Simplification:

In terms of cost optimization, simplification is about reducing complexity in order to reduce costs. IT systems are inherently complex, but a lack of standard platforms, inconsistent business processes, and poorly defined IT services and service levels are more likely to drive up IT costs.

To be sure, there are factors other than complexity that drive high IT costs (for example, quality of IT staff, quality of leadership and geographic location). However, complexity does impose an unnecessary surcharge, and Gartner estimates that surcharge can be as much as 25 percent on a unit cost basis. That means the same IT unit of work could cost up to 25 percent more in a highly complex environment than it would in a streamlined environment.

However, the goal should never be to simplify at the expense of business value. Rather, organizations that are mature in terms of IT cost optimization will have identified and eliminated unnecessary levels of complexity. These unnecessary levels of complexity are areas where complexity adds no value to the enterprise.

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