13 Ways to Cut IT Costs Now

By Ericka Chickowski  |  Posted 2008-12-01

With the economy headed the direction it is for at least another quarter or two, many in the IT industry are being tasked with doing more with less as we begin heading toward 2009.

“When you’re talking about saving money in IT organizations, they’re in a tough spot, because something like 60 percent of an IT organization budget is made up of fixed costs,” says Ian Hayes, principal with Clarity Consulting, an IT consulting firm.

However, in that remaining 40 percent, most organizations can still find ways to cut unnecessary expenses, suspend costly processes and make their departments better off in the long run.

Baseline examines a baker's dozen of strategies to not only cut costs quickly, but to take advantage of this downturn as a way to streamline a department. Some are easier than others to implement, and some may not necessarily be feasible to departments with completely frozen budgets, but they all will leave an IT department more efficient in the long run.

1. Data Deduplication

Even as storage hardware costs continue to drop, the explosion of corporate data and information management costs outstrip these savings. Many of these costs are unavoidable, but there is one instance where IT executives can make a dent: duplicate data. Through the chaos of users’ day-to-day operations and IT’s disaster recovery backup efforts, data and documents have a nasty habit of multiplying  carbon-copy style within the storage and backup infrastructure. Trim storage hardware and management costs through the use of data deduplication technology.

2. Trim Compliance Reporting

Compliance is like a vendor’s secret password to get into the customer’s budgetary lockbox.

“Every vendor in the world out there is pitches their tool as helping with compliance and you need to do this for compliance,” Hayes says. “But if you really sit back and  look at it a lot of this stuff is very very tenuously associated with compliance.”

He thinks that organizations would do well to reexamine what they are spending on compliance and reporting and trim down on excess reporting processes. Doing so can cut down on staff resources, disk space and even the licensing for the software that does the reporting.

“The amount of time the average administrator spends on doing reporting its just incredible,” Hayes says. “The question I would ask is, one, are those reports truly necessary? And, two, does anybody actually look at the reports even if they're necessary?’”

3. WAN Optimization

Bandwidth may be an unavoidable fixed cost, but you can keep it from ballooning as business bandwidth needs multiply through the greater use of collaboration tools such as video conferencing. Effective use of WAN optimization can help cut down bandwidth from anywhere between one and three fold of your unoptimized network.

The IT professionals at Graef, Anhalt, Schloemer and Associates (GASAI), an engineering and architectural firm based in Milwaukee, WI, was able to do just that with its WAN optimization deployment, reducing bandwidth by about 270 percent. Not only did that keep costs down, but it also enabled the business to drastically cut down on its travel budget by replacing some face-to-face meetings with bandwidth intensive collaboration tools. Check out Baseline’s case study of GASAI’s deployment.


4. Restructure Responsibilities

If it seems like your systems management costs have gotten out of control, it may be time for a restructuring of your org chart. Often times, the operations hierarchy is several years behind the way the technology is actually deployed. Sounds like it's time for an new alignment with cost-cutting and resource-saving technologies like virtualization.

“IT structure has got to be adaptable to change as the technology is changing,” says Illsley.

For more tips on making IT operations teams more efficient, check out Illsley’s advice on streamlining systems management.

5. Utilize Telework

Survey the staff roster for suitable employees who can be sent home to work—even if only part of the week. The creative use of telework can not only cut cost and promote efficiency, it can also be a big morale booster in a time of staff reductions and payroll freezes.  

“Not everyone can telecommute, but there are a whole lot of things in terms of flexibility that you can do to make people happy,” says Rose Stanley with WorldatWork. “The more flexibility you offer your organization, the more you  are paid back through productivity, less absenteeism, less turnover and a greater loyalty to the organization.”

In some extreme cases, full-time telecommuting can reap serious savings through reduction in real estate and facilities operations costs. Telework can also be an attractive carrot to dangle in front of valuable on-site employees you’d like to keep in the face of cut hours, wages or benefits. For example, if you must bring someone down to part-time status and don’t want to lose them, then think about adding the telework option to your pitch when it comes time for that difficult conversation.

Hear more from Stanley and pick up some tips in Baseline’s report on strategies for managing remote workers.


6. Pull the Zombie Projects

Now is the time to pull the plug on those projects that have been dragging on ceaselessly with no end in sight or which have lost their utility now that the economy has shifted business-side priorities.

