How To Reduce IT Costs the Smart Way

Digitalization is necessary for almost all companies, with the motivation varying from one organization to another. Many factors may come into play, including cost savings, new business models, laws, or regulations. A good outlook for IT decision-makers is that, according to Gartner, annual spending on technology will continue to rise in the coming years. However, given the uncertain economic situation, the topic of cost-cutting is still on the table at many organizations. 

Across-the-board Cuts Miss Impactful Opportunities

What is typically employed when cost savings are needed is the infamous across-the-board cuts. No choices are made here, just everyone and everything must cut back a little. This principle is all too often applied when talking about IT in medium-sized companies and large corporations.

Making cuts without making choices — whether based on outdated benchmarks or not — is, however, a short-term solution, often aimed at keeping shareholders happy. This approach avoids tedious homework, but research is necessary to rationalize your IT landscape. Because let’s face it; how many organizations really know what they possess in terms of technology? How many companies ask themselves how they would set up their IT environment now if they were starting from scratch?

Rarely are both questions considered thoroughly. As a result, organizations are missing out on important insights that they can use to make truly impactful decisions regarding their IT assets and policies; decisions that will help them reduce their basic IT costs.

Assess Your Current Technology

Effective IT cost-cutting starts by making a good inventory of all the technology your organization uses. Look at the infrastructure, computers, applications, departments, and branches. Then clean things up based on the overview you’ve created. Make choices when doing this; some applications may be past their expiration date and should be thrown away.

Most medium and large organizations have around 200 applications in use, at least a quarter of which are barely used or not used at all. Three overlapping applications are being used where one would suffice, or there are too many licenses in circulation. Dare to make an unpopular decision and stop with certain activities. Standardize where possible; even SaaS is subject to a tiered rate. Given how quickly businesses are evolving, it is advisable to pay attention to your licensing and user management quarterly.

Lift and Shift

When it comes to IT infrastructure, a somewhat longer-term approach applies. Many companies already operate in a hybrid environment, part cloud, part leased and part in-house data center. But is everything in the right place and at the right price? Many workloads have been lifted and shifted to the cloud over the years but there is no guarantee that the well-argued choice of the past will still yield the best results today. It is therefore advisable to investigate this every six months.

The same applies to some extent to data and data retention. Data is the new gold, and it’s also bound by all kinds of laws and regulations. From the basic principle that there are three types of data (at rest, in transit, and in use), it is possible to determine which type of storage capacity to use for which data and at what cost. Storage tiering has been around for a long time, but a recalibration in the current era is certainly not a luxury.

Reducing IT Costs for Maximum Impact

At a time when much is uncertain, IT decision-makers are being asked to do more than cut back on what they already have. It’s about cutting back with an eye toward digital transformation and acting in such a way that an organization’s relevance is secured. To achieve this, across-the-board cuts will not suffice; a magnifying glass, a fine-toothed comb and a Workmate should be employed.

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