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Management Strategies

02:13 PM

The Dreaded IT Budget Cut: Myth, Reality, Transparency

On the surface, a 10% cut on a $2 billion IT budget seems easily attainable. In reality, it isn't.

Executive and business management rarely have the transparency they need in terms of the technology economics of the IT function. As a result it is easier to specify “cuts” than to make them happen. Therefore there is an urgent need for IT management to provide more exacting and insightful views into the cost structure of IT – what is controllable in the short term and what is not. In short, there are many misconceptions surrounding realities of IT budget cuts.

The ScenarioA financial services company is focusing on managing expenses downward in the face of flat or declining revenue and increasing regulation. A Board and Operating Committee that has reviewed company expenses, has identified IT as being among the top five expenses in the company. Leaders mandate that IT should reduce infrastructure costs, currently at $2.5 billion, by $250 million (10%). Sound familiar?

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Dr. Howard A. Rubin is a Professor Emeritus of Computer Science at Hunter College of the City University of New York, a MIT CISR Research Affiliate, a Gartner Senior Advisor, and a former Nolan Norton Research Fellow. He is the founder and CEO of Rubin Worldwide. Dr. Rubin is ... View Full Bio

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