Turbulent times can create pause for business owners to crack out the spreadsheets and find ways to become a leaner organization and pare back expenses.
We’ve been fielding calls from many clients asking: “How can I shave IT costs without increasing risk and putting my company at a disadvantage?” We talk to clients from two vantage points: a) reducing short term costs and b) reducing long term costs by making investments.
Let’s focus on short term cost reduction because you don’t want to wait and making investments requires deliberation. Here are seven ideas that may make sense for you. Decisions made in isolation can be risky and what makes sense for one business doesn’t for another.
- Conduct a hardware and software inventory to cut out waste or maximize utilization of current equipment.
- Inventory software licenses and stop paying for software you don’t need (especially if you’ve had to lay off staff).
- Pause systems (servers, software, networks) that are not being used. For example, we’ve had clients that shut down remote offices temporarily or laid off all remote staff but kept all their IT running. Pausing systems saves money in a variety of ways including reducing electricity consumption; and costs to monitor and maintain IT equipment.
- Make equipment upgrades versus buying new where feasible. For example if you’re set to purchase new computers for slowing machines and are worried about productivity:
- Install new SSD drives and more memory instead to speed up existing computers.
- Provide dual monitors to staff so they can complete tasks more efficiently.
- Determine where you should host your business applications and whether you go with third party software or build custom. Third party cloud applications can yield costs savings on licensing, reduce support requirements and eliminate equipment purchases. But custom software can help you cut costs. Read our article on this topic. They key – run a business case to determine which approach makes the most sense.
- Using third party cloud applications can yield costs savings on licensing, reduce support requirements and eliminate equipment purchases.
- We have seen situations where clients are spending significantly more for third party applications with limited customization for their workflow. In one case we determined that our client could have a custom built app that worked exactly the way they wanted for less than their annual licensing fees.
- Consolidate servers to reduce licensing costs and the number of servers you need to maintain.
- Reduce on site time requirements from your IT provider. Some companies take comfort in having IT contractors work on site. But this increases costs. If you have your provider on-site three days/week, try to cut back to two days/week and have them spend the other day working remote. It’s unlikely to have any impact on delivery and support and will cost less.
- Make use of videoconferencing to reduce travel costs. This may require some short term costs to install software and/or hardware and potentially increase support requirements, but soon your travel bills will be dropping and you will free up time to increase productivity.
- Sign on to longer contracts with your IT providers and request a discount for making a long term commitment or contract renewal. Maybe offer to prepay for services. These are win-win approaches to reducing vendor fees without creating long term resentment.
Before we wrap up this post, we’d like to offer a few ideas on actions to avoid which can create risks for your business; and lead to a negative long term impacts.
- Don’t grind suppliers and ask them to do the same amount of work (or more) for less. If you have a great IT provider, find a win-win situation to receive the service you need with a fair approach (see point #7 above as an example).
- Don’t cut corners on IT maintenance and monitoring or avoid necessary upgrades. You still need your IT to perform efficiently and reliably. And in tight times where you’ve laid off staff, you’re asking your existing staff to do more with less. The opportunity cost of downtime now can be potentially more damaging because you want maximum productivity with the team you have.
- Don’t eliminate face time with clients. You still need to visit clients, but maybe not as often. While using video conferencing services cuts back the travel bills, failing to strike a balance of remote work with face time can open the door for your competitors to steal business. You can ill afford to lose customers now.
We hope that you can apply some of these ideas to reign in IT during the current downturn in the economy (and let’s all remember – it’s a cycle and we’ll recover!). If you need some support to evaluate cost savings opportunities, please don’t hesitate to contact us.