Reduce IT Costs

6 Proven Strategies to Reduce IT Costs and Maximize Your Budget

Technology has proven to be a worthwhile investment throughout the pandemic as organizations realize returns on IT spending, which has facilitated employee productivity amid significant change. Even with fears of economic turmoil, businesses no longer see technology as a cost center. Instead, IT has become an enabler that’s critical to success. Moreover, as companies look to maximize efficiency and reduce costs during an economic slowdown, technology will help companies do more with less. As a result, experts expect strong demand for IT in 2023. According to the latest forecast by Gartner, worldwide IT spending is projected to total $4.6 trillion in 2023, an increase of 5.1% from 2022. 

However, just because there is a surge in digital transformation and IT spending doesn’t mean, businesses need to break the bank. Here are five proven strategies to reduce IT costs and maximize your budget in 2023.

Introduction to IT Costs

IT costs are the expenses associated with purchasing, maintaining, and operating hardware, software, and other related IT services. Hardware consists of any physical components necessary for your IT systems, such as computers, servers, and other peripheral devices. Software includes the programs used to run your IT systems, such as operating systems and applications. Finally, services refer to the services provided by IT professionals, in-house or outsourced, to keep your system running smoothly.

Proven Strategies to Reduce IT Costs

1. Automate IT Processes

With the demands on the IT team growing faster than the department’s budget, IT automation can play an essential role in helping to reduce IT costs while still achieving a high standard of service. The more tasks that can be automated, the more time your team can spend on strategic initiatives rather than drudge work. 

IT automation enables teams to replace high-volume, time-consuming, repetitive and error-prone tasks. There are thousands of potential use cases for IT automation, from provisioning new employee software to automating simple help desk activities to routine IT operations and cybersecurity functions. 

For example, automated provisioning and de-provisioning, helps manage access to applications, systems and data within an organization through automated practices. By reducing manual provisioning processes, you can free up time and resources for more critical tasks and avoid user downtime, resulting in greater productivity, lower operational costs, and improved operational efficiency.

2. Deploy the Cloud

A major driving factor for cloud adoption is reduced IT costs. One survey reported that 94% of IT executives said the cloud reduces setup and maintenance costs, and 47% said their IT costs would drop by 30-50% from cloud infrastructure and apps. 

Utilizing the cloud allows you to access the resources you need on an as-needed basis, eliminating the need to purchase and maintain expensive hardware and software. As a result, you will save on capital costs and reduce the time and effort needed to manage and maintain hardware. Cloud infrastructure also allows you to pay for only the resources you use, which helps to reduce IT costs. Additionally, it can help you save money on energy costs while reducing your carbon footprint.

3. Leverage Open-Source Software

Using open-source software is another excellent way to reduce IT costs. Open source software (OSS) is typically free software distributed with its source code, making it available for use, modification, and distribution with its original rights. In contrast to proprietary software, OSS does not require upfront costs, subscription or ongoing maintenance fees, helping you minimize your expenses. 

4. Implement Virtualization

Another way to reduce IT costs is virtualization. Many IT organizations deploy servers that are only running at a fraction of their capacity, often because they are dedicating their physical server to a specific application. This is inefficient because excess capacity is not being consumed, leading to higher operating costs and IT costs. Virtualization enables better use of physical resources. Rather than running multiple servers at approximately 40 percent energy efficiency, virtualization allows you to consolidate workloads on one or two servers – or eliminate the need for servers altogether.

Furthermore, servers, personal computers, and data centers require a lot of electricity to power machines and cool the environment in which they operate. Virtualization can dramatically reduce your business’s energy demand and carbon footprint by consolidating software operations on fewer servers.

5. Standardize Your Systems

Technology standardization is positioning your applications and IT infrastructure to a baseline of standards that fit your business strategy, security policies, and goals. Standardized technology reduces complexity and enables cost savings through economies of scale, ease of integration, improved efficiency, and better IT support. It also simplifies your management of IT. For example, if you use a variety of hardware and software, it is much more costly and time-consuming to support than if all your team members are using the same systems. Instead, consider having all team members use the same devices and programs, such as password managers, email, business management software, CRMs, and operating systems.

6. Outsource IT Services

Outsourcing IT services to a managed service provider (MSP) is a great way to reduce IT costs. 

  • With an MSP, expenditures are predictable. You will incur a monthly cost, making it easier to budget for your IT needs, forecast your expenses, and control your costs.
  • An MSP eliminates the need to build an expensive and expansive IT environment as they already have their own enterprise-grade infrastructure.
  • An MSP helps reduce employment-related costs such as recruitment, salary, benefits, turnover and overtime. 
  • Training an in-house IT team on the latest technologies can be costly and time-consuming. An MSP gives you direct access to a group of industry experts. 
  • MSPs will advise you on the most efficient upgrades and technology investments to ensure you aren’t racking up unnecessary expenses.
  • According to the 2023 State of IT Report, managed services spending will account for 18% of IT budgets in 2023, up from 15% in 2020.

Wrapping Up

Organizations can be easily overwhelmed by IT costs and complexity. However, implementing the strategies outlined in this blog post can reduce IT costs and maximize your budget while you are on your digital transformation journey. 

Subscribe to Updates

Get latest IT trends and best practices