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Consolidate Your Servers And Virtualize Them
Minimizing your on-premise footprint is one of the best ways to cut IT expenses and decrease power usage for cooling servers.
Virtualization may also help cut licensing fees while increasing server utilization and improving availability/reliability for applications outsourced IT managed services.
Cloud Computing: Move to the Cloud
Cloud computing can also help reduce IT expenses. By moving infrastructure and applications into the cloud, you'll save money - with many providers offering flexible pricing that allows you to only pay for resources used.
Moving project websites from on-premise servers to the cloud has enabled Baisch Engineering to reduce development time.
Our partnership enabled them to migrate their project websites seamlessly while setting up their environment ready for new projects in the cloud environment. For more details on Baisch's success in the cloud environment, please download their case study in full.
Optimize Software Licensing
Many companies need help managing and tracking their server licenses effectively. Utilizing virtual machines on the cloud helps ensure you only pay for what is necessary, and purchasing monthly perpetual licenses from Core can reduce costs via hybrid-use discounts while organizing licensing - or conduct an audit and optimize licensing accordingly [Learn about our expertise in Microsoft Licensing]
Implement Energy-efficient Practices
Reduced energy consumption is a great way to reduce your IT costs. Some energy-efficient techniques include using power management on your devices, consolidating data centers, upgrading to energy-efficient hardware, and more.
Outsource non-core IT functions
Consider outsourcing non-core IT functions such as help desk support, network management, and managed services to third parties to reduce labor costs while improving service levels and freeing up more time for strategic initiatives from your IT staff.
Outsourcing can reduce labor costs while simultaneously freeing them up for strategic initiatives.
We assisted the NRP group with limited resources and urgent cybersecurity vulnerabilities, acting as an extension of their IT team to enhance security posture while helping maximize Azure investment.
Our case study provides more insight into their successful transition from traditional to agile operating model.
Open Source Software: Leverage it
Open-source software offers a great alternative to proprietary solutions, enabling you to sidestep licensing fees while tapping into an active developer community that works tirelessly on updating software retail IT managed services.
Regularly Conduct Technology Assessments
Regular technology assessments will enable you to identify areas to optimize and reduce costs. A technology assessment can identify underutilized resources, eliminate redundant systems, or identify technologies that can increase efficiency while decreasing costs.
We did this for an East Coast financial institution through our COMPASS program, which helps clients develop plans to take control of their Microsoft licensing portfolio and prepare them to transition to cloud technology.
By strategically planning implementation and streamlining licensing requirements over three years, we allowed this client to pay for it without worrying about unexpected expenses or out-of-pocket costs.
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What Is The Best Way To Manage IT Services Costs?
IT service costs can burden organizations that rely on technology to deliver value to their customers, employees, and stakeholders.
So, how can organizations effectively manage IT spending while meeting quality, security, and innovation requirements? Below are a few strategies to help effectively control IT service costs.
Align IT Goals With Business Objectives
Aligning your IT strategy to your business goals and objectives is the key to managing IT costs effectively. Understanding the impact and value of each IT service should inform budget allocation accordingly while communicating your expectations among key business units, stakeholders, and other parties involved is also key in effectively controlling IT costs.
Adopting A Service-Oriented Attitude
Adopting a service-oriented delivery approach is the second step to managing IT costs effectively. This requires designing, developing, and delivering IT services following customer expectations and needs, monitoring performance measures of quality satisfaction scores to enhance services continuously, and collecting feedback to optimize these offerings further.
Service-oriented approaches can reduce waste while improving efficiency and increasing value creation.
Cloud and Automation
Cloud technologies provide an effective means of streamlining IT operations and infrastructure while mitigating costs, with their various advantages: reduced capital and operating expenses, flexible user sizing options, and access to cutting-edge innovations; plus, they enable automation that streamlines and standardizes processes while eliminating human error; this frees your staff up for more creative or strategic tasks.
Implement Demand Management
Demand management is the fourth step to controlling IT costs. It should balance supply and demand for your IT services and resources.
Demand management involves analyzing, forecasting, and influencing customer demand while aligning it with your IT capabilities and capacity. Create a transparent pricing model and communicate it to customers' enterprise IT service management system.
