Optimising IT spend in a turbulent economic climate

Since the beginning of 2020, work practices have shifted rapidly for a multitude of businesses

Due COVID-19, we find ourselves in a unique situation. This has tempted many organisations to relax procedures and approaches towards the adoption of new technologies in order to enable employees to remain productive at home. For many who found themselves scrambling to keep up with the surge of early requests, IT teams are beginning to sift through the initial chaos in order to properly manage resources and streamline technology spend.

Naturally, in the initial and sudden shift to remote working, cost optimisation may not have been a primary focus. Businesses were keen to get workers up and running as quickly as possible, and by any means possible. However, now that remote working is becoming a new norm for businesses across the globe, IT spend is 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 crucial to finding additional cost saving opportunities and delivering much-needed value to the business. Unlocking efficiencies within IT spend can have a positive impact on the bottom line and help organisations navigate these times of ongoing uncertainty, 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, and be prepared to address IT cost management requests from their business?

The short answer is visibility.

Managing visibility across new IT environments

Having complete transparency and visibility of 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.

The reality, however, is that many businesses have a fragmented view over the technology applications 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’s being used, how much and what tools are left inactive but still paid for. 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.

Determining usage and spend

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, 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.

Looking to the cloud

The cloud is another area that IT departments should be assessing now to manage spend. During times of market uncertainty, investment in cloud infrastructure can often surge as businesses need employees to access assets remotely. However, there are significant cost savings to be made when it comes to both hybrid and on-premise cloud models.

For on-premise 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 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.

Managing SaaS costs to unlock hidden savings

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 over provisioning, redundant applications and duplicated accounts. That’s what makes SaaS a perfect target when it comes to unlocking hidden 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 application that serve the same or very similar functions. Regularly reviewing and consolidating to one application, 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.

Navigating market turbulence

No one knows the long-term effects of our current reality, but economies around the world have been feeling the impact. 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.

Another effect of the economic impact is the increase in vendor audits. The ‘mad’ scramble to home working and shift in IT approach means that lots of companies are now potentially exposed as the software use has changed, in turn 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.

Regardless of what’s in store, complete visibility across your technology environment has never been more critical. Comprehensive insight into your organisation’s infrastructure, cloud usage and applications will keep businesses profitable and compliant as we ride out this storm.

About the Author

Jelle Wijndelt is Director of Business Consulting in EMEA at Snow Software. Snow Software is changing the way organizations understand and manage their technology consumption. Our technology intelligence platform provides comprehensive visibility and contextual insight across software, SaaS, hardware and cloud.

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