It seems like everyone is scrambling to find ways to cut costs these days. Projects are being put on hold, redundancies are piling up, travel scaled back, etc. And when it comes to technology costs, no organisation is safe. But how do you ensure IT does its part to reduce costs while ensuring you don’t compromise security or competitive advantage? There are a number of maturing technologies that are peaking at just the right time to deliver in the downturn.
One of the most significant components of any IT support budget is ‘lights on’ support, or simply keeping the organisation’s technology infrastructure running. This includes fixed costs such as power and resource headcount as well as variable costs like equipment replacement and incident support. And while these costs can consume upwards of 75 percent of a technology budget, a significant portion is potentially wasted. A number of surveys show that average utilisation of server resources hover around 10 – 20 percent, which is a legacy of the strategy of dedicating server hardware to individual software applications. In a time where costs are being squeezed from all sides, this is unacceptable.
Virtualisation allows a single physical computer to emulate one or more machines through software. In practice, that one email server sitting in your computer room could also serve double duty as a web server or accounting software server. As well, virtualisation has moved to the desktop, which allows for centralised management of user’s personal computers while reducing the physical hardware requirement. An inexpensive client is all that’s required on the desk while a virtual desktop is sent over the network. This reduces deployment and support costs significantly, while enabling full backup of every computer in the company.
While software-as-a-service (SaaS) has been gaining momentum for years, the combination of technical maturity and economic urgency has created a perfect environment for most organisations to take advantage of this technology. In effect, SaaS allows you to take advantage of powerful, innovative software without any up-front costs or local installations. Take Salesforce.com as an example. Traditionally, companies had to pay a significant license fee up front, spend considerable somes customising and installing the software at their location, and then continue to pay large sums in maintenance fees and user support. Now, for a set fee per user per month, a growing enterprise can give their users full customer relationship management (CRM) functionality for a fraction of the price. And it’s all the better in hard financial times when you can pay for these investments out of your operational budget instead of committing to a capital expenditure. Remember, cash is king.
Once adopted only by the intrepid, open source software is now permeating every facet of business. Even Google’s foray into the mobile phone space is spearheaded by their open source software offering, Android. And while it’s a myth that open source software is free (you have to support it, after all) the lower costs and flexibility make it an attractive option for most organisations. There are now significant offerings in desktop systems software, traditional word processing and spreadsheets, database management systems, website hosting platforms, and even internet telephony systems. Can you really justify that purchase of Microsoft Office for the receptionist when you can get OpenOffice for free?
There are many other areas where one can look to cut technology costs in trying times. But if you take a strategic look at what’s available you can not only survive the temporary cost-cutting cycles but also set yourself up for a significant strategic advantage when things take a turn for the better.
Jamie Vachon is the founder and Managing Director of Innovant, a technology company focusing on identity management, advanced infrastructure, strategy and custom software development.