Businesses heavily rely on IT services to maintain their overall internal and external operations, as we know; in today’s world, it is impossible to run a company without incorporating efficient IT strategies. However, with various IT strategies comes the IT budget that takes a massive chunk of the venture’s finances to support its infrastructure. This is where IT consulting becomes a necessity. To come up with information technology cost reduction strategies.
Let’s see some of the methods you can opt for to ensure your business’ IT is Cost-Effective.
1- IT Cost Allocation Models
For starters, you need to analyze the current IT expenditures of your company. Calculating the IT cost gives an overview of how much money is being spent and what steps you can take to cut down the costs. You can use metrics to organize all the numbers and keep everything in order.
You can then use all the data to create efficient IT budget, allocation models. The CIO (Chief Information Officer) works on the budget of the IT department by analyzing the information technology cost drivers. The cost drivers could include,
- IT personnel
- Services
- Hardware
- Software
- Subscriptions
Also, the IT department should closely work with the finance department of the company. This cooperation can be highly beneficial for the overall enterprise as it can help develop effective Information technology cost management.
Furthermore, information technology cost-benefit analysis helps decide how much money should be invested in what type of technology. This step can help the company to grow in the future and generate adequate profits. Such projects require a flexible budget but investing smartly after running thorough IT cost analysis can close all the possible cost leaking holes.
Real-Life Example:
if the accounts department is suggested by IT experts to shift from Oracle software to SAP software for enhancing productivity and accuracy of data, then heavy capital expenditures would incur
- for installing software and paying the license fee
- for training the existing employees to use the new technology
Now, IT cost-benefit analysis can show:
- the cost spent on Oracle and the profits it generates from using it compared to the cost required to shift on SAP and the benefits of investing in SAP
- the anticipated rise in profits
- Cost-savings/cuttings per month
- Impact on the employee work efficiency level
2- Reduce Employee Costs
IT employees are pretty expensive. In short, you spend a handsome amount of the budget on paying the personnel, also covering their other expenses like travel and health. To control the personnel expenditures, it is better to hire fewer people that are competent enough to deal with the IT matters.
For example: If you don’t need an app that requires constant change in coding, don’t hire a full-time Android programmer. Instead, get your app made by a company and hire someone on an hourly basis to get little tweaks done every now and then.
3 – Only the Must-have Hardware
Hardware expenses usually include the money spent on the equipment, its installation, and maintenance. You can save a substantial amount of cash by,
a) Using remote employees
b) moving all the data to the cloud storage systems
4- Review Subscriptions you don’t need
You need to look out for subscriptions you’re paying annually but not using anymore. When companies use external software and services, they often buy annual subscriptions; however, down the line, when those services are no longer required, you can easily forget to cancel the subscription fee, which makes you lose money.
For example, an HR manager pays the subscription fee to use the Quilgo app for setting a timer on an online test, but after some time, they switch to a better application, forgetting to cancel the premium fee for Quilgo. It will then become a hidden expense that calls for you to keep a check on subscription payments and cancel any you don’t use anymore.
5- Software Contracts and AI Tools
You can save some money on the software you use by negotiating pricing plans with your software vendor. Chances are you might get a discount or some other opportunity for cutting down the costs.
Moreover, you can use free software and AI tools online. Many websites offer free services and tools. For example, if you provide content creation and writing services, you can use applications like Canva for graphics and Grammarly for checking grammar plus the quality of your writing. Google Analytics is another good example of keeping track of your website traffic.
6- Track Invoices
Use customer relationship management (CRM) software to track your various invoices, customer data, sales, employee information, contracts, and client management. All in all, you can use particular CRM software to take care of more than one job. Salesforce work and Infusionsoft are good examples
7- Communication Apps
Use free applications like Zoom, Skype, or Google Hangouts to have meetings with remote employees. You can arrange a timely meeting with your consultants, advisors, or legal counselors related directly or indirectly to IT online without traveling to a specific location.
8- Avoid Shortcuts
Don’t forget that you get what you pay for –
From your personnel to hardware/software and service providers, check everything. Create virtual databases and use a metric system to keep track of your cost savings. Moreover, cut down only those costs that are unnecessary. Try to avoid looking for cheaper alternatives to everything.
Final Thoughts
There are even more information technology cost savings ideas you can use to lower the expenses dedicated not only to the IT department itself.
Analyze your investment in Social media platforms and applications; you can find ways to reduce your IT costs there as well.
