystem in the healthcare provider vertical industry segment could set a goal of reducing its ITspending by 43% over the next four years due to changes in its industry, a recent electronicmedical records implementation (after which costs are typically reduced significantly) andimpending enterprise merger activity. (Taking into account mathematical compounding issues, whilethe total IT spending reduction over four years was 43%, the actual reduction was 37% using ahypothetical baseline of 2008.)

Although IT spending and budget reductions should be lined to strategic planning and governanceprocesses, these figures could be used as leadership goals ("We think this is about right," or"Because we can't estimate well, we will use these figures as a proxy") to move forward on costoptimization. Depending on the vertical industry, the compound IT spending decline over four yearsranges from 26% to 46%, with the average for all industries at 35%.


From an individual vertical industry perspective, the three industries that cut their IT spending themost from a compounded percentage perspective were energy (−46%), telecommunications(−42%), and banking and financial services (−39%). Among enterprises that reduced spending, thethree industries that cut their IT spending the least were chemicals (−26%), consumer products(−27%), and retail and wholesale (−28%).

IT Cost Optimization by Vertical Industry

Shown below are cost optimization examples segmented by industry groupings. As stated earlier,many of these examples can be applied to any and every vertical industry, but there are examplesthat will be particularly applicable to a specific industry.

Banking, Financial Services and Insurance

Banking and financial services organizations have barely recovered from the global recession, socontinued economic uncertainty and less stimulus from governments are keeping cost optimizationtop-of-mind in this sector. As traditional high spenders on IT, financial services firms have foundrich IT cost optimization opportunities in data center consolidation. Cost opportunities still remainfor this sector in legacy migration and application rationalization. Specific examples we haveobserved in this sector include:

■ Creating a cross-functional team charged with looking at how buying next-generationtechnologies now can reduce costs in the long term

■ Using data from ERP systems to better understand enterprise financial risk; focusing onimproved IT service portfolio management and reducing IT staff via attrition

■ Benchmarking internal chargeback rates with external market to set goals; renegotiatingcontracts for desktop and help desk services; starting a new captive operations center toreduce IT services delivery risk and increase scale

■ Harvesting the rich opportunities for application rationalization, with an eye towardconsolidating costly, homegrown systems

■ Adopting multiple IT architectures and delivery models; one for commoditized, shared services;one for mass-customized services (e.g., ERP); one for highly customized services

■ Investing in improved IT financial transparency to identify and eliminate unused or underutilizedassets

Construction, Materials and Natural Resources

This sector, which generally spends conservatively on IT, has seen savings in consolidatingoperations, largely from far-flung locations. Specific examples we have observed in this sectorinclude:

■ Renegotiating and consolidating mobility contracts, and using alternative delivery models foroffice productivity software


■ Creating a new planning framework based on the theme of converting cost to profit, improvingthe maturity of chargeback, and considering moving IT to a profit center business model

■ Setting new IT spending goals based on external benchmarking, and closing mines that are notprofitable, thus reducing IT spending

■ Performing a full IT hardware and software asset inventory on business units that had beenacquired but were largely left to operate independently (which meant running duplicate ITsystems)

■ Focusing on increasing the productivity of "revenue-generating" employees, such as engineers,through improved collaboration and document management environment

Energy and Utilities

Significant challenges exist in the utility sector, including high energy prices, ongoing environmentalsensitivity, and the search for successful business models that will address changing policymakerattitudes and consumer expectations. Atop all this, the fallout of the global financial crisis creates anadditional challenge for utilities trying to generate anticipated shareholder returns in uncertainregulatory settings, while protecting the security of the critical generation and delivery infrastructure,and maintaining system reliability with aging physical assets. From a cost optimization perspective,specific examples we have observed in this sector include:

■ Outsourcing infrastructure and application management; focusing on IT cost per user metrics;initiating an IT performance management scorecard

■ Exploiting business process outsourcing, thus removing many IT requirements; creating sharedservices; using business value metrics for external benchmarking

■ Tightening IT demand governance and overhauling IT portfolio management practices;outsourcing contract renegotiation; evaluating per unit costs and understanding the relationshipbetween IT volumes, market price and demand

■ Revisiting business and IT accounting practices (especially asset depreciation life cycles) todiscover tactics for shaving material expenses off the IT budget

■ Increasing the size of new shared IT service organizations as an alternative to additional IToutsourcing contracts

Government and Higher Education

Continued budget pressures in most jurisdictions, combined with increasing worries over sovereigndebts, social tensions and political instability, create a context where balancing short-term costcontainment and the ability to fulfill statutory obligations in the long term becomes a majorchallenge. Specific cost optimization techniques we have observed in this sector include:

■ Mandating consolidation of data centers; improving program management; creating shared ITservices; implementing a "cloud first" policy


■ Benchmarking run-the-business IT spending, and setting two-year run cost reduction targets of5% to 10%, based on benchmarks

■ Ensuring that service-level agreements (SLAs) are in place for all services, and, whenappropriate, negotiating lower SLAs with stakeholders

