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Editor's note: Learn the best practices in moving data to the clouds right here.

Traditionally, CIOs have focused on a supply-side approach to IT cost control. And in large part, they have succeeded -- witness the steady and consistent declines in IT unit costs over time.

Despite these improvements, total IT spending has increased. The reason: unchecked growth of demand for IT resources.

Today, it's no longer enough to simply deliver IT resources to business customers at the lowest possible price and the highest possible service levels. Rather, CIOs must work with business leaders to define strategies to manage demand for and use of IT resources, and to raise awareness of the cost implications of different choices.

Top-performing organizations are finding ways to do just that -- through virtualization, storage management strategies, chargeback, and developing new incentives for service providers.

Why manage demand?

The chart below illustrates the divergence between IT efficiency (declining unit costs) and business use (growing volume), and underscores the imperative to improve demand management of IT resources.

While even the most elite performers can continue to squeeze incremental savings from efficiency improvements, most operations have effectively used benchmarking and other techniques to effectively manage the supply side of IT costs. As such, businesses are recognizing that the demand side of IT service delivery represents the most effective way to rein in spending, identify and achieve significant new savings opportunities, and enhance business performance.

The CIO's role in demand management should not be to direct or dictate usage levels. Rather, an effective leadership role for IT involves defining choices and quantifying the cost implications of business decisions regarding the use of IT. Put differently, the business leadership should define the priorities and forge the necessary compromises; IT's job is to implement projects and explain why some are taking precedence over others.


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