Budget Take a Hit? 5 Ways to Optimize Your Spend

Budget Take a Hit?

5 Tips to Optimize Your Spend

Budget Take a Hit? 5 Ways to Optimize Your Spend

  • 17 Februar 2021
  • 2.5 minutes to read

The new year is here. And like many IT professionals, you’re challenged with ramping up digital transformation efforts – but with a leaner budget due to reduced revenue from 2020.

This challenge forces many IT Managers and CIOs to take a hard look at their current technology arrangements and ask, "Is this the most efficient solution?" According to the Flexera 2020 State of the Cloud Report, over 35% of cloud spend goes to waste due to inefficient use of resources. In this article, we'll walk through five ways to get the most out of your 2021 IT budget – while doubling down on investments you’ve already made.

1. Eliminate Shadow IT

Not only does Shadow IT pose a severe threat to your company's security, but it also endangers your company's financial well-being. Recent Gartner studies found that 30 to 40% of IT spending in large enterprises goes to shadow IT. Everest Group found it closer to 50%. Typically, the most significant risks of shadow IT exist within Marketing and HR departments, where employees are most likely to go rogue to achieve desired results. Although these departments are the most susceptible, it's essential to take a full inventory of software usage to resolve your shadow IT problem.

An easy way to conduct a company-wide audit is to employ a software asset scanning tool. This tool sheds light on any non-IT sanctioned software that your employees may be using, giving you the data you need to root out shadow IT. Additionally, you'll be able to consolidate user data, ensure compliance and improve security, among other benefits.

Often, shadow IT occurs due to a lack of communication. The employee who downloaded the application may not know that you have a solution that accomplishes the same task. Ultimately, identifying shadow IT can help drive digital transformation within your organization and enhance communication between IT and other departments.

2. Optimize Licensing Contracts and Renewals

Like Shadow IT, inefficient use of cloud service contracts can wear down your IT budget. Most companies move to the cloud to drive more value. So, why are so many businesses not getting the most out of their cloud service contracts?

The answer lies in the rapid adoption of cloud services, especially this past year, and how it has consequently increased IT environments' complexity. The best way to sort through the confusion is to partner with a Software Lifecycle Management (SLM) expert. They'll provide you with actionable recommendations to optimize your current cloud contracts, including how to:

  • Align your IT roadmap to fit the cloud provider's technology & license stack, ensuring you only get the solutions you need.
  • Identify any user technology requirements to consider during the contract negotiation.
  • Analyze licensing costs to achieve the most efficient solution, helping your team understand where and how you can save costs.
  • Design optimal contracts by helping your team create an ideal bill of materials.
  • Negotiate with your cloud provider by ensuring your benchmarks are accurate and convincing, giving you the upper hand in contract negotiations.

By taking these actions, an SLM expert can help you configure and manage your licensing contracts the most efficiently. At SoftwareONE, our Microsoft Advisory Services connect you with the right person based on your industry and needs. In addition to providing actionable recommendations, a SoftwareONE SLM expert will help you create a Microsoft 365 Investment Scorecard to ensure you drive value and cost savings consistently throughout your cloud contract lifecycle.

3. Implement an IT Chargeback Program

Another great way to optimize your IT spend is to implement an IT chargeback program. This tool allocates technology costs to the internal business units that consume them rather than attributing all technology costs to a central department. An IT chargeback can help provide a more accurate representation of where and how technology resources are used within your organization. This helps align operations more appropriately within the business and eliminate the island of ambiguous IT overhead expenses.

When you ask a CIO about cloud spending and planning, most admit that they face multiple challenges, and their department is overwhelmed with Help Desk tickets. How can IT implement a chargeback program quickly, easily, and maybe more dauntingly, get other departments on board?

One way to implement an IT chargeback is to ask your Software Asset Management (SAM) provider about options within your current investment. Ideally, your SAM provider would be FinOps certified, meaning they meet industry standards for bringing financial accountability to cloud spend. SoftwareONE and our PyraCloud platform were recently FinOps certified, providing CIOs and Finance Managers with the transparency, predictability, and governance they need for effective cloud financial management.

Getting other departments on board may not be as difficult as you think. When departments are responsible for their IT expenses, they're more intentional about being efficient with their resources and reducing company-wide IT consumption. Many organizations experience increased internal customer satisfaction as IT and other departments begin working more closely to analyze and improve efficiency.

4. Streamline Procurement with a Digital Supply Chain

Procurement processes can be a source of significant inefficiency for businesses still using antiquated ordering processes. It's essential now more than ever to have a Digital Supply Chain (DSC). A DSC is the application of electronic technologies to every facet of a supply chain. For many organizations, the coronavirus pandemic compressed the time it takes to transform digitally from years into months. A DSC automates regular tasks, equips stakeholders with real-time insights, achieves the best cost-to-benefit ratio, and majorly boosts your bottom line.

The first step when implementing a DSC initiative is to evaluate your entire software portfolio. If you skip this step, you risk spending money on software that you might not need. A DSC will identify outdated, unused, or unauthorized software. With a centralized global software catalog, you can monitor this regularly, with frequent updates for accurate pricing in all available currencies.

A DSC should be a seamless and integrated solution from demand to fulfillment. By implementing automation, you eliminate time-consuming manual entry and quell worries of human error. Transforming and streamlining your software supply chain to a digital supply chain will enable your Procurement and IT teams to operate with the versatility, speed, and agility you need to compete. Ultimately, a DSC gives you transparency into software spend through sourcing and volumizing, reduces the number of transactions annually, and reduces operational expenses related to procurement workflow – a great way to show your CFO considerable results.

5. Offload Day-to-Day Tasks

For an organization to operate efficiently and compete effectively, reliance on your IT team increases. When reviewing your priorities for 2021, challenge each of your team members to identify 2-3 tasks that they may be able to transfer to a different department or stop doing altogether. Being overwhelmed with the day-to-day management weighs your team down. By removing the routine, “keep the lights on” work, your team will be freer to focus on the more pressing priorities like innovation and transformation.

Working with a trusted managed services provider is another useful way to help you and your team focus more on business transformation, intelligent automation, and new business opportunities. A recent study from Dynatrace estimates that IT teams spend 29 percent of their time troubleshooting and resolving problems around IT complexity – costing their employers $2.5 million annually. Managed services can reduce these costs and help IT teams achieve simplicity through their expertise in digital transformation. Reduce your IT tickets and focus on innovation.

Take Control Today

Between eliminating shadow IT, optimizing licensing contracts, streamlining procurement with a strong digital supply chain, implementing an IT chargeback, and offloading day-to-day tasks with managed services, you’ll stretch and make your 2021 budget work for you. Identifying your priorities and understanding where to begin is often the most challenging part. Get started and get maximum value from your technology investments.

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