How to cut back on your IT costs
- Chris Molina, PMP
- May 15, 2020
- 14 min read
One of the greatest factors for a company’s growth today is IT. It doesn’t matter what your core business is, IT solutions can and should be a strong enabler for your success. With the advent of mobility, IoT, remote collaboration, social media, social collaboration, crowd funding and crowd sourcing, many new opportunities, and new ways to bring business inside the companies, have arisen.
So, it is reasonable to say that IT costs are not an issue pertinent only to IT companies anymore. Even if your core business involves, for example, a house cleaning service, and you wish to drive your company’s growth, you will probably need to start investing in IT solutions to connect with your customers (and potential ones too), to manage your assets, inventory, employees and do everything that is NOT your core business on an easier way, so you don’t have to worry about something that is not your focus. It just makes sense, right?
It doesn’t matter what your business is, you need to go where your customers are, and almost everybody is on the internet now. Smartphones are everywhere, geolocation became a particularly important part of our consumer habits. People want to find things closer to them, and businesses need to be able to use all those new channels to acquire new clients and to drive their growth. If you don’t do it, your competition will. And if that applies to a small or medium business, imagine when you are talking about a multi-million or even billion-dollar business.
"It doesn’t matter what your core business is, IT solutions can and should be a strong enabler for your success. You need to go where your customers are, and almost everybody is on the internet now."
We need to keep a constant vigilance over IT costs. Resources (specially of the financial kind) are more and more scarce nowadays, so spending money on IT might not look so good. People tend to cut back on IT costs by not doing things that are necessary for the business. Doing so might be just as bad as spending too much money. Every company must ensure they are spending money the right way, to further their tactical and strategic goals. Be smart about it.
So, how to make sure I am doing everything that I need and not spending too much money? How to deliver everything IT related that my business need, and keep IT costs as low as possible? I have a few tips that might help to ensure that your company is spending your IT budget wisely and even saving money with your IT needs.
Here is an inforgraphic that summarizes the rest of the article, to give you an idea of where we are going with this. Feel free to share this with your team and leadership!
1. Outsource your IT
Outsourcing your IT operations might be an exceptionally good, easy, safe and quick way to save money. But don’t get me wrong, I am not talking about outsourcing your entire IT department, but the daily, repetitive, massive operations should be considered for outsourcing. For example, areas such as IT Helpdesk, Asset Management, Infrastructure Management and Monitoring, etc. Creating an IT structure could be quite expensive, not only for equipment and licenses procurement, but to hire, manage, develop, and keep specialized personnel in-company. And it takes time.
"Creating an IT structure could be quite expensive, not only for equipment and licenses procurement, but to hire, manage, develop, and keep specialized personnel in-company. And it takes time."
That is why you might consider outsourcing part of your operation to a specialized partner. For example, if you need to have a heavy helpdesk or technical support team to support your own staff, you might consider having another company doing that job for you. That carries a lot of advantages, not only on the financial side, but you don’t have to worry about the HR load to support that operation, for example. Outsourcing brings you all kinds of benefits, but the most important are:
• Cost Forecast – You will always know how much you will pay for that part of the operation. Often you can have a fixed price contract with your partner, so you can forecast your cost for the year’s budget. No surprises mean better planning and a more efficient way to spend your money. A good partner will even help you go over your annual schedule and other projects, in order to forecast any increase on the demand, so you can plan ahead for the extra-cost to support this (and maybe incorporate this extra cost into the project’s budget).
• Focus on what really matter – If your team doesn’t have to worry about the high-demand/low-value everyday work, they can use their time and expertise to further the company’s goals, to bring new ideas and turn your IT area into a valued strategic agent inside the organization.
• Lower risk and impact on your daily operation – Risks such as broken computers and other IT equipment, network performance and down times offer a lower impact on your daily IT operation, since your partner is usually bound by contract to deliver a service level and for that it must have the necessary contingencies in-place.
