6 Best Practices for IT Cost Optimization

The number of digital businesses is increasing day by day. The increasing competition in the business world has become a driving force for digitalization in businesses. For this reason, businesses allocate a large amount of IT budget for technology investments.

World-renowned research firm Gartner expects worldwide IT spending to increase 8.6% to reach $4.2 trillion in 2021. Businesses have various goals within the scope of digitalization. Most businesses do not have sufficient IT budgets to achieve these goals. This is where IT cost optimization comes into play.

What is IT Cost Optimization?

IT cost optimization is a business process carried out to reduce unnecessary IT expenses of businesses. Efficient use of IT budgets is one of the important responsibilities of CIOs. The main goal of cost optimization in IT is to dispose of low IT value IT assets, eliminating unnecessary IT expenses and turning these savings into high IT value investments.

6 Key Strategies for IT Cost Optimization

1- Determine your Business Needs and Priorities

Whether you call it a digital transformation process or the planning process of IT investments, in order for a process to proceed successfully, it is imperative that the objectives are set at the beginning of the process. If you want to optimize your IT costs, first examine your business objectives and IT environment from a broad perspective. After this examination, your shortcomings and priorities will now be clearer.

2- Get Rid of Unnecessary IT Expenses

It is not a realistic possibility for IT investments to be 100% successful. Some IT purchases by businesses may no longer have enough IT value. Unnecessary, unused and duplicate IT assets waste businesses' IT budgets. For this reason, businesses need to analyze their IT assets and get rid of IT assets that do not provide sufficient conditions.

Businesses need an effective IT asset management (ITAM) strategy to evaluate their IT assets. IT asset management covers the business processes for tracking and managing IT assets throughout their lifecycle. IT asset management ensures that the IT structure of the enterprise is more visible. And so businesses can gain data and insights to evaluate their IT assets.

3- Negotiate with Different Sellers for Pricing and Conditions

IT departments must try to find the best price when purchasing an IT asset. Due to the high competition in some sectors, businesses can turn this situation into their own advantages in their purchasing processes. Businesses can get a product they need cheaper from another vendor with the same IT quality and functionality.

4- Evaluate Outsource Services You Get

Oftentimes, businesses purchase consulting or freelance services to improve IT operations, apart from purchasing IT assets. These outsource services can sometimes be an additional cost spent from the IT budget for an application you have purchased. In such cases, the cost of that application should not be calculated only as a license fee. Additional costs must also be added to the total cost of that application.

Businesses should measure the IT value of the application they use as a whole and the outsource service they receive and analyze them holistically together with their costs. Consider the value of IT application and outsource services must be changed.

5- Optimize Your Server Costs

Some businesses use servers that they invested in the past with a large budget, today, in a limited way. This causes companies to cost maybe 2 times as much as their server costs should be. For this reason, CIOs or IT managers must analyze server usage. And the server should change the server package according to their usage.

In addition, the adoption of the hybrid IT model in this process helps companies optimize their IT costs.

6- Implement Holistic IT Asset Management Approach

As we mentioned at the top of the article, IT asset management is an approach that businesses must adopt to optimize their IT environment and IT costs. ITAM ensures that all assets for which IT is responsible are tracked and measured. Companies can have comprehensive data about what applications, hardware, systems and integrations they have with ITAM.

IT Asset Management Software for Cost Optimization

IT Asset Management Software is a solution that develops businesses to improve and improve their ITAM processes. ITAM software enables businesses to implement a more holistic IT asset management process by protecting them from the inefficiency and dysfunctionality of spreadsheets.

Loggle is an end-to-end IT asset management software that offers application portfolio management, hardware asset management, integration inventory management and IT cost management solutions. Businesses can manage the inventory of all their assets on Loggle and gain insights to shape their IT investments. Loggle can run as cloud and on-premise.