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According toresearch, one of the biggest problems of DevOps engineers is the abundance of manual processes. The more time specialists spend fixing everything manually, the less time they have to optimize or find a better solution for your business. The number of services you can implement in your IT infrastructure is huge. There are so many of them that sometimes businesses do not notice that they use almost the same services and pay for them. Moreover, if your team has been working on their own previously, there can be a mess with the selected services as well. DevOps engineers deal with several challenges such as a huge number of manual processes, understanding the money you spend on delivered services, and increased prices from vendors.
Book a FREE, professional assessment to find out how to make IT a driver of business innovation and productivity. It can be easy for cloud environments to grow out of control because services are so easy to introduce. 2023 calls for digitalization and digitization cost reduction strategies in manufacturing to help business owners address upcoming challenges, boost their growth, and remain flexible in the face of the changing market. Using provider’s services instead of a home-grown solution that could be more resource-consuming.
- Remote working will create challenges in employee onboarding, discipline, and communication.
- Instead of focusing just on cost reduction, more CFOs should explore consumption reduction, a thorough, periodic evaluation of how money is spent.
- Although some costs can be capped by policy rules and restrictions, many removed costs inevitably creep back in as budget owners and managers pursue spending and initiatives in the name of supporting growth.
- They cost less and can help you save money on your business trips.
- “Across the board budget cuts, without regard to workload, automation or process improvements will end up costing the company more in the long run,” noted Abdul Jaludi, CEO of TAG-MC.
- The situation is similar to getting a paycheck at the end of the month.
Not replacing hardware when it should be replaced can be a costly mistake. It’s tempting to put off replacing hardware that’s old but still functional. But you’re much better off investing the money to replace it when you know it needs it but before it completely fails, because failures can disrupt business or cause other systems to fail as well. Be ready with productive options when your CFO asks for cost reductions.
The four stages of the tech-enabled cost-reduction approach
Unless another case is added or worked hours are reduced, there really is no financial impact. Unfortunately, all too often internal cost reduction initiatives fail to produce the level of savings required. For many organizations that fall short, the next step is to call a consultant – a costly approach as the expertise and often the ownership is outsourced. While many factors may limit the effectiveness of an internal or external approach, the lack of an effective leadership structure to drive the cost reduction initiative is usually the most toxic. Top management must establish cost-cutting as an organization objective and must provide for a plan for cost reduction.
In addition, leaders need to start planning for where they can find expense savings, while also avoiding typical pitfalls that make it difficult to accomplish long-term development aspirations. Combining processes, people or product components could lead to cost savings. While most people will consider investing as an additional expense, investing in technology is quite different.
The result is another painful round of cost reductions when the next crisis hits. IT infrastructure is one of few flexible business aspects that allows cutting costs. It’s explained by the fact that most businesses prefer development and growth to maintenance and support of the current business situations. In fact, many of these companies can still optimize their expenses by optimization of the processes.
For instance, our experience suggests that in finance, about 75 percent of revenue-management processes are fully automatable; in financial planning and analysis, only 10 percent are. A library of use cases makes it easier to prioritize actions and select appropriate ways to cut costs. Only 11% of organizations can sustain cost cuts over a three-year period.
Cloud
Based on our experiences with 24 industrial companies, we found that it can cut indirect costs by as much as 15 to 20 percent in 12 to 18 months. There’s more to cutting costs than leaving the creamer out of the break room. Serious expense reduction requires serious thought and an organized approach so that you’re can reduce waste without impacting the quality of your services and products. It is vital to keep up with technological innovations and emerging trends to capitalise on growth prospects. You can grow to meet rising customer expectations, fix inefficiencies, and get ahead of the competition with the help of cutting-edge software.
In all instances, fundamental and underlying causes of a company’s expenses need to be identified, which requires a robust, detailed, trackable procedure. Everyday business decisions, like choosing suppliers or finding quick ways to cut costs, rely on this kind of expenditure information. Our Business Trends Report emphasises that the cost-of-living crisis and stagnant UK economy presents businesses with real difficulties. 78% of respondents are worried that economic circumstances will influence their organisation’s profitability during the next 12 months. As they strive for development and improved earnings, there is an immediate need to limit this risk by making systems more “bulletproof”.
