6 Strategies to Reduce IT Cost

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Running a business can be expensive, especially in today’s technological age. IT budgets are steadily increasing, and by the end of 2020, worldwide IT spending is expected to reach $3.9 trillion. This represents an increase of 3.4% from last year.

Although the costs associated with IT can often be high, it is certainly possible to reduce them. In this article, we will explore some of the best IT cost reduction strategies to help you maintain a healthy budget.

The 6 Best Strategies to IT Cost Reduction

Reducing IT costs is not an easy task. With so many elements and moving parts, it can be difficult for IT teams to identify areas of improvement.

Luckily, IT budgets can be broken down into seven basic pieces:

  • Hardware – physical equipment such as computers, printers, wiring, and other electronics.
  • Software – costs to implement tech, including software licenses and installation fees.
  • Subscriptions and Services – any recurring expenses such as management services, tech support, monthly subscriptions, etc.
  • Capital – non-financial assets used to complete projects.
  • Operational Cost – the internal cost of using and maintaining your IT systems.
  • Projects – costs incurred from specific tasks.
  • Safety Buffer – a rainy day fund, just in case something goes wrong.

The trick to cost reduction in IT is to take an in-depth look into each of these pieces and identify areas of waste. Here are just a few of the best strategies to cut costs from each of these areas.

1. Effective Supplier Management

Your current suppliers aren’t always the best ones for the job. Many businesses opt for a single, one-stop-shop supplier for all their IT needs. Yes, it’s convenient, but you’re likely paying a premium to have all services under one roof.

For IT vendor cost reduction, you need to seek out the most cost-effective suppliers. Whenever a vendor contract is set to renew, get quotes from other suppliers to identify cheaper services. Even if none can beat your current vendors’ prices, you still have your old vendor to fall back on.

2. Dynamic Personnel Management

Labor is the most significant cost for any business. According to the U.S. Bureau of Labor Statistics, labor makes up 70% of employer costs. The quickest way to cut costs is to reduce the number of personnel.

Balancing the right number of employees can be tricky. During busy times, you need a large staff to handle the increased workload. When things slow down, you’ll have too many employees without enough to do.

Instead of hiring and firing with the tides of business, consider using contract staffing. Maintain enough personnel to handle slow periods and use contract staffing to fill gaps during busy times. That way, you’re not wasting money on extra labor during the slow periods.

Always be looking for vendor upgrades based either on cost or service. By keeping up with supplier management, you can get the best IT solutions available while still enjoying IT services cost reduction.

3. Outsource IT Services

Doing things yourself isn’t always the cheapest option. It might work for painting your house, but some IT tasks are too complicated for just anyone to tackle.

For example, if you want to implement a disaster recovery system, you’ll need to install and maintain a data center to store your information. All that tech can be expensive and will have a huge impact on your IT budget.

There are already companies with the hardware and expertise you need. Use them! Depending on the services, some businesses have enjoyed a 25 to 40% cost reduction from outsourcing IT solutions.

Outsourcing some of your IT services will give you solutions you need at a much lower cost than implementing them yourself. Plus, trained professionals will handle all the maintenance, meaning you won’t have to worry about surprise costs impacting your budget.

4. Source the Right Hardware and Software the First Time

With so many hardware and software options on the market, it can be difficult for businesses to identify the precise tools they need.

Just like labor costs, if you purchase hardware or software that offers too many features, you’re wasting money. If you get technology that can’t keep up with your needs, you can’t operate efficiently, therefore, wasting more money.

Choose the right technology that will meet your unique business needs the first time. You might have to spend time doing research, but it’ll pay off in the long run. The right technology will streamline your business process for lower costs and less downtime.

If you’re not sure which technology is right for you, contact the experts at OnCall. We’ll take the time to learn about your business and use our expertise and industry relationships to source the perfect IT solutions, so you don’t have to.


5. Migrate to the Cloud

Cloud computing has grown considerably in the past few years, with global spending estimated to top $330 billion by the end of 2020. It’s no wonder so many companies are adopting cloud solutions for their IT needs. They’re faster, more flexible, and accessible from anywhere.

With all the amazing benefits, cloud solutions can reduce your IT budget by up to 15%, on average. Small to medium businesses benefit most from cloud adoption, with IT cost reductions up to 36%.

While cloud services will add a monthly fee to your budget, it’ll eliminate the need for updates and server maintenance. Additionally, the increased scalability means you won’t have to worry about purchasing new services in the future for even better long-term cost savings.

6. Renegotiate Supplier Contracts

While you’re collecting quotes from other suppliers, don’t forget to get one from your current vendors as well. Renewal periods are a great time for negotiating contracts to get a better deal on your IT products and services.

If you’ve already collected quotes from other suppliers, you can use that information in the renegotiation process. For example, if Supplier X is 15% cheaper than your existing supplier, let your vendor know. They might be willing to come down and meet the price, helping you save money on IT costs.

Want to Learn More About IT Cost Reduction Strategies?

Every business wants to reduce costs, but IT cost inefficiencies are often difficult to identify. If you need help discovering ways to slash your IT budget, ask the professionals at OnCall Telecom.

We help businesses identify areas of improvement in their IT stack and implement the right technology to help them reach their business goals. We take the time to learn your business and create a customized IT strategy.

Using our 187 industry partnerships, we can also procure IT products and services at the best prices to keep your business running efficiently without breaking your budget.

Ready to reduce your IT costs? Contact us today to create the perfect, cost-effective IT strategy for your business.

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