CIOs outline savings found by squeezing IT budgets

Computerworld - COLUMBUS, Ohio -- Sam Coursen, CIO at NCR Corp. in Dayton, Ohio, has been able to cut more than $20 million out of his IT budget during the past year by eliminating what had in the past been considered fixed costs at the company.
For example, scrutinizing who gets company-paid cell phones, handheld devices or laptop computers -- and then paring those perks -- has saved millions for NCR, Coursen said this week.
He was among more than 150 CIOs attending the 2003 CIO Symposium here titled "Successfully Leading Change Through Turbulent Times." The conference was hosted by the Columbus Technology Council and the Center for Information Technologies in Management at Ohio State University.
In perusing fixed costs, Coursen found that NCR was spending $7 million a year in voice conferencing, a figure he was able to cut dramatically by looking at who was using the service and how it was being used. "We've taken out 50% of the fixed costs over the past few years," he said.
NCR also found big savings by migrating to a shared services model, where IT resources among various departments at the company are allocated according to need. That allowed NCR to hack $100 million from its expenses annually, with savings occurring in the first year in which the shared services model was in place.
"We don't do any projects anymore that don't have a one-year payback," Coursen said.
But not all such efforts to use shared services to cut costs are as successful.
During a CEO panel discussion at the symposium, Brad Dunnington, senior vice president of strategy at Edwards Industries Inc. in Columbus, said he has had a tough time moving to a shared services model across a decentralized group of companies because managers tend to fight over which service models are best.
That kind of input from managers can be useful, however, when looking to save money, according to Mike Curtin, president and CEO of The Dispatch Companies Inc., owner of The Columbus Dispatch newspaper. Curtin said he uses his IT department to determine which projects are most valuable to the company as a whole.
"We rely on the IT team to be the honest broker between departments," Curtin said.
Another way to save money is to renegotiate contracts, said Greg Jackson, CIO for the state of Ohio. Moving from an owned to leased software model for his enterprise management software saved Jackson more than $15 million by reconfiguring contracts with various vendors.
Jackson said, for example, that Microsoft Corp. cut$12 million from its software contract with him, BMC Software Inc. reduced its pact by $2.5 million, and Cognos Inc. dropped its by $3.4 million.
"We also examined utilization of data center space and found 20% of it was being used for office space at $30.92 a square foot," Jackson said.
The solution: He asked the office workers to vacate the data center location and find "appropriate office space."
Savings aside, Jackson said one of the most difficult issues he has faced has been convincing his superiors that spending money on IT in hard economic times can still save money in the long run. Building a reputation of success is the best way to convince business executives that such spending is wise, he said.

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