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In the world of business, there’s a point when cutting back on IT costs becomes a no-brainer. With recession on the horizon, the latest State of IT Report 2024 from Spiceworks has some grim news: Three Quarters of Businesses are Whacking their IT budgets & in a few cases they’ve been forced to give some staff the push. But the thing is – when things start to get tough, waving a white flag and making do with less just isn’t good enough.
It’s actually a chance to do some smart thinking and chop costs without having to sacrifice a single bit of quality in your IT set up. When a business hits a rough spot, it’s all too easy to view cost cutting as the bare minimum.
But clever business leaders don’t see it that way. They see it as a chance to take a step back, give their IT strategy a good hard think, and come out the other end even stronger. It’s not just about launching a cost cutting exercise it’s about fashioning a more efficient, streamlined IT system that will give you a real boost.
Deloitte Insights IT budget survey 2018
IT Cost Reduction Strategies
Before you dive into a comprehensive strategy for cutting IT costs, it’s time to take stock of where you are now. Get out your ruler and do a quick audit of your current setup, including capital expenditures and resource allocation.
This exercise has a few purposes – it’ll give you a baseline for where you are now, help you spot areas where you can cut costs and give you the numbers you need to build a long-term cost-reduction strategy. You’ll be looking at things like your IT assets, software usage, subscription services and even how you’re using your staff – along with the things you’re spending money on, like energy bills.
A Quick Audit for Immediate Savings
Wasteful Spending
You know you’re under-spending on your IT department when you’re just mindlessly chugging along, wasting resources left and right that’s a recipe for disaster just waiting to happen. And we’ve all been there splurging on new hardware only to find out it’s collecting dust, locked into software contracts that aren’t doing a lick of good anymore or just plain throwing money out the window on energy bills. The first step to any real cost cutting plan is actually figuring out what’s going on and making some real changes.
Analytics tools and key performance indicators can help you do this – and then it’s just a case of reallocating those resources to the things that really matter. By cutting out the waste and making the most of the resources you’ve got, you can make a real difference to the productivity of your team and your bottom line.
Breaking Energy Costs
Energy usage is a major cost that IT departments often under-estimate. But cutting costs isn’t just about saving cash – it’s also about doing the right thing for the environment. To get started look at what’s really chewing through your energy bills. Is your server room a power guzzler? Are their pieces of your setup that you can upgrade to something more energy friendly? These kinds of upgrades can make a big difference in the long term.
Getting a Handle on Software Costs
Software is at the heart of most businesses these days, but managing licenses and tech stacks can be a real headache. It’s easy to end up overpaying for software that nobody’s using. Here are a few strategies to help you keep your software costs under control.
Audit Your Software Licensing
Think of software licenses like a garden. Over time, the ones you’re not using can start to take over and drain your resources. Do a thorough audit and identify the licenses you’re not getting any use out of. Maybe there’s a tool you invested in years ago that nobody’s touched in ages. It’s time to cut the dead wood and save some cash. By doing this, you’ll be freeing up resources for the things that really matter, and saving money in the process.
Volume Licensing
When you’re looking to get your hands on multiple copies of the same software, volume licensing is worth looking into. Not only can it save you a pretty penny, but it also makes the whole process of managing licenses a heck of a lot simpler.
Think of it like stocking up – buying a bunch of licenses at one go can get you a far better price than scrambling to buy each one individually, and you end up with the same effect as getting the wholesale price instead of retail. Plus, dealing with a single deal for all those licenses makes it way easier to keep them all straight in your head.
Streamline Your Stack
Your tech stack is like a toolbox. You need to make sure each tool has a job to do and isn’t duplicating anything else. If you’ve got tools that are doing the same thing, it’s time to consolidate and get rid of the duplicate. Don’t have two hammers in your toolbox when one will do.
The same goes for software tools – let’s cut through the unnecessary and focus on getting the job done more efficiently. Not only will this save you a pretty penny, but it also simplifies the day-to-day grind for you IT folk. A streamlined stack’s like having a perfectly sorted toolbox – everything’s right where you need it, and you can get on with the task at hand.
