Saturday, 18 July 2015 11:35

Twelve IT Cost Containment Opportunities

cost containment


The current market cycle has become much more serious this week, with virtually a complete restructuring of Wall Street and financial services in the US as we know it.  One likely fallout of this deeper, more concerning market situation will be tightening IT budgets.

Most banking and investment services firms have been working to contain costs for awhile now.  Here are 12 ways your organization can further contain IT costs:

  • Spending transparency and visibility – Reducing costs means that having visibility into spending is a requirement (not a nice-to-have option), ideally by IT portfolio area (run-, grow- and transform-the-business items) and activity (hardware, software and so on).
  • Cost activities – Get every item on the table for review, including those that are perceived as “untouchable” costs. Benchmark these against competitors and industry averages.
  • The right match – Ensure that there is a proper match of technology to the business need. For example, collateral management systems and HR systems do not need the same availability or processing capacity as trading systems.
  • Non-personnel costs – Increase the focus on all non-personnel-related costs; significant layoffs have already occurred in the banking and investment services sector; the risk is losing strong talent but not touching the underlying inefficient technology of business activity, which will then remain as the market cycle turns more positive in the future.
  • Selective control – Once the true costs of IT are known, reallocate spending to high value areas. To identify high-value areas, leverage business intelligence (BI) tools and activity-based costing tools to understand where revenue is produced (customers, markets, products), where there are opportunities and challenges, and which IT levers can optimize growth while avoiding risk.
  • Customer needs – Identify the true wants and needs of customers (through BI tools and surveys) as well as their profitability. This costs money to execute, but will enable CIOs to ensure that spending goes to high-value areas.
  • Life cycle management – Practice more-effective life cycle management, retiring underperforming hardware, software, and other assets and practices.
  • Lean computing – Reducing demand for resources can be advanced as part of the normal IT procurement cycle. For example, computer power management (CPM) can save $15 to $45 per desktop computer annually (see “Green IT: The Future is Now”).
  • Strategic sourcing – Selectively shift undifferentiating services to lower-cost providers, utilities and business process networks (BPNs).
  • Economies of scale – Exploit economies of scale by leveraging shared services.
  • Process optimization – Re-engineer horizontal processes (such as compliance, HR), and aggressively attack inefficient, non-revenue-generating processes. This will result in the need for fewer personnel, or enable personnel to shift to higher-value functions. Simple questions, such as “Is this required?” and “Is it mandated by law?” can eliminate a lot of unneeded processing.
  • Run rate – Selectively slow the spending and run rate of the IT budget.


Read 1809 times Last modified on Wednesday, 22 July 2015 15:37
More in this category: Remove 8 Wastes to Add Value »