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8 Cost-Saving Actions For Midmarket CIOs

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8 Cost-Saving Actions For Midmarket CIOs

One of the most daunting challenges midmarket IT executives face today is the demand by business leaders to do more with fewer people, smaller budgets and limited resources. Any IT executive will tell you it is not easy. As a result, CIOs of midsize enterprises must produce positive business outcomes through a savvy mix of partnering, Opex-based budgeting and prioritizing projects.

We asked more than 130 midmarket CIOs about their top cost-saving actions and compiled the results. Survey respondents were attendees at our recent Midsize Enterprise Summit conference.

No. 1: Virtualize Everything

A large majority of the IT executives surveyed said their No. 1 cost-saving action was virtualization. The one thing to know about the midmarket is it was an early adopter of server virtualization. “Virtualization has reduced power consumption and cooling costs for our organization. It has also reduced the management burden and allowed IT staff to invest time into other initiatives,” said James Ledbetter, manager of IT at Independent Stave Company. 

Many IT executives noted that virtualization helped with hardware and application management as well. “Virtualization has saved us money and has made our environment less complex—we now maintain one-sixth of the hardware,” said Greg Katers, director of IT at Green Bay Packaging. In agreement with Katers, John Grove, director of IT for TMI Montana, said: “Virtual desktop infrastructure (VDI) has huge cost savings on the backside when dealing with user support and the ability to handle applications on any hardware and OS.”

No. 2: Review And Refresh

A close second to virtualization is a review and refresh of the IT contracts and infrastructure. Sometimes, taking a step back and acquiring a fresh perspective is all it takes for an IT executive to truly understand the budget issues they are having and find a proper solution. Many of the CIO respondents said they reviewed or refreshed IT communication contracts and various operation elements to oil their IT machine and save money.

“We reviewed contracts to eliminate unused services, pushing for discounts and inventorying products to get all of the uses,” said Matthew Colona, CTO of Envininet Inc. Other IT executives replaced and refreshed certain technologies, specifically printers and network infrastructure, to improve ROI. “Most IT executives’ cost-saving initiatives are targeted to redirect budget-saving to new initiatives. Funding of new initiatives are accomplished through saving in other IT or business expenses,” said Jose Martinez, director of information services at Pacific Maritime Association.

No. 3: Consolidate

Consolidation is a word that is increasingly circulating around the IT community as many have recognized the value of packaging technology to save costs. Some of the areas IT executive respondents said they are consolidating are: servers, applications, cellular billing, multiple hardware platforms, ERP and CRM, data centers, telephones, personal desktop devices and, of course, the IT distributors and vendors that supply such technologies. 

“Server consolidation from 50 to less than 15 physical devices has really helped us reduce costs,” said Director of technology for Dalton Public Schools Howard Langford. Scott Andrews, IT manager at Ag Leader Technology, shared another consolidation success story: “Consolidation and renegotiation of telephony contracts created 50 percent savings.”

No. 4: Leverage Internal Skills

Leveraging IT skill sets across the organization and developing the skills of those on the IT team can save the costs affiliated with hiring and training new staff. “We have transitioned more IT development work to internal staff and are working with management to help prioritize organizational needs to direct our focus,” said Chuck Cozad, director of technology services and strategy for the National Pork Board.

Jim Schwan, director of IT for Preferred Credit, said his organization is focusing on a similar strategy to save dollars. “We have made extensive improvements in worker productivity by building more capability into our architecture. We also changed the trajectory of our headcount growth path. Our projections in 2007 were that we would have 350 to 400 people by now; we have managed to hold our headcount to around 250 while growing our volume by 30 percent,” he explained.

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