2. The Right Stuff
You need to have the right people on your team. Not only the right people, but the right people in the right places and roles. Getting to know your team, their specialties, skills, history and, most important, their mid and long-term goals, is a key component to build not just a good, but a GREAT team.
People work better, harder, and smarter when they are in the right place, doing what they do best. And people with well-defined goals and an environment that enable them to pursue these goals tend to excel in their jobs.
"A potential specialist on Database Management or Infrastructure Administration can be forgotten on a Help-Desk position, or a Project Manager can be wasting their talent as a Developer."
So, the first thing to do is to analyze and define which skills, abilities, knowledges and experiences you need on your team. What the company need, to deliver the projects and achieve the goals? Only after you define the roles you need on your team and the profiles of the people you need for those roles, you will be able to analyze your team, identify who is who and where to place your assets. Sometimes you realize that you might need to move a few people to another role, or even let some people go.
I know, that’s never ideal, but sometimes someone is just not what your organization need. And that’s OK, is part of running a business. At the same time, sometimes your organization is not what that person needs to further their personal and professional goals. And more often than not, those two things walk together. So, an honest and open conversation with all your assets, to understand their goals (short, medium and long terms) and their expectations, and to make them understand your goals and expectations, is a very important part to determine if someone is what you need.
Other times (and more often than you can imagine) you realize that you actually have a lot more talent in-house than you thought, just not on the right places. A potential specialist on Database Management or Infrastructure Administration can be forgotten on a Help-Desk position, or a Project Manager can be wasting their talent as a Developer. Is not that those people are bad at their current positions, but you could be using them for so much more.
3. Office 365, Cloud Computing & Virtualization
Especially when we are talking about companies that do not have IT as part of their core business, having a whole team dedicated to managing an IT infrastructure, investing on hardware acquisition, maintenance and renovation, makes absolutely no sense.
Companies such as Amazon, Google and Microsoft have a broad portfolio of products and services operating on the Cloud today, and that comes with a lot of benefits for their customers. Dedicated 24x7 support, high availability and redundancy, constantly renovated hardware infrastructure, replacement of faulty equipment, all this is covered by your contract, as you will not be paying for hardware, but for a service.
SaaS (Software as a Service), IaaS (Infrastructure as a Service) and many other services that are replacing old models of doing business when it comes to IT products are just some of the options available. Some of the best solutions are offered by “newcomers” to the infrastructure business, such as Amazon Web Services and Google, but we also have a few older companies that reinvented their business, like Microsoft, IBM, Dell and HP, just to name a few. Basically, any application you might need today can be found on a service-based version, with lower upfront costs and negotiable recurring fees.
"Basically, any application you might need today can be found on a service-based version, with lower upfront costs and negotiable recurring fees."
The first saving point with Cloud is that there is no heavy upfront investment. Moving to cloud is a lot cheaper than people usually think, as all infrastructure costs will be covered by your service provider. You don’t have to acquire hardware and costly licenses, a dedicated high availability infrastructure to support a data center, because all those requirements will be fulfilled by your partner.
High availability comes with a very high cost when you operate it on-premise, but the cloud platforms tend to have it as a standard service (or at least a much cheaper option). Also, should you have a seasonal peak on demand or have an event happening that will require a higher tier on availability, you can have this added as a temporary service to your contract, with a much shorter planning and deployment times, and a much lower cost, if you compare to do it all on-premises.
"High availability comes with a very high cost when you operate it on-premise, but the cloud platforms tend to have it as a standard service (or at least a much cheaper option)."
And this brings us to virtualization. Although this is not new on the IT world, some companies still believe on dedicated servers for critical applications, instead of having a shared infrastructure that can grow as needed through virtualization. And when you ally virtualization with cloud computing and IaaS, you have a much faster, cheaper and stable environment growth, where you can add and remove servers and applications as needed, without having to wait long periods for a hardware to be delivered, assembled and configured.
Another advantage of cloud and virtualization is that support can be done remotely, without your team having to in the office at all times. Power outages, network issues and things like that no longer affect your business continuity, because there are no critical systems running inside your house. If something goes down, your support team can have it fixed without having to leave home, anytime, anywhere.
