IT Cost Saving Strategies for Your Enterprise Infrastructure

Managing the pressure to reduce IT costs in uncertain economic conditions is familiar territory for organizations worldwide. The impacts of the 2008-2009 financial crisis and the COVID-19 pandemic have taught business leaders the importance of clear communication, streamlined processes and optimized spending to maintain resiliency. Since economic downturns bring marching orders for IT, finance and other departments to revisit and deploy cost-cutting strategies, it’s vital to start on the right foot.

Establishing a solid partnership with your CFO, CIO and other IT leaders is critical since this group often leads the charge to reduce business expenses and identify cost-containment opportunities. While IT cost reduction strategies are in motion, ensure everyone has a seat at the table to share goals, address challenges and review solutions together throughout the process.

Identifying how and where to cut costs isn’t always a welcome or straightforward endeavor. However, it presents an opportunity to reevaluate the status quo and uncover ways to make the most of existing investments. As an IT leader, here’s what you can do now to reduce business expenses, increase efficiency and maximize productivity amid economic headwinds.

6 IT Cost Reduction Strategies

Here are 6 techniques for reducing information technology costs for your IT infrastructure.

See what the Solutions Architects at Park Place Technologies have to say about saving on IT costs.

1. Engage in 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. Prioritize immediate and long-term IT cost reduction tactics

Whether your cost-cutting initiatives are immediate or downstream, start by aligning current IT investments with high-level business objectives. Doing so highlights which IT resources are essential and will not undergo any cost-cutting measures.

Gartner recommends using a systemic and programmatic approach to long-term cost optimization and reduction. It’s imperative to resist the urge to cut or freeze resources in one fell swoop. Take the time to assess opportunities and potential obstacles using a multi-phased approach.

Before implementing cost-cutting measures, bring stakeholders up to speed on the next steps and action items. Having open lines of communication provides greater transparency and eliminates working in silos.

3. Speed up Transformation with Cloud Migrations

Many organizations have planned cloud migrations. Now 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.

4. 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.

5. 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.

6. 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

Optimizing OpEx

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. 

3. Temporarily bridge the tech talent gap with managed services

How can IT leaders ask their teams to do more with less while pursuing cost-reduction strategies and ensuring critical operations remain intact? A fully staffed, robust IT team can take on many responsibilities, but IT leaders are finding it increasingly difficult to maintain such a workforce with widespread talent shortages. The lack of time, budget, resources and capacity limit IT leaders’ abilities to meet changing demands. Significant skill gaps also pose a problem as older generations retire, taking long-held expertise and niche competencies.

According to McKinsey, outsourcing IT responsibilities isn’t a blanket solution for an effective IT talent strategy. Investing in your IT workforce is essential to building and maintaining a talented team well-equipped to provide critical business understanding, productivity and agility.

The good news is that there are options for teams experiencing talent shortages or a lack of resources. Infrastructure managed services offer IT departments a customizable solution to alleviate stress, stabilize costs and fill talent gaps. By leveraging managed service solutions, IT leaders are better equipped to handle workloads, balance priorities and develop critical IT talent.

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. 

Balance capital and operating cost-cutting strategies

Gartner’s recommendations for IT cost reduction encourages leaders to focus on addressing both CapEx and OpEx. Curbing only CapEx initiatives and new projects may seem like the default solution, but it’s not the suggested route to reduce business expenses.

Taking a balanced approach to CapEx and OpEx reductions keeps projects moving forward without tipping the scale. Addressing both areas results in a balanced and sustainable cost reduction strategy.

Park Place Technologies is happy to help you succeed. Contact us today to learn how!