MILAN, August 10, 2012 — IDC Government Insights today announced the release of a new study that outlines an IT investment assessment framework and management processes for evaluating cost-optimization initiatives in the public sector. The study is the result of research conducted about both investment management and cost optimization, and provides useful insights for CIOs and all other IT executives in government, particularly in North America and Western Europe, who are under pressure to contain costs. Key recommendations for CIOs in the study are based on four fundamental components of the framework that are necessary for cost-optimization evaluation: value, cost, risk, and time.

The study concludes that a reduction in government external IT spending in Western Europe will continue beyond 2012 and that IT departments will be pressured to take a share of the cost-containment pain that politicians are mandating to reduce public deficits and debts. To effectively address this issue, IDC Government Insights recommends that assessment of cost-containment initiatives be tailored to specific domains and organizations and applied consistently, as it can greatly improve the ability of the CIO's organization to meet cost-optimization objectives by identifying the key initiatives that are most likely to show results.

According to the study, CIOs should consider at least three types of initiatives to tackle cost-optimization concerns:

• Reducing IT waste. These are the lowest-hanging fruits, the initiatives that could be considered even in the case of increasing ICT investments, so that unproductive investments can be eliminated and resources directed to ICT services that produce value.

• Revamping IT productivity. These initiatives are concerned with improving the ratio between IT inputs and outputs by leveraging economies of scale through centralized procurement, consolidation of IT infrastructure, and rationalization of the application portfolio.

• Retrenching IT supply. These types of initiatives are the most dramatic: the budget cuts are so significant (more than 15% of annual ICT budget) that the only way to deal with them is to reset the expectations of the demand side of IT (i.e., the line-of-business users) because the quantity of services or the service levels will diminish. Therefore the risks are higher, and time to benefits realization can be very long depending on how effectively IT governance can align IT and the business.

"To limit the risks of arbitrary cuts, government IT executives should follow investment management best practices to assess and prioritize cost-optimization initiatives that realize value at low cost and controllable risk in the intended time frame," said Massimiliano Claps, research director, IDC EMEA Government Insights and Health Insights.

More insights are revealed in the study Methods and Practices: Prioritizing Government IT Cost Containment Initiatives (IDC Government Insights #GIGM06U, July 2012). For more information or to arrange a one-on-one briefing with IDC Government Insights analysts, please contact Kanupriya at kanupriya@idc.com.

About IDC Government Insights



IDC Government Insights assists government policy, program, and IT leaders, as well as the suppliers that serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of government and IT industry experience, our global research analyzes and advises on business and technology issues facing the federal/central and local/provincial governments. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of IDG, the world's leading technology, media, research, and events company. For more information, please visit www.idc-gi.com, email info@idc-gi.com, or call 571.296.8060. Visit the IDC Government Insights Community at http://idc-insights-community.com/government.

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