Some of Allstate's projects that have benefited from the cost savings include a "huge investment" to modernize analytic systems throughout the company. The project, which was launched in January 2003 and will conclude later this year, has yielded "great payback and hasn't required any incremental funding," Abbattista says.

Banking on benchmarking

To help reduce its IT maintenance costs, Royal Bank of Canada (RBC) makes extensive use of benchmarking services from vendors such as Compass North America and Gartner Inc. They help the bank measure its IT operating costs against those of other world-class companies and identify processes it can improve to run those activities more cost-effectively.

"My budget may go up because we're driving incremental revenues through the mainframes, so that may be a good thing," says Dick Swadley, executive vice president of IT infrastructure at the Toronto-based bank. But "that may not tell the story that the business needs to know" when it comes to demonstrating the steps his group is taking to hold down the bank's IT infrastructure costs, he says. Benchmarking helps Swadley clarify both costs and savings.

For instance, RBC's IT infrastructure group has benchmarked the costs of buying, operating and maintaining its PC LANs three times in the past seven years. By benchmarking these and other IT unit costs, RBC has been able to identify improvements it could make to streamline those operations and have them run more efficiently. Swadley estimates that the bank has been able to drive down its IT infrastructure expenses by 5 percent to 8 percent annually by applying these lessons.