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CEO’s and especially CFO’s of many companies continuously expect IT cost to be reduced or demand more IT support with the same resources. This is quite a challenge for most CIO’s.

No matter, if you currently have pressure to reduce IT cost, if you look for continuous improvement in your IT organization or just want to see what are the key lever to drive down IT cost, I encourage you to invest a couple of minutes to read this post and watch the video.

This blog is the second in a series to provide insights about IT Economics and discuss results from the 2013 edition of the CIO surveyTCO & IT Economics“. 92 CIOs and IT manager from the German speaking SAP user group DSAG provided their perspective on key questions and best practices.

Here are CIOs top 10 measures with the highest potential to reduce TCO:

1. Virtualization of Infrastructure

  • Make available the existing infrastructure resources on a flexible basis, with a centrally accessible layer
    – e.g. with several virtual machines, a physical server can be used for a wide variety of tasks.
  • Target key virtualization areas include nonproductive systems (development, testing, and training); satellite systems (FTP server, global trade system, and other interfaces); and legacy systems (tax and auditing systems).

2. Implementation/ Optimization of a joint  Business-IT Planning

  • The main mission of joint business–IT planning is to determine investments in the application landscape, operations, maintenance, infrastructure, and other IT services, in strong alignment with the business.

3. Joint IT-Business Project Portfolio Management

  • By planning and managing the project portfolio jointly, both partners – IT and the business – can better focus on the correct disposition of project-related resources.

4. System Landscape Consolidation

  • Reduction of the number of operated systems (technical consolidation including production, test, and development systems), in order to better operate and maintain these systems with less effort.
  • Reduction of the variety of operating systems and databases

5. Implementation/ Optimization of a Super/ Key User Concept

  • A super / key user is a talented user within an organization who is brought into a position of leadership of one or more IT systems, supporting and instructing users, answering how-to questions, and making acceptance of the technology less challenging.

6. Master Data Harmonization

  • Consolidate your master data and manage it consistently across your enterprise.

7. Return to Standard (Out of the Box Solution; Modification Clearing)

  • Enforce modification clearing and custom development reduction as the way back to standard.
  • Replace custom development or “down ports” from intermediate releases with standard functionality and achieve:
    • Code modernization
    • Implementation of latest technologies

8. Reduction of Number of Applications

  • Foundation: Compilation and maintenance of an application catalog, covering all applications in use by the enterprise with their main
    characteristics.
  • Key Strategies:
    • Identification of applications rarely or not used over the past year; disposal where applicable
    • Identification and replacement of similar applications with an existing- or a single new application

9. Accelerated & lean Implementation & Upgrade

  • Apply ASAP methodology for implementation (= SAP road map and guidance for the implementation of SAP solutions)
  • Make use of SAP „Rapid Deployment Solution“ Packages (RDS)
  • Follow template approach (a template is a standardized, reusable solution encompassing process, data, and IT, which takes into account global and local requirements.)
  • Apply and leverage SAP Enhancement Packages
  • Leverage available Tools (i.e.  Solution Manager, Test Tools, Business Process Change Analyzer)

10. Eliminate/ Limit Shadow/ Hidden IT

  • Shadow IT: IT solutions built and used inside business organizations without organizational approval and/ or knowledge of the IT department.
  • Actively manage Shadow IT and  mitigate risks,enforcing enterprise architecture, system administration needs, and security standards.

I would love to get your feedback. Just take a moment and leave a comment!

  • What is your experience on TCO reduction?
  • What have been your best strategies to reduce IT cost?
  • What did not work?

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