The growing popularity of the world of tech has given way for the necessity of reducing the inevitable IT costs. 

Since everything is becoming increasingly digitized, it is essential to know how to best operate things on the web. Whether it is having the best IT help desk services or getting an effective CIO, the need to get up-to-date and ahead of the competition is pivotal. 

That is why we have gathered a list of 15 foolproof, tried and tested ways to help you reduce your IT costs for a better technological future.

Let's dive in!

1. Reduce Labour Costs Through Automation

The first step towards reducing IT costs is to take a hard look at your employees and figure out the roles that could be done easily through automation.

There might be some positions in your IT department that you needed once but do not anymore or employees that have been performing below expectation or giving no real benefit to the company. There may also be jobs that once needed people but now can be automated. 

Identifying these and reducing unnecessary labor costs through automation helps manage expenses over time. 

You don't need to keep people on a team whose job can be done through machines. Figure out what's been eating your money and lose the dead weight. 

2. Monitor Your Cloud Costs 

Moving to Cloud itself is a wise decision that helps reduce IT costs, but it can also be monitored to further increase savings.

Cloud investment is growing due to extremely adaptable technologies, increased usage, and rising expenses. 

Tangoe predicts consumers spend more than necessary on the cloud by as much as 40%. Undeveloped management strategies can result in excessive consumption, which can be mitigated with a comprehensive cloud structure approach that increases IT costs.

This is a reason why IT executives should ask tough questions about their cloud expenditures and the value they provide in comparison to those costs. 

Companies that adopt a multi cloud strategy may see increased OpEx numbers because, they may benefit from volume savings and streamlined management and control, thereby reducing IT costs. 

FinOps is gaining prominence as a paradigm for maximizing cloud investments by eliminating wasteful cloud usage, streamlining necessary amenities, and adopting cloud-native services when needed.

3. Eliminate Unnecessary Services

There are many instances where companies have redundant or unnecessary services. 

Having multiple processes for doing the same things can spike IT costs unnecessarily and waste resources that could be better used otherwise.

Recognizing and eliminating these amenities and processes can assist to save financial expenses, optimize operations, and increase overall efficiency. 

To find and remove duplication in every aspect of the company, organizations should first assess present IT mechanisms and procedures to determine which can be optimized or eliminated. 

Once discovered, organizations should devise a strategy to substitute or eliminate duplicate services while making sure systems already in place are not adversely affected. 

Finally, organizations should assess the effectiveness of their initiatives, throughout the context of reducing expenses as well as productivity enhancements.

4. Don't Cry Over Spilled Milk 

When reducing IT costs, it is important to remember the saying, ‘don’t cry over spilled milk.’ In technical terms, don't spend your time focusing on sunk costs.

It's a waste of time and resources to believe that if you have already spent money on something and it doesn't work, going for an alternative will mean your previous investment is lost.

True, squandered money is gone, and whatever you may do can bring it back. However, spending the existing budget on mistakes from the previous budget just exacerbates the problem. 

Rather than continuing spending on solutions that do not meet your needs, focus your expenditure on things that will help the organization in the long run.

5. Stop Paying for Out-Of-Date Licenses

When you are evaluating your IT costs, you will most likely discover some unnecessary clutter. 

You may find certain software licenses that have long since expired. Perhaps you required the license for a long-gone project or for contractors who haven't been around in a while. Perhaps the license is for an obsolete software version that is no longer maintained. 

These events occur, but they do not have to continue. Stop paying for the license if it is no longer needed or is out of date.

6. Try Cost Effective Sourcing

To reduce IT costs, IT leaders should analyze contracts involving outsourcing companies and independent suppliers, as these are frequently the largest costs in the IT industry.

Contracts and subcontractors should be treated like automotive insurance, with a focus on expiration schedules and avoiding higher-than-market rates or costly contractor classes. 

Techniques such as supplier tail expenditure evaluation, contractor expense Pareto optimization, comparative analysis, and market abilities research can assist discover revenue escape in IT service transactions, resulting in savings of almost 30% on IT services expenditure. 

Internal procurement can also save money, as contracting is more costly and less adaptable unless you can forecast the future and are a competent procurer. 

To avoid overinflated costs, complications, and mismatched outcomes, modern IT directors are implementing an agile sourcing strategy.

7. Squeeze Out Value from Existing Tech

Instead of hiring people and spending more on new facilities, a way of reducing IT costs is to take out value from what you already have.

Educate staff on the tools that are available to them and raise awareness within your company about enhancing existing IT solutions.

Optimizing what is available on hand can help reduce unnecessary expenditure and improve company sustainability.

8. Evaluate Both Fixed and Variable IT Costs

When you compile everything into an accounting book or plan, you'll discover that some expenses are simpler to handle than others. 

Housing, salary, equipment leasing, and administrative expenditures will be consistent over time and are unlikely to be reduced in the short run without hardship.

Variable expenses may be easier. Items such as the volume of storage space in the cloud you use, the total number of programme license seats you pay for, and the professionals you deal with are likely to fluctuate, based on your current needs. 

When money is tight or if you're trying to remain ahead of the financial curve, you should start by looking at your variable costs.

9. Get It Right Once and For All

None of your effort and planning at reducing IT costs matter if you fail at the final stage: execution.

Make sure the costs you are reducing require the reduction, it will be costly to bring back services or employees you need after you have cut them off.

Similarly, when you keep something, ensure you are actually going to need it. Learn how to prioritize what best fits your company or you will be losing what you need to run it and keeping what slows you down.

Make sure you have carefully thought-out the process and are not rushing your decision because it is going to be final in several ways.

10. Outsource IT Services

A business study found that outsourcing digitization services can help organizations save 25-40% of their costs. 

This method is especially advantageous for smaller organizations with low IT budgets, as more than half use freelance services. 

Outsource IT services to help reduce IT costs for your company and get ahead of competition.

11. Implement Virtualization

Implementing virtualization can help reduce IT costs both short-term and long-term.

Virtualization substitutes tangible components with digital substitutes, allowing businesses to reduce hardware expenses by compartmentalizing low-use servers. 

Companies can also switch totally to cloud servers, removing the requirement for real servers and lowering power and computing expenses. 

This strategy is very useful for businesses that need to optimize server utilization.

12. Use Cheaper Hardware Alternatives

Bargaining, amending, and thoroughly researching all possibilities accessible for upgrading your current equipment is another way of reducing IT costs. 

Choosing for cheaper hardware can result in significant IT expense savings. For example, purchasing a Mac rather than a PC can be a cost-effective decision because a Mac has a significantly higher residual value than a PC.

13. Decrease Not Freeze

When reducing IT costs, focus on expenses that can be truly eliminated instead of paused for a while.

You don't want to freeze your expenses for a bit and have them reappear in costlier ways. Reduce what you can and cut it away for good.

You want to focus on the long-term reduction of IT costs for a sustainable future instead of short-term cutbacks. Do that and you have a better, more manageable future of technology.

FAQs

How can I budget my IT expenses? 

You can budget your expenses by managing your hardware and software costs, the cost of the services you use, and employee costs associated with your IT department.

You can read more about budgeting IT expenses here.

Why is reducing IT costs important?

Reducing IT costs is important because it helps give you control over your finances and use your resources towards things that are more beneficial to your company.