When operating in healthy economic environments, business teams are often allowed greater rein to explore how budgets can be allocated. But when times become tough due to geopolitical tensions, global tariffs, tech disruptions, layoffs, restructurings and rising tech costs, there is greater pressure on CIOs to minimize wasteful spending and prove the value of their IT investments — ensuring a louder bang for their buck.

In all this, leaders and CIOs are pressured to “do more with less” – including growing scrutiny over how IT dollars are allocated and justified. Being able to measure and communicate the ROI of IT initiatives to stakeholders becomes more important than ever. The paradox of rising expectations paired with reduced resources is the new normal.

This is especially true in the public and federal sectors, where proposed cuts to CISA and tech security budgets by the US federal government adds to already heightened pressures to align with accountability, regulatory guidelines and compliance.

Ivanti’s 2025 Technology at Work Report reported that more than half (58%) of IT professionals say wasteful IT spending is a problem in their organization. Tech sprawl, scope creep, limited asset visibility, siloed teams and redundant operations represent poor IT cost management practices which drain resources that could be committed to strategic innovation.

Today’s reality is that CIOs are working with less budget across the board. As such, they must focus their energy on finding and reducing inefficiencies in their current spending. But more so, IT cost optimization is shifting from reactive operations to a strategic, future-facing imperative. Leaders are becoming more strategic and targeted with their investments and creating room to fund the initiatives that drive long-term business value.

IT cost optimization is a top priority

Ivanti’s report finds that IT cost optimization is a top priority for enterprise IT teams this year – but at the expense of investment in IT infrastructure and AI / ML. This aligns with trends across industries: CIOs are simply facing increased executive and board-level scrutiny as budget approvals become more centralized and return on spend must be proven faster than ever.

Additionally, Gartner’s 2025 CIO Agenda report finds that only 48% of enterprise-wide digital initiatives meet or exceed their business outcome targets – that means there’s plenty of room for improvement. This is prompting forward-thinking CIOs to rethink IT budgeting not just as an optimization exercise, but also as a strategic reallocation of resources.

IT leaders are looking at ways to tighten spending in some areas to allow for transformation in others and demonstrating measurable business outcomes of their initiatives. While budget cuts are never an easy time for organizations, the need for IT cost optimization could be an opportunity to generate fuel for growth.

Top causes of inefficient IT spending

Inefficient IT spending is often the result of compounding breakdowns across systems, processes and leadership structures. CIOs looking to optimize their budgets must first identify spending redundancies, inefficiencies and misalignments in their current tech stack and processes. Below, we explore top culprits behind IT budget bloat and how each contributes to mounting costs and diminished returns.

Poor asset visibility

Lack of visibility into endpoints, devices and SaaS assets leads to overspend and blind spots. This is compounded by the expansion of attack surfaces as organizations’ external and internal assets continue to grow — oftentimes with unknown or unmanaged visibility gaps.

This is backed by Ivanti’s Tech at Work research, Device and license usage is tracked by just 38% of IT teams, and only 36% track device performance / health.

Complicating matters further is shadow IT. Unknown and unmanaged use of devices and applications often results in duplicate existing capabilities or go entirely unused, leading to avoidable spend and potential compliance issues.

Even sanctioned tools lack oversight without standardized IT asset management practices, making it hard to enforce usage policies, track renewals or manage the asset lifecycle efficiently. Many opportunities are then missed to reduce spending through consolidation or retirement of redundant tools

Tech sprawl and cloud sprawl

Duplicate tools drain resources and fragment the tech stack without adding performance. This adds both cost and complexity to the IT ecosystem. And inaccurate forecasting and poor usage monitoring inflate cloud spend.

Organizations are often challenged by frequent “swivel chairing” – where employees switch between disconnected tools which leads to wasted time and diminished productivity. For example, an IT support agent might bounce between a ticketing system, an asset management database, a separate knowledge base and a communication platform – copying information between them just to resolve a single issue.

Technical debt

Without regular vendor audits, redundant or underperforming tools overstay their welcome and legacy systems linger. These drain resources and diminish returns.

Finally, a lack of integration across overlapping tools contributes to siloed team processes, slower response times and inconsistent or incomplete data. When systems and processes aren’t fully integrated, it’s easy for efforts to be misaligned. 

Inefficient processes

Inefficient processes in IT workflows can also be a major budget leech. A good portion of standard IT work can be automated, yet isn’t – leading to talented IT workers spending time on easily optimizable workflows including manual ticketing and patching, at the expense of higher-level strategic initiatives. A study cited in CIO found that the average large enterprise lost an estimated $104 million to digital inefficiencies, leading to shadow IT solutions which only augment the above-listed causes of avoidable spend.

Another process drag comes from siloed work and poorly integrated systems. When teams don’t have a unified platform or standardized protocols, work is duplicated and fixes are delayed. Ivanti’s 2025 research reported that 37% of IT teams reported that organizational silos reduced collaboration within their company – and 40% of IT professionals said that these silos hamper IT efficiency.

Moreover, current IT talent shortages augment an already challenging environment. Understaffed teams have to prioritize day-to-day firefighting, leaving little room for other, higher-level work.

