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IT cost optimization (ITCO) is a method of determining the overall value of IT systems and software products to achieve business goals and objectives. Most modern firms have a false goal of lowering information technology costs. Many companies find themselves in this scenario as a result of over-purchasing and under-utilizing older tech solutions that no longer meet their current technology needs. Organizations that are serious about expansion should reinvest in a more flexible, cloud-based operating model and adopt a strategic cost-transformation plan. As companies are being urged to improve their digital capabilities by investing in transformative technologies that speed up digital innovation and disruption, immediate one-time steps to lower tech expense levels can’t work in this situation. That’s why, businesses must embrace more creative cost-cutting efforts that enable them to realign budgets and generate long-term savings.
Best Practices for IT Cost Optimization
Many businesses regard cost optimization as a one-time task that yields measurable financial rewards. Approaching organizational cost savings in this way is doomed to fail in the ever-changing technology world. A new, more strategic approach, called Cost Transformation, promises to produce better results that result in real cost reductions while also preparing a company to succeed in the future.
Cost Transformation Provides a More Productive ‘Cost Optimization’ Path
Rather than merely looking for ways to cut technology expenses, a strategic cost transformation approach starts by reviewing an organization’s business objectives. A strategic cost transformation program is guided by three primary ideas:
- Reducing costs across any declining business areas to stabilize the company
- Getting the most out of every dollar spent by creating an elastic subscription model and continuously adjusting costs to react to seasonal demands
- Creating a growth-oriented investment engine to help the company benefit from new technology and business opportunities
IT Cost Optimization Challenges
Despite careful planning, cost-optimization attempts continue to result in IT overspend. This can occur due to a variety of reasons, including the following:
- Focusing on short-term goals rather than establishing long-term and sustainable cost-cutting methods
- Focusing solely on headcount reduction without a clear grasp of how it will influence all aspects of the organization
- A lack of awareness amongst stakeholders about the role of IT infrastructure in business processes
- Lack of senior and middle management buy-in
- Sweeping, abrupt cuts with improbable saving targets
- Inefficient performance tracking tools
Synoptek’s IT Cost Optimization Services
Synoptek’s IT Cost Optimization Services include overall IT cost-transformation services that provide a complete review of all technology services and the costs associated with operating those services. By scrutinizing the business needs, the use of technology, and the costs of supporting those technologies, Synoptek can save companies between 15% and 25% of annual IT costs.