We all agree these are challenging times, and although some costs are easy to cut when times are tough, others are necessary to continue to operate and conduct business. One particularly challenging area for executives is Information Technology. While it touches most aspects of our working lives, it can be like a bomb where cutting the wrong thing can lead to negative consequences.
The fundamental need with technology is not necessarily cutting, but rather optimizing your spend. Companies frequently overspend or make excessive purchases of software licenses, equipment, etc. during the good times. However, when times get tight and the economy contracts, it is important to know what can be scaled back while maintaining your business’s operations.
The following is a list of areas you can look into when better optimizing your technology spending:
- Consolidate your software applications – Far too often companies purchase multiple application licenses to various products that can all perform the same functions. For example, a company may use Salesforce for their CRM, an accounting software like Microsoft Dynamics, Concur for its expenses, and others. The combined cost of these licenses can be significant to $100,000s per year or more, when one cloud-based ERP software (e.g. NetSuite) can perform all of those functions in one solution for half the cost.
- Video conferencing explosion – As workforces over the last two months rapidly shifted to a work-at-home model, companies have relied more heavily than ever on video conferencing. Try to first use the video conferencing solution you already have. For example, if your company uses Microsoft 365 office for its productivity suite, you already have access to Teams for video conferencing. Avoid paying for additional conferencing solutions unless they are filling a critical need. Some companies already have access to MS Teams while their employees are purchasing and expensing Zoom licenses.
- Outsource all or part of your IT function – IT is comprised of three major functions: Help Desk support, Infrastructure Management, and Server & Security administration. Some companies may also perform their own internal application development. If a company outsources all or part of its IT operations, they can “flex” those costs down during lower periods of demand, or hold those costs fixed for long periods of time if demand increases rapidly. This also shifts the risk and expense to the third party for recruiting talent, retention, training, development, payroll taxes, and benefits. If you are a smaller organization you can also gain access to a shared pool of highly skilled resources that you otherwise may not be able to afford because you may only need a 1/4 of a system engineer, 1 help desk person and an 1/8 of a security expert. You can even pay for hourly support as needed in some situations.
- Optimize your equipment use – If you are forced to significantly downsize, consider using a “desktop as a service” model. This is a concept where you provide the employee access to your software and files via a “virtual desktop” hosted in a data center. The employee can then use a device they already own or a cheaper device you provide to access this “virtual desktop”. This gives you flexibility to spend less on equipment and prevents you from having a room full of unused equipment in periods of contraction. You can also use an IT Managed Services partner to help manage the physical inventory and virtual desktops.
- Renegotiate volumes on print services – Some print services contracts are fixed based on predetermined volumes. These contracted print volumes typically can be renegotiated on a quarterly basis. In a period of contraction, if you do not go back to the print vendor, you may continue paying for more printing than you can use.
- Cut consumption at unused locations – Ensure all electronics outside of any server room or network closet are unplugged or operating at any unused or closed locations. This will help cut down on electricity expenses outside of those that are required for basic operations.
Hopefully this will be only a temporary period of contraction. Although for some essential businesses this has been a time of rapid change and expansion, many deemed “non-essential” are now facing real challenges. Regardless of your situation, the lesson learned is to always be nimble and flexible because change is constant and happens in the blink of an eye. A company that can rapidly contract and expand while maintaining reliability will always survive to the next day.
SAGIN, LLC is a professional services firm which provides services in consulting, technology and talent management. If you would like to learn more about these solutions you can contact us at: +1.312.281.0290 or firstname.lastname@example.org. Also visit us at www.saginllc.com