24 Oct Gartner's Kurt Potter on cost optimization and IT trends
Editor’s Note: Kurt Potter is a research director for the IT finance and metrics team, within the Gartner CIO Research Group, where he creates insightful, actionable fact-based research focused on business and IT performance. This includes trends and metrics related to cost optimization and the economy, IT spending, IT productivity, vertical industries, and business processes, as well as frameworks, scorecards and dashboards for communicating performance. Sym Times, Gartner Blog originally published this interview.
Sym Times: What new things are happening in the cost optimization area?
Kurt Potter: We are seeing clients shift away from a focus early in the recession on IT spending reduction and cost avoidance, to long term cost reduction. Similarly, the shift is away from managing IT supply to managing IT demand. Mostly, IT leaders are instituting management practices or improving their maturity levels in IT portfolio management, IT service management, chargeback and cost allocation, and streamlining their governance in general. By just focusing on three important management practices IT organizations can cut their IT baseline costs 10% to 20%.
The general opinion of clients early in this recession was that it would be “business as usual” after a few months, but some clients have entered the zone of the “new normal” which means their level of business alignment is “over-mature” for their new situation. IT leaders have worked through their communication issues with the business stakeholders and now know better what is most important to the business, which will guide the long term cost optimization efforts beginning now and continuing through 2010.
ST: What are the top three trends you’re watching in this area?¨
Potter: 1. To enter and be successful in the second round of cost optimization in 2010, many IT organizations are pursuing aggressive external benchmarking strategies as the definition of “best practice” has changed due to the recession, and also to help identify areas where they can reduce cost long term.
2. Many IT organizations are improving the maturity of their performance management practices. IT leaders were not measuring the right things and this hurts organizations with trying to figure out the impact of the recession and cost optimization on basic IT metrics. Many are moving even higher to business value metrics and tracking leading indicators for their industry and company to ensure better alignment.
3. The basic concept of IT service levels appears to have changed forever due to the recession. We are seeing more IT organizations that are focusing on defining their services and applications based on their importance to the business. Thus, is the project mission critical? Is the service mission critical? If it is not mission critical, lower or even industrialized service levels and assigned and this in and of it self is helping to reduce long-term IT costs. Initially, this has created some frustration with IT staff who in the past took pride in high service excellence.