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Advisory

Cost Optimization Services

Achieve a competitive edge through sustainable cost transparency, cost reduction and cost agility across your technology and business operations.
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Cost Opt

AI-driven Cost Transformation

Traditional approaches to cost optimization are still good hygiene, but today remaining competitive requires AI-driven cost transformation. We address three levels of cost optimization, identifying quick-win and deep-potential opportunities and working toward both simultaneously. ISG helps our clients achieve fast, sustainable savings through AI-centered expert advisory, market data and insights, and execution support.

  • Cost Trimming

    focused on cutting external spend, especially network, software and contract labor

    Think of traditional cost trimming methods as pushing down on a balloon - often, this causes another area to bulge because it's not addressing the big picture. Cost trimming is transactional - good to achieve quick wins, but it should be implemented as part of a holistic cost optimization program.

  • Cost Substitution

    focused on swapping one cost center for a more economical model, like outsourcing.

    An intermediate method, cost substitution, involves operating model substitution usually through outsourcing, global capability centers, and/or AI and automation to drive sustainable cost resets.

  • Cost Transformation

    focused on changing the operating model to achieve cost agility and transparency.

    The final method is a cost transformation of your business' operating model for agility, resulting in cost transparency. Using zero-based budgeting to stay goal-aligned, AI to accelerate the business, and change management to empower your people, you can continuously optimize costs to stay competitive. 

Think of traditional cost trimming methods as pushing down on a balloon - often, this causes another area to bulge because it's not addressing the big picture. Cost trimming is transactional - good to achieve quick wins, but it should be implemented as part of a holistic cost optimization program.

An intermediate method, cost substitution, involves operating model substitution usually through outsourcing, global capability centers, and/or AI and automation to drive sustainable cost resets.

The final method is a cost transformation of your business' operating model for agility, resulting in cost transparency. Using zero-based budgeting to stay goal-aligned, AI to accelerate the business, and change management to empower your people, you can continuously optimize costs to stay competitive. 

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How to Get Started: A Rapid Cost Assessment

We believe that you can't manage what you don't measure. The first step to achieving optimized costs is knowing where you are mis-aligned with the market and your goals. 
ASSESS YOUR COST OPPORTUNITIES

Step One

We perform a rapid, holistic market assessment of your IT and business functions looking for opportunities in four areas by asking:

  • Supplier Ecosystem:
    Can external spend be reduced?

  • AI and Automation:
    Can technology provide a better solution?

  • Processes & Controls:
    Do you have the right visibility, transparency, decision support and controls?

  • Operating Model:
    Can your operating model be improved to deliver better outcomes at a reduced cost?

Step Two

We build a transformation roadmap prioritizing your cost optimization opportunities, a business case with an operational expenditure (OpEx) view, and a future-state operating model design.

Step Three

We execute the transformation plan to realize phased savings, leveraging strengths in organizational change management, operating model design, sourcing and market data/research.

  • Cost Transformation Projects, incl. AI, Transformative Sourcing, GCCs, Apps

  • Control Effectiveness Projects, incl. CoE, FinOps, Project Estimation, TBM

  • Supplier Sourcing Projects, incl. Services, Labor, Network, Cloud

  • Supplier Governance Projects, incl. Value Realization, VMO, Software Audit Defense, Telecom Audit

Client Results from Cost Optimization

Saving shouldn’t compromise your growth. That's why ISG aligns cost optimization with your top-line business strategy, ensuring the program enables, and never hinders, your next move. We help you achieve sustainable savings that won't have cost bounce backs by integrating a cost optimization center of excellence into your company DNA. And our results speak for themselves:
Saved
$ 28 M
ISG assessment identified 20% in annual savings from near-term addressable spend fr a North American automotive firm.
Saved
17 %
ISG identified accelerated transformation savings worth $7M to 16M in short term for a global manufacturer.
Saved
$ 33 M
ISG rationalized the portfolio of network providers for a North American FinTech firm by 40%.
Saved
$ 60 M
ISG achieved reductions through Project Estimation as a Service on a $460M portfolio for a North American energy firm.
Saved
$ 2 M
ISG assessed 100 processes and delivered $2.1M in automation savings in just six weeks for a financial services firm.
Saved
$ 4 M
ISG GovernX enabled savings on renewals in just 2 weeks for a North American healthcare company.

Project Estimation & Controls

How do you know your project costs are reasonable and being controlled appropriately? 

We simplify project cost and effort estimation, preventing scope creep with rigorous controls and governance, providing you with:

  • Enhanced visibility into expenditures to allow for better budget management

  • Optimized costs for each phase of the project by analyzing the work effort and staffing needed to complete the phase and benchmarking the market rates for that effort

  • Continuous monitoring, which identifies cost-saving opportunities throughout the project

  • Built-in risk identification and proactive risk management

Average Cost Savings After a Cost Optimization Exercise

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20 %
of specific external spend in savings. For Software & Cloud, Network & Telecom and Service Providers
10-35 %
of applicable external spend in savings for Contract Governance, Telecom Audit and Software Audit Defense.
20-50 %
of overall cost areas for Managed Services, Sourcing, GCCs and Automation.
15-30 %
of specific cost areas for SAM, FinOps, TBM, Project Estimation and Controls or Application Rationalization.

