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IT cost reduction

Exploiting new technologies to reduce cost and gain agility.

Overview

Keeping pace with today’s volatile and intensely competitive business environment demands an IT function that drives speed and agility.

Whether managing weak economic conditions or handling the uncertain nature of global growth, C-suite leaders need to address both cost and its context, delivering the new IT to realize value in their businesses.

Cost reduction often begins with IT. Frequently viewed as a significant cost, yet at the same time expected to deliver technology that transforms how a business operates, IT cost reduction is becoming more challenging than ever. After many years of identifying IT savings, CIOs have typically exhausted any “quick wins.”

By taking advantage of new technologies, CIOs are better positioned to launch the next wave of cost reduction. For those CIOs seeking to reduce the cost of business operations and increase flexibility, strategies that exploit new technologies can help to manage changing conditions while gaining greater efficiencies.

Accenture identifies and explores four waves of cost reduction to help organizations reduce cost while increasing the benefit that IT can deliver to the overall business.

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Key Findings

Accenture estimates that, as a proportion of total corporate spending, IT ranges from less than one percent to around 15 percent; a significant component of sales, general and administrative cost.

By shifting the focus from immediate short-term gains to more coordinated long-term efforts, IT can better position the organization for the future. The four waves of cost reduction include:

  • Minimize spend

  • Optimize for efficiency

  • Re-architect to future-proof

  • Drive IT-enabled business value

By implementing the first three waves of cost reduction in parallel, CIOs can transform their IT function into a lean, efficient operation, while securing additional business benefits. These waves are iterative, ongoing processes through which organizations can continue to innovate and drive further cost reductions.

Recommendations

Digital technologies are challenging industry leaders in ways that have not been experienced before. Whether as a result of competition from players in adjacent industries—or even unrelated industries—there is now a distinct risk for the revenue streams of any business.

The greatest challenge for technology leaders is not the removal of cost from existing operations, it is where to invest the resultant savings. Although the solution may lie with technology, the relationship between technology investment and profitable growth is a complex one for any business.

Here is where technology leaders and their IT departments can excel; by powering the business with IT there is value not only for the organization, but also for the whole industry going forward.

Learn more about Accenture Strategy

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