Managing IT spend in an uncertain economic period
The introduction of the coronavirus had a profound ripple effect on the global economy and caused an exodus of the office, in favour of remote work. Despite many countries beginning to reopen and return to the physical office environment, we are likely to see a hybrid workplace with some employees remaining remote and others returning to the office – even if only a few days a week. To say this is an unprecedented situation for CIOs and IT leaders would be an understatement. While you may be tempted to relax procedures and approaches towards the adoption of new technologies in order to enable or maintain employee productivity as they work from anywhere, this is unadvisable. For many who found themselves scrambling to keep up with the surge of early requests, CIOs and IT leaders are still to sifting through the initial chaos of where resources may have been distributed in order to properly manage and streamline technology spend.
The initial and sudden shift to remote working likely did not prioritise cost optimisation at the outset. The extent of the current climate has surpassed some initial predictions – and the impact to global economies is only now starting to come to light. As such, businesses were initially keen to get workers up and running as soon as possible, and by any means possible. However, now that working from anywhere is becoming a new norm for businesses around the world, IT spend should be a core focus in preparation for what is looking like an uncertain economic future.
For many IT leaders and their teams, identifying over-licensed and inactive software and hardware will be essential to finding additional cost saving opportunities, reducing the potential for wasted IT investments and delivering much-needed value to the business. Unlocking these cost efficiencies within IT spend can have a positive effect on the bottom line and significantly help organisations navigate these especially uncertain times, whilst ensuring business continuity.
So, how can businesses and IT decision makers determine which technologies they truly need and which they can afford to cut back on, especially in a new era of remote working, whilst being prepared to address IT cost management requests from their executive team?
The short answer is visibility.
Establishing visibility across an evolving IT ecosystem
Gaining comprehensive visibility of what resources are being used, purchased or inactive in an organisations’ entire IT ecosystem is an essential first step to optimising costs. This includes having a full, holistic view across all solutions, whether they are on-premises or in the cloud.
However, the reality is that many businesses have a fragmented view over the technology applications, software, hardware or cloud instances running within their organisation, which makes identifying inefficiencies extremely difficult. Even before the shift to remote work, the evolution of department-led technology purchasing had caused many IT teams to lose visibility of their technology estate, including accounting for what is being used, how much and what tools are inactive but are still costing the organisations money. According to research by Snow and IDG Connect, 67% of IT leaders confirmed at least of half of technology purchasing is now controlled by individual business units and departments.
To gain better visibility, organisations should begin by gathering a comprehensive inventory of the technology in use across all areas of the business. This raw data must then be normalised, categorised and augmented with additional information such as application type or end-of-life data.
Understanding technology use and its cost
Once a clear view of all technology assets has been defined, IT teams can then start to assess the current usage and spend of the organisation. With many employees working from home or some hybrid of office/home, it is likely they will be using a variety of new tools to work effectively. Whilst it can be difficult to determine exactly what is being used and by who when many workers are remote, having this information is crucial to effectively reducing redundancies.
For instance, there might be a piece of software already in place within the organisation with spare licenses that employees may not be aware of, leading them to purchase an additional license or even another solution unnecessarily. By having this insight, businesses can identify overlapping technology and limit usage to one single solution to dramatically reduce overheads, whilst also improving data management and security. Managing existing licenses or negotiating an early renewal, can also help to free up crucial budget needed to support other areas of the business.
By continually monitoring and comparing both the entitlements and deployments of enterprise software licenses, organisations can use this knowledge to re-distribute licenses for maximum effect, whilst protecting themselves against significant unbudgeted costs.
Another area of potential cost is the increase in vendor audits. There will be more activity here over the coming months, and we are already seeing software vendors increasing their audit programs. The ‘mad’ scramble to work from home along with the trend of to decentralize IT means that lots of companies are now potentially exposed as the software use has changed affecting compliance. Again, step one is to ensure visibility: understanding what is out there, how is it used, who is using it, and when is it being used can reduce the risk of significant and unexpected bills.
Head in the clouds
The cloud is another area that IT departments should be assessing now to more efficiently manage spend. During times of market uncertainty, investment in cloud infrastructure can often surge as businesses need the agility the cloud provides to enable employees with remote resources and access. Many organisations though are not prepared for the differences in always-on pricing policies that public cloud services use – or how difficult it can be to move your data between SaaS application providers. However, there are significant cost savings to be made when it comes to both hybrid and on-premises cloud models.
For on-premises environments, which are often developed over a longer period of time, going back and performing an audit can be extremely valuable as there may be legacy applications that are no longer required. By doing so, organisations can typically expect to reclaim 10% on resources and free up additional data centre budget.
For public cloud use on the other hand, when it comes to production, it’s best to start with agreements and focus on reserved instances, rightsizing or savings plans. The long-life and consistency of these workloads make it easier to analyse and to commit to ongoing spend for a discount.
Unlocking hidden savings in SaaS
Last, but by no means least, Software as a Service (SaaS) should also be a key consideration for cost optimisation. Without the right guardrails around it, SaaS like other types of software, can rack up a whole wealth of inefficiencies and waste through overprovisioning, redundant applications and duplicated accounts. That’s what makes SaaS a perfect target when it comes to identifying potential cost savings.
Here are three ways of doing so:
- Reduce unused licenses: unlike the traditional on-premises world, in a SaaS environment you can simply stop paying for a license if you are no longer using it. By gathering detailed usage data, you can manage contracts by buying and renewing only the subscriptions you need.
- Downgrade excessive entitlements: different license tiers of SaaS applications have vastly different costs. And often, you will have employees with advanced licenses who use just the basic features of an application. To be able to identify this and recoup the wasted spend, businesses need detailed understanding of both the license and its usage.
- Optimise applications: most organisations have two, three or more applications that serve the same or very similar functions. Regularly reviewing and consolidating to one application per use case or category, making this available to the end users via an approved application list, will benefit organisations in multiple ways. This includes potential volume discounts due to an increased in users, and lower support and security cost as there will be less applications to support and maintain.
Preparing for lingering uncertainty
No one knows the long-term effects of our current reality, but most organisations have been impacted – some more than others. During a time like this, having full visibility of IT spend through effective asset management can be a tremendous resource for businesses planning for future sustainability and growth.
Regardless of what’s in store, complete visibility (and where possible, manageability) across your technology environment has never been more critical. Comprehensive insight into your organisation’s infrastructure, cloud usage and applications will keep businesses resilient and compliant as we ride out this storm.