6 Cost Reduction Strategies for Enterprise IT Influence

Cost reduction strategies
Cost reduction strategies

Enterprise IT relates to hardware and software demands of large organizations. When someone refers to enterprise IT management, the primary aim is to optimize your organization’s availability, compatibility, reliability, performance, security and scalability (although that’s not necessarily the whole list). The strategies we discuss here to influence Enterprise IT cost, may apply equally to more compact organizations depending on their structure. Hence we encourage you to read on even if you are already lean and mean.

Cap the Costs of Software Licenses

Sometimes we think capex and balance sheet, and not expenses and profit and loss. Both are equally important, but we should not overlook major recurring costs like software licenses. Software vendors have to keep reinventing to ensure a steady flow of annuity income.

Software upgrades keep piling into customer mailboxes, and may contain unnecessary innovations. Consider whether you really do need to adapt to their latest cloud strategies. After all, you are hardly in partnership with them. If you push back, they may come up with a more affordable solution. We tried this solution recently on a $3,000/year software license and found out about a lower level option that meets our needs for $1,000/year from the same provider simply by objecting. Even with the service not hitting every “wanted functionality” it hit all of our needed functionalities. They eventually came back and offered the original service for $1,500/year.

Use the opportunity to find out which scripts they run on your network to detect possible misuse of their software. Ask them to stop running these because they could damage your systems, and that’s potentially a high cost. If they don’t budge, ask for an open liability contract in terms of data security breaches. Shop around for a replacement service if they decline.  When last did you cost-justify your software licenses?

Finally, searching for zombie (or unused) licenses is a good excuse and extra benefit of an annual security audit. We looked at some large organizations software licenses and have seen as much as $10-15,000/mo in unused licenses that just needed to be cleaned up and cancelled. Every little bit adds up.

Spend Money Where It Counts

You need to step back and take a critical look at your organization. What areas need vital funds? Are there any areas where the budget isn’t being used to full potential and if so why? Are there any places that, with some extra funding, could be a greater asset to your company? Prioritize based on questions like this and you’ll be able to make sure the money is going to where it needs to be and not wasted elsewhere.

Asking questions like the above, where you evaluate the budget allocation, should be done every year. Markets, demands, and companies change regularly, you need to make sure you adapt to these changes. You should re-evaluate organization priorities each year from a corporate strategy and high level infrastructure perspective. What are the actual needs versus wants? Are there any new regulations that you have to cater for? You should be on top of every penny, by zero cost budgeting once a year and going back to justify each license existence.

As part of making sure your budget goes “where it counts” do not overlook the education and training of your IT staff. IT Staff turnover (very typical) is one of the largest costs in IT. You get lost documentation, lost data, legacy applications, licenses, and settings that can’t be found or setup differently. Finding and replacing all these will not only cost money, but it takes up valuable time. Take care of your people, educate them, keep them up to date on the latest and greatest.

Make sure to consider the soft skills of IT managers. Organization change, buy in, understanding on PNL, and understanding of organization architecture is key along with technical education. The investment in these areas and soft skills will significantly help with retention but also organizational effectiveness.

Get Your Cloud Back Under Control

Different parts of the data stack require different storage solutions. Do we need colocation, hybrid or cloud? We can use various technologies to hybridize best. It’s time to explore hyper converged infrastructures like Pivot3, and cloud native hybrid storage strategies including Rubrik.

Data storage clouds are expensive, although because we can’t touch them we tend to treat them as open ended. Forbes believes that a staggering one third of cloud spend is wasted.  The dollar values are startling. Forbes reports 26% of large enterprises spend over $6 million a year, with a further 26% spending over $1.2 million annually on clouds.

Yet, and this is the surprising part, 70% say they will increase these amounts by at least 20% in 2019. However and here’s the bright side, 58 regard optimizing this top priority. Perhaps they will succeed in taming the monster, although habits are hard to break. This could be the year to clamp down on what is happening deep in your enterprise.

Hire a Managed Service Provider

This may be throwing in the towel, but you could get a clean one back. Hiring a managed IT services provider sweeps aside office politics, and quickly spots failing projects that should have closed down months ago. This can be an opportunity to redefine the role of IT in your company and take it to a new level.

Having to agree a range of services at a defined cost, can be a great improvement from simply spending the money in the budget. A further advantage is the service is scalable and you can fine-tune it to your business cycle. Some board members welcome not having to make technical decisions they don’t fully understand.  Others will never risk their enterprise IT in another’s hands.

How Did We Get Into This Mess?

The irascible Irish writer George Bernard Shaw said, “A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing.” However, he did also remark, “Progress is impossible without change, and those who cannot change their minds cannot change anything.”

Enterprise IT has followed a winding road since we stumbled over it recently, compared to other key business tools. Perhaps we should make doing IT right first time our IT mantra. However we had no idea what was coming at the time and we may never know.

Do we spend more time mulling over a standard for office sizes than we do approving a data solution? Everyone on the board understands offices, but how many have their minds fully around enterprise IT. Rushing through a project to achieve the savings early often does not achieve all the desired long term results.

Go Slightly Slower Into Your Enterprise IT Future

Please don’t forward our list to your IT department with a scribbled note ‘get this all done’. Discuss it with them first. IT people are smart and you may have none of the issues we listed. On the other hand there is always some room for improvement. Provided the benefits outweigh the costs.

Set up your storage and software policy to suit your operations, and not the other way around. Use failures to interrogate the quality of your people and your contribution as a leader. We may learn more from failure than success, when we look, listen, and consider. You need to ask yourself about your leadership and users in the organization what the expectations are and what level of failure is tolerated and plan to that with a justified cost strategy.