Target Areas to Reduce IT Costs
  • 5th October 2020
  • Subha



IT Capex / Opex costs are an expensive component of any organization’s budget.  Cutting these costs can be difficult when there are so many other priorities and the fact that many costs seem like they are fixed.  This article will show that many IT costs are not as fixed as they might appear and offers suggestions for reducing the IT budget.

When looking at most IT budgets, personnel costs are often the predominant expense.  Fortunately, there are many strategies for reducing labour costs.  But, there are other capex costs which can be reduced as well and so added a second section to deal with these less obvious opportunities.



Operational Expense - Reduce labour costs

  • Outsource IT Operations
  • Operational Efficiency
  • Hire temporary as on required.


  1. Outsource your IT operations:

Handling IT operations in-house can be extremely expensive and it is out of core business focus areas. The average business doesn’t have the ability or knowledge to manage its IT operations itself. unless of course you are an it company, it isn't considered to be a core operation in your business. It will cost you a fortune to hire professionals that will maintain your IT operations.


It also may be hard to find the right people for the job. So why bother with all that? Instead of paying all that money operating a department you don’t need.


Outsource all that work to companies that will work for a fraction of the money you will be paying locally. These companies cost way less because of the lower cost of living of the country they reside in (i.e. India).


  1. Operational Efficiency


Automate time-consuming tasks.


There are a lot of things that your staff may be doing that might be routine work or require no experience at all such as: Doing configuration change, data movement, adding data, redirecting calls etc. These operations are reducing your work force's productivity and putting unnecessary work load on them. These operations can be simply automated through a one-time payment.


One of the most effective strategies for cutting costs in your IT organization is very easy to implement; simply publish a metric each month of the money you have saved from your cost-cutting initiatives and celebrate when you have a major accomplishment.  Metrics are a great way to influence behavior and having a published number will encourage your organization to focus on reducing costs.


  1. Hire temporary workforce:

Sometimes your company might have a specific task that isn't necessarily core in the business operation.

Hiring a full-time employee for it will be wasting a lot of resources and you will be required to give them all their benefits as full time employees.

But that isn't necessary, you can hire consultants for that specific job or period of time, and their job ends once you don't need this process anymore. It will help you save a lot of expenses while minimizing your workforce and keeping only the necessary employees that contribute daily to your company.



Capital expense

  • Use Cloud
  • Virtualize servers by using containers
  • Use open source software


  1. Use the cloud :


Storage and hardware no longer need to be on-site and the cost of renting as we use, can be much lower than the cost of owning as resources are only used when needed.  Containers can also be useful here as they allow customers to shop for the best price from cloud providers.


  1. Virtualize servers by using containers

It wasn’t too long ago that every application used a dedicated server and this multiplied due to DR servers, test servers, etc.  Many of these servers had low utilization rates so hardware costs were not optimized.  If you still have dedicated servers, partitioning them to allow multiple applications to share the hardware can save money.  Extending this concept, containers are a great option.  Linux containers are self-contained runtime environments that are lightweight and portable.  Because services can be run on the same box, hardware expenditures are reduced.


  1. Use open source software

Open source eliminates the initial costs of acquiring software as well as the recurring annual maintenance costs.  But, open source is much more than a cost play.  With open source, you have access to the source code so you can make your own modifications.  In addition, code updates are made by developers from many companies so the software often improves faster than it might if a single company was supporting it.  Finally, when you have an issue, you are not tied to the software provider for help but rather have many options for assistance.



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