6 ways to cut IT costs
If you want to cut costs in Information Technology, it may help to look at things from a different perspective. Let’s start with a poll – what are the top 3 tasks that you should be working on right now? Let’s take those three tasks and ask two questions of each:
Are each of these tasks core to the business that you work for? (Does it drive customer value? Or does it differentiate your customers from your competitors and allow you to charge a premium?) [Yes, No]
- Yes = Core
- No = Context
Are each of these tasks mission critical for the company that you work for? (If you mess up, you are in big trouble) [Yes, No]
- Yes = Mission Critical
- No = Enabling
From these questions we can determine which of the four quadrants the particular task should be categorized into.
Mission Critical / Context: (top right corner)
According to Jeffrey Snover, the common statement is that IT organizations spend over 80% of their budget just “keeping the lights on” which are the tasks that exist in this quadrant. Depending on the core of your business, these tasks might include managing on-prem. data center resources, purchasing new hardware, managing on-prem. systems like Exchange or SharePoint, managing on-prem., customer-developed software, or even dealing with day-to-day tasks like onboarding/offboarding users or patching systems.
For this quadrant, you should reduce risk by reducing complexity. Reduce complexity by standardizing, automating and offloading tasks in this quadrant.
Mission Critical / Core: (top left corner)
Maximize IT investment here to differentiate yourself from your competition/focus in this area. What is in this area will be based completely on what is core to your organization’s business. As an example, Catapult is primarily a services firm, thus our “Solutions as a Service” fall within this quadrant.
This quadrant is the area where organizations should increase their IT spend.
Enabling: (bottom half)
Tasks that enable the business are required for an organization to conduct business, but are not mission critical. This list will vary depending on what the organization does, but it may include examples such as reception, HR, billing, expenses and marketing. Each of these tasks are important and they enable the business to function, but they are not mission-critical. As an example, we could have the world’s best billing department, but it’s not going to cause you as a customer to choose Catapult over another services firm (with that said, a bad billing experience could cause a customer to not choose Catapult as a vendor going forward, so this is not to say that enabling tasks aren’t important).
For these bottom two quadrants, we should minimize investment in IT while maintaining the needs that enable the business.
If you want the summary for this concept, it comes down to this: “Build what differentiates you. Buy what doesn’t”.
6 ways to cut IT costs
Now that we’ve identified where you should focus your IT resources, how do we go about making this shift? There are six ways we recommend considering:
#6: Standardize your equipment
According to Gartner, 80% of the total IT costs for equipment occurs after the purchase of the equipment (OPEX). From my own experiences, one of the largest complexities associated with managing client operating systems is dealing with different hardware types. End-users appreciate the ability to buy any type of equipment they want, but if you want to keep costs down, keep management to a minimum by using consistent hardware types.
#5: Stop writing your own apps
Unless your organization is a software development shop at its core, why continue to develop your own in-house applications? Instead, leverage existing off-the-shelf software packages where applicable. For areas where an off-the-shelf option isn’t viable, consider partnering with a software development shop to either augment your existing team, or to do your development for you.
#4: Rebuild legacy applications on PaaS
Do you have applications that you can only patch during specific hours of the month, or applications that really need to be modernized? If so, consider re-writing these applications as PaaS based applications. Well-designed PaaS-based applications completely bypass challenges including patch management and can be run for a fraction of the cost required to support on-premises systems.
#3: Stop managing on-premises systems and datacenters
Are you running an on-prem. Exchange environment? How about SharePoint on-prem? Or how about on-prem. file servers or on-prem. backup? There are cloud-based solutions that can replace most on-prem. systems. This effectively decreases risk and frees up your IT team to focus on the mission-critical/core aspects of the business.
#2: Standardize your Operating System
It costs more for IT to manage multiple operating system versions. To minimize this cost, migrate to the same current operating system such as Windows 10 and Windows Server. With Windows as a Service, new features are made available on a six-month cadence. This makes it extremely important to understand which features are available in your Operating Systems and to deploy the features that are beneficial for your organization. Standardizing your operating systems decreases your maintenance cost and increases your operating system’s capabilities.
There is never enough automation in Information Technology! In most organizations, automation has the potential to be the next great win for IT productivity. Some examples for automation to consider include:
- Onboarding and offboarding employees and making changes to employee logins, permissions, etc.
- Patching for servers and workstations
If you or your team members are doing something several times a day then start thinking about how you could automate it.
Please note: The ideas in this blog post were spawned from Jeffrey Snover’s presentation on “Digital Transformation – a roadmap” which is available here. Jeffrey Snover draws his insights from Geoffrey Moore. I was also glad to see that there are others who also considered this presentation to be as impactful as I did.
Summary: “Build what differentiates you. Buy what doesn’t.” By focusing on what is mission critical and core to your business, you can have more impact to the business and you can also become the strategic partner who can help your organization from being digitally disrupted. For tasks that are not core to your business, consider standardizing, automating and offboarding these tasks. For ideas on how to do this, take a look at the top six items we discussed in this blog post:
- Standardize your Operating System
- Standardize your equipment
- Stop managing on-premises systems and datacenters
- Rebuild legacy applications on PaaS
- Stop writing your own apps