Five Tips To Lower Your IT Services Infrastructure Costs
IT infrastructure is the backbone of modern business. The rising demands of IT resources is putting pressure on budgets and staff so prioritizing your IT needs is essential. What does your business need vs what can it do without? How much control do you need vs how much can you outsource? Lots of questions to ask yourself.
We know that for SMBs like yours, resources and efforts are limited so we compiled a list for you to help find ways to reduce your IT infrastructure costs.
1. "Get a professional assessment of your current IT infrastructure" says engineer David Boulton. An accurate assessment of your personnel and technology is the best place to start. According to Erik Giles, a Command Center Manager at the University of Chicago, you need to:
"Know your costs: fully burdened labor, assets (carried depreciation), annual capital budget, annual expense budget (software maintenance, etc.), project budget, any other burdens your finance group hits you with. Here is the way to look at it: imagine you were going to start a business as an IT Infrastructure Provider; if you need it and it isn't free then you need to capture it."
In short, you need good data as your terra firma. We agree that a technology assesment is the best place to start.
2. "Understand how this infrastructure is being used," according to IT Consultant Scott Russell, Mat Ellis, CEO of Cloudability agrees. Companies need to " get into the weeds of why each project is spending what they are spending. Try to calculate some tangible metrics."
But Mr Ellis suggests getting even more granular. Put each project into one of four quadrants: "High Spend/Low Efficiency", "High Spend/High Efficiency", "Low Spend/Low Efficiency", "Low Spend/High Efficiency." From here, you want to look at 'wins' and 'losses' and understand how your infrastructure could be made better.
3. "Determine which costs are supporting the strategic goals and which are not" according to Jon Martin, an IT project manager near Washington, DC. A big thing here is to factor in every little bit of your program. Independent IT benchmarketing director Jeremy Smith says:
“To some degree the immediacy of the ability to impact costs will depend on whether your infrastructure services are provided internally or by an outsourced provider. If you have an internal IT organisation and you undertake a benchmarking exercise you will be able to see quite quickly where there are opportunities and you will be able to prioritise and implement reasonably quickly. If you have an outsourced contract then it will depend on whether you have a benchmarking clause in your contract and if so, what the clause states in terms of the outcome after a benchmark has been undertaken.”
And there lies the irony that exists in tech; it’s not always how good the technology is, but how good the company and the people are. Sometimes a contract gets in the way of your cost reduction plan. Learning how to navigate contracts and companies can be just as key as designing the right IT infrastructure.
This could take some renegotiation. In taking this on Mr Ellis has some fantastic advice:
“contact your colleagues outside where you work and compare unit prices, especially for things like bandwidth, co-lo and staff costs. Make sure you're in the top quartile for value (i.e. lowest costs). Renegotiate with vendors where you are not there, and plan to change vendors and staff where you are not getting great value.”
Again, your IT infrastructure has to be aligned with the changing business needs of your company. If what your company values begins to change, the way to think about those contracts will also need to change so that everything is aligned.
4. Determine the right-size of the IT infrastructure based on the future business requirements and create a model.
If your IT infrastructure is to be the backbone that it is meant to be, understanding the future of the company is essential. This could mean involving other departments or decision makers into the fold and understanding what the sales, marketing, hiring and expansion goals the company has. From there, you will understand how to support those goals.
From here Mr Giles advises, “ you need to create a model that associates costs with each of these services. Things like labor are hard; but things like software licensing is usually easy. Most items in your "cost model" will be a portion of a whole. The messaging service will use a part of person, a ratio of your backup costs based on storage volume, all of several servers, etc. All your costs have to go somewhere. It is not easy but once you have a good model you are most of the way there.”
5. Align, Implement and Assess Model. So now you have the model, the people, the outsourcing (if necessary) and the alignment. Finding benchmarks for success are important. And understand that a plan isn’t always set in stone, but needs to be as flexible and nimble as your company’s goals. “After initial integration phase, and orientation phase, re-assess money being spent and efficiency. Rinse and repeat if needed.” according to Mr Boulton.
Reducing IT infrastructure costs is not a task you complete, but a method of looking at a problem constantly. Having the right people in place (and outside resources like an IT consultant) can help save money for companies like yours.
To find out more about "When You Should Outsource Your IT Services" you can click the link.