Organizations are getting back to a "new normal." For many industries, it is time to sort through a level of uncertainty. Many of our clients are developing plans to reduce IT Operating Costs to cope with the uncertainty. Reducing IT Operating Costs should be a carefully constructed set of actions that will maintain required service levels and also retain the capabilities necessary to help the organization take advantage of the eventual recovery.
Through Solutions-II's Adaptable Data Center® framework, we have developed an approach that can help IT organizations optimize their spend. Cost optimization (cutting) should be organized around the business context of IT for the company. That context can be defined by understanding the following:
- Current Challenges
- Strategic Guidelines
- Desired Business Outcomes
A major current challenge for many of our clients is uncertainty which creates the strategic guideline of ‘cut IT Operating Costs by x percent’ which is tied to the desired business outcome of ‘maintain service levels by doing more with less’.
Key Focus Areas for Cost Optimization
Here are four key focus areas for cost optimization:
- Cut Software Licensing Costs
This exercise includes validating that current entitlements are all being used. According to a very recent report by CoreView the average business has 44% of Microsoft entitlements that are underutilized or oversized. This is just one study done on one software vendor (albeit a large vendor). Rightsizing licensing costs is the first approach. Subsequent actions can include replacing expensive licenses with Open Source solutions – or – at least lower-cost solutions. That includes some change capital to make the switches, but the payoff could be significant.
- Automate Processes and Automate IT Service Management and Security Response
Automation of Service Delivery functions, automation of workload provisioning, Cloud Management Platforms that include automation, and Security Orchestration – Automation – Response (SOAR) are great force multipliers that eliminate workload while delivering better results. Robotic Process Automation (RPA) is also a way to potentially reduce workload and deliver consistent process execution.
- Optimize/Reduce Maintenance Costs
The first approach in this area is to be sure that you are right-sizing your SLA. Over time assets that are on 7x24x365- 4-hour response get to a point in their lifecycle where a less stringent SLA is required. In other cases, you can look at the criticality of each and every asset and align the maintenance agreement with the criticality of the resource (perhaps using their RTO and RPO as guidance). The second approach is to look at the cost savings in moving to Third Party Maintenance support. This may not be right for every asset, but it could be a great approach for a subset and deliver significant savings.
- Optimize Service Delivery Model
Much like the automation step, applying lean principles to your Service Delivery Model can result in financial savings. Approaches include building self-service capabilities into your Service Catalog, shrinking Service Desk coverage hours and/or staffing, or even outsourcing portions of your Service Desk and Service Delivery models.
This is a good place to start and of course, not the only places to optimize operational costs. The next blog of this three-part series, which can be viewed here, has four additional ways to optimize operational costs. We're here to help, so click here if you would like more information on how Solutions II is helping clients with the Adaptable Data Center® or just need to ask a question about getting to the "new normal."