5 IT Cost Saving Strategies for Your Enterprise Infrastructure
Park Place Technologies
COVID-19 has impacted organizations in multiple ways in their ability to serve customers while ensuring the well-being of its employees and will continue to do so into the 2nd half of 2020 and even 2021. In response, most leaders enacted IT cost saving initiatives while addressing a new reality for both its employees and customers.
As the economy slowly starts to rebound and businesses not considered essential start to cautiously reopen, Park Place has learned more about the impact on IT organizations.
CIO recently did a COVID Impact Survey which revealed, not surprisingly, that 2020 IT budgets saw an impact from COVID-19 and Cost Control/Expense Management is now a top priority for IT Leaders. Prior to COVID-19, 59% of IT Leaders expected an increase and 34% expected a flat budget in 2020, but post COVID-19 only 25% expected budgets to be higher than 2019 levels.
The analyst community also expects contraction in spending in technology. IDC expects a decline of 2.7% in worldwide IT spending with every industry impacted. Hospitality, tourism-related industries, and personal and consumer services are expected to decline by 5% or more. As a result, learning how to cut IT costs has become a priority since the inception of COVID-19.
Gartner paints a more grim outlook, declaring they expect an 8% decline in global IT spending. According to John-David Lovelock, Distinguished VP Analyst at Gartner, “CIOs have moved into emergency cost optimization which means that investments will be minimized and prioritized on operations that keep the business running, which will be the top priority for most organizations through 2020.”
5 IT Cost Reduction Strategies
As we go into the second half of 2020, Park Place would like to share 5 techniques for reducing information technology costs for your IT infrastructure amid a COVID-19 response.
1. Prioritize Optimization Programs
Organizations should ensure that they have optimization programs in place to make sure that they are not wasting resources. Often, major programs are put into place and little is done to ensure that they are running optimally and are as cost-effective as possible. Analyzing and optimizing your network hardware support contracts can help you identify options to extend the life of existing assets by deferring unnecessary hardware purchases.
The ClearView™ network hardware contract analyzer can provide an impartial recommendation on the best mix of extended support including assets that should stay on OEM support, assets that could provide cost savings if moved to third party IT maintenance, and equipment that is a good match for NetSure+, our Cisco SmartNet alternative that combines of third-party support with our global logistics expertise.
2. Speed up Transformation with Cloud Migrations
Many organizations had planned cloud migrations in 2020 or beyond and these remained in the budget. This is a great time to speed these transformation projects up in order to receive the cost-benefit from an accelerated implementation plan. The accelerated transition may not lower IT costs immediately, but they could reduce overall operations expenses over the coming years. Look to storage migration services from trusted IT partners to ensure an efficient migration with no data is lost in the process.
3. Utilize On-Demand Resources
Unfortunately, staffing remains one of the go-to IT cost reduction techniques for companies around the globe. Many organizations had to make changes to existing staffing levels – particularly in non-critical roles or areas outside major headquarters or key technology hubs. However, this did not change the need to support critical hardware in other areas around the globe.
Instead of hiring additional staff later, it may be a good idea to look at project or ad hoc staffing options for break/fix, remote hands support, or Install/Move/Add/Change services, and IT deployment services for projects that are still necessary. These on-demand approaches can create data center cost savings over the long haul, as salaries can represent a large percentage of some organization’s costs.
4. Limit New Assets or Extend Lifecycle of Current Assets
Hardware refreshes should be limited to needed hardware to assist in changes to the working environment such as working remotely or implementing new products/services. Third-party maintenance options can extend the lifecycle of server, network, and storage hardware post OEM warranty/support. You can also consider purchasing pre-owned used hardware to reap additional information technology cost savings, when additional capacity is required or even gain additional revenue from ITAD programs if necessary too.
5. Partner with Key Vendors, Control Costs and Gain Flexibility
As you make cost control adjustments, it’s important to ensure the health of key vendors and utilize partnerships in order to create win-win opportunities. For example, perhaps an infrastructure managed service provider or third-party maintenance provider will allow greater flexibility in terms of service level agreements. You may be able to even alter the SLAs by location when an OEM may not be able to do so. Partnering can often provide new opportunities for managing IT costs when both parties tackle a challenge or goal with a win-win mentality.
IT Cost Reduction: OpEx vs. CapEx
An operating expense is any ongoing expense incurred to keep a business running on a day-to-day basis. OpEx spending uses a “pay-as-you-go” approach, as there are no long-term assets involved. Within the IT industry, operating expenditures account for employee wages, energy costs, bandwidth charge, equipment leasing fees, and much more. Two strategies for reducing OpEx costs include:
1. Lower Maintenance Spend
To lower your maintenance costs, focus on your support value. Renegotiate hardware, maintenance, and support contracts, getting rid of those that are too expensive and securing lower payment schedules for others. Third party server hardware maintenance, storage maintenance, or network hardware maintenance is an affordable alternative to costly OEM support contracts, averaging anywhere from 30% – 40% less than that of the manufacturer.
2. Lower Hardware Costs
You don’t have to purchase equipment out of the box to reap the benefits of manufacturer offerings anymore. Certified, pre-owned IT hardware is available from trusted providers, and offers the reliable hardware your testing or backup environment requires without the exorbitant price tag. Curvature, a Park Place Technologies company offers high quality, refurbished parts, with the sole difference being the prior use that makes for significant savings in comparison with buying new.
Optimize CapEx Spend
A capital expenditure, or CapEx, is a one-time expense that involves the purchase of a tangible asset, usually in the form of property or equipment. Therefore, all IT infrastructure within your data center environment is a capital expenditure. Unfortunately, CapEx also applies to the cost of repairing or upgrading your data center assets over time. Below are the best strategies for optimizing on your CapEx spend:
1. Extend Equipment Lifespan
Strive to delay the procurement of new assets whenever possible and choose an alternative to a costly hardware refresh. Third party maintenance providers can prolong the useful life of data center equipment by anywhere from 5 – 10 years past End of Service Life. Because we’re brand agnostic, our multi-vendor hardware maintenance doesn’t come with an expiration date.
Our only objective is to keep equipment functional for as long as possible to ensure you achieve the maximum possible ROI. An extended support plan can significantly lower your maintenance costs to help you secure a better return on infrastructure investments. Extending equipment lifespan could also be instrumental in deferring costly hardware upgrades until current financial restrictions subside.
2. Consolidate Data Center Assets
Gartner recommends consolidating data center sites. Such a move will help rid you of redundant IT assets, maintenance and support, and disaster recovery contracts. A data center consolidation strategy is vital right now, as I&Os globally are having to pack more workloads into fewer systems.
Even in the case your organization is 85% or 90% virtualized, if the systems those virtual workloads are running on are only 20% utilized, there is room for improvement through consolidation. Savings from consolidation can range from 5% to 15% of the overall data center budget.
The impact of COVID-19 will be felt throughout 2020 and into 2021. Businesses still have customers and employees to serve – although it may be different than in the past. In many cases, this has accelerated digital transformation. However, the business reality is that IT Leaders will have to adjust while also being diligent about cost control.
Park Place Technologies is happy to help you succeed. Contact us today to learn how!