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Reducing your IT Costs

Keeping pace with today’s volatile and intensely competitive business environment demands an IT function that drives speed and agility. In addition, digital technologies are changing the game. The potential for new cost reduction is emerging alongside new tools and solutions that offer a fresh opportunity for cost containment. Advances such as cloud computing, powerful collaboration technologies, standardization and industrialisation dramatically extend the scope to not only drive down costs in IT, but also to introduce innovative cost reduction practices that benefit the whole business.

Written by: Matthew Parton

Published: 2017/04/01

 

The key to enabling business cost reduction is better alignment between the core business and your IT team/supplier or infrastructure. To achieve strong business-IT convergence, technology platforms need to be more agile and flexible, the IT operating model must be aligned and your IT team needs to be ahead of the game and in tune with the latest new trends and technologies. Cost reduction often begins with IT and is viewed as a significant cost, yet at the same time expected to deliver technology that transforms how a business operates. Equally, IT cost reduction is becoming more challenging than ever.

Five steps to reducing IT costs

  • Introduction
  • Reduce Capital Expenditure
  • Use managed services instead of employment
  • Rent instead of Purchase - Office 365 an example
  • Virtualise your infrastructure
  • Automate your disaster recover plan
  • Conclusion

Introduction

Whether big or small over the years you have most likely identified and implemented any IT savings and potentially exhausted any new “cost saving quick wins.” That said, the greatest challenge for many businesses is not the removal of cost from existing operations, it is where to invest the resultant savings. Although the solution may lie with technology, the relationship between technology investment and profitable growth is a complex one for any business.

As a small or growing business your primary focus is on running your business, driving sales and delivery. And, whilst every business model is different and IT infrastructures vary dependent on size, operation and sector, there is one common factor for all business operations to enhance profitability and growth and that's Saving Money.

But as a smaller company where do you start, how can you save money? IT doesn't and shouldn't be a barrier, in fact it should be the opposite, an enabler to make your business more productive and connected. In this feature we showcase five important steps of how utilising the 'cloud' within your IT infrastructure can have a huge impact to efficiency and also bring essential business cost savings.

Reduce Capital Expenditure

Reduce Capital Expenditure - Stop buying new hardware you don't need to by this stuff any more.  As a new or existing SMB your ability to spend on hardware is limited. A new business cannot afford to layout capital expenditure. Well you could but how will that impact your cash-flow, ability to pay wages, pay suppliers etc. Add to this the cost of all the software that goes on top too.  

These days more efficient options are available that will not only reduce your IT costs but will increase your cash flow, your ability to acquire more business and increase growth organically. How? Virtualise your servers and limit the number of on-premise machines. Instead utilise cost effective, cheap cloud based servers. Which give you the ability to scale the number of servers simply and easily on demand as your business grows. The cost of a virtualised server compared to buying real hardware is peanuts today and storage comes even cheaper

Another benefit of cloud based servers and storage is you only pay for what you use. So when you have down time when your business isn't operating at full capacity, you will actually be saving money. Compare this to on premise machines where you not only pay for the hardware but also the electricity and cooling costs.

Use managed services instead of employment

If you are small company (1-5 employees) its likely that someone in your business is acting as the IT guy, its highly unlikely you are employing a specialist IT technician that looks after your PC's for you. These guys don't come cheap. An average IT Technician costs around £35k per year to employ and we all know as employers that the actual cost to employ someone is much higher when you bolt in NI, Taxes and Pension schemes.

If you are the IT Guy or have someone in your business acting that role, then how much is that resource really costing you? The person taking this role was probably not employed for that reason and you really should sit back and calculate how must time that person is taking and how efficient they really are. Compared this to a professional technician who deals with this stuff every day. Even if your a bigger company and employ a professional to do this, you still have to question the costs. So why bother, simple answer don't, it really is costing you more money.

Managed services are a more efficient and cost effective way to control spending in your business. This is where an outsourced specialist IT team looks after your services for you. Its a fixed monthly cost per user or machine and comes with an SLA agreement. These providers also have pooled resources and are highly focused trained specialists in IT, which basically means they will fix your systems faster and cheaper.  Another benefit to your business is these costs are easily accounted for in your business accounts as an operational cost not capital expenditure. Which basically means it leaves your business as a expense before taxes. This is easily budgeted per month which wont impact your cash flow and the cost grows evenly as your business grows.

Rent instead of Purchase - Office 365 an example

There are many good reasons to use Office 365. If you go and buy Office Professional off the shelf its going to cost you around £150/year/machine and it will be out of date in a year. If you pay monthly for around £7-8 depending on the plan, you'll be paying approx £72/Year which includes updated features every week. Its never out of date. What's more you'll get Word, Excel, OneNote, Power point, Access and all the standard office applications that you need to help your business grow. Further your core dependent email system is constantly updated with the latest anti virus and anti malware patches automatically by Microsoft technicians, meaning you don't get those crazy emails from some company in Nigeria pretending their Amazon

To make this more impressive you will also get SharePoint (A portal for your whole team to store documents, write team pages and discuss things with each other that are important to your business). Add to this: Skype for business, so you can talk to customers and staff anywhere in the world and you really do have an impressive package. This all comes with office web and desktop versions for you to download and 1TB of storage space.

Virtualise your infrastructure

Virtualise your infrastructure get rid of those on premise servers. Fancy words hey if you not very technical. Well what does this mean? Well years gone by a company would by a server, install an operating system and load tones of applications on it. Then they would load it with users until it got slow. The M.D. would then buy another server add more applications and then load it with more users until it got slow, and so on and so on.

Problem with this approach is cost. Firstly you are paying for infrastructure up front and applications, which will definitely impact your cash-flow, these things are not cheap. Your model is reactive not planned. Your costs are random and expensive and require high maintenance. Virtualisation is a way of taking a bare metal server and installing lots of small software based servers inside it. This can be done easily and quickly and with minimal cost upfront. What's more from a disaster recovery perspective these virtual machines can be copied off-site and ready to boot up should you have a failure; meaning your business keeps running.

Automate your disaster recover plan

Automate your disaster recovery plan and store your data automatically off-site. Stop doing manual backups to your local Terabyte storage server hidden in your back office. You probably do this manually every week and take it home afterwards. Whatever your doing its taking time and is very risky. Also ask yourself when did you last test if your disaster recovery plan actually works. Its simpler to automate your backups into off site storage that has a retention policy, managed over a chosen number of days. This basically means you can restore information to a previous point in time. Don't forget disaster recovery includes what happens if your server fails. How long can your business run without that server running. Hours, days, weeks. How much will that cost you. You really do need to plan this and rehearse the scenario regularly to make sure you are prepared if it goes wrong.

Conclusion

Still not sure, then let us help you - Intelligenics are a Microsoft Silver Cloud Solutions Partner, we help small to medium size businesses we offer a free consultation