3 Smart Steps to Reduce Your IT Costs

  • calender Image January 21, 2021
  • Posted By Jason Pietryga
Blog Image

Everybody needs to cut costs right now – for many businesses it will mean the difference between survival and collapse in the post-Covid-19 world.

But at a time of heightened stress, reactivity, and emotion, it’s critical to ensure those cuts fall in the right place and that they serve the business both in the short and long term.

To do this effectively and avoid falling into the trap of common IT-cost-cutting misconceptions – such as cutting services that are the largest singular monthly outlay without consideration for their level of necessity – there are important steps it’s prudent to follow.

Without doing so, organizations risk making arbitrary cuts of services, goods, and offerings that, while costly, are essential for the business to continue running.

We are all operating in unknown territory at the moment – every single business on the planet – so be mindful of that when looking where to make cuts.

Speak with your suppliers, vendors, customers, and staff. Everyone is in the same boat and it’s in everyone’s interests that their customers, suppliers, employer, and even peers stay afloat during these unprecedented times. 


Step 1: Audit

Reduce IT Cost 2

Audit is the first essential step to take in order to identify in which areas of your business you can cut costs.

The audit should consist of a thorough exploration of incomings and outgoings – spending time combing through every single invoice that goes out and comes in.

In particular, every invoice that has come in over the last 90 days, as this will help you ascertain where your low-hanging fruit may be. 

Without this you risk making arbitrary cost cuts to things that, though expensive, may be an essential part of your business, and that once cut, will be very expensive (but necessary) to set back up.

A simple but thorough audit will prevent this and not only provide you with the detail you need to understand where you can make your cuts both now and in the coming months but, importantly, in order of priority.


Step 2: Address the Low-Hanging Fruit

It seems obvious, but many organizations will bypass this and go straight to the highest-priced items on their invoices, especially during these times of panic and reaction.

While obvious costs to cut right now are staff, hours, supplies, nice-to-haves, and so on, also consider what your areas of low-hanging fruit might be.

A good place to start might be your SaaS providers. An easy cut here is the number of seats you’re paying for.

You may well find that you’re not using all the seats you’re paying for, or if you are, you’re only using some of them 20 percent of the time.

Being able to identify low-hanging fruit like this will serve the long-term aims of keeping the company afloat and holding on to your essential infrastructure and services.


Step 3: Progress to Mid-Tier Cuts

Reduce IT Cost 3

Many offices look increasingly like this, as businesses shut down their physical locations to reduce costs.

Once you’ve started carrying out your audits regularly and the related cost cuts have stabilized, this should allow for a structure to be in place for carrying out those cuts.

With this being effectively managed, you can now start looking at what of your infrastructure may be unnecessary as you seek to make further cuts.

The mid-tier cost cutting is also important right now as all firms seek to curb their footprint and not fall prey to the hidden costs that can often be found in certain infrastructures, such as public clouds.

Overhead

If you have a massive IT footprint and you can carve out 20 percent, for example, or consolidate systems a little, consider the administrative and technical overhead that you’re cutting out and the benefit that can present.

Suddenly team members will have more time to do things that are more worthy of their time and more useful for the organization, meaning you’re not just cutting costs, you’re reducing footprint. 

Office Space

A good starting point for the mid-tier at the moment is anything you’re paying for that is necessary for running your physical office space.

Many organizations are not currently using their office space, so this is an obvious starting point for making mid-tier cuts.


Think Before You Cut

But be absolutely sure that you are making the right cuts.

Once the low-hanging fruit is dealt with and you are in full swing in the mid-tier, be mindful that going from a solution that’s tried and tested in an effort to cut costs is not always the answer.

Before making any decisions, do your homework and don’t be reactive. 

In the current environment, it’s easy to want to cut the most important parts of your IT infrastructure for something cheaper, but you may find yourself facing issues you didn’t consider during this process, such as reduced functionality, increased hidden costs, or a reduction of oversight, all things that in both the long and short term, will cost your business more.

