5 Proven Initiatives to Optimize Costs in IT
Posted by on April 21, 2017
The global economy routinely cycles through periods of strength and weakness. Similarly, most industry verticals also wax and wane as market forces fluctuate. But through it all, good times and bad, companies continue seeking ways to cut costs.
And why not? As Ben Franklin famously advised, a penny saved is a penny earned.
With this in mind, here are five ways to save money that you shouldn't overlook.
#1) Standardize and Automate Processes
Most IT departments are plagued with processes that have been cobbled together over the years and are anything but streamlined. Many of these processes incorporate wasteful steps which involve unnecessary human intervention. Even worse, many processes aren’t documented and standardized, so they’re performed differently each time, requiring personnel to reinvent the wheel over and over.
Common processes and procedures should be analyzed and reworked to eliminate wasteful steps. The processes should also be documented so that they are performed the same way each time. (Consider using the Information Technology Infrastructure Library (ITIL) as a documentation tool.)
Once procedures have been streamlined and documented, many of them will be good candidates for automation. The degree of automation possible, of course, will be determined by the capabilities of the technology you have implemented across your IT portfolio.
#2) Offer Enhanced IT Self-Service
Self-service is the Holy Grail of IT: getting users to handle many of their own problems instead of contacting the IT service desk at every turn. IT self-service also happens to be a great way to cut costs.
Gartner has reported that 40 percent of help desk calls can be eliminated through self-service—and some industry experts estimate that number to be more like 60 percent. But that same Gartner report estimates that only five percent of IT issues are resolved through self-service.
Enhanced self-service is a great cost-cutting opportunity that most companies are simply overlooking.
The Gartner report also notes that a key to enhancing self-service is the quality and capabilities of the tools used: “The right ‘companion’ tools and processes are prerequisites for a successful implementation.” The report also notes that if the proper tools aren’t chosen, costs can be counter productively increased when trying to enhance self-service.
This is where your ITSM tool comes into play. What are the most important qualities to consider when implementing self-service?
- A Community Feature: The tool should provide the ability for users to seek and receive help and advice from other users. The social aspect of this capability can be a strong driver in encouraging more self-service participation.
- Easy Customization: A self-service portal should be easy to customize and configure. It should not require extensive development resources to build, customize, or automate—otherwise you might find yourself facing increased costs through enhanced self-service, as the Gartner report warns.
- Anytime, Anywhere Access: A tool that provides self-service portal access only via desktops will be of limited value in today’s business environment. Users typically utilize multiple devices, including tablets and smartphones. The tool must provide a degree of device-independent flexibility that will serve to increase the level of utilization by users.
#3) Evaluate Licensing and Deployment Models
The old model of buying a software tool outright, and then spending additional money each year in support and maintenance costs, is plummeting in popularity. Instead, more organizations are moving to a subscription model. Similarly, SaaS is gaining favor over on-premise development as a means of cutting costs.
But there are many factors in pricing models that can affect TCO. And no single model is going to be a silver bullet for every company. The following is meant to be a guide to the options available, and not a recommendation of which is better. That determination will be decided by your organization’s unique circumstances.
Deployment: SaaS vs. On-Premise vs. Hybrid Cloud
- SaaS: SaaS environments offer the benefit of effectively renting an environment. Renting is more expensive than buying, but SaaS offers the potential for huge savings by eliminating the need to hire staff to maintain the systems.
- On-Premise: This model is often chosen to address security concerns and potential regulations. Some companies chose on-premise because they already have the necessary expertise and infrastructure in place. In these cases, on-premise can be a great fit, and can yield some serious long-term cost savings if the system is configured correctly.
- Hybrid Cloud or “Own Cloud”: This option is a blend between on-premise and SaaS. If your IT department has its own Azure or AWS environments, you can offload the hardware portion of your solution to the cloud while maintaining strict control of the software environment. Again, costs will be impacted by existing expertise on staff, and the need/cost of employing new people. Evaluating your existing hardware/cloud infrastructure can provide guidance in determining where your company is most comfortable and where it will see the most savings.
Which solution is right for you? I’d suggest looking at software solutions that are flexible enough to fit any of these deployment models. Look for tools that can conform (AND CHANGE) to meet your needs vs. the solutions that force you to adapt to their requirements.
Licensing: Subscription vs. Perpetual
How you license can also impact TCO—and, as with deployment models, there is no right or wrong way for every company.
- Subscription: Subscription models are great for companies that are growing quickly or that experience constantly changing IT staffing cycles. Subscription can also offset a lump sum purchase by spreading out payments into more manageable, budget-friendly amounts. But exercise caution: Some subscription model contracts are so rigid in terms and time frames that the flexibility benefits of this model can be negated.
