Assuming you haven’t been forced into drastic cuts on IT spending, one Info-Tech Research Group analyst recommends you look at implementing internal service level agreements (SLAs) to help easily communicate potential budget cuts to your bosses.

Refael Keren, a research analyst at the London, Ont.-based consultancy, said that implementing an internal SLA – agreeable to both the business and IT – creates a baseline for service levels. When cuts become more drastic and the business is looking at IT, the C-level executives can clearly understand the consequences of the services they scale back.

“Offering a choice empowers the decision-makers,” Keren said. “This is a good tactic when IT doesn’t have a particularly strong relationship with the business. You can present them a variety of different options.

“And as far as accountability goes, whatever the consequences are, it was a business decision.”

An example of expanding the service cut menu for stakeholders would be giving them the option to scale back on help desk hours, cut back on storage redundancy or limit office e-mail accounts. Outlining how much each service costs to keep up and running can help bring greater transparency and accountability into IT spending, Keren said.

More about internal SLAs

IT signs on the dotted line

“The problem when you approach cost-cutting at a hardware or project level is you don’t know the true outcome of it,” he added.

Unfortunately, tying costs to services is not something an IT department can do very easily. To pull this off, Keren said, IT will have to foster a closer relationship with the enterprise’s CIO and other decision-makers.

They will also have to put aside their reservations about internal SLAs.

“The business is under more economic pressure now and has started paying more attention to IT,” he said. Most IT managers don’t see the benefits of making service guarantees, but Keren indicated that being preemptive with budget reduction scenarios will only help IT should a cost-cutting effort arise.

The same can be said about external SLAs.

From IT’s perspective, re-evaluating SLAs with vendors can also help free up much needed capital and may also foster better communication with enterprise leaders about efficient IT spending.

Trying to go back to the bargaining table and negotiating out of an existing outsourcing deal might be difficult. Paul Roehrig, principal analyst at Forrester Inc., advised against begging for a lower price or engaging in strong-arm tactics with your service provider.

“What clients undervalue are the long-term implications of these tactics,” he said. “Unless you are materially overpaying, there’s not much room for a lower price point without changing your services.”

Roehrig advised IT leaders to think about which technologies are essential to them and simply scratch the rest. For example, rather than signing on with a gold-plated service level agreement, enterprises would be wise to scale back to silver and bronze services.

“If you’re asking for the highest levels of services from everyone across the enterprise, when the reality is that everybody can function well without that, you are wasting money,” he added.

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