Budget Time: Can you save us money?

A common question I get during budget time is whether the IT budget can be reduced. If the organization has been underspending on IT for years then the answer is probably “no”. If reducing operating costs is an absolute necessity the I can recommend a Cost Reduction Specialist who will perform detailed analyses of operational expenses and will guarantee savings. I always look for a prudent use of financial resources in good times and lean times, but when the budget is tight I will focus on the following items:

Efficient Subscriptions

As covered extensively in: Budget Time: The cost of Cloud Computing? – PARTTIMECTO, an annual reconciliation of cloud computing costs is the most likely way for an organization to identify cost-saving opportunities. Properly managing annual subscription costs, unused licenses and inappropriate subscription levels can often save a company thousands of dollars per month.

Decommissioning old equipment

The cost of continuing to run an antiquated IT environment is often a hidden cost or it is simply taken for granted. The cost of electricity for running a server room can be remarkably high – hundreds or dollars per month – and the rationale for maintaining the old environment if often very flimsy. Replace the on-prem systems with cloud-based system and shut-down and dispose of the old systems.

Managing risk

Service agreements, support and warranty extensions are an “optional” expense. A company can choose to not renew them but that decision will come with risk. Whether the risk reduction is worth the cost has to be determined on a case-by-case basis. For critical systems it’s often a requirement, but a review of all systems and a thoughtful plan basedn on what-if scenarios can easily save a company thousands or tens-of-thousands of dollars.

Timing

While it may be obvious that old computers or antiquated systems need to be replaced, the question of when may not be so obvious. Computer purchases, printer purchases and network purchases can often be pushed off a year. This is an expense delayed, not an expense avoided and ultimately something will happen – see here Budget Time: Preparing for Windows 10 End-of-Life in 2025 – PARTTIMECTO – that will require the orgainzation to “pay now” and that expense may be much higher than the organization was prepared for. Commnication can make a huge difference.

Impact on the Bottom Line

Having a solid and well-managed approach to budget-reduction can have a major impact on an organization’s financial performance. The business operations of some companies make it desirable for the IT budget to be as consistent and predictable as possible. Other organizations put off IT expenditures for as long as possible, even if doing so makes the expenses more unpredictable. Either approach can have a solid strategic rationale but each needs to be managed with the organization’s preferences in mind.