Gartner Offers Cost-Cutting Tips For Midsize CIOs

"Moving from frame relay to an IP-based backbone system like VPN will save a lot of money. One midmarket company cut their WAN [costs] by 30 percent by moving to broadband VPN," he said. "Also, make networking contracts more competitive. One of our clients, a health-care company, cut their phone costs from $45,000 per month to $23,000 per month by opening their renewal to multiple telecom carriers. Even if you have no intention of moving away from your provider, we recommend opening it up to make it more competitive," he said.

Another cost-cutting measure currently employed by many midsize companies is virtualization. Still, Cosgrove points out, most organizations can do more in that area. At last year's MES shows, Gartner ran a survey that found that 64 percent of servers in attendees' IT environments were still physical. There are three issues critical to virtualization success, he said: controlling sprawl (even "VM-sprawl" Cosgrove said), improved ISV licensing and training.

"There's a wide variance around what ISVs will support in a virtual environment. Eventually, ISVs will figure out a way to monetize it to run in a virtual environment, but it's very inconsistent today," Cosgrove said.

CIOs also should understand the total cost of IT support, which can be eye opening, Cosgrove said. For example, it costs between $12 and $20 for a Level 1 call center contact, but moving to a self-service model can reduce that amount to $2 to $10, he said.

"Most organizations are at 65 percent first-contact resolution. We think 75 percent to 80 percent is good. A one percent increase in first-contact resolution represents a 0.64 percent increase in customer satisfaction," Cosgrove said.

Finally, Cosgrove also advised that midsize companies hold off on moving to Office 2007 because Office 14 will be available in the middle of next year. "Office 2003 will still be supported for the next five years. You're in a really good position to see what Office 14 is like," he said. The cost to migrate from Office 2003 to 2007 is between $900 and $1,600 per user, he added.

Most midsize companies also won't see true cost savings by moving to OpenOffice.org or Google Docs because too many users will still need Microsoft Office, he said. "We don't recommend moving to OpenOffice.org unless you're absolutely sure your works don't need Microsoft Office," he said.