How to prevent IT Budgeting mistakes and runaway technology spending

saving money on IT

Many companies today are in the middle of a digital transformation. Businesses are moving more functions to the cloud, virtualizing systems and deploying business analytics to gain more insight into the business. Some companies are seeing a large range of SaaS applications being purchased by departments other than IT. It is very easy for technology spending to get out of control. The ability to deploy technology in all kinds of new and exciting ways seems to be constantly growing. As a CEO or IT leader there are a few guidelines that can help keep spending under control and avoid mistakes.

Provide Technology Leadership

Rather than throw out a simple "We need to move to the cloud" mandate. Evaluate why the move will benefit the business. Are you saving money, gaining functionality, is security or redundancy a concern. What are you gaining by making the move? For example you can move a few servers off site to a data center a "lift and shift" as it is commonly called and you get the security of a data center however that model may prove to be more expensive than keeping it in house. Moving servers to the cloud as it was designed would be to take advantage of the ability to scale consumption up and down based on need. A true cloud environment allows you to scale servers on the fly as needed and scale them down when their not. If your business doesn't benefit from that dynamic then consider deploying a data backup strategy instead of a full move to the cloud. This way your servers are backed up in the cloud but remain onsite keeping costs low. The key point here is not to deploy technology for technology sake. Make sure there is a true business benefit. Leadership

Make sure Technology spend aligns with business needs

Today employees can purchase SaaS applications with a credit card, completely bypassing IT. It can be tough for IT to even know about these expenditures let alone control it. IT needs to work closely with business leaders in all departments. You want to avoid employees saying "I don't like what my IT department provides so I'm going to get something else." The next thing you know, they are putting critical company information on a consumer grade Dropbox account or some other public software that lacks the security needed to protect company data. By understanding what each departments needs are, in running the business day to day it's easier to put the proper tools in place and control shadow IT spending. It's also a good idea to have a mechanism so employees can tell you what they need.

Don't pay for Technology that doesn't add value

Work to Simplify by reducing vendors, services and redundant systems. Simplifying is the best way to get rid of anything that doesn't add value. Often times in large organizations there is technology that was purchased for a need at one point and that need no longer exists. For example you may have installed a bunch of analog phone lines for a piece of equipment or fax machine. Years later its determined that no one in the company faxes any more and all 10 of your locations are spending IT dollars monthly to maintain phone lines that are no longer needed. Another example could be software for an automated report such as billing hours or something that was tracked to bill clients at one time. Suppose the business changed and you no longer bill that way. The report is still auto generated and goes out but no one does anything with it anymore. Ask the question with various systems and software you may be paying for "If no decision is being made or no action follows it, Do we still need to do it? why are we doing it? Often times there are tasks that companies assign resources too because of a legitimate business reason but rarely does anyone say "Ok, lets stop doing that now its no longer needed". It's important to regularly review activities and decide if they still provide value. This is an area that working with a technology consultant can be quite beneficial. Often times they will provide this review on a regular basis, ask the tough questions and help you find technologies that add better value, eliminate un-needed services and cut costs.


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