3 Smart Steps

3 Smart Steps to Reduce Your IT Costs

Everybody needs to cut costs right now – for many businesses it will mean the difference between survival and collapse in the post-Covid-19 world.

But at a time of heightened stress, reactivity, and emotion, it’s critical to ensure those cuts fall in the right place and that they serve the business both in the short and long term.

To do this effectively and avoid falling into the trap of common IT-cost-cutting misconceptions – such as cutting services that are the largest singular monthly outlay without consideration for their level of necessity – there are important steps it’s prudent to follow.

Without doing so, organizations risk making arbitrary cuts of services, goods, and offerings that, while costly, are essential for the business to continue running.

We are all operating in unknown territory at the moment – every single business on the planet – so be mindful of that when looking where to make cuts.

Speak with your suppliers, vendors, customers, and staff. Everyone is in the same boat and it’s in everyone’s interests that their customers, suppliers, employer, and even peers stay afloat during these unprecedented times. 


Step 1: Audit

Reduce IT Cost 2

Audit is the first essential step to take in order to identify in which areas of your business you can cut costs.

The audit should consist of a thorough exploration of incomings and outgoings – spending time combing through every single invoice that goes out and comes in.

In particular, every invoice that has come in over the last 90 days, as this will help you ascertain where your low-hanging fruit may be. 

Without this you risk making arbitrary cost cuts to things that, though expensive, may be an essential part of your business, and that once cut, will be very expensive (but necessary) to set back up.

A simple but thorough audit will prevent this and not only provide you with the detail you need to understand where you can make your cuts both now and in the coming months but, importantly, in order of priority.


Step 2: Address the Low-Hanging Fruit

It seems obvious, but many organizations will bypass this and go straight to the highest-priced items on their invoices, especially during these times of panic and reaction.

While obvious costs to cut right now are staff, hours, supplies, nice-to-haves, and so on, also consider what your areas of low-hanging fruit might be.

A good place to start might be your SaaS providers. An easy cut here is the number of seats you’re paying for.

You may well find that you’re not using all the seats you’re paying for, or if you are, you’re only using some of them 20 percent of the time.

Being able to identify low-hanging fruit like this will serve the long-term aims of keeping the company afloat and holding on to your essential infrastructure and services.


Step 3: Progress to Mid-Tier Cuts

Reduce IT Cost 3

Many offices look increasingly like this, as businesses shut down their physical locations to reduce costs.

Once you’ve started carrying out your audits regularly and the related cost cuts have stabilized, this should allow for a structure to be in place for carrying out those cuts.

With this being effectively managed, you can now start looking at what of your infrastructure may be unnecessary as you seek to make further cuts.

The mid-tier cost cutting is also important right now as all firms seek to curb their footprint and not fall prey to the hidden costs that can often be found in certain infrastructures, such as public clouds.

Overhead

If you have a massive IT footprint and you can carve out 20 percent, for example, or consolidate systems a little, consider the administrative and technical overhead that you’re cutting out and the benefit that can present.

Suddenly team members will have more time to do things that are more worthy of their time and more useful for the organization, meaning you’re not just cutting costs, you’re reducing footprint. 

Office Space

A good starting point for the mid-tier at the moment is anything you’re paying for that is necessary for running your physical office space.

Many organizations are not currently using their office space, so this is an obvious starting point for making mid-tier cuts.


Think Before You Cut

But be absolutely sure that you are making the right cuts.

Once the low-hanging fruit is dealt with and you are in full swing in the mid-tier, be mindful that going from a solution that’s tried and tested in an effort to cut costs is not always the answer.

Before making any decisions, do your homework and don’t be reactive. 

In the current environment, it’s easy to want to cut the most important parts of your IT infrastructure for something cheaper, but you may find yourself facing issues you didn’t consider during this process, such as reduced functionality, increased hidden costs, or a reduction of oversight, all things that in both the long and short term, will cost your business more.

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