Many IT departments are under pressure to trim their budgets, but don’t know where to look to find cost savings. Here’s some advice from tech experts on smart ways to cut the IT budget.
Some areas of the IT budget — such as security — require constant increases in order to remain effective. The key is finding those areas where costs can be lowered.
Tech research organization Gartner says businesses should focus on their IT infrastructure and operations (I&O) spending, which makes up about 60% of all IT budgets worldwide.
Following these 10 steps, Gartner says, can help businesses reduce I&O costs by 10% over the next 12 months, and 25% over the next year:
1. Defer non-critical initiatives – When deciding whether to spend money on a project, IT leaders need to ask three questions: Does it support a high-priority business initiative? Will it help lower costs? Does it reduce the risk of security problems and outages?
2. Take another look at telecom costs – A big chunk of companies’ I&O spending goes to telecom service providers. It’s worth taking a regular look at how much the company is spending on those services, comparing them to current market rates, and trying to renegotiate contracts, if necessary.
3. Consolidate data centers – Many organizations — including the U.S. government — are saving money by shutting down smaller sites and consolidating operations into larger data centers.
4. Virtualize – Virtualization can help businesses squeeze more life out of existing equipment. Many businesses are starting to use server virtualization, but it can also be applied to desktops, storage, networking and other areas.
6. Control data growth – Gartner estimates that by 2016, businesses will be holding 850% more data then they are now — and it’s going to cost a lot to store all that information. IT must find ways to control the amount of data the business holds – including the use of storage virtualization, automated tiering and storage resource management (SRM) tools.
7. Use the lowest possible support tier – Many organizations have multiple tiers of IT support, with different cost points for each. To increase efficiency, businesses must make sure users are always directed to the lowest possible tier that can solve their problems.
8. Streamline process – There are several ways IT can streamline and automate day-to-day operations, thereby reducing headcount. Gartner recommends the ITIL approach.
9. Improve IT asset management – By keeping a closer eye on their assets, IT departments can find ways to cut costs, such as eliminating unneeded software licenses, deferring upgrades, and replacing unnecessary maintenance contracts.
10. Use smart outsourcing – The decision is a lot more complex than just figuring out whether to outsource all or none of IT’s I&O operations. Companies must look at their own situations and decide which areas are cheaper in-house and which should be outsourced.