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Reducing Capital Expenditures in IT

reduce operational costsOne of the biggest challenges facing IT managers today is reducing capital expenditures in IT. It’s not the 1990s anymore; there is more and more pressure on IT management to justify their costs to a sometimes-apathetic senior management. Add to this the increasing familiarity that senior management have with IT issues in general, and you can find yourself being constantly pressured to get costs down, both in terms of lowering ongoing costs and reducing capital expenditures.

Fortunately, there are some ways you can help contain costs and reduce capital expenditures in IT:

Review Your Portfolio
Take a look at all of the applications used in your organization. Identify the ones that are underutilized, ones that are duplicative and ones that may be absent altogether. Create an extensive list of applications, users and owners across the entire organization. This portfolio review will help you to be able to prioritize capital expenditures going forward, and it will also identify places where the organization has multiple apps that perform essentially identical tasks.

Review and Renegotiate Contracts
For many organizations, contracts are a large portion of your IT budget. Maintenance and support services are necessary and important, but you need to get a handle on them. Figure out where they exist – even outside of the IT department – and identify places where you can leverage savings or save on licensing.

Once you know where your contracts are, you can begin to renegotiate. Create a situation where vendors can compete to lower costs while getting rid of overlapping applications at the same time. Consider lengthening contracts to give you cost savings.

Analyze and Prioritize Projects
Take a strategic look at projects. Use a consistent prioritization approach. Break down projects into strategic points that can benefit the organization in the immediate future, rather than the entire project implementation which can take years.

Part of this process involves determining where benefits can occur and how fast. The quicker you deliver benefits to the company, the lower the overall cost and the more justified the expenditures.

Manage Lifecycle
Older IT systems have higher costs in terms of maintenance and retaining inefficient hardware and software. Take a look at older systems, and analyze the true cost of keeping legacy equipment. In many cases, systems beyond their lifecycle serve only as something of a security blanket for a department. In many cases, the data in those systems can be retained offline through ERM or imaging. In other cases, the data can be converted to an SQL database with query tools. Getting rid of legacy equipment will get rid of operating costs, maintenance costs and may even save money on the electricity bill.

Analyze Return
As more and more IT projects come under closer scrutiny, linking those projects to specific organizational objectives and/or financial returns is important. Look at project goals, and define measurable outcomes. Find ways that new projects can actually save the company money, free up organization resources or promote a company’s overall strategies. If a project can’t do these things, it should be reconsidered.

IDC White Paper: Lowering Operational Costs through Automation. Click here to download. 

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Unitiv, Inc., is a professional provider of enterprise IT solutions. Unitiv delivers its services from its headquarters in Alpharetta, Georgia, USA, and its regional office in Iselin, New Jersey, USA. Unitiv provides a strategic approach to its service delivery, focusing on three core components: People, Products, and Processes. The People to advise and support customers. The Products to design and build solutions. The Processes to govern and manage post-implementation operations.