IT expenditures are a big part of every company’s budget. When there are many other goals and many expenses tend to be set, reducing these costs could be challenging. This post will illustrate that several IT costs are not quite as fixed as they seem, and will also provide suggestions to reduce IT spending. Personnel expenses are frequently the most important expenditure of most IT budgets. There are a number of methods for lowering labor costs, which we will address in the first part of this post. However, there are other expenses that can be cut, so we have included a second segment to discuss these less evident choices.
Tips to reduce IT costs
We have categorized IT expenses in 2 groups:
- Personnel cost
- Non personnel cost
We will further discuss what these costs are and methods to reduce them effectively. Continue reading
Reducing personnel costs
Many IT companies have a top-heavy management structure, which evolves over time. Although having experienced staff makes it much easier to complete the job, it is not the most cost-effective choice. To cope with this, some firms reduce their employees on a regular basis to get their job levels down to a more manageable level.
- Replace turnover with lower level employees
Establishing the goal that all vacancies will be one step below the departing employee is a clear way of keeping the staff on track. Of course, this is not always necessary, but you should have a plan in place to deal with unexpected situations.
- Hire new college graduates every year
When the employer learns you’ll be recruiting the certain number of fresh graduates, they will prepare for that when attrition happens. Find a local college that you value, establish a relationship with the recruitment office, and hire there on a regular basis. Trainees could also be a good way of finding talent. As they are mostly less costly and easier to find and train according to your company’s value.
- Manage your contractors
Contractor costs can escalate out of control if they’re treated as a separate category. Alternatively, some companies can employ more costly contractors than they need because they think it will give them more flexibility if market conditions change. Although this is true, management should not overlook the challenge of eliminating contractors with particular skills that are needed. To ensure that the company is centered on the cost of contractors, track the number of consultants you have, the money you pay each, and the extent of overtime they operate which is another hidden cost. This increased exposure would promote better resource management.
- Reduce turnover
Hiring and educating new hires comes at a high price. The techniques we use to combat turnover will be the focus of a future post, but in the meantime, we think that retention can be greatly reduced by ensuring that workers recognize why the job they do is valuable and by demonstrating that you value their efforts. Acknowledging an employee’s effort is inexpensive, but the effect can be immense. Also, training employees in emerging technologies can help big way. For example, training a network engineer with Cisco online training can not only make him valuable for the company but it is also make your company valuable for employee since you are putting in efforts to train him.
Reducing non-personnel costs
We have covered all personnel costs. Now is the time to list down the non-personnel ones and ways to address them and cut the IT expense.
- Virtualize servers by using containers
It was not long ago that any program needed a physical server, and this number increased as test server, DR server, and other resources were added. Because many of these servers were underutilized, their hardware costs also were not controlled. If you do have dedicated servers, segmenting them so that different programs can manage the hardware can lead to significant savings. Containers are an outstanding extension of this definition. Linux containers are compact and versatile self-contained programming frameworks. Hardware costs are minimized because utilities can operate on the very same box.
- Use cheaper hardware
Containers not only optimize hardware complexity, but they also allow applications to execute on less expensive devices. With the development of powerful personal computers that could be connected together and work as well as costly mid-range databases several years ago, this technique got famous.
- Use the cloud
Hardware and storage no longer have to be on, and since services are only used as required, the rental cost could be much cheaper than the cost of buying. Consumers can purchase for the best deal from cloud service providers using containers, which can be useful in this case.
- Decommission software
You are capable of finding cost-cutting possibilities if you review your software licenses. When software contracts are restructured over period, the cost increases often serve as an incentive to switch away from such software. Furthermore, we have frequently discovered costly software used for minor functions for which the ROI to transfer to a different solution was easily explained.
- Use open source software
Open source software reduces both the upfront costs of software acquisition and the continuing recurring cost of maintenance. However, open source is far more than a cost-cutting technique. You can create your own improvements to open source software and you have knowledge of the internal. Furthermore, since code changes are made by programmers from a number of firms, the software frequently develops faster than it would if only one company supported it. Finally, if you have a problem, you are not dependent on the software vendor for help, but rather get a range of choices.
- Virtualize databases
Database technology enables the development of a key image and subsequent repositories that are gradual improvements to the key image. A full-sized test server, for instance, can take up very little space as it simply refers to the production case. This will save programmers a lot of time and resources, in addition to lowering cost of storage. For e.g., conside the capability to store a database image, execute a test cycle, do corrections, and later return to the actual image to execute the test again.