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Readying for a Possible Recession? Cutting the Right IT Costs Can Safeguard Your Business

by iSphere on May 24, 2023 in Blog, Business Advice, Hiring Challenges

With all the chatter about a potential oncoming recession, it’s time we talk about controlling your IT costs. Let’s start with the good news. Though layoffs, inflation, and banks closing are dominating headlines, they’re somewhat offset by reports of healthy job growth, steady unemployment, and gradual GDP growth. If a downturn is around the corner, there’s still a chance it’ll result in a “soft-landing” rather than a meteorite crashing to earth.

That said, it’s still important for your organization to add a little cushion when the economy takes a harder turn for the worse. As we see it, the best way to insulate your company against rough terrain is identifying where you can safely cut costs without hurting operations.

As an IT consulting and staffing services company, our wheelhouse is finding IT cost reduction strategies. That’s why we’ve put together a list to help you pinpoint ways to streamline costs while maintaining exceptional performance.

1.) Consolidate Your Platforms

Redundancy is a common source of budgetary waste. In the past, the decentralized nature of on-premises operations, especially for mid-sized to large organizations, resulted in the impromptu implementation of systems with overlapping features. Though digital transformation took a positive step towards centralization and reduced waste, the problem didn’t go away; it only moved with us to the cloud.

A study by Zylo, a SaaS management company, found enterprises still end up investing in siloed applications for departments that share features and multiply IT expenses. Specific types of programs are most commonly redundant. In the Zylo study, the main offenders were online training (18.5%), team collaboration (13.4%), and project management (12.5%) platforms. Reviewing your repertoire of these tools is a clear starting point, but they’re not the only instances where SaaS redundancy can occur.

The best way to reduce these types of IT expenses is to routinely run audits to evaluate your current state. Whether conducted by in-house teams or outsourced partners well-versed in strategic planning solutions, you can get to the bottom of where you are duplicating IT costs and functionality.

Some platforms (Workday, Oracle, etc.) offer interoperability across HR, finance, sales, marketing, and other key functions—allowing you to consolidate tools broadly. Unless you’re regularly implementing an assortment of solutions, you might miss chances for consolidation.

2.) Pinpoint New Tasks to Automate

Not every IT task needs a human touch. Plenty of routine activity can be completed by everything from robotic process automation (RPA) to more sophisticated AI platforms. In fact, Goldman Sachs anticipates as many as 300 million full-time positions will be impacted by some level of automation as more responsibilities are entrust to algorithms. However, whether that amounts to augmentation or full replacement depends on how organizations think about these tools.

For example, routine cybersecurity tasks such as scanning for known security loopholes can be handled by the right vulnerability management and security information and event management tools, powered by machine learning capabilities. This leaves in-house or outsourced partners to handle the strategy and evolution of their cybersecurity best practices.

Or on the sales side of the business, RPA or more advanced capabilities can streamline customer data entry or invoicing with ease. This level of automation helps salespeople focus their efforts on building strong relationships that result in trust and a decision to buy.

Each function is rife with opportunities to create automation—you only need to know where to look. Organizations hunting for more ways to automate need to practice a little introspection.

Which technical processes cause bottlenecks for your organization?
Which ones are time consuming yet require little creativity or problem-solving?

Which tasks are so frequent and clockwork they would distract your employees from more important and engaging work?

Spot those and you can reduce IT costs with some clear-cut actions.

3.) Identify Roles for Contract Employees

What about tasks that do require human involvement? There are more than enough responsibilities and projects to keep IT professionals occupied during a jam-packed workweek and still leave work undone. Rather than hiring full-time specialists for every duty, more organizations are opting to hire contract workers.

The renewed interest in contract IT workers is evident, as 37% of companies that have made recent layoffs have opted to replace employees with contract staff. Professionals are increasingly embracing consulting opportunities, with 39% of the U.S. workforce having engaged in freelance work within the last year.

Clearly, there’s an existing talent pool for companies to engage contractors—if you know how to identify fake candidates in recruitment processes—but the challenge is determining when IT can function through contract tech workers.

For the answer, ask yourself these questions:

Which tech functions are critical to your business?
Which IT disciplines support your business but can be done on a responsive basis?
Are there projects which only require short-term attention from planning to launch?

For any instances where IT skillsets only offer a tactical benefit or only require temporary investment, that’s when you can cut costs an individual or a team of contractors. Whether you need Texas-based IT consultants or run a remote workforce, the right partner can resolve your talent needs.

4.) Lowering IT Complexity

Your tools should be sophisticated, not necessarily complex. Unfortunately, technology tends to compound upon itself if not monitored carefully. This creates byzantine systems that tend towards inefficiency and costliness, requiring proactive fixes to rectify them.

In “Overcoming IT Complexity,” author Lee Atchison states there’s a bit of entropy at work with unchecked growth. He says “natural separations start taking shape as applications grow in complexity and the organization grows in size. Traditional divisions between development and operations begin to formalize, and the space between […] groups expands.” It’s this loose expansion which should be a key target for your IT cost reduction strategies.

The response to complexity creep? Proactive evaluation of systems infrastructure, team operations, delivery processes, and any other structure that can mushroom in complicatedness given enough time. When organizations take inventory of what’s overcomplicated or costing your business excess money, they can build a roadmap to reduce or simplify those IT expenses.

Organizations looking to accelerate their timelines can engage an information technology strategy partner. With the right blend of experience, attention-to-detail, and an understanding of your business goals, the right partner can quickly suggest simplified IT solutions that benefit your bottom line.

Choosing the Right IT Cost Reduction Strategies

These are some of the most common issues but aren’t the outer limits of potential IT cost reduction strategies. Organizations willing to dig deep and reflect upon their processes are far more likely to identify sources of overhead, both large and small. With the help of an outside perspective, you can soften the impact any downturn can have on your business.