4. BYOD & Home Office
One of the trends regarding hardware inventory is BYOD (Bring Your Own Device). Instead of providing and managing a costly hardware inventory, the company provides a “monthly allowance” to employees, with which they can procure, purchase, and maintain their own hardware, which they own and are responsible for. Should their computer have any issue, they are responsible to fix it or having someone do it at their own expenses.
This helps on the predictability of IT costs, since you have a fixed cost-per-employee, and any unplanned costs and expenses are responsibility of the employee. If there is none (because there is no issues with the employee’s equipment that month), the employee doesn’t have to spend any of the money, and it can be set aside on a savings account, for example, for when a refresh on the equipment is needed.
"This helps on the predictability of IT costs, since you have a fixed cost-per-employee, and any unplanned costs and expenses are responsibility of the employee."
This does pose a few difficulties, as there are many ways to manage this equipment, and the greatest challenge revolves around cybersecurity. This is something you will need to give some serious thought about, since you will need to have in place all kinds of ways to ensure your network and corporate information as secure, but there are many solutions on the market that are specifically designed for this kind of environment, such as Multi-Factor Authentication and Hardware Encryption.
Another possibility (that may or may not be combined with BYOD) is Home Office. With the recent changes the world is going through, Home Office became something far more important than ever before. Many high-tech companies have been using Home Office for years now and are quite mature on this setting, but most other companies have no idea how to do it.
"With the recent changes the world is going through, Home Office became something far more important than ever before."
First things first, your corporate infrastructure must be prepared for that, but this is not something that hard to achieve. Often small companies think that they will never be able to explore the concept of home office precisely because they are “too small” to invest on a robust infrastructure for remote working, but this is exactly the opposite. There are many solutions already designed to help small companies have their infrastructures optimized. If you go on the direction of cloud computing and SaaS applications, you are halfway on the right direction to explore the full potential of remote working.
The main benefit of Home Office is that you do not have to create, keep, and maintain an extremely heavy and expensive physical structure to accommodate your workforce. You do not need a big office space downtown, with 120+ A-Grade desks and chairs with ergonomic features, telephones, proper lighting, noise levels, a kitchen filled with snacks, assistants, all the infrastructure and the heavy costs for maintenance of this structure. Let’s be honest, on any big city an office space with all the trimmings and infrastructure needed can amount to anywhere between $ 10,000 to $ 150,000 USD. And this is monthly!
"Often small companies think that they will never be able to explore the concept of home office precisely because they are “too small” to invest on a robust infrastructure for remote working, but this is exactly the opposite."
Instead, you can have a smaller structure on a smaller office, focused on meetings with clients, showroom your products and services, with only the essential crew on-site, plus a few “hoteling areas”, where your home-based staff can work on the few occasions when they actually NEED to be in the office. We are talking about a huge difference on recurring costs, not only with rent, but with utilities, drinking water, etc.
Another advantage of Home Office is how much time your team will gain on commute. Not needing to spend 1-3 hours every day to commute to and from work adds up to a huge amount of gain every week, which translates on employees that are more rested, relaxed, happy and, as a result, more productive than the alternative.
Many companies (and especially many managers) have a severe mistrust of home office. They really do believe people will not work as much as they would if they were in the office, and that may be the case sometimes. But then again, as I said earlier on this article, you need to have “the right stuff” on your team. If someone is slack, maybe they should not be working for the company and this would be a good way to pinpoint who needs to be replaced.
"Not needing to spend 1-3 hours every day to commute to and from work adds up to a huge amount of gain every week"
Regarding productivity, in my experience working remotely (from home or on the road) for years, for different companies, I find that having the freedom to work from home or sometimes even just spend the day on the hotel room between two trips to customers is very rewarding. You make so much more of that time, and sometimes being on an environment where you feel more comfortable makes your creativity and problem-solving skills work on overload.
