The recession has forced many businesses and public sector organisations to put expenditure of all kinds under close scrutiny, and it was no surprise to see that ‘Reducing IT Costs’ was quickly elevated to the top of many IT department’s strategic priortities. But while IT assets are an easy target fo cost reduction exercises, it’s what those assets do for the business that can have a far greater value than their removal rewards. Information flow is the lifeblood of businesses and cutting back on IT assets can quickly strangle that flow. Keeping the assets requires money but that justification can  be made easier by demonstrating: 1/ the value of the assets, 2/that the assets are being acquired and maintained at rock bottom prices through good negotiation, and 3/ that the assets are being fully sweated prior to retirement or replacement. IT management is no longer simply about running a good IT department, it now includes keeping a canny eye on cost management, ROI and contract negotiation skills. Some of these skills you may already have in-house and the rest you can buy in from such cost management advisors like Silver Bullet Associates.  Instead of stripping assets you should first squeeze your IT suppliers.

An email sent to IT contractors by Lloyds Banking Group in June revealed that their pay is being cut by 15%. According to the Computer Press, the bank told contractors to accept the offer or leave. The email was sent on 19 June and contractors were given until 20 July to accept the changes to pay. One recipient of the letter said, “all attempts to negotiate around the imposition of the cut were met with: ‘take it or leave the bank on notice’.” In the email to contractors the bank blamed the “unprecedented volatility and extreme market conditions” in the UK economy for the cuts. “This adjustment is not a reflection of the perceived quality or value of your contributions to date, but is a response to current market events and Lloyds’ focus on cost management,” it said. Lloyds is also making IT staff redundant. The bank has taken on billions of pounds in loans from the government and has set itself tough cost-cutting targets. So the credit crunch rumbles on and on and on. Still, it’s a great time to be negotiating with IT suppliers. They must be getting used to the comment: ‘This is a tough economy and you’ll need to do better than that if you want us to sign a new contract with you’.