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10 Ways To Manage IT Costs In A Weak Economy

IT executives were stretching their budgets even before today’s weak economic conditions. Median IT spending per user this year fell to $6,667 from last year’s $7,397, according to Computer Economics. This represents a 6.2% decline, consistent with the fact that IT managers are supporting an increasing number of users without corresponding increases in IT spending.

How can you do more with less in IT? In this time of economic uncertainty, what strategies should you employ?

1. Stay calm – IT is and will remain critical. Stay calm and proceed methodically.

2. Use Technologies that reduce costs – Voice over Internet Protocol (VoIP) can save businesses thousands of dollars a year in long distance calls and other communications expenses.

Software-as-a-Service (SaaS) has emerged as a viable mode of software usage for enterprises of all sizes due to its ease of deployment, low cost, and low maintenance. SaaS can provide a lower total cost of ownership (TCO) if you are paying high software maintenance fees and suffering expensive upgrade processes. SaaS enables organizations to eliminate costs associated with upgrading installed software, acquiring and managing hardware, staffing an IT help desk, and using internal IT staff to configure and code changing workflow or reporting requirements. The areas of SaaS application are gradually increasing. Some of the areas where SaaS are widely used include Customer Relationship Management (CRM), human resources (HR) and payroll.

Virtualization decreases the number of servers required, thus saving on power and A/C. It can provide not only cost savings but also increased data availability. By consolidating your servers, you can save energy, lower capital equipment costs, increase hardware utilization by up to ten times, enable continuous uptime with high availability and focus your IT efforts on more strategic initiatives.

3. Focus IT on the finance department – Finance is one of the critical areas where IT can have a substantial impact. Implement integrated systems that help you collect payments from your customers. Even a small improvement in the average number of days of open receivables (days sales outstanding) can meaningfully impact your organization’s cash flow and financial stability. Spending in IT may help with business problems related to tightening credit and cash flow. Look for ways to automate to reduce labor – especially important given likely headcount and hiring freezes. This will also result in quality improvements, as there’s less likelihood for human error. A billing system that is integrated with your CRM, for example, can generate invoices automatically and decrease the workload of the Accounts Receivable team.

4. Make sure all customer-facing applications are stable – Avoid penny pinching on technology that will impact customer-facing applications, such as ecommerce and email. While you can postpone many hardware purchases, for example, don’t do so with aging servers that manage your website or ecommerce. And take extra measures to ensure that email, your critical link to customers, prospects and partners, is never down.

5. Make your network compliant – The number and type of devices on your network matter. The move to more mobile technology means more devices on your network, such as, smart phones, wireless laptops , I-pads. All these devices compete for connectivity and can seriously affect your companies “up time” especially if there in not uniformity in the devices. A properly managed and compliant network runs smoother with fewer issues and less down time saving you time and money. Most MSP’s (manage Service Providers) will include a technology or network audit as part of their monthly maintenance contract or will offer this as a free service once a contract term. This is a very valuable service that can highlight areas of weakness or concern with your internal network allowing you time to set priorities make critical decisions while planning your IT strategy.

6. Investigate Hardware as a Service (Haas) – Having uniformity in your network devices is great for decreasing network maintenance cost and improving connectivity but can be an expensive undertaking up front. Also, replacing servers and work stations routinely is costly and this is where a HaaS (hardware as a service) can really help companies scale back on capital expenses. Most MSP’s can help companies replace and or upgrade their hardware for a monthly fee with no upfront capital cost. The contracts are usually termed out for 3 years and are set up to replace or upgrade devices at the end of the 3 year term making it easier and more affordable to keep networks and devices up to date and compliant.. These managed service agreements usually include a monthly maintenance fee that include any cost to proactively manage, repair or replace defective devices. Managed Service Contracts are fixed monthly fees and can make creating an IT budget much more predictable, eliminating unplanned or unexpected network maintenance expenses..

7. Invest in strategies that give you competitive advantage – Those who invest during the recession will come out of the recession quicker that company who didn’t.

8. Postpone cutting edge or disruptive technologies – Unless a technology can give you a clear competitive advantage or help you reduce costs, postpone it. Overall, it’s a good idea to bias your new-project selection over the next few quarters toward shorter-duration, lower risk projects so your organization can respond quickly to economic changes.

9. Secure, protect and backup your environment – Protect your data, and be sure you can get to it when needed. Look into disaster recovery planning.

10. Re-think how you approach IT –  Are you operating the most efficient and cost-effective infrastructure? Have you analyzed the efficacy of software-as-a-service for your key applications? Is managing your IT environment a core competency? Managed service providers offer a cash-flow-friendly alternative to on-premise installation for projects including email overhauls, Intranet development and wiki workspaces.

Please contact us (859) 757-2804 if you would like to learn more about how Managed Services, SaaS, Haas, Virtualization, or any of the other technologies mentioned in this article can help your business during and after the recession .