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How Rethinking IT Can Reduce Costs and Boost Profitability

by iSphere on May 21, 2024 in Blog, Business Advice

These days, the endless stories of tech layoffs, stubborn inflation, and anemic consumer spending are leaving business leaders rattled. Though we’re not in a traditional recession, companies want to walk a fine line by preparing for the worst yet taking advantage of the best opportunities.

That’s easier said than done. Many companies, hoping to prepare for tough economic times, have accidentally shot themselves in the foot, creating some anxiety in the talent pool and bruising their operations in the process. Google’s Sundar Pichai admitted in an interview that the layoffs of 12,000 employees in 2023, though necessary, ultimately hurt their employee morale.

If you’re worried about maintaining workforce levels but staying resilient and scalable, there are some actions you can take. Here’s how to avoid laying off workers while also innovating and protecting your organization’s data assets.

1.) Auditing for Redundancies

The digital transformation process isn’t as tidy as it could be.

Plenty of organizations have attempted to implement new systems without the proper guidance or, despite their best intentions, worked with partners who weren’t up to snuff. On top of that, some well-meaning employees have made rogue implementations or ad hoc deployments of digital tools, creating shadow IT infrastructure in the process.

The result is overlapping or needless costs that drain budgets. In fact, an article from the CEO of a spend optimization company suggests that 32% of cloud expenses are wasted. That can add up quickly.

In CloudZero reports, 55% of respondents spent somewhere between $600,000 and $6 million on their cloud costs, which could be close to $192,000 and $1.9 million in waste spending in the worst scenarios. In Texas, that’s at least one senior developer on the lower end or almost a dozen at the upper end.

Auditing your IT infrastructure is critical to find those cost savings. Whether inspecting your signed agreements, vendor invoices, comprehensive workflows, or another element of your organization, the key to catching redundancies is diversifying your review strategies. Otherwise, you risk missing a major source of wasteful spending.

2.) Using AI to Generate Revenue

What about boosting revenue? Higher earnings can definitely justify a larger workforce, but generating meaningful yields is easier said than done. Big data helped organizations expand services, maximize customer segments, and improve sales outreach in the past, and now there’s an even greater opportunity with artificial intelligence.

A McKinsey study found that organizations going “all-in” on artificial intelligence have attributed 20% of their 2022 earnings before interest and taxes (EBIT) to their use of the technology. That’s an incentive to not only retain IT professionals to help implement and leverage AI but to hire employees or engage consultants to leverage it.

What low-hanging fruit can help to produce fast results? McKinsey found that applying AI to customer operations, marketing and sales, software engineering, and R&D is already creating value.

These tools are rapidly delivering information and offering strategic recommendations in game changing ways. Streamlined customer interactions, boosting operational workflow, identifying medical breakthroughs, and innovating new product designs are just some of the goals you’ll be able to achieve.

3.) Accelerating Your Efficiency

Maximizing the productivity of your people is another way to reduce the need for layoffs. Robotic process automation, machine learning, and generative AI are helping organizations to streamline the more routine or repeatable elements of their IT. This frees up your workers to focus on more critical projects, making it easier to justify retention.

Moreover, artificial intelligence is contributing to greater efficiency across various technical disciplines. For example, using AI to generate code accelerates delivery timelines and coding sprints. Instead of eliminating employees, it can redirect the efforts of developers and QA professionals to review code, identify bugs, build complex features, and enhance the core experience.

On top of that, AI is completing data analysis in record time. Automation can handle data cleansing, processing, and mining while leaving the more sophisticated or novel analysis for humans. Additionally, you can task your people with evaluating findings to ensure that AI’s conclusions are accurate and actionable.

4.) Maximizing Cybersecurity

Sometimes, the best way to keep your workforce budgets intact is to prevent your organization from incurring unwanted costs. Cyber-threats are often the king of surprise expenses. From punitive fines and ransom payments to lost revenue from operational disruption and reputational damage, successful attacks siphon off critical funds.

Let’s look at ransomware. Law practice Fisher Phillips found that ransomware cost organizations with low levels of regulatory compliance an average of $5.05 million per data breach. This is more than $1.04 million higher than those organizations with greater regulatory compliance, showing a defensive posture can save significant amounts of money. While those funds would not exclusively be earmarked for your workforce, you won’t have to cannibalize that budget to compensate for losses from your data breaches.

Implementing robust cybersecurity best practices can help to mitigate potential risks and keep businesses safe. Once again, artificial intelligence can be used to control costs while maximizing your team and responding to evolving threats.

If you’re looking for more ways to maximize your IT budget and retain your workforce, we’re here to listen. With over 24 years of experience, we offer advisory services on the next steps to take.

 

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