The increasing financial and economic pressures that many organisations have found themselves facing recently have led to an intense pressure for IT cost savings. Organisations are no longer willing to make speculative investments in information systems without a clear understanding of the costs and measurement of the benefits. Today, a new air of realism demands that cost efficiencies must be derived from existing systems, that costs must be firmly controlled, and that new projects must add value.
The corporate focus on IT costs is often driven by the enterprise-wide mandate to ‘do more with less’ and growing demands for compliance and governance-led transparency. Consequently, IT management needs to understand, and closely control, the activities that drive IT costs and factors of demand and supply. It is only through the implementation of formal cost management activities that the IT function can deliver cost-effective IT service provision and maximise visibility into related cost structures. IT cost reduction should be gained through a systematic and holistic approach, as well as being integral to existing IT processes and management, in order to ensure that the best value is being achieved from the organisation’s IT investments.