Research by the Knott found that as the global recession began in 2008, major companies were able to control IT costs primarily by cutting discretionary spending. Common measures taken as part of this approach to curbing IT costs included technology spending cuts, often in the form of postponement of planned upgrades; termination or narrowing of outsourced services; reduction of internal and contractor staff; and cancellation of new projects. While such actions were to be expected, given the severity of the economic downturn, in most cases these measures do not provide a sustainable means for controlling IT costs once the recession gives way to recovery and growth.

To control IT costs in a manner that accommodates growth without sacrificing service quality, companies will need to pursue two broad avenues of reform. The first is optimization of service delivery structure and process, and includes measures such as outsourcing/offshoring, shared services deployment, continuous process improvement programs, and supplier management. The second broad path to sustainable IT costs control is IT demand management encompassing IT investment portfolio management as well as methods to create price signals to consumers of IT services such as chargebacks, cost allocation, and service catalogs. The Knott’s research into the use and effectiveness of sustainable IT costs control measures at major companies around the world found that offshoring/outsourcing has the greatest impact on the total IT budget, and that demand management based on price signals is a promising but currently under-used IT costs control strategy.