How to Differentiate IT Cost Cutting from IT Cost Optimization
You might feel like you’re having trouble finding savings in your organization, and you don’t really know what the best practices are. You’ve been told to cut costs, or even to optimize them for your IT budget, but what does all that really mean? What’s the difference? What are the best IT cost management practices for your enterprise?
In this article, we’ll help you differentiate IT cost cutting tactics from IT cost optimization efforts, and we’ll bring to light the value in each of these practices. This can help you establish what your company needs and how to implement these new best practices in order to improve workplace IT cost transparency, allowing you to identify savings.
IT Cost Cutting
Gartner defines IT cost cutting as a one-time undertaking aimed at reducing expense levels. The most effective IT cost-cutting efforts are structured by identifying a precise amount (not percentage) of money to be saved and identifying a date by which the savings must be completed. Companies implement various measures to reduce expenses, and accordingly, improve profitability. Many IT cost cutting options are related to human resources, like reducing pay, laying some individuals off, switching to a less expensive health insurance and so on. Gartner estimates that 37% of IT budget is related to staff, so it makes sense why organizations first cut costs surrounding employees. Other tactics could include downsizing to a smaller office, changing hours of service, or restructuring debt.
Cost cutting refers to immediate, direct actions, but Gartner also strongly recommends to invest in a Telecom Expense Management (TEM) service. It’s worth the inquiry, it will pay for itself, and most importantly, provides an opportunity to increase savings. This service will automate many tasks related to IT and Telecom, giving you the opportunity to save money and time by allowing your employees to focus on more important projects while maintaining an accurate inventory, ensuring you don’t overspend on IT services and assets.
IT Cost Optimization
Now, let’s talk about IT cost optimization. According to Gartner, IT cost optimization is a business-focused, continuous discipline to drive spending and cost reduction while maximizing business value. Effective IT cost optimization often adheres to programs and policies that are based on time-tested best practices and procedures. Activities included in IT cost optimization would be:
- All business purchases have the best pricing and terms: With Cimpl, you can place and manage orders directly within the platform. This includes coordinating with providers, agents and logistic teams, aligning with contracts, and managing the internal change order process. This automation also reduces potential for errors in processing the inventory. Through a self-service dashboard, employees can see their own usage and costs and take action according to their needs, resulting in a direct impact on IT cost management.
- Platforms, applications, services and processes are standardized, simplified, integrated and rationalized: Using a Telecom Expense Management system would be a great first step in optimizing your IT costs. With a software like Cimpl, the management of all your IT, Telecom, UCC, Cloud and Wireless costs and assets would be automated and centralized into one platform.
- IT and business operations are automated and digitalized: With a TEM software, all the processes included in an asset’s lifecycle are automated, from procurement to retirement: workflows, work orders, approval processes… Letting your resources focus on expediting requests and processing exceptions, while virtually eliminating potential human errors. Manage more with less people hours.
To be able to optimize your costs, IT cost transparency is key. Unlike cost cutting, cost optimization isn’t a one-time, immediate activity. Instead, it provides a long-term solution for your IT budget.
In both cases – Cost Cutting and Cost Optimization – you should consider a Telecom expense Management Solution, such as Cimpl, as a key factor to help you save money, time and have an accurate inventory. If you would like to learn more about what Cimpl can do for you, contact us now. If you would like to see all of these Cimpl features described in this article in action, request a free demo!