Poor leadership visibility

A major overarching factor in IT efficiency and wasteful spending is lack of visibility with other executive leaders. The 2025 Tech a Work Report revealed that 57% percent of IT professionals felt that their company leadership did not have high visibility into IT efficiency (or lack of efficiency).

This lack of collaboration with leadership often leads to misaligned investments that don’t meaningfully contribute to actual growth. This worsens when budgeting is disconnected from KPIs and OKRs. When the ties to business outcomes aren’t clear, CIOs can’t justify their investment choices or show the real impact of their team’s work.

Fast-paced demands from above without consultation can often push IT leaders to sacrifice long-term stability for short-term speed. And skipping testing and documentation undermines system stability and invites costly breakdowns. This prioritization of operational efficiency over strategic longer-term business impact is a symptom of poor alignment.

Federal and public sector CIOs face unique challenges

Across the board, IT leaders are encountering shrinking resources and growing accountability – from healthcare systems to financial services to manufacturing. But, as mentioned above, public sector CIOs operate in a more rigid and scrutinized environment than their private sector peers.

While private enterprises face similar challenges, public sector IT budget management is usually fastened to annual fiscal cycles, necessitating longer-term decisions and restricting agility. Heightened procurement, compliance and regulatory frameworks bring additional constraints.

Fragmented ecosystems are an issue here as well. This is highlighted in Deloitte’s Government Trends 2024 report. Government bodies struggle with limited understanding of the real value that IT brings and the challenge is that ROI is harder to prove in these environments due to complex procurement processes and strict compliance needs – not due to lack of effort or intention from IT leaders.

Budget constraints are tightening even further, and audits are steadily increasing. CIOs in the public sector must demonstrate cost control and operational efficiency even more diligently than their private-sector peers. Transparent, strategic IT cost optimization frameworks are no longer an option – they’re required.

A strategic approach to IT cost optimization

It’s time to fully embrace a cost-efficient resolution with an actionable playbook. Addressing IT spending is more than cutting costs; it entails a deeper look at how IT integrates with overall business strategy. In doing this, CIOs must align IT with higher-level goals, uncover the right data to inform decisions and clearly measure outcomes.

Every investment must have a specific impact. A smart IT investment strategy ties spending to results – in increased revenue, more efficient processes, better user experience and bigger-picture thinking. The objective is to move from simple cost-cutting to intentional, strategic allocation of resources.

The result is a modernized budgeting model that’s aligned with business and driven by real-time data focusing on actual return on investment. Where does tech drive performance? Where does it drag? Where can automation be applied?

Start by focusing on these actionable steps:

Manage and monitor IT assets

Establish full lifecycle visibility into hardware, software and endpoints by implementing centralized IT asset management solutions. Effective IT asset management will allow teams to better consolidate asset data across the overall environment and standardize how assets are discovered, tracked and retired. Real-time monitoring, supported by AI and automation, enables teams to identify underused assets, reduce redundant purchases, remove bottlenecks and proactively manage renewals.

By integrating ITAM with service management and configuration databases (CMDBs), leaders can gain a holistic view of asset performance and compliance and minimize security risk and improve budget control.

Streamline IT workflows with AI and automation

Manual, repetitive work can be readily automated using AI and other technologies. Identify where steps can be automated across service management, endpoint provisioning and patching. AITSM capabilities have been proven to improve ticketing, detect anomalies and continuously monitor device performance and health in a faster and more complete way than human oversight alone.

There are also cases where an IT team may already possess these tools but aren’t utilizing their full capabilities due to poor visibility, tech sprawl or lack of standardized IT asset management. Conducting an inventory of all assets and identifying redundancies and inefficiencies then frees up valuable resources for other, higher-level priorities that tie back to impact and ROI.

Define and measure IT business value

IT cost management requires quantifying how IT actually contributes to the overall business. Start by tracking real outcomes, including revenue growth tied to technology investments, risk mitigation efforts (ticket resolution, patches, thwarted attacks) and tracking the digital experience of customers and employees.

Improve collaboration and communication with executive leadership

When IT investment strategy is cross-functional and clearly linked to business performance, executive buy-in follows. IT leaders cannot operate in a vacuum, let alone optimize in one. They must define and own measurable KPIs that show the ROI of their investments, be it AI, automation or cloud modernization. And CIOs should proactively set performance benchmarks tied directly to business outcomes. When leaders translate IT strategy into the language of business value, CIOs can shift the perception of IT from a cost center to a cost enabler and make stronger cases to executive leadership and the board.

Aligning IT spend and strategy

IT cost optimization isn’t just about trimming fat. The long game of optimizing IT efficiency is in building a smarter, more responsive and more valuable IT function that’s recognized as crucial to business outcomes. CIOs who tackle inefficiencies head-on implement more streamlined processes, reallocate budgets and deliver greater ROI for their spend will strengthen their strategic position in their organization.

In circumstances where every dollar spent must justify its existence in spades, taking actionable steps to cut down on IT waste and shifting mindsets from reactive cost-cutting to smarter, targeted investments transforms IT departments into an active value generator, even in times of disruption and uncertainty.

For deeper insights into the root causes of IT budget inefficiencies and how to fix them, check out Ivanti’s 2025 Technology at Work Report: Reshaping Flexible Work.