12 ways to reduce your IT costs

Once the need for IT cost reduction has become pressing, working with the right framework, complete visibility and real insight is vital for elimination and rationalization efforts. With over 10 years of experience in transforming business ideas into reality, generating impressive ROI, and nurturing long-lasting relationships with clients and colleagues alike. I’ve played a pivotal role in driving growth and implementing game-changing strategies. HBR Learning’s online leadership training helps you hone your skills with courses like Strategy Planning and Execution.

Encourage them to document what they’re doing and how they’re saving money, so people can learn from one another. It behooves you to spend some extra time, reaching out to a few other vendors for comparison. Even if you have a specific vendor in mind that you prefer working with, you can use a competitors quote as leverage. The cloud will also help make extended remote work a possibility (which we’ll talk about shortly), because you don’t need as much personnel on-premises for maintenance and up-keep.

Negotiate with vendors

Though this option might not be possible for all teams, it’s one worth considering. Consolidating applications where two or more are running for similar purposes. If your organization knows you will be hiring a certain number of new graduates, they can plan for this when they have attrition. Find a local college you like, develop a relationship with the placement office, and recruit there consistently. Setting the expectation that all replacements will be one level lower than the person who leaves is an easy way to keep your organization in line. Of course, this might not always be possible so you should have an exception process to deal with unique circumstances.

Perhaps each location of your business orders hardware and software separately, for example. Though this may be easier in the short-term, it likely costs money in the long-term. Consider aggregating some of your purchases for greater capital efficiency. Many organizations can reduce up to 30 percent of their information technology spending by auditing and optimizing software usage. Start by compiling a complete list of software and cloud applications being used, noting who is using them and for what purpose. According to RightScale’s annual State of the Cloud report, companies are wasting about 35% of their cloud spend.

IT cost reduction strategy example for procurement and operations

Another benefit of implementing cost-saving measures is that they can help to make your business more efficient. In addition to increasing your profits, implementing cost-saving measures can also help to improve your cash flow. Many benefits come along with implementing cost-saving measures within your business.

The average cost of downtime is over $7000 per minute for the average-sized company. Not only does doing things according to best practices prevent downtime, but it also minimizes tech debt, giving developers time back to focus on money-saving and revenue-producing projects. He also recommended requesting an unlimited liability agreement with software providers so https://www.globalcloudteam.com/ they have to take full responsibility for any damages that might occur from their scripts. Cutting the number of licenses used can provide cost reduction for maintenance. Virtualization treats a single server as several servers that can support multiple applications at a single instance. This will not only reduce hardware costs but also save up on energy usage.

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• You can conduct this thorough IT hardware and software audit in-house, and this is particularly effective when analysing technologies designed and built by your own IT teams.
• This includes hardware, software, staff hires, contract projects, as well as support and training.
• Further, there are instances when we have optimized server performance so that the client can achieve optimal usage of resources, thus, reducing unnecessary costs behind server usage.

According to Computer Weekly, 56% of enterprise IT decision-makers surveyed felt pressured to adopt a supplier’s cloud strategy. There is a need to rethink these transactional associations as partnerships. In 2017, at an ITAM Review conference, Jochen Hagenlocher of Novartis stated that “90% of audits can be avoided through smart contracting, relationship management or if you purchase early. While IT cost reduction can get complicated for many the above-mentioned strategies can help you to strategize the IT cost budget. Following the above-mentioned strategies will not only help in cost savings but also help you to design a better IT budget each fiscal year and build a better business. Almost 3% of IT cost reduction is observed in this cost-cutting strategy.

IT cost reduction strategies

Rationalizing personnel can come in many different forms and is a quick way to cut costs effectively. When IT cost transformation is set up as a discrete one-off initiative, the risk is that it is typically driven top-down, requiring high upfront activities to align while at the same time will be quickly outdated. This pattern is particularly prevalent in times of crisis, where there are very specific mandates to achieve a cost saving target. The outsourcing arrangement during the build stage often gets further complicated with multiple vendors and subcontractors. Used prevalently in multi-staged waterfall-style project management methodology, the subcontracting approach emphasizes scope and cost control, at the expense of agility and adaptability. Suppliers are often willing to negotiate prices, especially if you have a long-standing relationship or promise future business.

Companies can cut costs by partnering with other organizations that have complementary strengths. For example, a manufacturer can partner with a software development company to jointly develop a new product. Moving to the cloud also improves organizational agility and efficiency. Remote work is on the rise, having been accelerated by the COVID-19 pandemic.

A Guide for Strategic IT Cost Reduction in 2023

You can think of it as the “operating system” of the cloud as it has built-in deployment, scaling, and resiliency capabilities. It is important to prioritize your business values – what matters most – to make sure that the cost saving strategy you choose will result in the desired outcome. Information technology costs are the costs incurred through a company’s IT landscape – these costs can cover anything from IT personnel to servers to SaaS.

Here’s how to manage the pressure to reduce IT costs in the short term without harming your organization in the mid-to-long term. Did you ever go to buy a car, or even an item of clothing or piece of furniture, and find out about rebates you didn’t know existed? The same may be true with mortgage loans, as some lenders offer incentives to attract borrowers.

Technique No. 6: Focus on IT demand-side spending for greater business cost optimization

They calculate how IT costs impact the delivery of IT services, as well as their effect on business costs and revenue. However, they neglect to evaluate its impact across other business units in the organization. The premise is that the more you can reduce maintenance and management costs, the more money you’ll have available for new project development or new initiatives that service the entire enterprise. Today, let’s look at six common strategies organizations are using to reduce their M&M costs and increase their competitiveness. Unlock cost savings and increase business value through effective IT cost reduction strategies.