Controlling costs is a challenge every business must face. This is especially true when it comes to technology spending, with organizations projected to spend $3.5 trillion globally by the end of 2017. And the amount companies spend on their technology will only increase, with Gartner projecting IT budgets to swell by 3% by 2020.

IT is an area where most businesses have to invest regularly in order to stay competitive. It’s no longer considered a luxury to upgrade from older, legacy systems. Today’s businesses need all the computing power and functionality they can afford if they want to meet their organizational goals.

However, it is possible to reduce your IT costs in ways that don’t involve skimping on vital hardware and equipment.

How to Reduce Your IT Costs

When you go looking to improve your efficiency, you’ll usually find ways to streamline processes that can lead to cost savings. It’s no different with your technology. Making strategic changes to your IT environment, your staffing, and your vendor relationships can make a significant difference.

Conduct an IT Assessment

Do you have an objective view of your IT environment? You probably don’t. That’s why getting an outside perspective can help you determine what changes you can make, and the available options, for simplifying your technology operations.

Start with an IT assessment from an external source. IT companies will be able to send consultants to analyze your infrastructure setup and IT environment to make recommendations as needed. These can include:

  • Identifying opportunities for consolidating hardware, software & licenses
  • Recommending outsourcing of non-essential functions
  • Finding ways to simplify your technology

Ultimately, this assessment can determine if your technology is in alignment with your operational goals, recommend changes to make it more cost-effective, and outline a technology roadmap so that you know the optimal time to make future upgrades.

Cross-Train Staff

Your personnel are a valuable resource for your business. While you may have experienced and highly-skilled people working for you, they might not always be deployed with maximum efficiency.

For example, someone whose skill set focuses in one area might only typically act in that capacity, and having people on your team with highly-targeted areas of competency can limit their effectiveness. It’s a good idea to cross-train your staff to be able to perform more than one role.

Conversely, if your staff are comfortable working in multiple roles, you’ll dramatically improve your organizational flexibility. You’ll be better able to balance workloads and avoid scenarios where one person is overworked while their colleague is underutilized. Your staff get the opportunity to gain new skills and your business has another resource that can perform that function in the future.

In the end, improving the flexibility of your team by encouraging staff to handle multiple areas of responsibility will reduce your staffing costs significantly.

Renegotiate Terms with Vendors

Your organizational needs are constantly evolving; what may have suited you at first may no longer be the case down the road. For that reason, it’s important to have a good working relationship with your technology vendors so that you can renegotiate terms and pricing when needed.

Nearly everything is negotiable. Your vendors are in business too, and it’s in their own best interests to see to it that yours are also met. Otherwise, if the relationship isn’t productive, it can place further business dealings in jeopardy.

Your IT assessment will arm you with areas of focus for reducing your expenditures. In many cases, your IT consultant may be able to help you in the negotiation process by identifying better options for hardware, software, or other IT products.

Renegotiate License Costs

Managing software licences is a major challenge for most businesses. Since licensing agreements can be complicated, and bulk buys the norm, you may find yourself in a position of paying for licenses that you aren’t using.

The best way to approach this is to:

  • Assess and analyze all your current agreements
  • Understand your actual usage numbers as well as trends
  • Look at shifting from a fixed-seat arrangement to a flexible one which grants temporary licenses as needed
  • Investigate license swaps for better balance

At the end of the day, implementing IT Asset Management best practices will help you focus on maintaining a healthy balance between your software/hardware spend and the return on investment.

Modernize Your Technology

Companies spent an estimated $156.7 billion on IT support services alone in 2016. It’s a good indicator of the cost of keeping older hardware and equipment in good working order.

While upgrading and modernizing your technology carries its own capital costs, these costs can usually be mitigated by a reduced spend on maintenance/repair of legacy equipment and the difficulty in finding resources with the specialized skills to do so.

Another cost-saving measure can include migrating certain services to the cloud. If you are a candidate for cloud computing, you may not need to purchase hardware and maintain an expensive data centre to house it but rather pay an ongoing fee for cloud services instead.   

When you factor in the associated savings from warranties and manufacturer support, it’s clear that operating an up-to-date computing environment can significantly relieve IT budgetary pressures in the long term.


There are many avenues for a business to save on their IT costs without sacrificing your ability to compete in today’s landscape. Getting an outside IT assessment of your technology setup can give you a clear picture of where inefficiencies have taken hold, and give you a roadmap for overcoming them.

Partnering with an IT services company will help you put these cost-reduction strategies in place so you can be sure that your technology budget is well-spent.

Views: 79


You need to be a member of Small Business Bonfire to add comments!

Join Small Business Bonfire

About the Small Business Bonfire

The Small Business Bonfire is a social, educational and collaborative community founded in 2011 for entrepreneurs that provides actionable tips and tools through a small business blog, a weekly newsletter and a free online community.

Subscribe to Our Newsletter


© 2019   Created by Alyssa Gregory.   Powered by

Badges  |  Report an Issue  |  Terms of Service