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Four Tips To Help Reduce Your Fixed IT Costs

by | May 11, 2020 | Business Advice, Cloud, Pricing & Cost

There are several ways small businesses can prepare for the future, as unexpected hurdles can put the brakes on projected growth quickly. One of the biggest issues companies have to deal with is times of recession. A slowing economy affects virtually every business out there.

The difference between making it to the end of a recession and folding is good preparation. The good news is, one way you can prepare for the worst-case scenario is by adjusting your information technology costs. IT support is a critical part of your business that you rely on to keep things running smoothly. However, the high fixed costs associated with professional support can eat away at your bottom line, which can leave you scrambling when times get tough.

By changing several of your fixed costs to variable costs, you get the flexibility you need to weather the storm. Not only are you able to save money, but also you can adjust those costs as your needs change. As the president of an IT company, I’ve outlined four IT areas I recommend reviewing if you want to adjust your IT costs:

1. Look for ways to make IT support more affordable.

For small businesses, having an in-house IT team isn’t always practical, as it can be an expensive endeavor. If this is the route you decide to take, keeping metrics is huge when looking at the cost and value of an internal team. Have employees track all their time so management can see where it’s being spent and ensure the team is being held accountable. Managers can’t adjust where IT people spend their time if they don’t track it. Awareness and visibility allow managers to be able to make tweaks to their process to get the most value out of them.

Alternatively, some businesses don’t create in-house teams, or they choose to switch to outside IT support. (Full disclosure: My company offers IT support services.) IT service providers have industry experience and expertise, enterprise-level tools, and reduced management and training costs, which is why I’ve observed some businesses opt for outsourced labor. Before hiring an outside IT team, ensure you know:

• Your administrative passwords.

• How many computers, servers, and employees you have.

• What compliance regulations your company is under, such as HIPAA, NIST, FINRA, etc.

• What your budget is to ensure you’re not purchasing services outside your limit.

Consider the challenges that come with outsourcing IT labor, such as unexpected cost add-ons. It can also be tricky to decide who the key decision-maker should be when outsourcing IT support. I believe the decision-maker should be someone who is business-minded with a focus on operations. Someone who focuses on operations, rather than someone who is more technical, looks at how to make the overall company better, which can be helpful when trying to cut costs.

2. Consider leveraging SaaS software.

Software as a service (SaaS) can be another helpful way to reduce long-term costs. It’s a common misconception that SaaS is more expensive to use. While you do have recurring costs, I believe the benefits help offset those costs. For example, SaaS products are entirely cloud-based, which can reduce your labor costs by removing the setup and maintenance of an on-site server.

When you make the switch to SaaS, go with the minimum possible. Most SaaS options will have minimum user requirements. Your minimums should be lower than what you already have. SaaS providers will always let you increase your user count as your needs change, but if you get stuck at too high of a minimum, you won’t be able to flex the benefit of compressing the licensing count down.

3. Decide if it’s time to adopt a cloud infrastructure.

Another way you can reduce your IT costs is by moving everything to a cloud infrastructure rather than using on-premises hardware. (A number of companies, my own included, offer cloud solutions.)

Again, cloud infrastructures can come with a bit of a negative reputation because of the recurring costs that come with them. But, cloud infrastructure costs can be adjusted based on your company’s needs. Understanding your IT overhead is huge when planning for a recession. It simplifies the process and can help you determine costs when planning for an increase or decrease in employees.

If you’re already using a cloud infrastructure, make sure you perform an audit of the resources you’re using. You’d be surprised by how easy it is to overpay for cloud resources you don’t even use.

For those who are new to the cloud, keep in mind that adopting a cloud infrastructure is not for the faint of heart. Companies that have not kept up with technology might find it hard to transition due to a lack of updated software. You’ll need a backup plan if the internet goes out. Finally, the unfamiliarity with some cloud setups can cause a hiccup in user adoption, so it’s key to have a smooth transition.

4. Take advantage of the communication tools you already own.

Most don’t give this a second thought, but the communication methods your team uses could be costing you a lot more than you need to spend.

One way to improve communication costs includes taking advantage of the existing licenses you have. For instance, if you own a software line that includes features such as a workplace chat system, video conferencing, or any other communication tool, use that preexisting software rather than investing in new programs. Since you already have the license, you can eliminate extraneous communication costs entirely.

If you do choose to change any communication methods within your company, it’s imperative to have a system in place to train your employees.

The key to making your business recession-proof is to prepare. Waiting to perform cost-cutting measures until after a recession hits could lead to disaster. Consider making the changes I’ve described above to better prepare you for the unknown.

Four Tips To Help Reduce Your Fixed IT Costs was first published by Forbes on April 2, 2020.

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