You’re the manager for your companies IT Budget, and as we go into the New Year it’s important to make sure the business is getting the best value out of IT investments. Finding cost savings depends on the vendors you currently work with, the business’ IT maturity and the cost savings impact to the bottom line. It’s crucial to make sure not to remove costs that would hurt the organization. I’m going to share with you core concepts to IT Cost Optimization that will help you make decisions in the coming year.
The Price is Right, Bob
One of the best ways to cut costs is to review your vendor contracts and purchasing habits. Identify things like licensing bundles or deals around certain times of the year. Each vendor is going to have a roadmap for products. This information will benefit the organization by making sure your technology has a next phase of improvement. Let’s say you currently have a vendor that provides you with tools to handle IT issues ad hoc. In IT, this is a very costly method and shows the lowest level of IT maturity. Pressure the vendor for proactive features or automation in the tools. If you cannot get the price down, integration still adds value. Remember that’s the goal, value to the business, not just cutting the bottom line.
Do More with Less
There may be times when you will have the option to cancel a service altogether. You work with teams and find out something is not being used, or it’s not as good as it was expected to be. The right thing to do is just to eliminate the service or configuration item. Another core way to do more with less is to standardize. Reduce IT knowledge waste and support waste, rework by using a simple set of powerful tools that are easy to cross train. Doing more with less is also about IT process and service delivery. Here is a list of things you should be doing to cut costs.
- Standardize – machine configurations, software deployment packages and images, tools for management, IT service delivery catalog
- Automate – Management, Backup, Deployment, Software Builds, Monitoring, Audit Reports, Remediation
- Consolidate – I/O, Virtualization, Reduce Power and cooling needs, Reduce SLA for Support, Contain Storage growth, Asset Management with RMM, Network Requirements Review
- Roadmap – This is about looking at the technologies you are currently using and making a decision to divest because, in the future, the technology has lost its advantage, or is no longer returning an investment.
These first two sections will get you some modest savings and reduce costs; however significant cost reductions come with investments in IT maturity and business agility. When IT starts working with the business to identify opportunities to integrate teams with the right tools and process across departments, efficiency helps begin to expose larger savings.
Why Can’t We be Friends?
IT and business owners collectively can look at how people work and what workflows are identified, then build technology solutions that automate business. It all comes down to two cost types, labor, and capital. If you can reduce the labor hours for a department by providing workflow to automate document processing that’s and example of labor savings. Build relationships with the business counterparts and develop a technology plan to help optimize workflow, IT project, and service management. Cost savings is simple; reduce, reuse, optimize infrastructure, and cancel any unuseful services. An example of labor cost and how it would fit IT cost optimization is when you work as a group with business stakeholders to reduce IT costs. This reduction might mean increasing IT costs by 5%, but that increase allows 300 more call center operators to close 50% more contracts per month.
As IT leaders, we no longer live in a closet full of cables and parts. The job market and our career development is pushing us to become IT Business Management minded. This type of planning emphasizes that the accountability for good decisions to the business is more important than cost cutting and budget bottom line. Providing the company with transparency by linking IT costs to business services, using chargeback or show back all helps everyone at the table to understand the cost drivers in IT and make the best decisions. IT Business Management is needed to measure the business value of IT correctly so cost optimization can become a regular conversation with the CFO.