Application development and maintenance currently accounts for 34% of IT budgets.
Optimising application development and maintenance (ADM) could lead to 50% cost cuts, according to Gartner.
The research firm suggests that the implementation of sourcing strategies, metrics and processes could assist CIOs in trimming down their costs by half by purging legacy applications, complex architectures and outdated approaches to staffing.
Gartner VP Claudio Da Rold said that ADM accounts for 34% of IT budgets.
"Most organisations tend to assume that the cost of ADM can only grow over time due to rising labour costs and the increasing complexity and number of applications," Rold added.
"The ADM unit cost can be significantly optimised over time, provided that best practises across the application and sourcing life cycle — strategy, selection, negotiation and management — are followed."
CIOs can further reduce costs by performing an application portfolio and life cycle activity analysis to merge ADM suppliers, as well as by using the right metrics to size application portfolio and development efforts, and determine the right ADM team size, Gartner suggested.
Gartner research VP Gilbert van der Heiden said that when sizing the total development effort, organisations need to determine which activities of the life cycle are embedded in the estimation, because different phases in the life cycle can be sourced with different service providers — whether they are internal or external.
"For sizing of the maintenance effort, additional models may apply," Heiden said.
"Whatever model an organization uses, it should be applied consistently and as objectively as possible, with a focus on measuring and improving productivity and quality.
"The more comparable the data that an organization applies to the model, the better it can benchmark the results."
Further, CIOs are also advised to drive continuous optimisation of ADM activities through focused benchmarked metrics and contractual key performance indicators/SLAs.