Cutting the costs of our businesses is something that we all need to consider. The last five years have seen uncertainty shape economic thinking across businesses big and small. As a major cost centre for most businesses it is tempting to ‘raid’ the IT budget to reduce fixed costs and improve the balance sheet.
However, such an approach is a precarious strategy. It may produce savings in the short term, but this can have a long term impact, such as damaging competitive advantage.
When looking at costs, understand exactly what you get for your cash and make sure that services meet the needs of your business. What you really need to obtain is good old fashioned value fro money. Here are five things to consider when looking to cut the cost of IT:
Before a logical decision can be made about whether to reduce the level of a specific service or even dispense withy it entirely, it is important to understand its importance to the business. When hardware is relatively cheap, hardware maintenance service may not look like good value. However, be careful because support contracts for servers and other crucial kit like firewalls are often essential.
Beware of long term contracts that promise cost reductions. These lock you in and often prevent you from advancing development across your IT systems. Businesses shrink as well as grow. Services need to be scalable to meet the needs of your business. Fixed costs may make it seem like you win if the service grows as you expand. But fixed costs mean you lose if you need to down-size. Ideally you need to pay for what you use.
Take a long term strategic view. Look at the technology road map for the business and understand the points in the coming timeline when the benefit from investment can be maximised. A strategic approach to spending saves money in the long term, while enabling the IT estate to remain up to date and provides all the tools for the business to succeed.
Eliminate complexity across your IT environment where you can. Multiple systems are frequently a source of inefficiency. This is even more acute if manual intervention is needed to bridge between incompatible systems. Automation is often the key to unlocking efficiency. Administrative chores such as timesheets or expenses are examples of where efficiency can be unlocked. The cost of the systems is offset by freeing employees to be more productive.
Ensure that whoever is in charge of IT – whether that is an internal IT manager, a consultant or a trusted supplier – understands that costs need to be optimised. The approach needs to be consistent and repeated when ever expenditure on any item or service that goes against the IT cost centre is being considered. This needs to be holistic and fit with the long term strategy.
Don’t get us wrong. Just because we’re in the IT business, this is not a plea for you to adopt a blank cheque approach to IT. We all need to reduce costs wherever we can. We’re just cautioning against making cuts that cost you more in the long run.
Paralogic is a trusted technology partner of many smaller, expanding and mid-sized companies. Our end-to-end capability and strategic approach means we help provide the value our clients need to be successful in competitive markets
Want to know how we can help you cut IT costs? Simply fill in the form on the right or call us on 01844 293 330.
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