The rapid advancement of technology promises a lot of potential to businesses in scaling faster and gaining a competitive edge. And with businesses trying to capitalize on those promises, IT teams are being tasked with more responsibility and expectation than ever before, with IT spending projected to total $4.6 trillion in 2023. Unfortunately, technology tends to move faster than we do, leaving CIOs and IT professionals scrambling to keep up, maximize technology for their needs, and manage every moving part, all while making sure money isn’t wasted and costs are low.
While this may seem overwhelming, let’s look at it a different way: IT professionals are in a prime position to become heroes within their organization and reduce that IT waste, while improving overall performance. In today’s competitive business landscape, organizations are constantly seeking ways to optimize their IT operations and drive cost savings without compromising efficiency. Let’s explore six ways IT can save money:
- Rightsize infrastructure, software, and mobility
- Optimize vendor management practices
- Upgrade legacy systems
- Mitigate shadow IT
- Improve project management practices
- Enhance tracking and management of IT assets
By implementing these strategies, IT professionals can save money, improve operational efficiencies, and deliver significant ROI impact within their organizations.
Rightsize infrastructure, software, and mobility
Rightsizing infrastructure and software is about understanding your needs and what is required to meet them. Often, organizations invest in hardware, servers, data centers, and software that exceed their actual requirements. This can lead to higher upfront costs and ongoing recurring expenses, including maintenance, power consumption, cooling, space requirements, and subscriptions. A report by Productiv in 2021 found that the average company has 254 SaaS apps, but only 45% of those apps are being used on a daily basis. In fact, employees are forced to switch between up to 35 job-critical applications nearly once a minute—or more than 1,100 times every day, according to a Pegasystems report on back-office workers.
Other organizations might not invest enough to meet their requirements, leading to performance bottlenecks, limited scalability, additional usage fees, and reduced productivity for organizations.
Inadequate investment also hinders the adoption of new technologies and industry standards, limiting innovation and market adaptability. Organizations can avoid this by adopting more efficient practices such as capacity planning, virtualization, cloud computing, and monitoring and optimization. Virtualization allows multiple virtual environments to run on a single physical machine or server, which consolidates the workload and maximizes the utilization of hardware resources. This reduces the number of physical servers needed, leading to cost savings in terms of hardware, power, cooling, and maintenance. Cloud computing delivers on-demand computing resources over the internet, providing users with access to a shared pool of computing resources, including servers, storage, databases, networking, software, and other services, without requiring them to have direct control over the underlying infrastructure. Both virtualization and cloud computing are extremely flexible, enabling businesses to handle fluctuations in workload effectively. Due to flexible cloud computing, insufficient storage is less of an issue as many businesses are moving their storage to the cloud. Despite that, a survey found that 30 percent of cloud spend is wasted, with companies not properly monitoring their usage. By accurately determining infrastructure needs, optimizing resource utilization, and constantly monitoring their spend, organizations can maximize their return on investment and save costs.
On the mobile front, lack of a clear understanding of corporate data needs (and policies to enforce data usage) can cause significant cost risk when overages occur. This “bill shock” occurs when a user grossly overuses data applications without an appropriate data plan or uses a mobile device while roaming (whether domestically or internationally).
Optimize vendor management practices
Improving vendor management practices is another effective way to save money. Poor vendor management can result in unnecessary expenses and suboptimal contracts. Organizations should establish a structured process for vendor evaluation and selection, actively engage in contract negotiation and management, and proactively monitor vendor performance through key performance indicators (KPIs) and regular audits. Additionally, leveraging technology solutions such as vendor management systems (VMS) to streamline and automate vendor-related processes and fostering strong vendor relationships can further enhance cost savings and ensure the best value from IT investments. By selecting the right vendors, negotiating favorable terms, and strengthening vendor relationships, organizations can reduce costs, mitigate risks, and ensure better value from their IT investments.
Upgrade legacy systems
No one will dispute the fact that systems need to be upgraded in order to maintain their effectiveness. Often the cost of implementing upgrades to legacy systems can be more expensive than the purchase of newer cloud-based solutions. For the “commodity” components upon which most IT infrastructure is built (bandwidth, etc.) upgrading legacy systems is essential to remain competitive and cost-effective.
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Careful planning, stakeholder involvement, and robust change management are crucial to ensure a smooth transition from a legacy system and minimize disruptions during the upgrade process, but it’s well worth it. Businesses that regularly streamline operations, automate processes, and adapt to changing business requirements have a competitive edge. Modernizing their systems give them the ability to do just that. Upgrading legacy systems is a proactive step that IT professionals can take to deliver tangible benefits and position themselves as heroes within their organizations.
Mitigate shadow IT
Shadow IT, the use of unauthorized technology solutions within an organization, can lead to security risks, redundant technology solutions, lack of IT governance, and significant hidden costs. The same 2021 Productiv report found that 56% of all apps are Shadow IT. With so many applications to keep track of (again, the average company has 254 SaaS apps), it’s no surprise people go off looking for their own solution with resultant costs buried in expense reports. To mitigate shadow IT, organizations should have a clear department-wide understanding of every application in use. Only then can you grasp the scope of the issue. Organizations should collaborate and engage with users on discovery, look for redundancies and savings opportunities (e.g. rolling individual accounts into single corporate accounts managed by IT) implement IT governance and policies, and monitor and manage risks. By addressing shadow IT, organizations can enhance security, reduce redundant technology solutions, improve data governance, and ensure better collaboration between employees and the IT department.
Improve project management practices
Inefficient IT project management can result in wasted resources, missed deadlines, and budget overruns. A 2023 study found that the global average for wasted investment due to poor project performance was 5.2%. To save money and improve project outcomes, organizations should focus on clear project goals and scope, comprehensive project planning, effective communication and collaboration, resource allocation and management, risk management, stakeholder engagement and management, continuous monitoring and tracking, and continuous improvement. By adopting these practices, organizations can significantly improve project management efficiency, minimize risks, foster better team collaboration, and increase the likelihood of delivering projects on time and within budget, ultimately saving money and achieving successful project outcomes.
Enhance tracking and management of IT assets
Along the same vein, ineffective IT asset management can lead to unnecessary purchases, inefficient resource allocation, and increased costs. 24% of companies said that “they paid more than $5 million in software vendor audit fees in the past three years” to companies such as Microsoft and IBM. To address this, organizations should focus on asset inventory and documentation, establishing a centralized asset repository, asset lifecycle management, proactive maintenance and tracking, software license management, and asset disposal and retirement processes. By effectively managing IT assets, organizations can optimize resource utilization, prevent unnecessary purchases, and reduce costs associated with maintenance and support.
In conclusion, by implementing these top six strategies: rightsizing infrastructure, software, and mobility, optimizing vendor management practices, upgrading legacy systems, mitigating shadow IT, improving project management practices, and enhancing the tracking and management of IT assets, IT professionals can become heroes in their organizations. These strategies not only lead to significant cost savings, but also contribute to improved operational efficiencies, better resource allocation, and increased value from IT investments.