As great as technology can be, sometimes too much of it can make things complicated and expensive. By simplifying your approach, you can save money and streamline complex processes by transforming them into much simpler systems. As you invest in technology, make sure you’re prioritizing efficiency at every stage of the process.
6 Ways to Reduce Software and IT Costs
Businesses struggle (and eventually fail) for any number of reasons. But when you look at startups and young companies, nearly one in three businesses (29 percent) fail because they run out of cash. And in many of these instances, it has to do with poor cash flow management and mismanaged expenses.
Whether your business is struggling on the cash flow front, or you’re wanting to proactively get ahead of a potential cash flow problem before it becomes a widespread issue, a thorough analysis of your software and IT expenditures is a great place to start.
Likewise, it’s important to have a framework for understanding how to effectively invest in new technology and add it to your company’s existing tech stack. You want to do this in a way that maximizes efficiency and allows you to squeeze every last drop of value out of your software and digital tools.
Not sure where to begin? Here are a few specific cost reduction strategies businesses are using to gain control over this aspect of their cash flow and operations.
Let’s start with the most obvious step you can take. Because if you haven’t already moved your data to the cloud, you’re about to fall way behind.
Research from Cisco (News - Alert) suggests cloud data centers will comprise 95 percent of all data center traffic by the end of this year. And while there are dozens of benefits of transitioning to the cloud, slashing costs is the number one reason for most businesses.
Running your own servers is expensive. Between the actual hardware, the physical space required to store the hardware, the energy costs associated with maintaining a server room, and the time required to train staff to use and maintain equipment, onsite storage can hold you back and restrict cash flow.
A cloud server setup, on the other hand, is extremely lean and low cost. In addition to a pay-as-you-go setup, cloud providers are totally scalable. This means you always have just the right amount of service (and never have to pay a penny for something you don’t need).
We live in a subscription-based business world. Software-as-a-Service (SaaS (News - Alert)) has exploded over the past five years – giving businesses like yours the opportunity to invest in any kind of tool without a massive upfront investment. It’s easy to sign up for these tools – and just as easy to lose track of them.
Most businesses are only using a fraction of their subscription services. And because of the nature of these subscriptions, they’re easy to overlook. This happens a lot with annual subscriptions that automatically charge you once every 12 months.
Take a few minutes and review all of your current subscriptions. Ask yourself which ones are redundant, which ones are no longer being used, and which ones can be downgraded to a less expensive plan.
Stripping away any single unused subscription service might not have a very big impact on your cash flow. But as the subscriptions add up, you could potentially find thousands of dollars in savings.
Not quite sure where to begin with all of your software subscriptions? If you have physical inventory, you’ll find it helpful to use a software asset management tool (like AssetSonar) to streamline the process. This will help you:
The beauty of using a software asset management tool is that you don’t have to manually track things like licenses, renewal dates, and costs. Instead, you get an automated dashboard that tracks everything across your entire IT ecosystem. Automated alerts and notifications keep your IT team updated so that you never miss a licensing milestone.
You’d be surprised how many free tools exist in the marketplace these days. Almost every cloud tool or SaaS software operates on a freemium model. And depending on your company’s size and needs, you might be able to get away with using the free version on a short-term basis.
You probably can’t build out advanced processes with free resources, but they can serve as excellent solutions for plugging immediate needs and/or temporarily bridging the gap between tools while vetting various paid options.
Most of today’s businesses are using a combination of public and private cloud storage (plus traditional storage). This hybrid approach has the unintended effect of complicating matters and making it more difficult to maintain proper visibility. Many companies choose to simplify matters (and lower costs) by using a metadata engine to connect different storage systems.
“A metadata engine separates the metadata path from the data path through virtualization, making it possible to connect different types of storage within a single global namespace,” Data Foundry explains. “This includes integrating the cloud as another storage tier.”
With a metadata engine, enterprise IT departments can assign various objectives to data as a way of defining the data’s protection requirements and performance. It also provides a closeup view of whether the data objectives are being met. If not, it can be automatically transferred over to maintain compliance. This tiered approach to data storage ensures performance, reliability, and cost are all accounted for.
Our final suggestion is to virtualize your databases as a way of saving on storage in an effort to reduce costs. It also has the secondary benefit of increasing your flexibility and productivity – both of which further lower costs.
If you’re leery of going the virtualization route, start by virtualizing lower-risk databases (like development databases). Once you get comfortable with the process, you can expand into other databases and enjoy even greater cost savings.
Put Your Biz on the Right Path
Enterprise software and IT solutions exist to make your business run smoother. Unfortunately, in the pursuit of simplification, many companies make the unintentional mistake of overcomplicating matters by straining cash flow.
Hopefully, this article shows you that it’s possible to invest in technology and simultaneously remain fiscally lean. It requires some intentionality and planning, but it is possible. Apply as many of these techniques as possible and look for the right combination to move your business forward.