4) Centralize IT payment processes
Just like other departments like Finance, or H.R., I.T. services need to be centrally managed. It is critically important to have company I.T. policy clearly established and managed centrally, along with contract negotiations and telecommunication. Now here’s a kicker, one of the best spot to look for savings is in the bill payment area. If you organization is it setup such that all the reoccurring bill payments are going straight to Account Payables; you may want to change it. Just like the old say, “if you cannot measure it, you cannot manage it.” Having these costs go through I.T. allows you to constantly assess your costs, identify discrepancies, manage contract due dates, and look for new opportunties. In addition, having a centralize purchasing group allows organizations to get the best deal as well allows them to establish better vendor relationships. Without it, it would be impossible to proactively manage the expenses that are occurring at each location. Often IT department doesn’t want to get involved in the administration of these types of expenses due to lack of resources. A case can be made to either outsource these activities or manage it in-house with some administrative assistance. There are companies that specialize in this area and can do it in very cost effective manner.
5) Outsource IT
There is a convincing argument that we need to manage key IT processes in house. However, keeping everything in-house may lead to additional costs in some cases. Tapping in external resources to get expert opinion can result in long term cost savings. External hosting, software development and externally managed network services are good candidates for outsourcing. In addition to the cost savings, this allows you to get expert services; it also allows you to start focusing on your business rather than IT. You can take comfort knowing that IT is managed by experts. There is a word of caution when it comes to outsourcing; this is a major undertaking and the cost of change is very high. Therefore you must take into account the following:
* Vendor support – Does the vendor have necessary infrastructure to handle your current and future needs? On one side, small vendors might be able to customize a solution for your company; on the other side, they may not be able to grow with you needs.
* Agreement terms – Make sure the agreement spells out clear terms, cost, and responsibilities of the vendor as well as yours, the customer.
* Cost – it is a very important factor. Obviously companies would choose this route to save on their IT costs. The important thing is to compare apples to apples. If the company is offering you a better alternative, you cannot simply compare to your in-house option. Do account for hidden costs; and non-financial benefits of
* Business complexity - It is a complex decision; you may need an independent expert advise. This is especially true for businesses that require specialized business knowledge. There may be tacit knowledge within your organization that cannot be easily replicated or replaced.
6) Establish computer and equipment renewal policies
There is large number of opinions when it comes to server / PC replacement policies. Some would definitely want the latest and the greatest. Others would let systems fall to bits before replacing it. The cost of ownership at both ends of the spectrum is very high. If you replace the systems too quickly and acquire the best available in the market, you are bound to over spend. On the other hand, if you let equipment die before replacing it, it can lead to high administration cost, as well as loss of productivity. You could see your IT department spending valuable time fixing problems which could have been avoided. My opinion it to have a 4 to 5 year recycle plan. Every year you would replace a portion of your computers with whatever is readily available in the market, while sticking to one or two product lines. The focus is to get middle-range servers and computers. The cyclical replenishment approach can allow you to distribute costs over time. When replacing hardware, most companies will acquire brand new equipment; just keep in mind that there are some amazing deals in the pre-owned or after lease market. If you are not taking advantage of this, you might be paying too much. In terms of servers, keep in mind that your main servers can still play a key role as secondary servers once they are replaced. A similar approach must be taken for network and office equipment. Every time you purchase new equipment, I.T. must assess the business requirements as needs do change over time.
Gagan Goraya