IT costs reduction examples

Insight complexity

 

In a former article I promised to describe the measures which leading companies has taken in order to reduce their IT costs effectively and to realize a sustainable ROI.

 

This article describes a number of practical examples to reduce the IT costs effectively and sustainable.

 

How to start with IT costs reduction?

 

First of all you need a complete overview of all the IT assets in your infrastructure, hardware as well as software. Without this overview you cannot start developing a proper plan to earn money by cutting costs at the right places.

 

Many companies make assumptions to build a plan on instead of finding the real facts. We often hear that it is necessary because it is not possible to gather the facts in time. Other mentioned reasons: it is so complex and the available data are not complete and correct. Often the installed CMDB’s are incomplete or not used.

 

All the successful companies have started with fact finding. That can be done in a short period of time because there is software available that does the job for you. Software that builds a single version of the truth, through an agentless discovery process; all IP-connected devices are identified and categorized. Within weeks you create the desired overview of all the IT assets, enterprise wide! Now you have insight and you can start making a proper plan to earn money right away by cutting costs where it is possible.

IT costs reduction by virtualization

 

Leading companies have identified virtualization of their server environment as one of the key cost reduction initiatives across their enterprises. Most of them have established high goals of having 50% of their servers virtualized in the coming years.

 

Virtualization enables the consolidation of the hardware infrastructure and by doing this you will lower your total cost of ownership considerable. Besides this cost aspect it is easier for the IT function to adapt to a changing user environment by re configuration of hardware and re distribution of applications.

 

What benefits you can expect

 

 Less physical servers
 Less amortization
 Less maintenance
 Less energy usage
 Less cooling costs
 Less personnel costs
 Increased server utilization
 More flexible software environment

Through this approach, they expect to realize multi-million dollar savings on hardware and software costs, personnel costs (lower ratio of administrators to servers) and energy and cooling costs.

 

IT cost reduction by managing your software licenses

 

SAP, Oracle, Microsoft and many other software licenses are not cheap and you pay a nice amount on yearly maintenance. Take care of a good contract administration to begin with. If you don’t know what your rights and obligations are, you are not in a good shape to negotiate the best prices for your company.

 

After that, start measuring the usage of the software. Many people don’t realize that every user needs to pay for the use of software. Without knowing the costs, they allow user rights to too many people. So start  communicating the costs of using software into your organization and start measuring the real usage.

 

In all my engagements I have not seen one company that was not under licensed or over licensed. Through adding users during the year you reach very quickly the boundaries set by your contract. So when the vendor starts measuring the real usage of their software, you can be unpleasantly surprised by an extra invoice with an amount of six zero’s.

 

In other cases companies do have too many licenses. In that case you can start using the licenses or sell the licenses back to the vendor.

 

One way or the other, by setting up a contract administration, measuring the software usages and communicating the costs of using software, any company can safe money by cutting unnecessary expenditures.

 

The software you need for this will pay itself back immediately.

 

IT cost reduction by managing your Outsourcing invoices

 

After tough negotiations you have signed an Outsourcing contract. Your new partner starts the transition and after a certain period you will get new invoices which are based on the signed contract.

 

I presume that the content of the invoices can be traced back to the signed contract. Sometimes even that is not the case.

 

If you want to check the correctness of the invoices you do need to understand the invoices completely in terms of numbers and prices. Let’s concentrate on the number of assets, e.g. the number of desktops or servers. Do you have your own source of information to check the correctness of the invoiced numbers?

 

Leading companies know that they have to check those numbers by actions of their own. There are too many examples in the marketplace that proofs that you can earn money by only paying for the number of assets you really work with.
 

 

 

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