Forward-thinking companies aren’t slowing down innovation despite shrinking IT budgets. Here are a few ways to start the cost optimization process and get your organization on the right track.
We all know there’s a lot of waste in IT. Almost every organization has excess somewhere that could be streamlined and made more efficient.
And in today’s business climate, where 96% of CEOs are reducing costs across the board this year, IT leaders are facing increased pressure to do more with less.
“Businesses invest in technology and tools they don’t need just because that is what is trending,” according to “Important Tips About IT Cost Optimization” on ProCoders.tech. “But the aim of every investment is profit-making, and you want to ensure that your IT infrastructure is delivering value commensurate to your investment.”
But it’s not merely about cutting the chaff. To be successful, companies need a long-term, sustainable plan.
Cost optimization is a strategic reduction done primarily to maximize value, reduce unnecessary expenses, and improve operational efficiencies.
Cost Optimization vs. Cost Cutting
Both cost optimization and cost cutting are necessary in the IT space. While cost cutting focuses more on actual spend, it’s usually a one-time shot that will save money in the short-term but will have to be revisited every time a cost increase hits your budget.
On the other hand, cost optimization is a strategic reduction done primarily to maximize value, reduce unnecessary expenses, and improve operational efficiencies. Sure, cost cutting is a part of cost optimization, but it’s just the beginning of the process.
Here are three ways to jumpstart your IT cost optimization plan.
Step 1: Optimize licensing
By optimizing your software licenses, businesses can save as much as 30%. People tend to renew their licenses without even thinking about them, but license metrics change regularly for IBM software, and it’s crucial to double check these annually to avoid a potential audit. These metrics include the number of copies installed, number of users, and level of usage.
Step 2: Lift and shift to the cloud
The cloud is more nimble, faster, and cost-efficient. By 2025, Gartner estimates that over 95% of new digital workload will be deployed on cloud-native platforms. This is a 30% increase from 2021. Moving to the cloud generally brings an annual cost savings of about 30%, as well as eliminating the burden of resource management issues.
Step 3: Try a third-party software maintenance provider
Customized third-party software maintenance (TPSM) can extend the lifecycle of IBM products to deliver a greater overall return on investment by going beyond what is available in the vendor software support model. Gartner calls it a “quick win,” and engaging a TPSM provider can save companies up to 50% on maintenance.
Want to learn more?
Written for IT stakeholders, “Budgeting in Turbulent Times: a guide to cost optimization” tackles the ever-growing friction between software spending and company growth and offers practical solutions that can put your company well on the road toward digital transformation.
