How Businesses Reduce IT Costs
Cost containment has become a byword in IT circles because of the perceived conflicts between the IT staff (who are often seen as a cost center that has to be controlled) – and the financial and executive officers whom the IT people see as a barrier to improving the company’s IT capabilities.
The truth, however, lies somewhere in between: while conflicts about costs and financial outlays do happen, some common sense approaches to the matter can help resolve problems and improve the company’s bottom line without compromising its IT efficiency and effectiveness. The following are some strategies for better IT Cost Containment.
Look for ways of improving or standardizing procedures. There was a time when the pace of technological change was so fast that personal computers were upgraded once or twice a year. This had many companies resorting to developing processes and procedures on the fly.
The pace of technology is apparently slowing down; the changes that are taking place are – to a large extent – ‘improvements’ on already established systems (e.g. wireless networks replacing ‘wired’ networks). This presents an opportunity for companies to slow down and establish more efficient procedures.
Be open to new technology. One area of new technology is virtualization software, which helps servers do more tasks than originally planned for. An expert in computer infrastructures can use virtualization software to run eight machines off a single server. For an e-commerce company with 400 people, this can mean retaining the same people but working off only 40 machines. Admittedly total cost savings are not that high –savings due to virtualization are around 30-40%, but for larger companies, this can translate into a substantial amount.
On the other hand, going ‘virtual’ will also require outlays, especially for more powerful servers and increased networking costs, but the long-term savings are worth it.
Be opportunistic. Cost containment options are not limited to new technologies or improved practices – it also comes from a focused mindset exercising sound judgment and identifying opportunities as they arise.
Contract renewals are one such area for opportunities – especially for large corporations with heavy IT requirements. Leveraging on these supply requirements can translate into considerable cost savings if handled properly.
Moving into a new building is another. Rather than ‘wiring’ the building for IT use, wireless technology can be brought in. Before you say that this is a case of using new technology, note that shifting from wired to wireless technology removes the costs involved in hiring people to punch holes and string wires all over the place – to say nothing of the money saved from dispensing with wires and cables.
Involve IT personnel in budget planning and financial goal setting. Critics assume that IT managers and people have their head in the clouds and seldom bother to clarify financial targets and cost concerns with them. What is overlooked is the fact that IT people – like everyone else – are concerned about the financial well-being of their companies since their income and lifestyle depend on the business doing well.