Vendor and Contract Smarts
IT management is as much about making smart choices as it is about saving a buck. You need savvy vendor management, clever contract negotiation and a nose for spotting value in outsourcing to get the most out of your IT strategy.
Vendor Management
Don’t just go for the lowest price, go for the relationship. A good partnership with your vendor can get you perks like better pricing, priority support, or even early access to new features.
Contract Negotiation
Contract negotiation is more than just a game of “let’s try to get the price down”, it’s about finding a sweet spot where you keep costs from getting out of hand and also get a contract that matches your organisation’s goals and comfort level with risk.
Before you start hammering out the details, make sure you nail down those Service Level Agreements (SLAs) so you know exactly what you can expect from the service provider in terms of performance and reliability. And then there’s the what-ifs – consider throwing in some contingency plans or exit strategies, just in case things start to go wrong and you need to pull the plug on a vendor.
Managed services or staff augmentation
Sometimes it just doesn’t make sense to do everything in-house. Managed service providers can be a cost-effective way to get infrastructure services, network maintenance or cloud storage sorted, while IT staff augmentation is perfect for short-term project needs.
Security on a Budget
Security’s not optional, but it doesn’t have to cost an arm and a leg. Check out the affordable options and practices for protecting your data, staying compliant, and getting cost-effective data backup solutions up and running.
Cyber Security
Contrary to what you might have been told, you don’t need to break the bank to get good security. Open-source tools like pfSense for firewalls, Snort for intrusion detection, and ClamAV for antivirus are all great options – you just need to use them in conjunction with some solid security protocols and keep them up to date. Cloud-based security services are also a good option, but only if they match your specific security needs and the sensitivity of the data you work with.
Compliance
Staying on the right side of the rules doesn’t have to be a nightmare. Use self-assessment tools to identify where you’re already good to go and where you need to improve, and do a proper gap analysis to help you prioritise your compliance activities. And investing in some in-house training can pay off big time in the long run – it means you can avoid costly penalties and audits, and get on with running your business.
Data Backup
You already know data backup’s important, but it doesn’t have to be expensive. Incremental backup strategies can save you space and cash, and data deduplication techniques will get rid of any redundant data, cutting storage costs even further. Or look at cloud-based backup solutions – they’re getting cheaper and more secure all the time.
Remote Work and BYOD
With remote work and BYOD on the rise, think about how these strategies can save you money while keeping your data safe.
Remote Work
Cutting the cord and letting employees work from home can save you a pretty penny – reduced office space, lower utility bills, and so on. But with remote work comes the usual security headaches, like data breaches and unauthorised access.
To keep your remote workers safe, consider a VPN for encrypted data storage and transmission, and some endpoint security to protect those devices that are accessing your network from all over the place. Multi-Factor Authentication (MFA) can also help – just think of it as an extra layer of protection to keep your data safe.
BYOD (Bring Your Own Device)
BYOD means employees can use their own devices for work, which can save you a pretty penny on hardware costs. But, if you’re not careful, you’re exposing yourself to all sorts of security risks.
Note: nothing was changed in the original paragraph about Remote Work and BYOD being on the rise. To keep your BYOD setup locked down, install a solid mobile device management (MDM) solution you know what I mean? That lets you make sure security policies are being enforced on the devices that are poking around your network.
So, for instance, you can make all devices check in with the latest antivirus software before they even get to look at your corporate data. And don’t even get me started on password policies – you can make the blokes and bird make them strong. And in case someone’s wallet slips out the back of their pocket you can even wipe the thing remotely and be done with it, saving all that sensitive data from prying eyes.
Migrate to the Cloud
The cloud is no longer just a flash in the pan buzzword; it’s basically gone from being a novelty to a plain and simple necessity for any business to be taken seriously these days. And all that talk about scalability and cost efficiency sounds like sweet music to any business owner’s ears, I’m sure.
But don’t get too excited and think you can just rush into it: moving to the cloud is a pretty huge undertaking and it’s got its own unique set of headaches. It’s a bit like moving house actually – you can’t just slash everything into boxes and hope for the best, you need to be clever and plan it out properly first.
