Why IT Cost Optimization Should Be Part of Your Year-End Review
As the end of year draws closer, it’s time for businesses to reflect the amount of value their technology investments ultimately brought. An end-of-year IT audit and budget review is a smart way for those companies to ensure they optimize their resources and set themselves up for ongoing success. Manage the process the right way, and your business can achieve IT cost optimization benefits that add freedom and flexibility to your roadmap for years to come.
In this blog, we’ll discuss how to prepare for your end-of-year IT budget review — it’s coming sooner than you’d think! The tips dovetail with important IT cost optimization strategies that help businesses realize substantial savings year-round. Get the process started with these steps:
Review Current IT Expenses
First, conduct a comprehensive review of your current IT expenses. This includes hardware and software costs, subscription fees, maintenance contracts, and any ongoing IT service expenses. Look for unexpected spikes in spending and ask yourself and other relevant stakeholders whether the costs align with business objectives.
Consider categorizing expenses into essential and non-essential categories to prioritize where to allocate resources. Adding routine IT audits to your IT cost reduction framework can also offer significant benefits by giving your team an in-depth look at your company’s spending patterns and the relative value they bring back.
Assess Current IT Performance
Evaluate the performance of your IT infrastructure and systems. Do your tools meet current business needs? Are there any performance bottlenecks or areas where improvements are needed? What performance/stability issues do employees see that leadership might not be aware of? As above, routine IT audits and assessments can help your team identify underutilized resources and opportunities for IT cost optimization.
Examine Future IT Needs
Anticipate your organization’s future IT needs and growth. Consider factors like new projects, expansion plans, and evolving technology trends. Assess whether your current IT budget is sufficient to support the roadmap or if adjustments are required to accommodate future demands. Finally, take time to review IT cost reduction strategies you deployed throughout the year and determine their effectiveness.
Evaluate Vendor Contracts
Review all vendor contracts and agreements as you prepare for your end-of-year IT optimization. Ensure your team is getting the right value for its money: vendor services should align with your organization’s objectives, and your company should be taking the fullest possible advantage of any services it pays for.
Look for opportunities to renegotiate contracts or switch to more cost-effective alternatives, especially if you’ve outgrown your current agreements. If you’ve considered IT cost optimization audits as a data gathering and continual improvement tool, incorporating telecom audits can help pinpoint potential hidden communication costs that drag your budget down.
Prioritize Cybersecurity
Your IT budget review process should come with an explicit focus on observing and improving cybersecurity. First, assess your current cybersecurity measures and identify any vulnerabilities or weaknesses. Allocate resources to strengthen your cybersecurity posture, keeping in mind that seemingly large expenses can save you from even costlier security breaches down the line.
Make sure you’re also paying attention to the legacy technology your business uses and security risks that may arise as a result. Configuration errors and unpatched software versions can quickly lead to disastrous security results.
Consider Cloud Optimization
Cloud costs can easily spiral out of control. If your organization uses cloud services, reviewing associated spending multiple times a year (not just at the end) is essential to avoiding the issue. Companies often assume costs in their cloud agreement are baked-in, when they’re actually avoidable.
Consider talking to a consultant that can help you identify these opportunities and realize large savings. Implement cost-saving measures like rightsizing instances, optimizing storage, and monitoring usage to further improve your IT cost reduction strategy.
Employee Training and Development
Ensure your IT staff stays current with the latest technologies and best practices by investing in employee training and development. A well-trained IT team can be more efficient and effective in managing your technology assets — saving you money in the long run.
Plan for Upgrades and Refresh Cycles
Aging equipment can become a drain on resources, so it’s important to make hardware and software upgrades a part of your IT budget review. Use the information you find to budget for equipment refresh cycles to keep your IT infrastructure up-to-date and efficient.
In other cases, older technologies can be used indefinitely with the right configuration and cybersecurity changes. Seek opportunities to keep certain tools evergreen without impacting operations.
Document and Communicate the IT Budget
Ensure your IT budget is well-documented and communicated to relevant stakeholders within your organization. Transparency about IT spending and goals fosters better decision-making and accountability. Alongside IT cost optimization benefits, routine audits can further signal openness and transparency to colleagues.
Overall, make sure that legacy technology figures heavily into your IT cost reduction framework, since it has high potential to steal a disproportionate amount of your budget.
Seek Expert Advice
Consider seeking guidance from IT experts or managed IT service providers to assist with reviewing your IT budget. At Profit Advisory Group, we offer our expertise to help you analyze your IT budget, identify inefficiencies, and develop strategies for the upcoming year. Reach out to us today to learn more.