6 Cost Reduction Strategies for Enterprise IT

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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.

Cut Software Licensing Costs

It’s a software vendor’s job to continuously sell upgrades. According to Computer Weekly, 56% of IT decision makers surveyed felt pressured to adopt a supplier’s cloud strategy. There is a need to rethink these transactional relationships 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. At this year’s ITAM Review conference, Jochen Hagenlocher of Novartis states 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 businesses to resist any attempt to run these scripts because they pose a security risk and can damage delicate equipment. He also recommends 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 also reduce maintenance costs.

Reduce Storage Complexity

While it keeps things simple to stick with one vendor across the board, companies pay premium prices to do it. Instead, many companies utilize multiple vendors and multiple platforms in an effort to keep costs down. Mixing vendors also allows companies to select the best performing product for each function. Today, the majority of companies use some combination of public and private cloud storage, as well as traditional storage, but the resulting complexity of maintaining a variety of products and systems can be costly. One way to solve this problem 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, including integrating the cloud as just another storage tier. According to David Flynn, CTO of Primary Data, this enables IT to assign objectives to data that define data’s performance and protection requirements, 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 requirement—transparently to applications.

Virtualize Databases

Virtualizing your databases can help the company save on storage costs by sharing physical resources as well as increase 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 data bases. Initially, running virtualized databases may seem more complex, but the flexibility and productivity gains it provides outweigh this disadvantage for many organizations.

Get Cloud Costs Under Control

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.

Streamline Costs with Managed Services

In some cases, using a Managed Service Provider (MSP) can help companies save money. This is especially true when a company 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.

Do Things 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 a company 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 money in the end. Encouraging shortcuts in coding or programming and not 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. Not only does doing things according to best practices prevent downtime, it also minimizes tech debt, giving developers time back to focus on money-saving and revenue-producing projects.