IT Consolidation: An Optimization Approach

Consolidation of IT resources is a frequently cited task for IT decision makers, aiming to remove redundancy and thereby to cut costs. However, while economically motivated, the methods described in the literature rarely address costs directly. Instead, the focus often remains on purely IT-related considerations. In this paper, IT consolidation is addressed fro man operations research perspective, applying a binary integer programming model to find optimal solutions to consolidation problems. Since accurate cost estimates are vital to successful consolidation, and play an important role in the presented binary integer program, the paper also addresses the costs involved in consolidation, with a particular focus on the costs of modifying business processes. Applying the mathematical method, with accurate cost estimates, enables decision makers to make optimal decisions in a transparent and rigorous way. The use of the proposed method is demonstrated with an example based on a real consolidation problem from a large European power supplier.