■ Implementing a seven-year plan for nationwide shared services to include federal and localgovernment IT

■ Deploying virtualization-ready applications, consolidating servers, and reorganizing stateagencies to foster better use of shared IT services

■ Undertaking large benchmarking initiatives and using the data to justify and estimate the valueof continued shared services and selective outsourcing

■ Shifting from people-based to IT-based citizen service channels via business process re-engineering

■ Consolidating commodity procurement management practices

■ Mandating business cases and ROI for projects; mandating shared IT services for commonservices; improving IT financial management practices

Healthcare Providers

Healthcare has been one of the sweet spots for IT spending these past few years. While spendingon IT has risen in this sector, large health systems are under pressure to reduce costs. A commonapproach is to standardize and consolidate IT services that were previously decentralized. Specificexamples we have observed in this sector include:

■ Rationalizing application portfolio; renegotiating outsourcing contract rates for infrastructureservices

■ Improving project management office (PMO) procedures for calculating ROI and benefitsrealization; reducing IT spending related to future hospital closures

■ Charging back for IT to control incidental demand from electronic health recordsimplementation and to share the cost of implementation

■ Evaluating desktop outsourcing; reorganizing IT procurement staff to improve outcomes andget better economies of scale

■ Increasing the maturity of IT cost transparency; increasing the number of relationship managersto better focus discretionary IT investments

■ Switching from an asset view of IT costs to a business-based view by creating an IT serviceportfolio

■ Segmenting IT services into business-strategic pillars and business capabilities to justify newspending and protect current IT spending


Manufacturing

Most manufacturers are anticipating more economic uncertainty, and are keeping theirorganizations lean and focused while they scan the global landscape for growth opportunities. Tostay competitive, manufacturers must extend their strategic horizons beyond the short-termeconomic disruptions and focus on technologies that enable them to anticipate demand among anincreasingly sophisticated ecosystem of retail customers, consumers and shoppers. In terms ofcost optimization, here are some of the techniques we have observed in this sector:

■ Instituting a policy for global ERP application standards; outsourcing application hosting to acloud-based provider

■ Reimplementing ERP with strict guidelines about customization

■ Using food and beverage IT spending benchmarks for low-growth business units, usingconsumer products benchmarks for main business to protect growing business units

■ Creating transparency and opportunities via better benchmarking and IT performancemanagement scorecards

■ Supporting large culture change in IT by holding an global IT management summit

■ Using chargeback as a demand manager to reduce costs; focusing on business consumptionmanagement and accountability; focusing on benchmarking IT financial and operational costmetrics

■ Divesting low-growth product lines, business units and global regions; setting new goals for ITspending levels based on external benchmarks

■ Cutting IT budget by 20% in one year; ending ERP implementation early; moving the businessanalytics team out of the IT organization

■ Benchmarking the percent of spending devoted to application development and reducing toindustry benchmark; shrinking spending on applications maintenance; using SaaS for non-coreapplication projects

■ Reducing the number of global data centers by 90%; reducing number of applications by 50%;changing HR policies to prompt more turnover of IT staff

■ Achieving 20% reduction in IT spending, then moving to chargeback to provide fact-basedinformation to cut an additional 10%

■ Creating an IT service portfolio to manage demand and show value; centralizing common ITservices

Media and Entertainment

The media business is built on technology, so its leaders need to cope with digital disruption andtransform their businesses to align with consumer empowerment. Maturing technologies anddiverse consumer behaviors mean media sectors and their technology enablers will emphasize


driving real business value from multiplatform distribution, social media and social networking. Interms of cost optimization, some specific techniques we have observed in this sector include:

■ Enhancing the IT finance department with more staff, better role definition and ITIL certification

■ Creating data architecture program governance; renegotiating contracts with external storageproviders; renegotiating desktop software licenses

■ Establishing an IT performance scorecard; reducing IT staff, improving the maturity of ITportfolio management

Pharmaceuticals, Life Sciences and Medical Products

With many life science companies having restructured, consolidated and/or pursued externalresearch models, the industry is adjusting to relative low growth in sales and an intense competitivemarket. The focus has turned to leveraging existing investments and maximizing their return. IT isplaying a critical role in connecting business and technology capabilities and rationalizing low-valueapplications. In terms of cost optimization, some specific techniques we have seen used in thissector include:

■ Creating shared IT services for IT infrastructure; consolidating data centers around a "follow thesun" service strategy

■ Implementing lean or Six Sigma processes in IT, which includes eliminating unnecessarymeetings and reducing the number of individuals needed to sign off on decisions

■ Reducing the number of applications; performing external benchmarking in support ofdivestiture activity; creating separated funding governance for traditional IT and IT-enabledbusiness needs

■ Creating a center of excellence for IT cost management that is charged with ensuring thecontinuous improvement in efficiency of IT services

Professional Services

Professional services firms have not been immune to cost optimization, although they haveweathered the economic downturn fairly well. Their efforts concerning cost optimization often focuson consolidation and making revenue-generating employees more productive. Some specificexamples of cost optimization techniques we have seen in this sector include:

