5 best practices for IT cost optimisation

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5 best practices for IT cost optimisation | Pleo Blog
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Whether you’re striving for growth or weathering a financial storm, keeping an eye on your IT expenses is always a good idea – and that’s what IT cost optimisation is all about.

IT cost optimisation doesn’t just help you save money: it helps you assess your IT expenses and get to the core of how to get the most value out of your IT investments.

In this article, we’ll cover what IT cost optimisation is and includes. We’ll also give you 5 best practices for effectively optimising your IT costs.

Key takeaways:

  • IT cost optimisation is a strategic process that ensures your IT investments are aligned with your overall business objectives.
  • To do IT cost optimisation right, you should set up a solid IT governance framework, prioritise cloud cost management, declutter your tech stack, automate where possible and keep an eye on your vendor contracts.

What is IT cost optimisation?

IT cost optimisation refers to the strategic process of reducing a company’s IT expenses while maximising the value and efficiency of its IT investments.

Optimising IT costs isn’t just about cutting costs – it’s about aligning your IT spending with your business objectives to ensure sustainable growth and operational efficiency.

Key elements of IT cost optimisation include:

  • Cost analysis and transparency: Gaining a clear understanding of your IT expenses, including hardware, software, cloud services and personnel costs.

  • Investment prioritisation: Allocating resources to projects and systems that deliver the highest business value or ROI.

  • Cloud optimisation: Leveraging cloud computing for scalability and cost efficiency. This includes rightsizing, reserved instances and optimising workloads.

  • Automation: Using automation to streamline repetitive tasks, cut down labour costs and boost productivity.

  • Software asset management: Identifying redundant or underused applications and replacing them to reduce licensing and maintenance costs.

  • Reviews and adjustment: Continuously monitoring IT spending and performance to identify new opportunities for savings and improvements.

And much more. A lot goes into IT cost optimisation – but when it’s done right, it comes with a range of benefits that are worth the effort.

IT cost optimisation reduces unnecessary spend and boosts profitability, improving the financial health of your business. It frees up resources that can instead be used for innovation and strategic initiatives, and it ensures your IT investments support your overall business objectives.

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5 best practices for effective IT cost optimisation

There’s a lot to gain from prioritising IT cost optimisation – so let’s take a look at how to do it right. Here’s a breakdown of five best practices to get your IT spending under control:

1. Set up a solid IT governance framework

Without clear rules and processes, IT spending can easily spiral out of control. Governance helps ensure that every pound you spend on tech serves a purpose for your business.

Define clear policies for making IT decisions. Set up a cross-functional team to review major expenses – that way, there’s always someone asking, ‘Do we really need this?’

2. Prioritise cloud cost management

The cloud gives you much-needed flexibility. With that being said, you should always pay attention to your use: unused resources and unnecessary services add up fast.

Use cloud management tools like AWS Cost Explorer or Azure Cost Management to track cloud spend. Optimise your cloud setup by shutting down unused instances, resizing virtual machines and committing to reserved instances when you know you’ll use them.

3. Declutter your tech stack

You may think you can’t have too many applications, but that’s far from the case. In fact, redundant or outdated apps and systems can drain your resources without providing any real value, and a bloated infrastructure is expensive and slows everything down.

Audit your applications and infrastructure regularly. Identify what’s redundant, underused or simply outdated, and either consolidate or retire those systems.

4. Automation, automation, automation

We can’t emphasise this enough. Manual work takes time, and time is money. By automating repetitive tasks, you free up your team to focus on more strategic projects – while also reducing human errors.

Start small. Automate things like system monitoring or backups. Once you feel comfortable with it, move on to more advanced things like deploying code with DevOps tools or automating customer support with chatbots.

5. Keep an eye on your vendor contracts

Vendors often lock you into expensive contracts. The market changes fast, however, so it’s important to stay on top of this. Regular reviews can help you get better deals or switch to providers that offer more value for your money.

Don’t be afraid to challenge pricing or renegotiate terms with your vendors. If a vendor won’t budge, shop around for alternatives to use as leverage – this can often get you a better deal. Consolidating services with fewer vendors can also give you more negotiating power.

Wrapping up

IT cost optimisation is about much more than saving money: it’s about ensuring your IT investments support the sustainable growth and operational efficiency of your business.

By following the best practices above, you won’t just save money – you’ll also ensure your IT investments are doing what they’re supposed to: driving your business forward.

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