Just knowing that you are not tired from the commute by the end of the day gives you sometimes an extra boost of energy to work a little longer or to start the next day on a high-voltage mindset. And a good company knows how to harvest that potential. Just look at all the biggest, most profitable companies in the world!
There are design agencies offering specialized home office services, designed to boost productivity, creativity and especially the well-being of your employees. One good example is Mettespace, based in Toronto, Canada. They offer a wide variety of services both for corporate and home offices, to which would be nice to incorporate the company's identity.
5. Inventory & Telecom Management
Another way to have your IT costs reduced is to have a proper IT Inventory and Telecom Management in place. Note that I did not say anything about a system, because more important than finding a good system to support you on this, is to have in place the proper PROCESS for it.
When we talk about any IT management best practices, it is a rule that all systems should support proper processes, and any system will only be as good as the process it supports. This is IT Management 101, and it should be treated as a matter of the utmost importance.
"It is a rule that all systems should support proper processes, and any system will only be as good as the process it supports."
Nowadays, many enterprise level applications come with processes embedded in it. Applications such as Remedy, ServiceNow and others have their own recommended processes, based on accredited methodologies and best practices libraries, and that also is the case of other asset management leaders such as KACE and Ivanti. Many of those applications can be used also as a ticketing system that can support you should you decide to outsource part of your IT, and this is a very fine synergy.
That being said, it is important to have a strong, robust asset management and telecom management process in place, so you can be sure that you have all the hardware you need (and only the hardware you need, or will need on the next cycle) and most importantly, all the licenses you need.
Licenses are an especially important subject, given this can stack your IT costs to levels where a simple machine + licenses cost adds up to more than $ 10,000 USD. Believe me, it is not that hard to reach an amount that high.
A good asset management process+application will not only ensure all your employees have what they need to do their job, but also that they need what they have. For example, you know all your architects and designers need licenses for AutoCAD, SketchUP and some Adobe software, but do the director of the area need a set of those licenses too? What about the directors of other departments? If they will use a software only to open a file and review it once a month (or even less), wouldn’t it make more sense for them to review that information on a PDF file?
"All your architects and designers need licenses for AutoCAD, SketchUP and some Adobe software, but do the director of the area need a set of those licenses too?"
And what about that project manager that have a license to Visio, Project, Planner, Teams, but only uses Excel, PowerPoint and Outlook for all his projects? What about that accounting manager that asked for a license for a software that he will only use once for a project or idea he had? Sometimes properly managing IT means you have to question people about what they want and what they need (those are not always the same), and having they reaching the conclusion that maybe this added cost might not make much sense.
Going back to the idea of having a good process+application in place, most good systems have a way to run a check on each machine to find out “idle/unused licenses”, which are basically extra-paid software installed that is not being used frequently or not have been used for over 3, 6, 12 months. Those idle licenses might be cancelled (if they are subscription-based) or stored back on your license library (so they can be used to someone else in the future). Think about how much money saved, when you are talking about dozens or even hundreds of users.
"Most good systems have a way to run a check on each machine to find out idle/unused licenses which are basically extra-paid software installed that is not being used."
A good practice when it comes to asset management is to have a transparency policy in place, where each employee is aware of how much money is invested on their IT assets, including hardware refresh/depreciation, licenses and subscriptions.
This can be on a report that the IT department sends each employee every year (or six months), including some Telecom statistics, so each one will be able to evaluate their costs, asset usage and even request that a license be removed from their computers, because they no longer need it. Again, trust that you have the right stuff in your company and be transparent. You might get surprised!
Well, we talked about several ways to optimize your IT costs. Now, the next step is to do a reality check of your IT management and what are you doing now to address those costs, what you could (or should) be doing and, most important, what is really compatible with your organization. Not all companies are the same and should be using the same formulas, so it is paramount that each of those things are analyzed on the context of your company, to see if it makes sense for you.
As for all IT and Project Managers out there, effectively manage your costs is a very good way to show that you too have what the company need: the right stuff.
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