Encourage a Cost-Conscious Culture
Fifthly, to effectively manage IT service costs, you must foster an environment that cultivates cost awareness and accountability among your IT staff and customers.
It would help if you educated both groups on the benefits and costs of IT services while encouraging responsible decision-making and rewarding behaviors that contribute to cost reduction and value creation.
Regularly Review And Optimize Your Website
Sixth, you must regularly review and assess your IT performance and spending. Conduct regular audits and assessments of IT quality, value, costs, and any opportunities for improvement that exist within it.
Your senior management should be kept abreast of costs and benefits associated with your IT and report them directly; additionally, you can show proof of investment through your IT strategy.
Technology Expenses Management: The Best Strategies to Control Costs
Today's competitive workplace demands the use of advanced communication and collaboration tools. Hosted telecom services allow decision-makers to save both time and money while providing their teams with efficient, secure connectivity.
Technology expense management should be prioritized for companies managing digital services across multiple locations.
Businesses without a plan for managing cost-cutting measures often find their technology spending spiraling out of control.
Departments at mid and enterprise-level companies may become overwhelmed with managing technology inventories, contracts, invoices, or overspending, all tasks that may cost hundreds of thousands in annual losses for businesses without effective controls.
Also Read: Essential Strategies for Successfully Managing IT Services in Your Company
Why Do Business Decision Makers Invest in Technology Expense Management Services
In the early 2000s, during the Covid-19 pandemic, many mid- to enterprise-level business decision-makers that allocated funds for remote working believed they were investing only in short-term communication and collaboration tools; many considered this temporary expenditure; the best course was increasing technology spending to accommodate "workarounds." At first, it was thought that management and owners of businesses would abandon these "workaround" strategies once virus threats had subsided.
Most individuals today do not wish to revert to the technology solutions used before the pandemic; rather, they seek ways to reduce unnecessary expenses and streamline operations.
Managers overseeing tech inventories, monthly invoices, and contract renewals may find it challenging to ensure their organization is getting full value for its digital spending.
Technology Expense Management Services & Support: Benefits
When using outdated expense tracking and reporting tools, IT and finance departments can be difficult to keep tabs on all the hardware, software, and services provided to an organization.
While replacing outmoded processes with as-a-service software capable of tracking expenses is straightforward, complexities associated with business technology solutions billing terms make their usage complicated. Auditing all technology services can reveal costly oversights or discrepancies, leading to increased digital spending and financial management for IT services.
An accurate picture of your technology spending and investment analysis is vitally important. On average, companies support 200 employees using 123 SaaS applications divided among 19 billing owners.
Technology expense management systems empower business owners by providing an agile and adaptable expense system that can easily adapt as applications and services are added or altered over time.
Investment in technology expense-management services brings many advantages. Many corporate decision-makers find that the advanced reporting and analytical capabilities justify their purchase decision.
Automated Invoice Verification and Payment
Managing multiple IT invoices can be an arduous task for finance teams. Verifying complex service invoices often leads to missing any incorrect charges; there's often industry-specific jargon and subtle or not-so-subtle differences among payment policies, contracts, and service level agreements to navigate as well.
Technology expense management platforms serve to centralize corporate inventory and billing information on one user-friendly platform, automatically updating with any new invoices received and checking service inventory against billing data to identify inconsistencies quickly so account managers can resolve discrepancies quickly by researching and rectifying them quickly.
Identification of Unutilized and Underutilized Services
Managers frequently need to reduce reliance on older hardware and software as business requirements shift, with learning curves often making change challenging for employees.
Unfortunately, after upgrading technology, many organizations continue paying subscription fees or fees associated with equipment no longer used by users (or abandoned years ago).
An automated technology expense system that monitors tech inventories and subscriptions to as-a-service platforms collects usage data from service providers; underutilized or unnecessary services are identified and reviewed so decision-makers can reassess, eliminate redundancies, and cut unnecessary costs.
Proactive Email Notifications
Best technology expense management companies can help organizations of all sizes avoid service interruptions that could be detrimental and other problems.
Investing in technology expenses for support and automation of workflows, you can ensure that the right representatives are notified well before contract milestones.
Not all technology expense managers offer this feature, but it is a great way to avoid service interruptions caused by missed deadlines and miscommunications.
It also saves time and money because you can avoid unwanted auto-renewals for services you no longer need or pay additional fees to cancel off-market contracts.
