Doing more with less - how to rapidly reduce IT departments costs
As discussed last week, due to the current uncertain and pressurised economic environment all IT Departments budgets and spending have either been paused or reduced. IT leaders have been challenged with realising immediate cost savings in a way that won’t damage the medium- and long-term outlook of the business and the services they provide. In last week’s blog we identified many ways to reduce and optimise your monthly Public Cloud bill. In this we will discuss other ways to reduce IT department spending.
#1 Don’t “cut off your nose to spite your face” - cutting or decreasing services or projects where investment has already been made and costs already incurred has very limited value. Especially in areas where it will be difficult or impossible to - restart and the business will need when things return to somewhat normality. Think medium and long term as well as short term.
#2 Begin with the end in mind - Get a clear value in terms of money or a percentage form the business. We’re “just cutting costs” is not a clear target. If everyone is clear about what needs to be achieved a plan with cost cutting criteria can be developed.
#3 Cash is king -Target areas where the business can experience immediate cash benefits, like reducing monthly IaaS and SaaS bills. Another way is “sale and lease back” where you can convert assets that you have purchased with Capital into an Operating Lease and your organisation will receive the cash back into the bank account. In times like these this will make you very popular with the CFO!
#4 Audit your licensing -Review all your licensing and software agreements and identify unused and oversubscribed services that you are overpaying for. For example, when you are paying for 1000 Office365E3 licenses because you anticipated growth but currently have only 900 staff. Immediately contact your supplier and reduce to what you are actually using.
#5 Review your support contracts -Look at all your hardware, software and service support agreements. Have you automatically selected 24 x7 x 4-hour onsite support levels? Review each of these contracts and look at what can be reduced to business hours or next business day onsite. There is usually a 25-50% immediate saving here. These can be re-stated when business returns to “normal”.
#6 Reduce cloud spend -As per last week’s email, use the native cost analysis tools provided by the cloud vendors. Look at using reserved instances, shutting off unused resources and automating shutdown of instances during weekends and overnight where applicable. You can also look at re patriating what does not belong in the public cloud back on premises and can in some cases save up to 50% of your monthly costs.
#7 Review telecommunications and network spend - if your telecommunications contracts are coming up for renewal, or even if they are not. You can get your bill analysed by 1 or 2 of the incumbents’ competitors and see if you’re getting competitive “market rates”. You can use this to leverage a better deal out of your supplier or move to a more cost-effective service where it makes sense and won’t result in an inferior service.
#8 Be strategic - you can also look at ways that may require some investment but will result in medium term significant savings in effort or resources. This can include- adopting infrastructure as code to automate manual processes, implementing SDWAN so you can utilise cheaper WAN links and re-factoring applications to use native cloud services. This will require board level collaboration.
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