■ Abandoning programs to create global standards for ERP; discontinuing the role and office ofthe CTO; experimenting with user-provided PCs

■ Rationalizing mobile phone contracts

■ Reorganizing and consolidating central IT with business delivery for IT to share best practicesand reduce costs

■ Reducing the number of engineering applications; cutting IT travel and training by 75%;divesting segments of the business and the IT specific to that business


Retail and Wholesale

As the global economy continues to fluctuate and retail channels proliferate, the retail value chainmust respond to a multichannel, brand-neutral and value-driven consumer, while driving down costand improving service. In terms of cost optimization, specific techniques we have observed in thissector include:

■ Replacing legacy applications

■ Reducing IT spending as a percentage of revenue by 25% over two years; optimizing datacenter operations; focusing on nonoutsourcing expense categories

■ Making benefits realization the focus of a large ERP upgrade; reducing IT contract labor;outsourcing data networks

Technology and Telecommunications

Telecom carriers in the U.S. and Asia/Pacific are cautiously optimistic in 2012, while Europe isfacing a mix of challenges (slow growth and increased competition). Specific cost optimizationtechniques we have seen in this sector include:

■ Creating business value metrics to align all IT-enabled business initiatives; benchmarking ITservices; improving application development processes

■ Increasing the capitalization threshold from $5,000 to $10,000 to expense many new projectsinstead of capitalizing them

■ Reducing onshore hiring for engineers; increasing captive center staffing; increasing businesscase requirements for project approval; mandating better cost estimates for new applicationsas a prioritization criteria

■ Reducing IT capital budget by 75% for two years; focusing on finishing existing legacymigration initiatives; examining data architecture for remaining opportunities

■ Focusing on legacy migration; moving operational responsibility for business operationaltechnology to the COO

■ Reducing contract labor by hiring key staff full time; taking risks with software maintenancecontracts; engaging in mainframe legacy migration

Transportation

A changing global supply chain is forcing transportation companies to rethink their fundamentalbusiness models and investment priorities, and re-evaluate their capacity for change. Executivesacross all modes of transportation will need to streamline internal processes and invest inautomation and IT to keep rising costs under control. Cooperation, mergers and acquisitions willalso create opportunities for streamlining operations and realizing industry cost savings. In a worldof fluctuating oil prices and increasingly extreme weather conditions, executives will also need toimprove the reliability and flexibility in their supply chains. Finally, many carriers that have gone


through a protracted period of defensive cost cutting over the past few years have emerged in 2012with a new imperative to start strategizing again and looking at the big picture relative to growth.But in doing so, it is clear that they want to determine how they can grow, be healthy and beprofitable without having to build back many of the costs they have already eliminated. In terms ofcost optimization, some of the techniques we have observed in this sector include:

■ Triangulating interdependencies between three key goals: flat IT spending as a percentage ofrevenue, cutting "run the business" IT spending by 10% a year, and rebalancing the "run versuschange the business" percentages from 70%/30% to 50%/50% indefinitely.

■ Updating external IT benchmark from 10 years ago; focusing on alignment to strategicenterprise key performance indicators

■ Focusing on communicating IT value and benefits via annual report for IT; reducing applicationdevelopment contract staff; legacy migration

Moving Beyond IT Cost Optimization

Much of the information in this research is from a historical perspective: what enterprises did lastyear to cut costs and by how much did the average enterprise cut. Far more important for thetypical IT organization is to implement and/or mature the IT business management "capabilities"that will provide the analytics, demand management and processes to not only cut costs "ondemand," but to better justify new projects, prepare for externalization and reinsourcing of ITservices, justify budgets, and defend them as well. These capabilities, which can be considered"Round 2" of cost optimization, are encapsulated in the Gartner model for IT cost transparency (see"IT Metrics: IT Cost Transparency Action Plan, Definition and Performance Metrics to Start theJourney"). Those that have increased their IT cost transparency maturity in response to IT spendingreduction will find that their work is not over. New risks will be realized by many enterprises and ITorganizations because they did not cut costs the right way or the actions they took to cut costshave future hidden consequences. This "Round 3" of IT cost cutting is best described as the neweconomics of IT (see "IT Metrics: New Economic Rules of IT Spending and Staffing Metrics").

Recommended ReadingSome documents may not be available as part of your current Gartner subscription.

"IT Key Metrics Data 2012: Index of Published Documents and Metrics"

"CFO Advisory: Enterprise Cost Optimization; Overview"

"During the Euro Crisis, Fight IT Cost Optimization Fatigue With These Saving Strategies"

"IT Cost Optimization Round 2: Strategic Shifts and Doing Less With Less"

"Return to Growth: Moving IT to an Offensive Posture for Better Business Alignment"

"The Four Levels of Cost Optimization"


"A Checklist for Cost Optimization"

"Cost Cutting in IT to Cope With Economic Slowdown"

"Decision Framework for Prioritizing Cost Optimization Ideas"

"Balancing Short-Term and Long-Term Cost-Optimization Efforts"

"IT and Business Performance Goals for Cost Optimization"


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It Metrics It Cost Optimizat 232994

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