Overcharge Recovery
Even seemingly minor billing errors and overcharges add up quickly for businesses that pay multiple telecom providers in different countries to keep their business operational.
One leading global investment company discovered that after investing in technology expenses, they had been overpaying their communication services for several years.
Contract Renegotiation
You can have peace of mind knowing that your company is being supported by a team of experienced professionals working in the background to manage expenses.
Their industry connections allow them to negotiate service terms on your behalf and secure telecom upgrades without increasing costs.
Best technology expense management companies use AI-enhanced tools to improve network performance and reduce tech spending by analyzing current telecom contracts.
This ensures you are not paying more than market value. If you find that the system is identifying higher-than-normal costs for a particular location, you will have a roadmap to renegotiate your contract or replace your supplier.
Find Out What Technology Expense Management Solutions Can Do For Your Business
Many mid-to-enterprise-level companies with multiple branches assign their financial departments the task of validating and paying an endless stream of complex invoices.
Only some associates are familiar enough with the terminology used by their industry to describe the charges that appear on the invoices to be able to spot discrepancies. Many decision-makers pay even if they detect errors to avoid penalties, service interruptions, or straining their otherwise good relationship with service providers.
Technology expense management allows businesses to take control of digital spending and reduce telecommunications costs.
It does this by giving them a clear view of their technology inventory and providing the data-driven insights they need to evaluate the return on their investment. The best technology expense management systems include automated invoice verification, data analysis, expense allocation, and more.
What Are The Best Strategies To Reduce IT Project Costs And Maintain Quality?
Many organizations face the challenge of reducing IT project costs and maintaining quality. IT projects are often complicated, involving multiple stakeholders, evolving technologies, and unpredictable risks.
There are effective strategies to help you manage the budget of your IT project without compromising quality. Here are six.
Define Clear Goals And Scope
Scope creep is a major cause of IT cost overruns. This occurs when new features are added to the project plan or existing ones are changed without adjusting the budget or timeframe.
You can avoid this by defining clear and realistic goals and scope for your IT project right from the beginning. You will need to identify the business requirements, deliverables, success criteria, assumptions, and constraints. It is also important to get the buy-in and agreement of all project stakeholders.
Prioritize Your Tasks And Plan Accordingly
Plan and prioritize your tasks to maintain quality while reducing IT project costs. It is important to break down your project into manageable milestones and activities and assign them to the appropriate resources.
Estimate each task's time, cost, and quality and then prioritize them based on their urgency and importance. By planning and prioritizing tasks, you can maximize your resources, avoid delays, and focus on your most important aspects.
Use Agile Methodologies
Agile methodologies are a collection of principles and practices for IT project management that prioritize flexibility, collaboration, and customer feedback.
Agile methodologies allow you to reduce IT project costs while maintaining quality. They do this by allowing you to deliver incremental value, adapt to changing needs, and continuously improve your processes.
Scrum, Kanban, and Extreme Programming are the most common agile methodologies. Choose the agile methodology that best suits your project goals and context, then follow its guidelines.
Agile methodologies can reduce IT project costs by encouraging flexibility, improving team collaboration, and incorporating customer feedback regularly.
They focus on delivering value incrementally, continuous process improvements, early identification of risks, and transparent prioritization. Agile's ability to reduce costs depends on the proper implementation of Agile and the level of commitment and understanding amongst team members.
Leverage Existing Resources
Leveraging your existing resources is one of the easiest ways to reduce IT costs and maintain quality. You can use those you already possess or can access rather than buying new skills, tools, and assets.
You can reuse code, templates, or frameworks instead of creating them from scratch. Open-source and cloud-based software can be used instead of expensive hardware or software. Instead of using external consultants or vendors, you can collaborate with other departments or teams.
Examine And Improve Quality
To reduce IT project costs and maintain quality, the final strategy is to review and improve quality regularly. Conducting quality assurance and control activities during the entire project lifecycle is important.
This will ensure that your deliverables are up to standards and meet customer and stakeholder expectations. You must also collect and analyze data and metrics to find and fix any errors, defects, or gaps within your project.
You can improve your project's performance, satisfaction, and value by reviewing and improving the quality.
Risk Monitoring And Management
IT projects are risky because they include uncertainties, dependencies, and external factors that can influence their outcome.
