IT cost reduction strategies: Learn how to cut expenses with ease

IT cost reduction wasn’t paid much attention to before the pandemic. However, as soon as it began, many companies felt the financial burden and were forced to find a solution.

Now, there are hundreds of IT cost-cutting strategies with different approaches. We’ll cover the major options.

5 strategies to reduce IT costs

Below, you will find the most popular approaches that are implemented in the business processes of most modern companies.

We are confident that we have what it takes to help you get your platform from the idea throughout design and development phases, all the way to successful deployment in a production environment!

1. Moving to the cloud

Have you heard of cloud services? They help companies reduce the workload on local infrastructure and move the heaviest part to a cloud provider.

Cloud technology helps you reduce costs thanks to the following factors:

Infrastructure maintenance and upgrade;
Fewer in-house specialists;
Paying just for what you use.

Of course, a lot depends on what cloud type you use – public, private, or hybrid. Each comes with pros and cons, which were already described in the Global Cloud Team’s blog. Check it out, and you’ll see why it’s a cost-efficient choice.

2. Reduce the services you don’t need

Most companies make one and the same mistake – instead of removing idle services, they freeze them “for future use”. These could be subscriptions, cloud space, and others.

If you can remove something that you will not need back soon, then go for it!

3. Focus on remote work

Office positions usually involve higher expenses on salaries, rent, equipment, and a ton of other things that are needed in the everyday routine of an IT company. Try this out for at least a month, and you’ll see a huge IT cost reduction.

4. Automate processes

When you cut expenses, you should also invest funds in alternatives that will cover everything you remove. You could implement ERPs, CRMs, IoT technologies, cloud services, and a ton of other ideas.

If you think this will help you cut down on the number of employees, then you’re wrong. You’ll still cut your IT expenses, although you will also need a team with new skills to manage the processes. Creative workers are a must-have!

5. Manage your outsource contracts

It is no secret that many IT companies work with outsourcing specialists. In case your business works with several outsource partners, it is crucial that you analyze all the contracts to see whether they follow crisis-response actions.

First and foremost, all the outsourcing teams and services must be capable of working effectively no matter what the situation is. They are the backbone of your company, meaning they cannot let you down. Also, the team is obliged to comply with certain security policies.

Capacity is yet another issue that must be covered. Your vendor should be able to adapt both to increases and decreases in demand. If we speak about hardware, there is a need to guarantee that all critical services will always remain online.

After you check the contracts and analyze the rates, make a decision. Either you remain with the previous rates and models, or you attempt to negotiate to lower the price. This depends on the needs of your business.

IT cost reduction strategies: Learn how to cut expenses with ease

IT cost reduction mistakes

Now that we’ve covered the general IT cost reduction strategies, it is time we came up with several pitfalls one must be aware of. Even the highest-ranked CEOs make these mistakes, so don’t be like them!

Staff

It often occurs that specialists are the first to feel IT cost reduction in their company. This leads to a situation where many people are sacked while the company remains with the minimum number of experts.

When that happens, managers find out that they’ve kicked out the only people who knew how things work in the projects. Their absence makes the processes collapse as it is impossible to substitute such specialists in a short period of time.

Therefore, when sacking someone, always remember the consequences. Who will manage the responsibilities of that person? Will there be any value in that? Ask yourself those questions, and you’ll get the answer.

Infrastructure

Why use expensive hardware when you can get it cheaper? That’s what some companies would think. They get cheap infrastructure without preliminary analysis and then it occurs that it doesn’t keep up with the workload. Such mistakes lead to additional expenses, resulting in the IT cost-cutting failure.

Of course, cutting costs on infrastructure is possible and such a strategy exists. However, you must remember that this technique may only be implemented after proper analysis. It is necessary that you know the new hardware will comply with all the requirements and withstand the workload.

Strategy

Successful digital transformation is always built on a proper strategic approach. You cannot start cutting costs randomly from each department without analysis. This also does not mean that you should make a general list of “fancy stuff” you’d like to use.

A strategy means working with the stakeholders of your company to determine which technology would solve the goals of the business. All decisions will impact not only a certain department but the whole enterprise in general.

The bottom line

IT cost reduction is like a double-edged sword. With proper preparation, it will bring huge benefits. However, the slightest mistake could ruin the whole business.

Don’t make any mistakes when reducing costs. Contact a specialized expert for the best results!