Research by The Hackett Group® found that as the global recession began in 2008, major companies were able to control IT costs primarily by cutting discretionary spending. Common measures taken as part of this approach to curbing IT costs included technology spending cuts, often in the form of postponement of planned upgrades; termination or narrowing of outsourced services; reduction of internal and contractor staff; and cancellation of new projects. While such actions were to be expected given the severity of the economic downturn, in most cases these measures do not provide a sustainable means for controlling IT costs once the recession gives way to recovery and growth.
To control IT costs in a manner that accommodates growth without sacrificing service quality, companies will need to pursue two broad avenues of reform. The first is optimization of service delivery structure and process, and includes measures such as outsourcing/offshoring, shared services deployment, continuous process improvement programs, and supplier management. The second broad path to sustainable IT costs control is IT demand management, encompassing IT investment portfolio management as well as methods to create price signals to consumers of IT services, such as chargebacks, cost allocation, and service catalogs. The Hackett Group’s research into the use and effectiveness of sustainable IT costs control measures at major companies around the world found that offshoring/outsourcing has the greatest impact on the total IT budget, and that demand management based on price signals is a promising but currently under-used IT costs control strategy.
The Hackett Group: your partner in managing IT costs
As a leading global strategy and operations consulting firm, The Hackett Group offers an array of services to help your organization better control IT costs. We deliver deep expertise and experience in process benchmarking, service delivery design, best practice implementation, and change management. We offer hands-on consulting for all aspects of IT operations, as well as an executive advisory program specifically tailored to IT executives. The Hackett Group can also help you get the most out of specific technology projects such as SAP implementation or Oracle implementation, or technologies to support enterprise performance management.
The hallmark of The Hackett Group’s consulting services and advisory programs is a deep grounding in proven facts and evidence. Our acclaimed benchmarking and best practices repository is the world’s largest, capturing the insights earned through our more than 26,000 benchmarking engagements with nearly 9,100 major companies worldwide, including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100.
Our experience and expertise extends to all dimensions of back-office operations, including business performance management, supply chain process optimization, and organizational design options such as shared services or centers of excellence. We can also support the IT function in strategy development or the application of IT metrics.
To learn more about how The Hackett Group can help you to control IT costs, contact us.