You must control and monitor your risks to reduce IT project costs while maintaining quality. It means identifying, prioritizing, and analyzing risks and creating mitigation and contingency plans. You must also track your risk status, report it, and implement your risk management strategies if necessary.
You can minimize or prevent the impact of your risks on your project's scope, schedule, and budget by monitoring and controlling them.
Also Read: Counting the Cost: Understanding The Total Expenses Of Managed IT Services
Cost-effective Cost Optimization Strategies
Effective cost optimization requires a strategic approach. To achieve their business goals, organizations must align IT resources.
They must also maintain a clear view of the IT services and systems across multiple departments. This includes new operations brought in through a merger or an acquisition.
Opex Budget Rationalization
Budgeting operating expenses (OPEX) is fundamental to cost management and optimization. Budgets set spending limits and establish accountability.
Budgets can be developed using various methods, from zero-based budgets to budget baselines rolled forward based on the actual expenditures from the previous year.
Budgeting should have as its primary objective the allocation of annual expenses to maximize value. Many budgets carry over expenses from year to year without evaluating their value.
CDW can structure budgeting to put cost optimization at the forefront. We can implement OPEX budget optimization as a standalone or with investment analytics to broaden the optimization efforts.
Investment Analytics
Most organizations have limited discretionary funds and must determine which investments will bring the most benefits.
Cost optimization requires formal processes to evaluate and prioritize, select, and fund initiatives.
The business vision and goals will be essential to establishing the investment evaluation criteria. Prioritization and selection should be guided by standard tools and templates, and final funding decisions should be made based on the committee's consensus.
Validating benefits is an important step after implementation to confirm the return on investment. CDW can assist in designing and implementing a sustainable investment analysis framework and support initiative-specific decision-making with modeling and analyses.
Cloud And Hybrid It Finance
Cloud computing and hybrid IT have a profound impact on cost optimization. Cloud migration and multiplatform environments typically increase usage and cost visibility complexity.
As operations grow, optimizing costs becomes more important.
Cloud cost optimization is a multi-faceted process that includes resource pricing, discounting, monitoring of real-time usage, and governance.
Success requires a coordinated plan, which starts with cloud usage and visibility of costs. FinOps is a company that was created to tackle cloud financial management. CDW offers services to support FinOps, helping clients at every stage of their journey.
Cost Transparency Metrics
Transparency gives meaning to IT cost data by defining ownership, expense classifications, resource composition, and cost drivers.
Transparency is associated with costs at higher levels of maturity.
Cost data that is meaningful can be modeled, explained, and compared based on total or unit metrics. This can help identify business and technical cost drivers.
Unit metrics that map to the activities driving resource use are crucial for understanding and optimizing IT costs. CDW's cost transparency services will take your organization's roadmap for cost optimization to the next step.
Cost Benchmarking And Financial Health Checks
Cost benchmarking and financial health checks can be used to initiate cost optimization initiatives, especially when an organization wants better information about its financial processes and spending.
Benchmarking identifies cost-reduction opportunities, initially focusing on adaptive efforts to eliminate expenditure.
These entry points provide valuable data that can be used for cost optimization and growth planning. IT benchmarking expense categories can be used to create cost transparency frameworks and reporting models.
CDW IT benchmarking services and financial health checks can help jump-start cost optimization efforts when current-state assessments are the best starting point.
Cloud Strategy
FinOps-aligned cloud strategies focus on cost optimization while ensuring financial management and operational efficiency.
Many organizations use reserved instances (RI) to commit to a certain level of cloud use. By implementing RI management, organizations can save money in the long run.
A cloud strategy should optimize workloads by monitoring resource usage and adjusting to maximize efficiency and eliminate waste.
Scheduled automation streamlines resource provisioning by aligning capacity to actual usage and anticipated demand to reduce costs. The strategic storage tiering process moves data to the most cost-effective storage levels. These methods can be integrated into a cloud-based strategy to align financial goals with operational objectives.
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Conclusion
Reduced IT costs require a strategic approach that considers both the short-term and long-term opportunities for cost savings.
Businesses can save money by consolidating and virtualizing their servers, moving them to the cloud, and optimizing software licensing. They can also implement energy-efficient practices and outsource non-core functions.
