7 Effective Ways to Reduce IT Costs

it cost savings

If you have ever worked in an Information Technology (IT) department, costs savings has no doubt come up as a topic of conversation. IT systems, software and staff can increase in costs quickly. Implementing cost reduction techniques can be a smart way to not only gain insights into where your spending money but also how to cut costs across IT. Let’s review 7 ways to reduce IT costs in your organization. 

1. IT Cloud Services

There is a constant debate about whether cloud costs are cheaper than the costs of traditional onsite data centers. While we won’t argue about that here, let’s review some ways cloud services can reduce IT costs.

  • Pay-as-You-Go Model: Cloud services often operate on a pay-as-you-go or subscription basis, enabling businesses to avoid significant upfront investments in hardware and software. This cost-effective model lets them scale resources up or down as needed, paying only for what they use to keep cost down.
  • Reduced Maintenance Expenses: Cloud providers handle maintenance, updates, and security measures for their physical infrastructure. This eliminates the need for businesses to invest in dedicated IT staff or allocate resources to manage and maintain physical servers in a data center, reducing labor and operational costs. This also removes the need to regularly replace this hardware when it reaches the end of its lifecycle.
  • Flexibility and Scalability: Cloud computing offers incredible flexibility by allowing businesses to easily scale resources up or down based on business demand. This scalability prevents over-provisioning and ensures cost optimization for efficiently allocated resources, further reducing costs. You don’t need to order physical servers and wait for them to arrive; you can provision almost everything you need on the spot. This gives your business a strategic advantage for IT implementations.

2. Print Management

We can all acknowledge that we live in a digital world. Due to the different amount of current collaboration tools available today, the need to print documents and other content is continuously reduced. Most businesses would be surprised to learn how much they spend on printing content. Let’s look at how prioritizing print management can reduce costs.

  • Optimized Printing: Print management solutions enable organizations to track and control printing activities. By implementing print quotas, duplex printing, or routing print jobs to more cost-effective devices, companies can reduce unnecessary printing, paper usage, and ink/toner consumption, consequently cutting operational costs.
  • Consolidated Infrastructure: Centralized print management allows companies to consolidate their printing infrastructure. This reduces the number of printers required, simplifies maintenance, and decreases the need for multiple consumables and spare parts, resulting in cost savings.
  • Efficiency and Productivity: Print management tools improve efficiency by streamlining workflows. They allow for better monitoring of printing habits, identifying wasteful printing practices, and implementing policies to encourage responsible printing behavior among employees. This increased efficiency can lead to cost reductions over time.
  • Cost Allocation: Print management systems provide insights into printing costs by department, project, or individual user. This data enables companies to allocate costs accurately, identify areas of high printing expenditure, and implement a cost reduction strategy. 

If you don't have print strategy or you have not reviewed your print costs in your environment at all, its a good idea to start. This can be an obvious and simple area to cut costs. Better yet, most printer vendors (Ricoh, Xerox, etc.) will help you implement a print strategy for cost management. 

3. Outsource IT Staff and Services

I will preface this by first acknowledging that I am not in favor of outsourcing IT for cheap labor in other countries. That is a short-term fix for some companies, but it ends up creating animosity between IT and businesses. There are, however, other alternatives to IT outsourcing. Utilizing IT managed service providers as well as IT contracting firms can be extremely beneficial to reducing IT costs. Let’s look at some cost reduction examples:

  • Cost Reduction: Outsourcing IT services can convert fixed IT costs into variable costs, allowing organizations to budget effectively. By paying only for the services used when needed, companies can save on the expenses associated with maintaining a full-time, in-house IT staff, such as payroll, infrastructure, taxes, and training.
  • Access to Expertise: Outsourcing provides access to a pool of skilled IT professionals who are trained, experienced, qualified, and certified. This can be particularly beneficial for small businesses that may not have the resources to attract and retain top talent.
  • Focus on Core Business: By outsourcing IT functions, businesses can concentrate on their core competencies without being distracted by complex IT decisions. This can lead to improved productivity as management can focus on strategic business areas.
  • Scalability: Outsourcing IT services allows organizations to scale their IT operations up or down as needed without the need to hire or lay off staff. This flexibility can be crucial for businesses that experience seasonal fluctuations or are in a growth phase.
  • Quick Implementation of New Technology: A quality outsourced IT service organization will have the resources to start new projects right away, saving time and money. In contrast, handling the same projects in-house might involve weeks or months to hire the right people and provide the support they need. This can provide continuous customer success.
  • Preventative Maintenance and Support: Outsourced IT services can include preventative maintenance of IT infrastructure, which can help prevent issues before they occur. They also provide general system support, which can be more cost-effective than in-house support for small businesses.

However, it's important to note that outsourcing IT services also comes with challenges such as potential team pushback, dependence on a third-party provider, and the need to manage the outsourcing relationship effectively. Organizations should carefully select their outsourcing partners and clearly define their outsourcing objectives to mitigate these risks. It requires careful planning and management to ensure that the business value outweighs the potential drawbacks.

