For any organization, reduce IT cost is a crucial factor for its budget. You can reduce your IT expense though there are many priorities and some other factors involved. You may consider those apparently fixed but actually those are not. We will discuss here how to manage those IT expenses. If you analyze properly, you will see that the workforce costs are the foremost expenditure. This is something which you cannot simply keep aside. You can ignore and reduce other expenses for petty issues. You can implement a positive and effective strategy for reducing those IT expenses to simply publish a metric. It includes each month what you have saved from cost-cutting measures and disbursed when there is a major accomplishment. Metrics are the numbers of important information of a process. It practically motivates your organization to focus on reducing IT expenses. To know about details of metrics, you can read the article how to use metrics for IT success.
Focusing on expense of workforce costs
Which is common in many IT companies, that they have overloads of workforce. It’s true that the experienced people solve your critical issues easily and from IT cost standpoint it’s minimal. But the numbers of the workforce are really concerning. You must do the balance your workforce irrespective of their experiences. Sometimes, few organizations cut their workforce to reach in reasonable level. You should deal with this matter very judiciously, else they may revolt against your company. Though you may avoid this situation intelligently, if there are proper planning, streamline processes and right approaches.
Now we can drill down some positive approaches to reduce IT expenses:
Substitute with lower level resource
You can define your goal with expectation. You should balance the level of your company’s standards and turnover. Make sure that any substitution of a resource is one level lower than the previous position. Surely, this will not happen in every occasion, so you should have an alternate process to deal with such kind of situation and minimize your expenses.
Hire freshers every year
If your company decides to hire certain number of new employees, you can plan for this when your attrition is high. You just need to look for local reputed colleges and collaborate with the placement office of the colleges. Recruit from there whenever there will be opening. You can also hire interns for a specific period to get your job done. You can build an internship program in your company. Don’t depend on the recruiting consultant to avoid unnecessary expenses for IT cost.
Consider your expenses for contractor’s cost
Many companies often forget about the contractor costs involved into IT expenses. They just simply consider it as a different component. Most of the times, it happens that third-party costs get out of control. In many cases, some organizations hire high-priced contractors because of their expertise. Though that may not necessary at that point of time. It is true that, management thinks that contractor expenses are not subject to the same scrutiny. They may face difficulties to remove contractors who have the specific skills. Your company must focus on the costs associated with contractors. You can publish a metrics of the numbers of contractor you have and the amount you are paying them. You can mention also whether there is any overtime cost or any other hidden cost.
Don’t rely on offshore resources every time
You may probably know that some organizations open up with offshore services as a strategy of reducing IT expenses. There are some countries like US, Australia where man-power cost is high. In that case, a company can shift some works to offshore where resources are available in cheaper rate. Say for example, if offshore rate for a resource in home country is $50 per hour, then you can calculate the return on investment on the position in offshore, you can save $20 per hour. On the other hand, it seems true that there are some jobs which one cannot do effectively in offshore.
Minimize your company’s turnover
You should not forget about recruiting and training costs for the new employees. With proper strategy you can significantly minimize your company’s IT expenses. You can do it by making sure your employees understand the importance of their work and showing them your appreciation for their efforts. Recognizing an employee’s contribution may be small but there impact would be huge.
Remove unnecessary IT expenses
You shouldn’t think that all IT expenses are due to workforce. A competent management having foresight and deep understanding, can reduce those expenses in many ways without losing headcount.
Virtualization of servers and database
With virtualization method you can achieve significant savings for your IT expenses. You know that for every application runs, there is a dedicated server and that is multiplied due to DR servers. Many of those servers have low utilization rates, so optimization is not possible for hardware costs. What you can do, partitioning those servers you can allow multiple applications to share the hardware. Apply this concept for containers also. Linux containers have self-contained run-time environments. Companies can switch to virtual environments to decrease energy and IT infrastructure costs. Virtual database may take very little space and are flexible for other uses.
Use less expensive hardware
To maximize your hardware utilization, better use containers. You can run applications on cheaper devices or hardware also. With the creation of advanced systems you can get similar performances.
Use cloud platform avoid expenses
Many companies now widely use cloud storage to reduce IT infrastructure costs. A study from Cloud Security Alliance observed that approx. one-third of business enterprises unbelievably show interest in cloud adoption. 86% of companies already deployed cloud computing into their IT cost.
Check your software license
Software licenses provide you opportunities to save costs. As per the software license agreements, renewal of a software provides an incentive to move off certain software and gives a healthy discount.
Use open source software
Most of the small enterprises initially use open-source software. Thus, they can avoid the heavy price of purchasing the software and the recurring maintenance costs and expenses. The advantage is that using open source, you can access the source code and customize your modifications. The other benefit is that developers from many companies update the codes, so the software often performs faster.
Rightly use of your software
Many companies incur large costs when developers work with the outdated software. Automating the regression tests can save your money and improve quality. If a large organization charge different IT groups a rate for mainframe usage, then they will spend time making their applications more efficient. But if the company has a mainframe not impacted, the other team member will pay the price.
The Agile and DevOps methodology enable IT companies to implement updates and recover any systems issues faster. For that they can achieve lower failure rates overall.
The other way to reduce IT expenses is to build a rapport with the CFO. He can provide an objective analysis of the actual costs that you can save upon completion. However, the cost-cutting always challenges with long-standing ways of doing business.