7 Ways To Trim Your IT Budget
The press loves to report on train wrecks , the European debt crisis being no exception. Pick-up a newspaper, and every money commentator and business program you listen to has the overwhelming message of doom and gloom in Europe. Yet in Canada, specifically within IT, employment is stable. We see our unemployment rates inch upward only because more people are looking for work. Despite some signs of weakness in the overall job market, the IT sector is still a huge bright spot with unemployment at only 2.9%. When you factor in the natural unemployment rate (those involved in job transitions) we are actually at a point of over-employment. (Economists often say the natural rate of unemployment should be no less than 4%). So what does a Manager do? Some will push on with the status quo, others fight for talent, and some simply hunker down and wait for the storm to blow over.
The right answer probably lies somewhere in between. For those who are looking for ways to cut IT expenditure, we have come up with some ideas to achieve this:
#1: Delay Unnecessary Upgrades
Many organizations get in the habit of automatically upgrading to the latest version of software and hardware as soon as it is released. This strategy is an expensive one. How many new features do your user groups really need or ultimately use? In addition, if you are first to implement an upgrade or service pack, you should rethink that strategy since being an early adopter means you are the trail blazer for hitting bugs and issues first. These problems will be fixed, but at your expense.
#2: Review Old Vendor Pricing
Vendors continuously review and change pricing models and plan. When new features or services are announced, many companies add these on to their customers’ existing plans – this can end up being more costly. Changing your billing structure to bundle services and features together may dramatically reduce costs, a notorious practice of Cell companies. Also, vendors you have worked with for years may not be giving you their best price. New vendors may offer more aggressive pricing to get your business. So ask your existing vendors about new pricing options.
#3: Consider Selective Deployment of Open Source Software
Open Source software is often available free of charge, although it may come without warranties, formal training programs, or technical support and updates may or may not occur.
That being said, Open Source has a place in every organization if deployed carefully and selectively. Open Source server software could be appropriate for certain dedicated servers if you have the people with this expertise. Use the talents of your employees to save money. Another example is the use of Open Office. This is a great option instead of using MS Office as this solution is compatible with most file formats of commercial applications. Some users like this. Especially those who only need to create documents occasionally, and therefore do not require the advanced features offered in other commercial programs. This could be the right solution.
A careful assessment of where Open Source software can and can’t be deployed in your organization without undue disruption can help you create a cost saving integration.
#4: Have Fewer, Smarter Meetings
Have you ever tried to estimate the cost per-hour of your meetings? Add up your hourly rate, that of the 3 consultants, 2 staff, the Project Manager, a few users and other IT people all attending. It could easily add up to $1,000 to $2,000 per hour. If you have 12 such meetings a month, this could cost over half a million dollars a year to your organization.
See our May 2011 CIO letter, https://ignitetechnical.com/blog/run-better-meetings, where we discussed ways to run better and more efficient meetings.
#5: Look At Different Training Strategies
Training is often one of the first items suffering from budget cutbacks, but arbitrarily slashing all training dollars can end up costing the company more in the long run. Training is necessary for IT personnel to keep current on the technologies they deploy and administer; minimizing mistakes resulting in expensive downtime or even loss of critical data.
Rather than sending staff to exotic locations for conferences and training, look into local alternatives. Consider starting a local user group. Then have trainers come to your city to train the group. Hire local consultants to provide one-on-one training. Build a structure where senior staff trains junior members or organize Lunch-n-Learns as a great forum for training.
#6: Outsource Some Services
Outsourcing is a sensitive subject. Many people hear the word and think only of personnel cuts and jobs going to foreign shores. But judicious outsourcing can allow you to utilize the personnel you have more efficiently towards better cost effectiveness running your IT operation, minimizing the risks of entrusting your data to people half a world away.
For example, as your business grows and your need for more servers expands, you might find that it’s less expensive and less of a hassle to use a hosting service for your Web servers or E-mail, rather than buying more hardware and hiring more personnel. As with other money-saving measures, this is not a one-size-fits-all solution. First assess your specific needs, compare prices, and do a cost/benefits analysis to determine whether outsourcing really is the most cost effective option in both the short and long run.
#7: Consider Short-Term Contractors
Not to be too self serving, but contractors are a way to manage budgets. Many companies use large integration companies for large projects on fixed bids. This makes sense as they can deliver cost savings with flexibility. The problem with this approach is that the goal of integrators is to inject more of their own staff to work as Time & Materials contractors in your organization. Rather than just servicing the major projects they were brought on board for under a fixed bid, the integrator’s staff ends up working on smaller projects or one-offs on an hourly rate. Clearly this ends up costing far more than original cost savings projections.
To optimize your budget, use integrators only for fixed bids, and call on Resourcing Firms to provide resources for Time & Materials (this is typically half the rate of the hourly costs the large integrators will charge). Another secret your Integrator does not tell you is the T&M resources they are providing are often double marketed up as the Integrators turn to Resourcing Firms to fill short term roles. Going directly to Resourcing Firms will cut out this extra cost. We recommend reviewing the resources currently on-site from your Integrator and talking to a Resourcing Firm (i.e. Ignite).
There are no easy ways to trim a budget. It is easier to spend money than save it. Finding a 10% reduction in your budget will probably require some effort, but the impact of this effort to the health of your business could be immeasurable. Seek help. Ask your staff what they would do if they had to cut 10% from company’s costs. You may be surprised at the ideas that appear.