Ask Employees
Hiring a lesser number of resources from offshore is also a value proposition. Thus, investments in IT have compounded each year, estimated to be somewhere around 7.5% of the gross revenue. While some may be still fighting hard to keep up with the IT expenses, others are already building up strong strategies for IT cost reduction. In the seven real-world examples that follow, we explain what was done and how, and estimate the results. Each case addresses an essential business area such as finance, procurement, or production management. Each comes from a specific industry or application, but the general logic will remain the same.
Custom Software Development Build a custom solution, modernize your system, or solve a specific business issue with our end-to-end software solution development services. An effective way of decreasing software costs is to avail of open-source software over licensed ones. Licensed software is not only expensive but also requires additional costs from time to time due to software updates.
Things to Outsource to Reduce IT Infrastructure Costs
Watch this video to learn why leading organizations are using IFS assyst to transform their business. Say, you’ve invested in new software, but decided to skip out on the training sessions as you feel that your team can figure things out themselves. Not only do you risk an unsuccessful software rollout across your organization, but you could also miss out on great features just because you didn’t get to fully learn how to take advantage of them. The inability to dedicate training time when implementing new tools can hinder their uptake and usability, preventing you to extract the most value from your tech investments.
Rather than letting each department order what they need, you can combine orders or requests and get bulk discounts. With software, insurance, and other products, you can often get discounts for bundling your needs with the same providers. Cost reduction is the process of reducing unnecessary expenses to increase their bottom line. However, effective cost-cutting is a dynamic, continuous, and reflective process. A recent study showed that if you let your staff work from home for just half the time, your company would save an average of $10,000 per employee based on real estate cost alone!
Use this information to release temporary or contract staff, delay hiring or backfill, or shift labor to low-cost locations. Minimize disruption by reallocating internal resources in accordance with revised application strategy or business plans. Reduce padding by more closely tracking spend and taking quick action to avoid overages.
Cost Reduction Strategies that Work
Despite the importance of IT to day-to-day business operations, many technology leaders are given relatively small budgets while often being expected to perform miracles. An effective IT strategy balances IT cost reduction while keeping the right capacity and functionality in place and preventing you from making these mistakes. N-iX offers a Discovery Phase that allows to mitigate risks, optimize resources, and reduce development costs. We have over 18 years of experience in remote work and management of distributed teams and have built long-term partnerships (5+ years) with companies such as Gogo, Lebara, Anoto, CurrencyCloud, and others.
What is a cost reduction strategy?
To learn more about this, check out our legacy vs cloud ITSM article. Some companies cut employee costs through downsizing, retrenchments, or cutting employee headcount. Letting go of a long-term employee will save you a lot of money as his salary must have gone up through his years of service. However, doing so is counterproductive because you lose also the priceless experience and knowledge that such an employee has accumulated.
It can be tempting to forgo discussions with stakeholders to realize cost savings faster, but IT departments can no longer work in a silo. Even before the business continuity disruptions last year, plenty of factors contributed to errors in the workplace. These errors might seem small but such lapses have caused businesses to lose millions every year. Three notable examples caught my attention from the past few months. Embedding the defect prevention measures in software development life cycle processes. Errors in software requirements and software design documents are more frequent than errors in the source code itself, according to Computer Finance Magazine.
Not measuring and reporting the impact
You can either compartmentalize low-usage servers and use them further or else, opt for a complete switch to virtual servers and abolish the requirement of physical servers. Achieving rapid indirect cost optimization has never been more promising, thanks to advancements in such technologies as automation, smart workflows, AI, and data visualization. Getting started does not require long preparation or costly investments.
But even organised programmes intended to maximise cost strategies may be undermined by several cost reduction process mistakes. Many have reached the conclusion that this time cost reduction is not an initiative, but rather something that will need to be a core competency for every healthcare delivery system. Putting the right leadership structure in place will lead to you more effectively bending the cost curve, both right now and further down the road. This is a painful way of cutting down on employee costs but a lot better than letting them go. If a business is very slow, your employees will understand if you temporarily cut down their wages with the commitment that the same will be restored when the business starts to pick up.
