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5 Overlooked Factors that Could Affect Your IT Budget

August 29, 2013 No Comments

With tight budgets, many companies are looking for ways to reduce costs and be as efficient as possible. The IT department is frequently charged with the task to contain its costs, but for many IT managers their budgets are already heavily reduced. Finding those extra areas to cut even more costs can be difficult, but there are 5 factors you may have overlooked that affecting your budget.

1. Software License Optimization

By employing software license optimization, companies can track application usage and move licenses around based on how much they are used. Since license software is expensive, adding up to thousands or even millions of dollars, unused software licenses essentially send money down the drain. A regular review of license use allows the IT department to stop renewing leases on software that is not really needed and consider alternative plans for software or hardware that is only needed occasionally, such as a pay-per-use plan. Employing open source alternatives to proprietary software is another way to cut costs in this area.

For larger companies, simply having a system that tracks the licenses you have and where they are being used can save a lot of money and headaches by preventing the purchase of redundant licenses. Failing to stay on top of licensing contracts and renewing those that have expired can also result in hefty penalties that no IT department wants to fork over part of its budget for.

2. Ineffective Security

With budget cuts, many business executives stop prioritizing data security. Whether they feel they simply don’t have the funds or grow complacent about security threats, many IT departments have been forced to turn to low cost security products. While the initial price tag of these advanced threat protection measures look great, the hidden costs associated with these products often null any cost-savings made in the initial purchase.

Effectiveness of a security solution is the number one determinant of its cost. For each security breach an organization suffers, it must pay for the effort to restore systems that were affected and repair the breach that was made. For significant breaches funds must also go toward customer outreach, data loss, fines and lost business opportunities. While no security solution will be 100 percent effective, IT departments should factor in the cost of potential security breaches before going for the solution with the lowest price tag because ultimately it will cost more.

3. Outsourcing to the Cloud

Cloud based platforms are the hot item to talk about in the IT world right now. Keeping data in the cloud eliminates the need to purchase hardware and sometimes software. It is also touted for being scalable and its potential to offer valuable insights through big data cloud computing. However, organizations should be careful when making the decision to outsource to a cloud service and selecting a cloud provider. Unless a company has gone in and analyzed the full cost of running a server or application in house, they will not have a clear picture of whether the cloud can save them money. On the other hand, having those numbers allows a corporation to approach a cloud service with clear expectations of the cost savings they are looking for.

4. Orphan Projects

A lack of communication between IT and business management often leads to orphan projects that were requested by management but are no longer important to the business. The IT department will diligently continue working on the project based on the original request, but ultimately all that capital and man power is wasted on a project that is of no real value to the company. IT projects should be reevaluated frequently with upper management to ensure that resources are only being devoted to relevant projects.

5. Inefficient Hardware

Sticking to old computers and hardware past their prime may seem like an easy way to reduce costs on new equipment by getting more life out of current equipment. However, the power required to run and cool these older systems often costs more than what it would cost to get a more efficient system. New hardware can often cut energy costs in half or more making a better long term financial plan.

Ultimately, evaluating the IT system requires stepping back and looking at all of the factors associated with IT both direct and indirect. By looking at the bigger picture, you may find a leak in the system or an opportunity for cost-savings that you hadn’t thought of before.


by Rick DelGado, Independent Author

I’ve been blessed to have a successful career and have recently taken a step back to pursue my passion of writing. I’ve started doing freelance writing and I love to write about new technologies and how it can help us and our planet.” – Rick DelGado

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