“I’ve heard them called ‘zombie projects,’” Hayes says, explaining that they might be effectively dead, but still animated.

Getting rid of these projects can help reallocate staff resources to problem areas where headcount must be cut.

Learn about how to do just this with advice on how to pull the plug on an IT project.

7. Revisit Old, Abandoned Projects

As a corollary to the previous cost-saving measure, survey old projects that may not have gotten off the ground to see if there might be some intellectual property worth salvaging. Taking the junkyard approach to project management—by, say, unscrewing code from an old junker and bolting it on the new ‘car’ you want to build—can accelerate projects and save the department a bundle.

Check out Baseline’s special coverage of  project failure to learn how to effectively dump the zombies and how to get the most out of the work you’ve already done.


8. Install Air Economizers

In a recent data center operations pilot project, Intel’s IT department found that it could save $2.8 million annually on a 10-megawatt data center by using an air economizer that expels hot air outdoors and draws in outside air in lieu of air conditioners and chillers. The affects on air quality had negligible effects on data center reliability and reduced that center’s power consumption by 74 percent.

Finding ways like these to cut down on power and cooling costs can make a significant difference to IT’s bottom line.

Learn more about Intel’s data center efficiency efforts.

9. Take Advantage of Open Source Management Tools

It doesn’t have to cost a bundle to reign in systems management costs through automation. There are loads of open source management tools out there free for the taking.  Get started with your homework by taking a look at Baseline’s series of slideshows on free enterprise-appropriate tools, including log management, virtualization and database management.


10. Improve Software License Management

Many executives may not know it, but unnecessary software licenses are a big source of dead weight on a lot of IT department budgets. Hayes points to one big financial services company he knows of that literally had a closet full of software tools that were never installed but which the company were still paying license fees.

“The very, very first thing, and this one is so obvious and I’m amazed that companies don't do it, is do an actual inventory of who's using what software,” he says. “There are going to be a lot of copies of things that aren't being used at all and then there are going to be a bunch of people who are using things, but very sporadically, and who could do without it or with another alternative.”

Check out Baseline’s tips for improved software asset management.

11. Automatic Password Resets

Help desk costs can consume a big chunk of the IT budget each year. Most of those costs are personnel related, and, sadly, a lot of staff hours are eaten up by relentlessly repetitive tasks that could easily be automated. Take password resets, for instance. The process of manually resetting a password can take anywhere from 10 to 30 minutes, depending on the system and the organization. In a larger organization, installing automated password reset technology can help shave hours off of a monthly help desk budget. This affords IT managers the flexibility to immediately cut headcount or reassign smart workers to more important areas within the department.


12. Streamline Vendor Management

Examine your vendor contracts to see how much the department is locked in for and then see how much can be cut from the services, leases and products which you aren’t contractually required to continue.

“Be pretty ruthless about going back to the users of those services and saying 'Are you really doing this?' because what I find in many organization is that the path of least resistance is to just not change anything even if a service is underutilized,” Hayes says.

For example, he recently helped a company that was spending over $100,000 a year on a service that the user base was actively avoiding using. The user liaison was even reporting that users were using the product because he thought they’d get in trouble if he said otherwise.

“They may as well have been flushing the money down the toilet,” Hayes says.

He also says this is the time to find out who your friends are among your current vendor pool. Separate the wheat from the chaff by talking with your vendor contacts and seeing how well they can work with you to reduce costs in the short term with the expectation of your continued business in the long run.


13. Take Advantage of Standardization Frameworks

Following practices laid out by standards frameworks such as ITIL are a fantastic way to improve process efficiency. And the great thing about them is that most of their best practice information is available for free. Sure, many organizations spend a mint complying with standards, but many of the costs involved revolve around certification, compliance auditing and the requisite consulting fees. Don’t worry about all of that stuff, just try to use the often common-sense guidance offered by the frameworks for now.

“I’m kind of killing myself as a consultant here, but I’ll tell you, everything is out there on the web nowadays,” Hayes says.

If politics precludes strict adherence to standards, at least take internal stock of practices, Hayes says. Find a few efficiency measurements and apply those as rulers to the different IT groups. Find out what those that score well are doing and apply those practices across the board, while eliminating or changing the practices of those groups that don’t do so well.

“In that case the expertise for making meaningful changes is all right there within the company,” he says.