Strategic Cost-Cutting in Information Technology: toward a Framework for Enhancing the Business Value of IT

Abstract

The increasing dependency of many businesses with information technology (IT)and the high percentage of the IT investment in all invested capital in businessenvironment ask for more attention to this important driver of business. Thelimitation of capital budget forces the managers to look for more wise investment inIT. There are many cost-cutting techniques in the literature and each of them has adifferent impact on the organization. This study is one of the first steps in providingmore insight on this issue via proposing a conceptual framework for strategic costcuttingin IT. The literature review revealed that the strategic role of IT inorganizations, IT costs structure, firm’s IT structure, senior management support andorganizational learning are the important factors that affect the cost-cuttingtechnique selection in IT. The proposed framework focuses on the strategic role ofIT in business to suggest which cost-cutting techniques are the best to be applied inan organization in order to save costs while ensuring high-quality service andsupport for business growth and maximizing business value from IT spending.

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