It\u2019s budget season for many CIOs and already the scars and bruises are showing. Over the past few years, they\u2019ve jousted with finance to try and defend their budgets, even as the demands on IT continue to grow.\nAnalyst house Gartner said in its Q3 forecast for IT spending that growth is still positive, but has just been trimmed to 1.7 per cent, down from three per cent. And despite this nominal expansion in spending, IT is supporting a growing number of projects\u2014from social media tools for marketing, through to cloud-based CRM for sales.\nMore fundamentally, as a survey from the Society for Information Management highlights, there is also a growing expectation for CIOs to be driving \u201crevenue-generating IT innovations\u201d. This is now a top-five priority, for the first time in the survey\u2019s 14-year lifecycle, up from 17th on the list just two years ago.\nCost reduction: old problem, new solutions\nDespite all this, IT costs remain in the spotlight, with CFOs still looking to CIOs to find ways to save money.\nBut there is at least some good news: a plethora of new tools from recent years including, cloud computing, software-as-a-service (SaaS), improved collaboration technologies, better virtualisation, and so on, all of which can help tackle costs.\nThese play a role across all four waves of IT cost reduction. At the same time, they are also helping to optimise the company for future growth and flexibility.\nWave 1\u2014revisit short-term cost reduction opportunities\n\nAny CIO worth their salt has long since put a tick in the \u201cquick cost wins\u201d box. From renegotiating outsourcing SLAs to reviewing out-dated software licences, it\u2019s easy to assume that there is little left to gain. But as some are finding, rapidly evolving technologies can reopen the door to quick savings.\nTake BBVA, the global financial services group, for example. It is moving its 110,000 employees to Google Apps for Business, helping transform its business operations and support its wider technology innovation strategy. All while trimming IT costs.\nWave 2\u2014optimise IT for greater efficiency \n\nSimilarly, most CIOs push hard to get more out of their IT systems. But once again, new tools are giving new options to consider that are often overlooked.\nHere, the focus is on better aligning IT with the business, through service catalogues, better IT asset management, and improved process management and automation, to name just a few. All these can bolster IT efficiency.\nAnd beyond that, there\u2019s more to consider: by virtualising, standardising, consolidating and centralising systems, for example, or by switching to greater use of the cloud and SaaS.\nWave 3\u2014Re-architect IT for efficiency\n\nBy the third wave, things start to get interesting. Here, CIOs can start to prepare IT for tomorrow\u2019s challenges\u2014from increased employee mobility, through to the need to support a diverse range of personal devices entering the workplace.\nCost-effectively managing this requires a careful analysis of the entire IT systems landscape. Applications have to be readied for the cloud, while legacy tools have to be rewritten for a mobile workforce.\nThis is hard, but those who get it right today will have put in place a platform for what is potentially the biggest cost-saving wave of all.\nWave 4\u2014drive IT-enabled business value\n\nCIOs now have the right foundation in place to help cut costs out of the rest of the business far more effectively, while also transforming the effectiveness of various functions.\nAs a result, it is now far easier for CIOs to achieve a range of goals. Just a few examples include:\nAutomating business processes and various user interactions.\nImplementing user self-service, such as for standard HR processes.\nSupplying management data or key performance indicators as needed.\nDelivering services\u2014anywhere, anytime, and across any device\u2014as the workforce gets more mobile.\n\nAs this all suggests, this wave is where the potential for IT innovation starts to really emerge, even despite the IT cost pressures.\nMore fundamentally, it puts CIOs in the right place to adapt as the firm\u2019s business model shifts to reflect changing market realities.\nAbout the author:\nPaul Daugherty is Accenture\u2019s Chief Technology Officer and also serves as managing director of Accenture\u2019s Technology Strategy and Innovation group. With these roles, Daugherty is responsible for Accenture\u2019s technology innovation and growth agenda. He oversees Accenture Technology Labs, Accenture\u2019s Cloud and Mobility businesses, and groups that incubate emerging technology capabilities. Daugherty also is responsible for Accenture\u2019s pool of deeply skilled, certified technology architects.