4. Software Licensing

You can’t run a business today without utilizing critical software to keep operations moving. While software technology is extremely impactful, its also increasingly expensive. Most software is licensed with a subscription model which means you pay monthly or yearly whether you use the software or not. That’s why its very important to make sure you consistently monitor your software licenses within your organization. Lets look at a few ways we can reduce IT costs for software licensing:

  • Conduct Software Audits: Regularly conduct software usage audits to understand what software is being used, by whom, and how frequently. This can help identify unused or underutilized licenses, which can then be reassigned or removed to save costs.
  • Optimize Existing Licenses: Understand your user rights and monitor software usage to optimize license allocation. This involves tracking and analyzing actual software usage data to determine the optimal license configuration.
  • Negotiate Contracts: Enter negotiations with software vendors armed with data from your audits. Stand firm in software licensing negotiations and don't assume you can't be regularly renegotiating contracts. This can help you secure contracts that align with your financial and operational needs.
  • Manage Unused Licenses: Unused software licenses can be a significant cost. Implementing a license management tool can help you identify and manage these licenses effectively.
  • Use Software Asset Management (SAM) Tools: SAM tools can automate the process of software license optimization, making it easier to track usage, maintain compliance, and identify opportunities for cost savings.
  • Utilize Open Source Software: There is a lot of very good open source software thats available for business to use at a fractional cost or can even be free. Look at available options for your company to save money. 

5. IT Automation

Automation can be a very effective way to achieve IT cost savings. Having a solid automation strategy for your IT organization can reduce IT costs across the board. Its important to motivate your IT teams to look for automation opportunities within their current day to day responsibilities. Let’s look at how automation helps reduce IT costs:

  • Increased Efficiency: Automation can significantly speed up business processes, reducing the time required to complete tasks and improving overall efficiency. This can lead to cost savings by reducing the need for manual labor and minimizing errors.
  • Reduced Labor Costs: Automated workflows can significantly reduce labor costs by automating routine tasks that would otherwise require employees to spend time and effort completing. This can free up employees to focus on more complex and strategic tasks, reducing the need for additional staff or overtime pay.
  • Reduced Errors and Rework: Automation can help reduce the occurrence of errors, which can result in significant cost savings. By automating processes such as data entry and document processing, the risk of errors can be significantly reduced, reducing the need for rework and additional resources.
  • Faster Time-to-Market: Automation can help reduce the time required to bring products to market. By automating processes such as production planning and scheduling, companies can reduce the time it takes to produce and deliver products, leading to cost savings.

IT automation can lead to significant cost savings through these methods. However, it's important to carefully plan the automation strategy, choose the right tools, and consider potential challenges to ensure successful implementation.

6. Consolidate and Audit Technology Stack

It’s very easy to get caught up in spending on IT resources. Before you know it, you have too much IT overlap throughout your organization. It’s important to regularly review your IT resources and utilize cost reduction strategies to keep IT expenses effective and efficient. Lets look at how we can do that:

  • Eliminate Redundancies: Consolidating your tech stack can help identify and eliminate overlapping applications, ensuring each tool serves a unique and vital purpose in your business. This can lead to dramatic reductions in software expenses.
  • Reduce Licensing and Maintenance Costs: Consolidating IT software reduces the need for multiple licenses, maintenance fees, and support costs associated with different software.
  • Improve Efficiency: A consolidated tech stack can simplify administrative processes, making it easier for teams to collaborate and work efficiently. It can also enhance the user experience by providing a seamless digital journey.
  • Enhance Security: Consolidating your tech stack can also improve security by reducing the number of potential vulnerabilities.
  • Simplify Training and Onboarding: A consolidated tech stack can standardize processes and provide consistent user experience, reducing the costs associated with training and onboarding for new and existing employees.
  • Reallocate Resources: By reducing the complexity of managing multiple tools and platforms, you can free up valuable resources to focus on core services, such as improving service quality or exploring new service offerings.

To effectively consolidate and audit your technology stack, it's important to understand your business goals, define the scope of the audit, and evaluate each component of your tech stack for its need and usefulness. This process can help you identify opportunities to consolidate, optimize, and replace unnecessary technology. 

Remember, while consolidation can lead to cost savings and improved efficiency, it's also important to ensure that any changes do not negatively impact the quality of your services or your ability to achieve your business needs.

7. Process Improvements

Process improvements are a critical aspect of reducing IT costs, as they can lead to more efficient operations and the elimination of waste. Here are some ways process improvements can reduce expense:

  • Streamlining Operations: By reviewing and optimizing current processes, organizations can eliminate redundancies and increase efficiency, which can lead to cost savings. Don’t always assume you need to add more people to overcome poor processes.
  • Enhancing Productivity: Improving efficiency and productivity through process improvements can reduce the time and resources required to complete tasks, thereby decreasing costs.
  • Quality Control: Implementing quality control processes can minimize errors and the need for rework, which saves time and reduces costs associated with corrective actions.
  • Improved Resource Utilization: Analyzing work processes to optimize staff resources can reduce overtime costs and ensure that employees are used effectively.

Reducing IT costs requires a multifaceted approach that encompasses cloud services, print management, outsourcing, software licensing, automation, technology stack consolidation, and process improvements. By strategically implementing these seven measures, IT departments can achieve significant cost savings while maintaining operational excellence in the ever-evolving IT landscape.

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Jamie Larson
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