Reduce IT costs, improve service levels and do more with less: CA poll of IT directors

Reducing IT costs and helping clients to do more with their IT with less are core themes in Expense Reduction Analysts’ IT Cost Management business.

It was reassuring to read from Gartner and CA’s own surveys last week that the very themes that we focus on feature heavily in their 2010 IT market research. At the opening keynote presentation of the Gartner Symposium / IT Expo last week (see video here from the eighth minute onwards), Peter Sondergaard, pictured left, Gartner’s Global Head of Research, shared the following insights:

“While the IT industry will return to growth in 2010, the market will not recover to 2008 revenue levels before 2012. 2010 is about balancing the focus on cost, risk, and growth. For more than 50 percent of CIOs the IT budget will be 0 percent or less in growth terms. It will only slowly improve in 2011.”

Expense Reduction Analysts clients who have already benefited from our advice appreciate that the focus is on effective investment to avoid declining capital productivity.

A recent ‘Lean IT’ CA survey (formerly Computer Associates) of 560 IT Directors across Europe confirmed that ‘doing more with less’ (89%), more closely aligning IT and business processes (89%) and an intent to ‘reduce IT costs’ (83%) were all described as very important or important challenges for business in 2010. Virtually all respondents (95%) declared that efficient IT management was of most importance to their business but few (12%) are very likely to make additional software investments this year to help deliver more efficient operations to underpin this.

Gartner echoes the CA survey’s findings and believes IT leaders must make the following three critical budgetary considerations in 2010:

A Shift from Capital Expenditure to Operational Expenditure in the IT Budget — with concepts such as cloud services accelerating this shift.

Consider the Impact of the Increased Age of IT Hardware — This year, approximately 1 million servers – or 3% of the global total - have had their replacement delayed by a year. This will rise to 2 million in 2010 and by 2011 almost 10% of the server installed base will be beyond scheduled replacement if replacement cycles do not change. The inevitable increase in equipment failure rates will impact enterprise risk.

IT Must Learn to Build Compelling Business Cases — according to Gartner, “2010 marks the year in which IT needs to demonstrate true line of sight to business objectives for every investment decision. IT leaders can no longer look at IT as a percentage of revenue.”

Expense Reduction Analysts’ advice pre-credit crunch could not be more pertinent when forecasting trends for next year. Over the next few weeks, the Expense Reduction Analysts blog will look to explore how each of these budgetary focus areas – and those that were seen as the key challenges in the CA survey – have a direct impact on our clients.

Please feed back your comments and your questions on any of the above topics directly to me.