Despite the extensive disruption companies continue to navigate, business chiefs are now dealing with both stagnant if not reduced IT budgets.
There's also the increasingly common instruction, ‘Do more with less’ whenever technology is discussed in the boardroom.
For CIOs and IT managers, that means devising strategies to redirect resources to fund digital acceleration and enable high-priority initiatives, such as hybrid workforce policies built on equitable access to devices and online services.
As a result, tech leaders are turning their attention to operational expenses.
These are perceived as the best opportunities to shift or reduce spending in the short to medium term as companies ask themselves ‘do we still need all the services we signed up for last year?’ and ‘have employees subscribed to new apps that were never flagged?’, among other concerns.
Today, most organisations set out on cost optimisation projects using the same ad-hoc studies, spreadsheets and time-consuming manual processes that pulled them through the last two decades. Unfortunately, these tactics inevitably lack the sustainable framework to support continuous visibility and control over money spent on IT in today’s digital economies.
The origins of these challenges are highlighted in a recent report from Harvard Business Review (HBR), which found only 62 per cent of organisations are highly confident in the data they are using to make budget decisions despite 82 per cent having increased investment in digital initiatives in response to the COVID-19 pandemic. Meanwhile, only a quarter are reevaluating and/or renegotiating IT supplier agreements to improve costs and flexibility.
While there is a general perception that change is difficult, expensive, and takes too much time, changing the status quo is relatively simple and certainly logical: it starts with informed planning. Companies must begin by building defensible plans which incorporate tangible, real-time insights to accelerate the identification, execution and benefits of areas for cost optimisation.
There are four key areas where that level of intel should be focused:
- Cloud: now part of every IT organisation, whether planned or not. Staying on top of cloud consumption, usage patterns and cost with FinOps best practices is critical to avoid excess consumption, bill-shock surprises, waste, and cloud resource inefficiency. The concept of assigning someone to do nothing but FinOps may seem extreme, but in the context of total technology spend, these practitioners not only pay for themselves, but become cost management engines.
- Software-as-a-Service (SaaS): which offers clear advantages that enable organisations to collaborate and scale. Most companies, however, are now struggling to maintain control over their SaaS license footprint and use, creating further waste, contract compliance complexity and financial risk. Koch Business Solutions mitigated these challenges by leveraging recommendations, anomaly detection, and budgeting and forecasting capabilities to optimise $10 million in spend within 90 days of starting the strategy.
- Telco bills: which are hard to understand and analyse given the volume of call data, yet bear vast savings potential through the monitoring of excess data and roaming charges, and the possible re-allocation of outdated or ‘zero use’ devices. This is especially important right now given the lack of international business travel and requirement for international roaming plans.
- A critical part of any “Return to Office” post-COVID plan, is the need for IT to review and optimise pre-COVID desktop device fleets against work-from-home mobile devices. This also has the potential to reduce costs by eliminating duplicate, zero use or end of life devices. Recently, a sizable, ASX-listed financial institution operating in the Asia-Pacific region identified and cancelled 1,200 unused or excess service numbers in the first 30 days. This was followed by a 50 per cent reduction in time to answer ad-hoc questions about costs, two per cent annual public cloud cost savings, and reduced invoice validation times.
Once plans are in place, it’s crucial to keep track of realised costs relative to the plan, dynamically adjusting your strategy along the way and evaluating the potential impact of changes to costs and timeline. This translates into the ability to consistently model and compare various scenarios, balance commitments in other areas of IT, and maximise ownership costs over the lifetime of the strategy.
At a time where IT spend needs to be accountable, and boards expect informed decision-making in tech purchases, this can lay the foundation for enhanced investment in new technologies, enable a sensible and cost-effective transition to the cloud to underpin the hybrid workplace, and generate efficiency and productivity gains.
Companies with a data-driven, sustainable and tool-enabled approach are able to drive continuous cost optimisation to help them ride times of uncertainty.