Digital.Transformation.Cost.Optimization.2016.jpgDid you know today's CIOs are caught in the middle between two opposing forces?

Economic uncertainty and digital disruption. Why do CIOs need a cost optimization strategy that includes creating revenue-generating digital opportunities? Preparation for a digital future.

According to global information technology research firm Gartner, many organizations are currently behind the curve in terms of funding digital business; however, CIOs should be proactive about IT and business cost optimization to fund digital business investments. Cost optimization is not a new topic for CIOs. Since the great recession, beginning in 2007, many organizations have been on a steady course of improving the cost-efficiency of IT. 

However, according to Gartner's Cost Optimization in the Age of Digital Business, in the age of digital business, cost optimization takes on new dimensions. The pressure to remain competitive and invest in digital initiatives is increasing across industries. The reality is, digital initiatives embed information and technology in products and services and are, thus, joint IT-business endeavors.

Read Also: Time for Change: Digital Transformation Is Going Mainstream

Cost Optimization

ost optimization in the age of digital business means looking beyond IT and including business costs in the initiative. It also means that simply cutting the IT budget and taking an approach of waiting until the economic environment is more favorable to make digital investments are flawed approaches to remaining competitive, according to Gartner. 

Digital.Transformation.Cost.Optimization.Trends.jpgWhat are top factors to keep in mind when it comes to cost optimization today, according to Gartner?
  • Cost optimization in the age of digital business is one in which organizations use a mix of IT and business cost optimization for increased business performance while preparing for the digital future. 
  • Cost optimization in 2016 is not an IT-only activity. It is a stress test for digital business.
  • Cost-pressured organizations need to look at optimizing business costs as well, and this often involves using more information technology throughout the business.
  • A cost optimization strategy should be holistic, and include three different types of activities including IT cost optimization, business cost optimization and preparation for a digital future by digitalizing physical assets, data and business processes.
  • In the 2008 time frame, many CIOs waited to be told to cut their budgets. Waiting put them under pressure, and limited their options for reducing IT costs. Given the current economic environment, CIOs should be prepared to reduce their budgets — particularly the money spent on run investments — even further.

  • In addition to proactively exploiting both traditional and nontraditional cost optimization techniques, IT executives in the digital transformation age should take a leadership stance, helping the entire organization reduce costs, particularly on operations integration and optimization, as well as non-differentiating activities. 

Gartner is a leading global information technology research and advisory company. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT. For more information, visit Gartner.com.