- Perpetual: Perpetual licenses are great if you have an established IT staffing core, and if you have a great handle on what you’ll need, both immediately and in the future, from your licensed software. And although the upfront cost may be more, TCO over a typical two to five year period almost always shows that perpetual will save you money.
Licensing: Concurrent vs. Named
This will be an easy choice for most companies. In all but the rarest of circumstances, you will save considerable money going with a concurrent licensing model.
- Named: The named license model requires you to purchase a license for each login name. Whether a user name is actively logged in or not—whether they EVER login or not—if you have a login account, then you pay for a license. For the clear majority of businesses, overspending on licenses is a certainty with this model.
- Concurrent: Concurrent licensing requires the purchase of one license for every person CURRENTLY logged in. If you have 300 technicians on staff, but only 100 are in the system at any one time, then you only pay for 100 licenses. Gartner has found that the comparison of named vs. concurrent shows the ratio of licenses needed lies somewhere between 3:1 to 7:1. So, even if a single concurrent license were two times the price of a named license, you’d still come out ahead with the concurrent license.
#4) Expand IT Service Management to Enterprise Service Management
Why should the benefits delivered by ITSM best practices and technology be limited to IT? Why not apply the principles of IT service management to other departments within the organization such as human resources, finance, and marketing?
The only reason you wouldn’t do that is because you can’t do that; most IT service management tools don’t enable such broad capabilities and flexibility. But if you choose the right tool, you can streamline operations in multiple business segments while simultaneously maximizing the ROI realized from your investment in the tool.
And you can avoid the organizational and support chaos that can result from each department attempting to meet their needs by deploying different tools.
Using a single service management tool that can capably serve many different business divisions is a wonderful cost-cutting (and headache-reducing) move that many organizations overlook.
#5) Software License Management
How many software licenses are you currently paying for but NOT using? At most companies, that number is likely to be quite substantial.
Licensed applications commonly exist upon all or many of an organization’s computers, as part of a ‘standard image’ that’s replicated on each machine. But that doesn’t mean that every user needs that application. So the application sits idle on many machines, never used—but the license fees must still be paid. Pure waste!
Often the problem swings in the other direction: Users are added, with the resulting total number of users exceeding the number of purchased licenses. And when the vendor performs an audit and discovers the extra users, the resulting fines and fees can be quite substantial.
The solution is to use a tool that provides software license management capability, reliably providing you with visibility into your license inventory and usage status. And it certainly helps if the vendor you select has a demonstrated history of flexibility in negotiating terms and conditions that will conform to your changing needs. (Yes, some vendors do offer that flexibility!)
Time to Get Busy…
If you haven’t tapped-in to the cost-cutting initiatives listed above, you’re certainly not alone. Most companies are overlooking these easy-to-implement methods of saving money. And that means that with each tick of the clock, your IT department is needlessly wasting money.
That’s certainly not a good thing, but it does mean that you have a great opportunity ahead of you: five ways to save money that most of your competitors are overlooking.
Better get on it!
Analyst Research 7 min
Gartner: 6 Smart Steps to ITSM Tool Selection Process
Simplify the ITSM Tool Selection Process with Gartner's 6-Step Guide that offers a blueprint for success, along with industry-leading guidance that helps you customize your approach to evaluating ITSM tools.
Ebook 7 min
7 Deadly Sins of ITIL Implementation
Wondering whether ITIL® is still relevant in today's fast-paced digital environment? ITIL holds many timeless truths, but it can be misapplied when taken too literally. Uncover the seven mistakes commonly made with ITIL implementations, and gain guidance on how you can go faster—while still upholding ITIL's key principles.
Analyst Research 10 min
Gartner 2018 Magic Quadrant for ITSM Tools
Considering a new ITSM solution? Start with a complimentary copy of Gartner’s 2018 Magic Quadrant for IT Service Management Tools. The magic quadrant provides an evaluation of nine ITSM vendors—along with their viability, strengths, and cautions—and recommendations for defining your requirements.
You might also be interested in
White Paper 5 min
A CIOs Guide to Rethinking IT Service Management
Traditional ITSM models emphasize fixing as many problems as quickly and as cost-efficiently as possible. But today’s CIO needs to re-imagine and re-engineer ITSM to support demands for digital transformation. This white paper explains how to turn ITSM from a cost center into a hot spot for enterprise performance.
4 Ways Codeless Architecture Enables ITSM Initiatives to Scale
How can you scale new ITSM initiatives without spending additional time and resources? Two words: codeless architecture. Learn more today.
Webinar 40 min
Proven Cost-Optimization Initiatives Most CIOs Are Missing Out On
This webinar explores some of the major challenges currently facing CIOs, and lays out proven approaches that help IT organizations press forward with their digital transformation initiatives, while at the same time saving time and money.