You will achieve significant long-term IT cost reduction when you can see the essence of your IT, not its complexities.
Real-life IT is hard. You have to look after generations of IT systems, with overlapping functionality and unclear ownership. You have unsupportable old technologies and cutting edge. You are part way through multiple projects, none of which have enough time, money or people. Quality and compliance issues are waiting to bite you. You always have outstanding support problems. There's so much short-term pressure that you don't have the time to think about the long term.
We try to cope by looking at IT from many different viewpoints.
But having all these different viewpoints makes IT complicated. Complication is always expensive. And competing viewpoints make it hard to see how we can improve anything.
We need to find a focus that makes IT simpler. Something that summarises the essence of IT, without the surrounding paraphernalia of projects, services, technology and organisation.
The best focus we can have is simply "systems". A system is not just a piece of technology. It is not just a list of business requirements. It is not just logical application on an architecture diagram. It is just not an IT service. It is where all of these coincide, into a purposeful and distinct lump of IT. Systems are where we resolve the business-technology relationship. Systems are the essence of IT.
Focusing on systems simplifies your view of IT. It gives you a common point of reference to bring together all the other viewpoints. And anything that can not be mapped back to systems and their capabilities has no place in IT.
A system focus guides you to lower-cost IT. It helps you see where IT is well aligned to business responsibilities. It helps you see how IT automates business activity. It gives you something meaningful to consider from a customer viewpoint. These help you see where IT can deliver value. They help you see where IT can not deliver value and should be cut out. You can not see this if you only focus on projects, services, technology and organisation.
You can start building a system focus by listing the systems you have. You might find this hard because it cuts across and undermines the other viewpoints. You might find it hard to relate some of your projects, services, technology and organisation to a simple system view. This can show you where your IT activity is simply unnecessary, and can be cut out.
IT is hard. To reduce costs, you have to reduce complexity. The best way to reduce complexity is to focus on the systems themselves. This makes IT simpler, and can show you where to cut out excessive costs. If you want to cut long-term costs across all your IT systems, this is where you must start.