IT Cost Saving Strategies for 2020

As IT budgets shrink, businesses must adapt and reduce expenses with smart decisions.

By Michael Brenner

By Michael Brenner September 24, 2020

The digital transformation has forced IT departments into the spotlight in nearly all industries. Now responsible for being able to respond to 24x7 requests anytime, anywhere from colleagues, customers, and employees, their budgets have increased year over year.  However, in 2020, COVID has forced businesses to rethink their IT spend and get creative at ways to cut costs. To help you in your decision-making process, we have provided you with several IT cost-saving strategies for 2020.

IT Spend Expected to Decrease by 8% in 2020

With the impact of coronavirus, Gartner reports that global IT spend will decrease by 8% in 2020. These cuts are across the board—data centers, enterprise software, devices, IT services, and communication services.

In the chart below, you can see the hardest-hit areas—devices and data center systems. These are critical areas of IT but also some of the most expensive.

This shock to the budget isn’t unexpected. However, a decreased budget does not mean a decrease in the demand for certain segments of IT. The longer the pandemic continues, the emphasis on remote work continues to grow. As a result, sub-segments like public cloud services, cloud-based telephony, messaging, and conferencing spending are expected to mitigate some of the loss. Gartner reports these categories are likely to grow between 8.9% and 24.3%, depending on the technology.  However, organizations still need to act as COVID's impact is highly fluid. 

How to Cut IT Costs in 2020

The way every organization uses technology is unique. Reducing IT spend is not a one-size-fits-all process. 

Based on a company’s goals and objectives, often some hard choices need to be made. Start by examining the company’s data center then look for leaks in cloud service and evaluate what software and licenses are used.

Begin with the Data Center

The data center represents a large part of a company's budget. It’s also one of the most impacted areas for spend reduction. Those relying on a legacy IT system can save money by moving to modern technologies and services.

In recent years, many organizations modernized their data center by turning to hyperconverged infrastructure (HCI). HCI integrates compute, storage, networking and visualization.

It’s now possible to “pay as you go” with subscription-based licensing for HCI software, which can run on standardized hardware.

In a whitepaper by IDC, the research firm determined that customers experienced an average total cost of ownership (TCO) savings of 62% over five years.

Shrink Cloud Spend by Removing Cloud Leaks

Cutting cloud costs is possible with proper usage management and the establishment of governance policies. The right tools can quickly pinpoint cloud leaks. There are three areas of concentration:

  • Resource consumption: It’s critical to optimize this area. Costs may be mounting because resource sizing is a problem. There may be “zombie” usage, which is eating away at memory. Addressing these issues will stabilize resources.

  • Private cloud metering: The key here is to automate this process. In doing so, gives full insight into the costs of your private cloud.

  • Chargeback reports: Automated chargeback reports can provide fiscal transparency and accountability across multiple clouds.

One technology that can do help manage costs of using multiple clouds is Nutanix Xi Beam.

Complete a Software Audit

Most companies use a variety of software products. Performing a comprehensive audit brings visibility into all the applications and their use. It may be possible to eliminate some applications for these reasons:

  • Legacy systems: They are expensive and act as a storage center for old data. Decommission these for good by converting data to a new application or archiving it.

  • Overlap: Software solutions may be doing the same thing. It’s possible one department is using one version, while another uses something else. Choose the best application and drop the other.

  • Too many licenses: In evaluating usage, find out if the company is paying for too many licenses. If only a few people need access, then cut out that cost.

  • Software no longer in use: Some software may be configured for auto-renewal. Canceling software that isn’t being used immediately recoups costs.

Streamline Virtualization and Remove Licenses

Virtualization no longer has to be something that requires a license. An enterprise virtualization approach can provide easy management, security, and performance. This new approach to virtualization can also lower operational costs. In some cases, like with Nutanix AHV, the cost of virtualization disappears because it’s licence-free.

Enable Strict Cost Governance

Make cuts strategically by enacting cost governance. There are several cost governance best practices to consider:

  • Use policy-based and automated resource controls to define who can deploy resources.

  • Reframe IT—not as a cost center—but as a team that requires allocation of resources.

  • Stay on top of your budget by updating it with actual costs. If it’s over, then find out why because it could be a cost leak.

  • Examine workloads and how cost may be better controlled with optimized architectures.

  • Track all costs and ensure this information is available to all stakeholders.

Reducing IT costs is a continuous process and is frequently impacted by internal and external factors. Yet, finding savings isn’t always so hard to do. 

Editor’s note: Learn more about the possibilities of reducing IT costs with Nutanix.

Michael Brenner is a keynote speaker, author and CEO of Marketing Insider Group. Michael has written hundreds of articles on sites such as Forbes, Entrepreneur Magazine, and The Guardian and he speaks at dozens of leadership conferences each year covering topics such as marketing, leadership, technology and business strategy. Follow him @BrennerMichael.

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