One of the most significant factors on the path to continuous optimization depends on the ability of the organization to become more rapidly adaptable to internal goals and external conditions. A common problem occurs when an organization has been reducing costs, but then finds the majority of its costs are fixed and on long-term contracts with vendors and service providers. The organization then could be required to pay penalties to exit those deals if the demand for IT declines or increases. Sourcing IT on a variable basis is a good platform for continual optimization.
In order to optimize IT fully, both the supply and demand sides must be reviewed. Too often, organizations see optimization as how to best supply the demand for IT. This can create a culture where IT becomes reactive to the business needs and not proactive enough to influence demand. In order to optimize IT continually, leaders must take ownership of the futures of their departments.
IT systems are inherently complex, but a lack of standard platforms, inconsistent business processes and poorly defined IT services and service levels drive up IT costs. While Deloitte posits that the same IT unit of work could cost 25 percent more in a complex environment than in a streamlined environment, the report also notes that, depending on an insurer's specific circumstances, there are good reasons for tolerating complexity in IT, such as developing in-house apps and software as well as supporting heterogeneous computing environments.