Meet Our Team

Bill Huber

Bill Huber

Partner

Bill Huber

Bill Huber

Bill works with the world’s leading companies to identify, implement, and accelerate improved capabilities and better ways of working, and to align and optimize the network of strategic suppliers and partners. These efforts have driven hundreds of millions in savings for his clients.

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Sam Barringer

Sam Barringer

Director

Sam Barringer

Sam Barringer

Sam Barringer is a results-driven consulting leader with over 17 years’ experience helping organizations maximise the value of their technology investments.  

As co-lead of ISG’s EMEA Benchmarking capability, Sam partners with CIOs and CFOs to drive measurable improvements in IT efficiency, effectiveness, and experience. 

A firm believer in the Peter Drucker principle — “if you can’t measure it, you can’t manage it” — Sam applies data-driven insights and ISG’s market intelligence to deliver sustainable performance gains and informed investment decisions. 

 

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Carolyn Becker

Carolyn Becker

Director

Carolyn Becker

Carolyn Becker

Carolyn Becker is a knowledgeable ISG advisor who brings great experience to ISGs clients. Her clients benefit from more than eighteen years of experience in various roles and responsibilities within Service Management & Governance (SM&G). Carolyn has delivered advice on all aspects of Target Operating Model (TOM) design and implementation. Furthermore, she advised on sourcing relationships up to a total contract value of US$400 million.

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Ted Bedell

Ted Bedell

Principal Consultant

Ted Bedell

Ted Bedell

Ted Bedell has been a consultant with ISG for the past fifteen years, working with over two hundred clients in varying industries to: provide recommendations to improve services in both internal and outsourced IT environments, execute contractual benchmark clauses, conduct financial analysis and business case development, and support transactions with market price expertise.​

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Daniel Gilchrist

Daniel Gilchrist

Director

Daniel Gilchrist

Daniel Gilchrist

Dan brings considerable analytical skills, commercial acumen and extensive sourcing expertise to manage client engagements across the full lifecycle spectrum. His breadth and depth of experience has enabled him to hone his skills and stakeholder management to suit varying situations and ability to understand organisational complexities and become the APAC lead for ISG’s Cost Optimisation solution offerings. He works closely with clients and ISG colleagues alike, to identify and achieve outstanding client outcomes.

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Chris Karalis

Chris Karalis

Director

Chris Karalis

Chris Karalis

Chris leads ISG Data and Analytics in the Americas and is product owner of ISG Inform, a cloud-based benchmarking platform accessed via ISG’s website. Chris is also responsible for leading various activities in project delivery, including data analysis, financial modeling, data collection and validation, quality assurance, results presentations, and project management. He primarily works on Data and Analytics initiatives, performing IT Performance Benchmarks and Market Price Assessments Chris also has supported Strategy, Transaction, and Business Process Outsourcing projects.​

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Kevin Lewis

Kevin Lewis

Director

Kevin Lewis

Kevin Lewis

Kevin is a leader in the firm’s Cost Optimization Practice. He is responsible for overall practice development, managing sales and leading client delivery teams with a focus on reducing cost to enable business transformation initiatives for both business and IT-related functions. 

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Mike Rose

Mike Rose

Director

Mike Rose

Mike Rose

Mike is currently a Director, co-leading the America’s Data and Analytics Capability and providing strategic direction for ISG’s Holistic Cost Optimization practice. He is an outsourcing and benchmarking expert who is passionate about helping clients with competitiveness, finding strategic supplier partners, and creating global operating capabilities. He leverages his best practice IT outsourcing experience, global organization leadership, and benchmark expertise to help clients across industries achieve their goals. 

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Frequently Asked Questions

Why do so many cost optimization efforts fall short?

Cost optimization often fails because teams treat symptoms and act at the wrong time. Price cuts alone deliver short-lived savings that bounce back. The winners move at key inflection points, manage total cost (not just price), and lock in gains with live data, shared ownership, clear decision rules and governance at the moments that matter.

Can does benchmarking matter for enterprise cost and performance?

Yes, but only in meaningful ways when it’s embedded with finance, operations and technology. Negotiation alone won’t control costs. Procurement should orchestrate demand forecasting, architecture and usage optimization, continuous monitoring and policy controls, so the pricing, discounts, commitments and flexibility in the contract match how you actually use the service and can scale up or down as usage changes.

What’s the best way to start a cost optimization effort?

Begin with a rapid assessment to identify opportunities and quantify the size versus the effort. Then launch quick wins while shaping solutions for larger challenges. Conduct a total cost of ownership (TCO) benchmark and a review of financial processes and controls, operating model, technology use and external spend. The output should be a pragmatic, time-phased roadmap.

How do you make cost optimization sustainable?

Build a “smarter” organization. This means breaking down silos, creating a single source of truth on costs and integrating functions around shared data and decision models. Pair this with strong organizational change management to embed new ways of working. Over time, momentum compounds into a cost-and-performance flywheel.

What are the top moves to drive major cost optimization?

Benchmark your total costs for key processes. Stand up a cross-functional cost optimization center of excellence with the mandate to drive sustainable savings over the near term, mid-term and long term. Shift the mindset from price cutting to finding lower cost solutions with the benefits of transformation. Build governance to continuously review technology lifecycle decisions. Partner with tech-enabled providers and structure contracts to accelerate savings.

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