Gartner analysts say IT executives are frittering away as much as 25 percent of their budgets on unnecessary and redundant customization, and IT departments need to act now to take advantage of cheaper products and services.

According to the analysts, wasteful IT spending is on the decline, but IT will still overspend by at least at 10 percent through 2010. Much of the waste stems from the inability of traditional IT departments to realize savings as they shift from buying and building technology to accessing IT as a service.

At Gartner’s Emerging Trends Symposium/ITxpo 2008 in Las Vegas this week, researchers are urging IT to note the increasing commoditization of technology products and services. This ‘industrialization of IT,’ is nothing short of a third industrial revolution in the form of digital business in the cloud, Gartner says.

“No IT product or service is fully commoditized today—as there is still some cost to you in switching suppliers—but many are commoditizing and some are at a relatively advanced state such as desktop PCs,” Brian Gammage, vice president and Gartner Fellow told attendees. “As products and services do commoditize, prices should usually fall, but conversely, for most enterprises, one of the biggest impacts of commoditization is overspending. 

“Organizations need to find new and different ways of being able to scale infrastructure without scaling labor costs if they are to take advantage of this metamorphosis of IT.”

 “The platforms to deliver the new services may be on the way, but one of the main challenges for IT organizations in adapting to the next industrial revolution will be dealing with the cultural impact—both internally and in the way IT interfaces with other functional areas,” said David Mitchell Smith, vice president and Gartner Fellow, at the event. “The culture of ownership and integration will take time to overcome and will impact multiple constituencies within the organization. Finance functions, for example, will need to play a bigger part in making strategic IT decisions as financial considerations—such as levels of capitalization and cash flow—become critical to making IT decisions.”

*Here are 6 other ways from Gartner to cut IT costs. Do they compare?

Managing Spending Cuts
In a separate presentation, Gartner delivered 25 concrete ways to cut IT spending. The advice comes at a time when U.S. enterprises say they hope to spend $13,454 per employee on IT in 2008, according to Gartner's 2008 IT Spending and Staffing Survey. Given the recessionary economy, however, it’s likely IT will be asked to make cuts, and IT executives will be looking to make the most of slimmer budgets with a minimum of pain.

CIOs and IT managers must be proactive and start their cost-reduction planning now, in anticipation of being asked to do so. More planning time will lead to more intelligent and effective measures, the analysts said.