5 Proven Techniques to Reduce Your IT Expenditure
It’s an unfortunate truism today that the head of IT is between a rock and a hard place. On the one hand, the CIO is being asked to provide new leading-edge systems and services.
On the other hand, the CIO is being subjected to budget pressures, in effect being asked to do more with less. Hence the need to be creative with the budget.
The big question is how to change the mindset that IT is a cost centre and have executive management look on ICT as an innovation centre where technology can be used to support positive business change.
The mindset change may well be a longer-term objective, with the immediate problem of the funds available not meeting the calls on them still there.
Here are a few strategies to stretch that dollar a wee bit further.
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IT Support Company Costs
Most organisation use IT Support Companies to a lesser or greater extent. If the contract is a long-term one, costs might increase little by little without the CIO being fully aware of it.
- Review the work being carried out by the IT Support Company and make sure that they are meeting their contractual obligations and all charges are appropriate. Make sure that all the little add-ons that creep in are justified. Sometimes they are one-off charges that have become part of the regular furniture.Question if you need the services the IT Support Company provides and could they be transferred inhouse. If they can, an immediate cost saving. If a contractor is needed for a specific project task, make sure the contractor costs are included in the project budget, not the general IT budget Adjust or terminate as required.
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Budget Manipulation
A few years ago, a technique called zero-based budgeting was all the rage. Existing budgets are used for years and don’t fully reflect current realities. A new budget with new budget headings and values is created from scratch. This allows the CIO to fine-tune budgets, thereby demonstrating a “reduction” while preserving funds.
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Personnel Costs
Over time, IT Departmental staffing can become out of step with departmental needs. In particular, many become top-heavy as key staff are promoted. The first, but the painful way is to have a clearout from time to time to keep staffing levels in line with perceived needs.
However, periodic culling will create non-creative tension in the department and may not be in line with the organisation’s overall HR objectives.
It is important to have a departmental strategic plan and align staffing with it. Use retraining opportunities and redeploy staff into new areas that you may otherwise recruit for.
Another way to reduce staff costs is to introduce lower-level employees to vacant posts.
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Hardware and Software Optimisation
In the more mature organisation, there is often a mismatch between installed hardware and software and that needed to support operational systems. Changes, for instance, virtualised servers and storage can reduce a hardware and software footprint and therefore support costs.
There may even be redundant hardware or software which can be removed Carry out a systems audit and see if changes in hardware configurations can reduce hardware requirements and if any software applications are no longer needed and can be decommissioned.
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Change the view of IT
As mentioned above, IT is often seen as a cost centre. To manage budgets better, change that view to one where IT is seen as a means of supporting new business strategies.
There may be no immediate impact, but it is essential for the longer term:
- The CIO must be part of the strategic business planning process.
- Devolve costs that are not IT costs back to those incurring them, for instance, manage storage demands by applying a storage usage charge and manage telephony costs by recharging them back to the caller.
- Create a positive view of IT in the organisation, publish success stories, use trials to demonstrate how IT can be used to deliver value and reduce cost. Involve users and user department in IT projects.
- Keep close to Finance so you know exactly what you have, and what they will accept by way of creative budgeting.
IT budget issues are as Gladstone said of the poor ”Always with us”. However, as shown above they can be managed.