IT cost savings come in many forms and here’s one that caught my eye the other day.

HSBC has saved more than $1m in energy costs after rolling out technology that shuts down 300,000 PCs during evenings and weekends. The bank is implementing the shut-down system across its international network, eventually reaching all 8,000 offices in the 88 countries it operates in.

The technology, called NightWatchman from supplier 1E, saves data and closes applications before shutting down PCs. The bank is one of the biggest in the world and says it keeps costs down through “ruthless” standardisation of its IT across the company.

Matthew O’Neill, head of group communication systems and support, said, “A key part of our desktop strategy to minimise total cost of ownership is through ruthless standardisation of our environment. We deploy a single Windows image to all of our desktops worldwide and ensure that all additional solutions we provide are globally scalable. Within this environment, we are responsible for establishing all of the desktop settings, including our global shutdown policy, to ensure that this is adhered to across the organisation, maximising the energy savings.”

Well done to HSBC; saving the planet and the pennies at the same time!

There’s nothing new under the Sun. Just when we were all starting to wonder what IT Buyers in the USA did between 9 to 5, Gartner has used it’s time wisely and taken the time to find out. 

IT buyers in the USA have a high focus on IT costs, according to Gartner. It would appear that IT buyers in the US pay less attention to business innovation in IT as a driver for using IT services. The survey revealed companies belonging to all sizes, showed a movement away from aggressive adoption, and indicated their top driver is to reduce the operating costs of IT and to ensure IT availability. In addition, 60% of US buyers had renegotiated service contracts in the past two years, while 47% said they had found cost savings by using offshore services delivery, and 40% indicated the use of technology as a service as an IT cost reduction driver.

So now you know; or maybe you knew anyway.

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.

According to various sources, the most effective strategies applied by businesses last year to help reduce their IT costs were 1/ encourage remote and mobile working, 2/ deploy more cost effective technology, 3/ negotiate lower IT costs with their incumbent IT suppliers, 4/ deploy open source applications, and 5/ standardise on one application platform. Many businesses were loathe to lose staff or to outsource as a quick fix. Silver Bullet Asociates helped many businesses negotiate cost savings and cost reductions with their IT suppliers last year and we are looking forward to doing the same this year. In fact, we’ve already made a fast start and have saved money for a handful of clients whose IT negotiations had drifted over from December.

The downturn has given organisations the opportunity to revisit their software licences and maintenance contracts to make cost savings. David Chan, City University London’s director for the Centre for Information Leadership, encouraged businesses to use their commercial leverage to negotiate. “Perhaps you are intending to extend a service contract in a year’s time. By offering a longer commitment the supplier may well drop the rates.” He also said that users should seek external advice from the likes of Gartner which helps to renegotiate multi-million pound contracts, and for deals with a ticket value of £2m or below users should use firms like Silver Bullet Associates. You can read the full Computer Weekly article at http://www.computerweekly.com/Articles/2009/08/01/237406/lower-your-software-licence-fees.htm

A leaked document setting out the government’s IT strategy for the next five years is “complacent” and lacks ambition, the Conservatives say. The paper details plans to save billions through greater use of social media and innovations such as an online “apps store” for civil servants. The document, entitled Government ICT Strategy: New World, New Challenges, sets out how the government plans to harness computer technology to save cash and improve public services up to 2015. The bulk of the planned savings - £1.6bn - will come from the development of a government “cloud infrastructure” - a way of pooling computer systems which is meant to cut costs and energy consumption. The government plans to launch a prototype of what it calls the “G cloud” early next year, with a standard model to be introduced by the end of 2010. The document also outlines plans to develop 10 to 12 strategic data centres, which it says will bring together “existing public data centres into highly secure and resilient facilities”, which it claims will save £300m a year and cut power consumption by 75%.

According to the Conservatives, the report fails in its aim of showing how the government can get to grips with the “systemic failures in public sector IT procurement over the past decade,” such as the “calamitous” NHS database. Let’s hope that whoever is in Government over the next 5 years spends our taxes more wisely than has been the case in the last 5 years.

According to a survey conducted on behalf of software supplier BMC, the majority of European organisations that have cut cost from IT operations are reinvesting those funds into strategic IT projects. The survey of 300 European IT decision makers found that 60% were reinvesting their cost savings strategically. This makes a lot of sense as strategic projects can pay dividends in helping businesses grow when economic conditions improve. While those businesses that just save money without reinvestment could lag behind when recovery begins. Every organisation is different and what they choose to do with their savings will depend on a number of factors. Reinvestment is one option. But so too is reducing IT costs such as software or hardware maintenance in order to use the savings to save jobs. Mark Bartrick, Managing Director of Silver Bullet Associates says “cutting IT costs is not hard; simply negotiate better deals with your IT suppliers”.

When new money is short in supply, and your Finance Director is pressing for measurable IT cost savings, what can you do to validate your existing spend or uncover hidden over-spend? That’s pretty much the question Silver Bullet Associates was asked today by an IT Director. It’s a good question so let me summarise what I said to him; price benchmarking is a great way to quickly ascertain if you’re getting value for money from your IT suppliers.  It’ll also highlight areas where you are paying too much (compared to other users of the same products or services). But selecting a benchmarker can be tricky as not all ‘benchmarkers’ are independent. Many ‘benchmarkers’ have some form of relationship with the very suppliers you want assessed. Just look at the main IT Research and IT Consulting companies; they advise both users and suppliers, which can cause conflicts of interest when it comes to offering best advice. So select your benchmarker carefully and look for true independence.

IT cost savings have become something of a Holy Grail in recent times as businesses and organisations of all shapes and sizes scramble to find ways to cut un-necessary costs. On the way to a Silver Bullet Associates client meeting the other day, I had a timely musical reminder of what IT management across the UK is facing when Simply Red’s ‘Money’s too tight to mention’ came on the radio. How many IT Directors have been told by their Finance Directors that costs must be reduced where ever possible? That kind of mandate will inevitably mean the IT Directors will take a careful look at all areas of spend, including revisiting the pros/cons of open-source products, virtualisation, outsourcing and offshoring. But before investigating such cost saving avenues, we would recommend that IT Directors look for some simpler savings opportunities such as re-negotiating existing vendor contracts and squeezing more value from your incumbent suppliers.