Choose the Right Cloud Model
Youve got your public cloud, private cloud and hybrid cloud – each one with its own pros and cons. Public cloud is like WeWork, convenient as all get out but you are sharing space with all the other blokes and it can get bloody expensive if you’re not careful. Private cloud on the other hand is like owning your own pad, youve got more control but that comes with its own set of headaches and expenses. And then theres the hybrid cloud, that in between sweet spot – having your own main home and a co-working space for when things get busy.
Smart Data Migration
Moving this stuff can get pretty pricey if you dont have a clue what you are doing. One trick to keep costs down is to do a bulk data transfer – think of it like hiring a moving truck instead of making a dozen trips in your car.
Another trick is to migrate at off-peak hours; the digital highways are a lot less crowded which means faster transfers and potentially lower costs.
Monitor and Scale
Right so youve moved in now what? Just sit back and relax? Not on your life, keep a close eye on how youre using the cloud space.
There are heaps of tools out there that can monitor your usage – use them! If you find out youre using more or less space than you thought scale your resources up or down accordingly so you only pay for what you need – dont waste your resources.
The ROI of Employee Training
Employee training shouldn’t be just seen as a costs thing but as a valuable investment that pays off in spades down the line. By giving your IT staff the skills and knowledge they need you increase the operational efficiency of your business.
Trained employees make fewer mistakes so you don’t have to worry about all those expensive revisions or even worse damage control. And an investment in training usually means you get a reduction in technical support costs too – the less your IT department has to deal with, the more time they can spend on the important stuff.
Well run training programs also boost employee morale and job satisfaction which is good for productivity and employee retention. And don’t forget about the cyber awareness component – it’s just as important as getting your IT staff up to speed.
The return on investment for a good training program is pretty high – it saves your organisation from a world of financial and reputational damage down the line.
Why In-House IT Could be a Financial Liability
Having an in-house team may seem like the way to go because you’ve got control but it’s not as simple as it seems. The financial and operational costs can be pretty steep, leading to a pretty suboptimal return on investment and limited skill sets.
Let me tell you about some of the downsides, both obvious and hidden to maintaining an internal IT team:
Salaries and Benefits: One IT guy is pricey enough, but add in the benefits, insurance and other HR costs and it’s a whole new ball game.
Training and Up-skilling: Tech moves fast, so you need to be constantly up-skilling your team – which costs you time and money.
Infrastructure Costs: You can’t just magic a fancy server and firewall setup appearing out of thin air – it costs serious money upfront and to maintain.
Downtime: When things go pear shaped an in-house team might not have the expertise to sort it out in a hurry, which means costly downtime.
Limited Resources: An in-house team has only so many hands and hours – the focus often ends up being on fixing everyday problems rather than innovating.
When is the Right Time to Outsource?
The decision to hand over part of your IT to outside experts – whether in the form of outsourced or managed IT services – is usually triggered by a few key warning signs. These warning signs include rapid expansion that puts a strain on your in-house IT team, a surplus of IT budget that doesn’t seem to be paying off, and a noticeable increase in IT security problems or a serious lack of knowledge and expertise.
If one or more of these scenarios sound like your current headache, it’s probably time to give serious thought to putting your IT costs on a more even keel with the help of a more cost-effective specialist solution.
Your Path to Long-term IT Savings
To cut IT costs effectively, doesn’t mean just about pinching pennies – make smart moves that pay off in terms of efficiency, productivity and long-term success.
Here are the key cost-saving strategies from TechBrain:
- First things first, get an IT audit done to spot quick and easy savings.
- Next, sort out your software and tech to make the most of what you’ve got.
- Don’t get ripped off by vendors, get on top of your contract management.
- Make cyber security a priority – it’s not just a budget item.
- Consider letting your employees work from home and use their own gear.
- When migrating to the cloud, take the time to do it right.
- Invest in training your staff, as they are the ones who will be left to deal with IT in the long run.
- Take a hard look at whether you need to keep on IT staff or get more out of managed services.
Now, with these strategies in your back pocket, it’s time to take action and start saving your business some real cash. Don’t just stop at taking a few quick fixes – start planning for how your IT will grow and evolve with your business.
And of course, if you need any help along the way, TechBrain’s managed IT services are here to help you get the most from your IT – start saving money, and start building a more cost-effective, secure and successful business for the future.
