6 Cost Reduction Strategies for Enterprise IT

Apr 14, 2021 | Insights, IT

While the focus of many CIOs is and should be on bringing technological competitive advantages to the business, cutting unnecessary costs is always something to keep in mind. Here are six IT cost reduction strategies that allow IT departments to use more of the budget for new technologies that foster business growth.

Enterprise IT tip #1: Cut Software Licensing for Cost Reduction

According to Computer Weekly, 56% of enterprise IT decision-makers surveyed felt pressured to adopt a supplier’s cloud strategy. There is a need to rethink these transactional associations as partnerships. If a vendor doesn’t allow for this type of relationship, and you have to remain with the vendor because they offer the best product to meet your needs, consider using a software asset management (SAM) tool for cost reduction. In 2017, at an ITAM Review conference, Jochen Hagenlocher of Novartis stated that “90% of audits can be avoided through smart contracting, relationship management or if you purchase early.

Software companies often try to run their own scripts on their customers’ networks to detect misuse of software.” He urged enterprise IT CIOs to resist any attempt to run these scripts because they posed a security risk and could possibly damage delicate enterprise IT equipment. He also recommended requesting an unlimited liability agreement with software providers so they have to take full responsibility for any damages that might occur from their scripts. Cutting the number of licenses used can provide cost reduction for maintenance.

Enterprise IT tip #2: Reduce Storage Complexity for Cost Reduction

While it may be simple to stick with one vendor across the board, companies often pay premium prices to do it. Instead, many companies utilize multiple vendors and multiple platforms in a cost reduction effort for their enterprise IT plan. Blending vendors also allows companies to select the best performing product for each function.

Today, the majority of enterprise IT companies use some combination of public and private cloud storage, as well as traditional storage. Here’s the thing: the resulting complexity of maintaining a variety of products and systems can be costly. One way to solve this problem and achieve meaningful cost reduction is by using a metadata engine to connect storage systems.

A metadata engine separates the metadata path from the data path through virtualization, making it possible to connect different types of storage within a single global namespace. This includes integrating the cloud as another storage tier. According to David Flynn, CTO of Primary Data, this enables enterprise IT departments to assign objectives to the data that defines said data’s performance and protection requirements. It also allows you to analyze if those objectives are being met, and automatically move data to maintain compliance, tiering data between different storage devices to meet performance, cost, or reliability requirements.

Enterprise IT tip #3: Virtualize Databases for Cost Reduction

Virtualizing your databases can help your enterprise IT save on storage (and achieving cost reduction) by sharing physical resources. This also has the potential of increasing flexibility and productivity.

For example, developers can save a database image, run a test cycle, correct errors, and then revert back to the original database image for retesting. Start out by virtualizing your lower-risk databases, such as development and production LDAP databases. From there, you’ll run virtualized databases that may seem more complex, but the flexibility and productivity gains it provides help with cost reduction and outweigh any disadvantages for many Enterprise IT organizations.

Enterprise IT tip #4 Get Cloud Costs Under Control for Cost Reduction

According to RightScale’s annual State of the Cloud report, companies are wasting about 35% of their cloud spend. How does this happen? Users will spin up resources and then forget about them. There’s also a lack of visibility. Cloud use is often siloed by departments, and no one is monitoring total cloud spend. Additionally, cloud instances are over-provisioned. According to RightScale, 39% of instance spend is on VMs that are running at under 40% of CPU and memory utilization. If your company has a lack of visibility into your cloud spend, you may want to consider a cloud cost management platform.

Enterprise IT tip #5: Streamline Costs with Managed Services for cost reduction

In some cases, using a Managed Service Provider (MSP) can help companies with cost reduction. This is especially true when an enterprise IT organization doesn’t have the specialized workforce they need in certain areas, such as network management. Using an MSP is also cost-effective when a company only has enough work to warrant having a specialist to manage it part-time. According to CompTIA’s annual Trends in Managed Services study, improving efficiency and reliability is the main driving factor for going with an MSP for 56% of companies with 100 or more employees and 47% of companies with fewer than 100 employees. Interested in more tips like this? Check out our other blog about it.

Enterprise IT tip #6: Build it Right the First Time

“Do things right the first time” sounds like a simple concept, but it’s really an idea that has to permeate the culture of your organization to be truly effective. In a day and age where everyone wants everything done yesterday, getting things right the first time can be more difficult than ever. While it may seem like rushing through a project saves money, it causes companies to lose it in the end.

Encouraging shortcuts in coding or programming instead of following best practices, such as user testing and code review, can lead to costly problems down the road when a critical business application goes down. The average cost of downtime is over $7000 per minute for the average-sized company. This is only going up as we all move to the internet of things (IoT). Not only does doing things according to best practices prevent downtime, but it also minimizes tech debt, giving developers time back to focus on money-saving and revenue-producing projects.

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