Taking a long and hard look at your IT budget and how to manage it effectively will be front and center for 2010. These are some ideas that we believe can make a significant impact and demonstrate your commitment to aligning IT costs with the needs of the business.

i) Cease using IT recruiters

you don’t need them, there are enough IT candidates available for most staff positions and at 20%-30% of annual salary it just does not make sense in this market. Use your internal HR dept. or another resource to post and complete the initial screening of resumes or focus on an internal referral program. LinkedIn and Plaxo make excellent resources for posting positions and securing candidates through your personal network.  I recently spoke to the CIO of a national restaurant chain who hired a manager by posting an advertisement on his personal update.  He found many qualified candidates and hired someone very quickly.

ii) Eliminate or convert long-term contractor positions -

in all likelihood they are being paid double the market rate for a permanent hire.

iii) Cancel bad projects

that no longer make business sense. Work with the business to have a “no holds barred” discussion on what the priorities are for 2009 and whether the current project portfolio is in alignment. Sunk costs are just that….stop throwing good money after bad….

iv) Consolidate operations functions

and increase efficiency.  For example, production support, call centers, maintenance, end user support etc.

v) Consolidate data center facilities -

applications, servers and storage using VMWare or equivalent products to reduce the overall amount of infrastructure required.

vi) Review all telecom contracts

and look for billing errors and better deals in the market place.  There are companies that specialize in this, and they nearly always save you money. Vendors are highly motivated not to loose customers, so you have a very strong negotiating position.

vii) implement an IT Staff Management process

such as The Pennell Group’s IT Performance Management. Ensure you can account for and manage all your headcount costs on an hourly basis and that all IT managers are thinking like business managers.

viii) Ensure you are capturing all CAPEX man-hours and expenditures.

Anything you miss is most likely rolling up in a staffing expense line item somewhere.

ix) Implement stringent financial goals for all new and ongoing IT projects -

set hurdles for ROI, NPV, IRR or some combination. Form a project governance forum where all projects are reviewed regularly.

x) Extend the life of your legacy systems

which may be coming to the end of their original vendor maintenance window by entering into a third party maintenance contract.  For example, there are companies that will maintain EMC SAN hardware which is no longer supported by the OEM, they have spares and former EMC engineers on staff.

xi) Evaluate the use of RAID 5 & 10 in your Storage Area Networks (SAN).

You may have an over engineered solution that is driving you to purchase more drive capacity than you really need.  Evaluate the data being stored, the business need and what is reasonable.

xii) Implement thin clients for clerical users.

Sometimes Windows terminal devices can make more sense for certain classes of end users while being lower in cost to purchase and maintain.  For remote users, or home workers, consider allowing them to use their own personal computers in return for a monthly rebate.  Ensure that you have addressed information security concerns adequately.

xiii) Use open source software (Linux, Apache, Tomcat, JBoss etc.)

for commodity server functions such as web servers, file sharing, Java application servers, and development and test tools.

xiv) Promote flexible working practices

including flexible hours and work from home.  Then reevaluate your space requirements and renegotiate your lease accordingly.  ‘Hotelling’ and flexible space configurations will reduce the overall sq/ft requirements.

xv) Outsource non-strategic IT functions

to an offshore providers. For example,  maintenance of legacy back-office systems, software testing, data base maintenance and support and routine development projects.

xvi) Review your current IT service provider relationships.

If some of these are high-priced (Big 4 or comparable) and make use of out-of-state resources that travel weekly, look for a local provider that could provide the service with local staff.  Skilled resourced are much more available now, so you have more options.

xvii) Look for ways to offer up more internship and hire more entry level people into junior positions.

Many companies just find it easier to hire mid-level and senior people because it feels easier, but in reality a junior hire may work out much better and reduce overall costs.

xviii) Look for ways to use video conferencing and instant messaging,  Live meeting

and Webex type technologies to avoid unnecessary business trips.  Provide incentives for staff to stay with friends and relatives on business trips to reduce hotel costs.

xix) For training, focus on computer based training and self directed training efforts.

Highly motivated employees will do well with this option as they are much more invested in the process and the outcome.  When employees go to offsite training ensure that they provide a ‘lunch and learn’ for other team members when they return.  This will double their learning and share that information with many others.

xx) Hire The Pennell Group to help evaluate these and many other ideas.