With the current conditions surrounding COVID-19, it’s becoming evident that we are headed towards a recession. As with all economic downturns, businesses will become more frugal and look to cut unnecessary costs. From what we have seen, we have identified several ways that businesses can drive down current IT expenses.
The biggest components of IT expenditures will fall into the following categories:
- Payroll for internal IT employees
- Hardware (Network, Server, Desktops)
- Licensing and Support/Maintenance
- Telecommunications (Voice & Internet)
Internal IT Payroll
An engineer generally demands a salary that matches their experience. A good engineer should make substantially more than an entry level position. More experience enables more coverage, but it’s rare that a single individual can do it all. The trick is figuring out how to be lean with your employees and leverage their specific skills within the IT operation.
The goal for all operations is to make everything efficient and streamlined. This creates a good team dynamic where everyone has an important role. We have seen IT operations that have not planned for future needs because they have grown organically, experienced turnover, implemented new projects, etc. Efficiency always starts with a well-defined plan.
A well-versed IT operation will leverage management tools and have a defined hierarchy of skilled workers. This generally starts with a visionary/CTO, Management, Engineers, and Technicians. Schedules will be followed, projects will be managed, and automation will certainly be in play.
Today, new management software is implemented within the operation to help streamline the operation. This includes anything from remote access, security management/response, documentation, access, network etc. Much of this software is designed for efficiency so that manual jobs can be replaced with automated technology. The right tools can enable an engineer to work more efficiently.
Outsourcing work, whether it be day-to-day operations or specific projects have been a model for a long time. Third party managed services are continuing to drive value. An experienced team of professionals can deliver an optimized operation quickly as they already have defined practices and implemented the right tools. Their practices are transferable across multiple organizations.
Layoffs happen, but they are generally not the best avenue if there’s not already an optimized environment. Although IT can come at a cost, no business can operate without it. Often, when layoffs happen, the higher quality workers end up taking on additional workloads. This can stress the operation, lead to mistakes and a bad working culture. If employees must go, it is important to know what their roles were and how they will be covered in the future.
Hardware (Network, Server, Desktops)
Hardware covers a lot of things from Firewalls, Switches, Servers, PCs, Phones, etc. Hardware costs are unavoidable, however there are alternative methods that should be considered to keep costs down. Managing in-house servers is probably the best example of how IT operations has changed in the last 10 years. Although it is still common practice, there has been a significant push to outsource. It is common these days for a new business to operate without ever needing a server and there are many reasons for that.
- Rise of Cloud Computing for Developing new technology
- Managed Hosting for Legacy Server Applications
- The move to SaaS applications to power your business
- Cloud Storage/File Services/Directories
Switches are completely commoditized; you can get high quality managed switch for a fraction of the price that will have the same performance and features as a major brand. This is especially true with the rise of software defined switching. Although it may be a little more challenging to set up, it will be incredibly effective going forward. The same goes with Firewalls; many security vendors have created ecosystems that can all integrate more features and increase the value of the solution. If you are looking to integrate your firewall, endpoint, email, logging management, you can simply stack on new modules and keep the price down with a single vendor.
SDWAN is a new movement that relocated edge routing into the Cloud and is delivered as a Service. Businesses don’t need to get edge appliances for every office, just a simple managed device that has all the controls hosted in an Internet portal. Now admins can simply manage an enterprise network through a simple web interface.
PCs and Laptops are great, but sometimes it makes sense to implement a cloud service to deliver virtual desktops and applications. With new Cloud technologies, the price and performance have become much better for the consumer. Today a full desktop experience can be run off a $150 Raspberry Pi device that will last for years.
For the most part, more and more companies have started implementing softphone technology and completely ditching their traditional physical handsets. Many VOIP providers now have excellent soft phone applications that run off your desktop, accompanied by a pair of headphones or headset. Outside dialing is integrated into your CRM’s and you can quick dial a colleague through the UC technology. The future is literally a single device that connects to the Internet.
Licensing and Support/Maintenance
Software licensing is tricky because it’s hard to avoid. For the most part, there is always an open source version of almost anything that you can use for free (like Open/Libre Office), but your employees may not be happy and some features may be lost.
Enterprise software has made a huge change in the last 10 years and licensing has shifted from a purchase to a service. No one is buying Exchange licensing and putting it in the Cloud. Instead, they simply subscribe to a service that is deliverable over the Internet. Microsoft 354 is very similar manner to its predecessor, but it has much more web integration. This trend will continue to progress and will eventually be the primary way that software is procured.
For the most part, most organizations will just follow suite with what others are doing. However, there are many more options out there. Mindcentric hosts Zimbra email, an excellent alterative to Exchange for half the cost. Zimbra is a global platform that is used by millions, just not too popular stateside. There are many examples of these niche products, but companies wouldn’t know where to start looking for them.
Service providers are also starting to deliver software packages as a solution, which means they deliver software and services together as a bundle. Service providers work with the vendors in scale, so they get better rates than a company off the street. When it is mixed with a service (example: Back-Up as a Service), the company that works with them gets exceptional value and no longer has to worry about the burden of managing licenses etc.
When done carefully, licensing can be done more efficiently and that will help reduce costs. There are also tools that can run audits on Cloud services and SaaS applications, all designed to keep costs manageable. Larger organizations could realize great savings by using these tools.
Telecommunications (Voice and Internet)
Internet prices keep going down and speeds keep going up. In 2000, a DS3 (45 Meg) would cost $20k/month. Today, we get 4x that speed in our homes for $50. Incredible what a difference 20 years can make! This helps businesses expand their IT operation as they can leverage more and more Internet powered tools. The benefit there is you don’t need to buy software and install it on a server in your data center.
The same thing goes with Voice services, which are almost completely VOIP by now. This means that no one is using analog lines and everyone is moving their voice over the Internet. The big advantages to this are simple; lower costs and a cloud-based PBX/Management portal. You also no longer have expensive phone systems with ongoing maintenance costs.
The good news is, there are more choices and competition than ever before, if you really take the time to look at the market.
How Does Mindcentric Help Businesses Reduce Costs?
Mindcentric is a full-service IT Management company that delivers software/hardware along services as a single solution. We take a hard look at your entire business, make sure that we understand the objectives and align a solution that fits your budget. In business for over 20 years, Mindcentric has dealt with everything from startups to Enterprise level organizations. If you were open to having us evaluate your current IT operation, we would be happy to offer recommendations.