By Paul Michaels
Nov 21, 2008 5:05:10 AM

For the past few months everyone was hoping the IT industry might be saved the worst of the credit crunch fallout, on the basis that technology is vital to enterprise strategies to increase efficiency, improve services and ultimately benefit the bottom line.

However, it is becoming increasingly apparent that CIOs, along with businesses in general, are now facing increased pressures to reduce their IT costs. In addressing cost cuts, however, one of the central issues that need to be considered is the 'balance of value'. That is, it is crucial to resist the often knee-jerk reaction to simply cut IT costs down to the bone. Rather, one needs to look at the cost/productivity equation: how to reduce costs while at the same time increasing operational efficiency and competitive advantage.

Radical cost-cutting may answer short-term needs but can lead to higher future costs as strategic projects that could improve efficiencies are delayed or deep frozen. With this in mind, it's vital to measure hardware, software and servicing not on cost alone, but in the context of performance and quality. Here are some key points to consider in these cost-conscious times.

Making the right cut - Consider IT staffing. Before wielding the axe, one should first ask: How productive is the individual? What staffing levels are needed not just to maintain but to improve service delivery? Are our per-capita cost/performance ratios better, the same or worse than other companies in our market sector and against industry best practice?