After years of tactical cost-cutting, many organizations now face the challenge of continuous IT cost optimization after the realization that optimization practices are never finished, according to resrach firm Gartner.

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According to a worldwide survey of 2,053 CIOs, 65 percent of those surveyed stated that the main barrier preventing organizations from achieving continuous optimization of IT costs was related to mindset (that is, the ability for all resources to work together in the same direction with the same goal). CIOs felt that, if organizations were properly motivated and moving to achieve the same goal, they would make a greater impact on savings.

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"Organizations don't often achieve the desired results from their optimization initiatives, and costs end up returning into the business," said Sanil Solanki, research director at Gartner. "CIOs should consider incorporating five key principles into their organization's cost optimization practices to form a basis for continual optimization. These principles are geared toward avoiding the danger of tactical cost initiatives, which may seem to generate savings in the short term, but can mean costs returning into the business in the long term."

To continually optimize IT costs and avoid dangers that can be created from tactical cost-cutting, CIOs should incorporate the following five key principles into their cost optimization initiatives to ensure ongoing success of the business.

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Transparency: Higher maturity IT transparency practices are seen as a prerequisite for better supply and demand decisions, and they enable many enterprises to optimize costs and cut costs the right way, while preserving what is most important to the enterprise. IT business services must be defined and validated by the business for IT transparency and cost optimization to occur. The effectiveness of transparency needs to be considered through defining the business outcomes. This is not possible until IT and the business have agreed explicitly on what IT provides the business and what the business needs from IT.

With transparency, additional benefits can include better demand management, identification of business value, the ability to run IT like a business, better IT estimation capabilities and overall better marketing of the IT capability in general. Without transparency, the worst fears of enterprise stakeholders are often validated. With transparency, the IT organization can change its desired role in the business and enter into different value discussions that balance costs with benefits of IT-enabled endeavors and services.

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