Ensuring cost optimization for your IT landscape has become increasingly complicated. You need to manage the large enterprise purchases as well as annual or monthly subscriptions and on-demand spending.

In a prior article, we discussed which are the main cost drivers and how companies can turn cost reduction initiatives into a strategic IT cost optimization plan. Today, we will cover the steps that decision-makers must follow for strategic business transformation and cost optimization.

Steps to follow for strategic business transformation

If you are ready to embark on your transformation journey and exchange low-impact cost reduction with strategic long-term resolutions, you should follow a gradual approach that tailors these cost reduction techniques to your specific business and operational goals.

1. Alignment and Ongoing Governance for consistency

Successful transformation begins with the leaders who can get everyone on board and share their vision. Change is always difficult, no matter how many long-term benefits it might bring along.

To achieve the goals of validation and consistency, we recommend a reactive approach, even though that will seem to create higher costs and lower quality as bringing everyone to the same page can take time and energy. But in fact, consulting all stakeholders and taking the time to align everyone will be beneficial as the implementation unfolds.

To define the specific business need and scope for your transformation strategy, the first step encompasses both an analysis and a validation step:

• Alignment and prioritization

• Timetable and planning

• Assessment of risks

• Up-front investments required for later savings

• Planning for continuous governance

On every level, from operations to management, you should define the IT cost optimization goals, prioritize the diverse requests and budgets, and develop ongoing governance that will help you stay on track.

2. Evaluation and Assessment for efficiency

After understanding processes and context and ensuring consistency, you should have an easy-to-understand concept that is ready to be implemented. Your transformation journey should start from there and include:

• Portfolio evaluation

• Application evaluation

• Maturity assessment

• Roadmap for process improvement

• Evaluation of capabilities and resources

Transitioning to an optimal model means clearly defining and optimizing workloads, resources and realigning processes and decisions. This happens with simplified and standardized processes that have undergone an end-to-end reengineering. It will conclude into a reduced workload with rationalized and repurposed costs.

Another crucial aspect is to get the conversation going. Getting stakeholders involved in framing and implementing the idea will increase the collaboration and the buy-in inside the company. Reduce risks by failing fast and finding what to invest in is essential and a challenge that all companies face.

3. Implement and Calibrate

After your end-to-end cost analysis, implementation and continuous calibration are the next steps for your IT cost optimization journey. Gartner illustrates the top cost optimization techniques that organizations can explore:

• Shared Services

• Cloud-First Policy

• Standard Application

• IT finance transparency

• IT demand-side spending

• RPA

• IT asset management practices

• Optimize workforce

It is important to ensure centralized leadership, secure the approval and consent of management, involve the workforce at all levels and develop ways to promote personal responsibility and organizational cooperation.

After you have ensured that you have a culture of individual responsibility and incentives for continuous improvements, strategic cost reduction priorities should be regularly reviewed and updated. This stage should conclude in:

• Application portfolio rationalization

• Infrastructure optimization

• Application modernization

• Operation and process restructure

Benefits of strategic business transformation

• Improved cost management - reduce costs without compromising service quality and ensure continuous optimization

• Business Transformation - You benefit from a highly flexible IT portfolio that reduces risks and expands perspectives

• Unimpaired effectiveness - Improve the analysis of disruptive factors and prevent them before they affect your performance

• Aligned with industry best practices - You will reduce operational costs with a seamless transformation flow

• Increased savings - reduce workload and improve quality and time to market

• Strategic advantage - You gain a competitive advantage by investing IT cost savings in future-oriented innovative ideas.

Final thought

Optimizing IT costs is a challenge that companies face daily. Particularly when they are in a process of business transformation, businesses face the need to cut costs and improve the overall results of IT spending company-wide.

This complexity often leads to inefficiencies in cost distribution. By optimizing your technology spending, you can eliminate waste and reallocate investments to critical IT initiatives.