Gartner advises against just axing costs

The analyst firm said in a new report that the difference is important because cost reduction is focused on spending less on IT procurement and in reducing baseline IT costs, while cost optimisation focuses on longer-term process improvement to enable business restructuring and innovation.

The latter may involve spending more on IT, and joining IT with the business to reduce costs in business operating expenses, Gartner explained.

"Across-the-board cost cutting may be a reality for organisations that are fighting for survival, but should always be accompanied by measured and intelligent planning for the future and discussion around the IT and business trade-offs," said Barbara Gomolski, Gartner managing vice president.

"It is essential that IT leaders know their organisation's return-to-growth strategy, and make certain that this strategy gets the funding and attention it needs in order to be ready when the time comes."

Gartner warned that arbitrary cost cutting will delay optimisation because investments that would normally yield better results in the long term are delayed.