The responsibility of controlling technology costs ultimately falls with IT leaders. If that’s you, you most likely have a range of cost management measures in place, however, like in any aspect of business, there can be challenges along the way.
Cost management is a crucial aspect of running any organisation. With companies wasting around 22% of their tech spend, cost management in IT is key to controlling the growth and efficiency of IT spending, aligning IT with business objectives and achieving overall financial stability.
Increased supplier and business costs mean companies face many challenges in optimising their IT spending and ensuring value for money.
Cost management isn’t just about lowering a company’s overall cost in IT, it also helps to achieve:
- Budget control
- Cost efficiency
- Improved planning
- Cost transparency
- Value for money
- Optimised resource allocation
- IT and business strategy alignment
Understanding the Costs
When evaluating your IT costs, there are two types to consider: direct costs and indirect costs.
Direct costs refer to purchases and costs directly linked to a service or product. These can include:
- Hardware and software purchases
- Maintenance and support licensing fees
- IT staff costs
Indirect costs are broader business costs that can’t be directly linked to purchases in the IT department:
- Downtime and lost productivity
- Training and development
- Energy consumption
Challenges of IT Cost Management
The responsibility of controlling technology costs ultimately falls with IT leaders. If that’s you, you most likely have a range of cost management measures in place, such as IT audits, vendor management, automation, cost-benefit analysis and employee training. However, like in any aspect of business, there can be challenges along the way:
- Technology changes: Technology evolves constantly, leading to frequent updates and new investments that can strain budgets. Use flexible budgeting that allows for adjustments based on technological changes.
- Hidden costs: Unexpected expenses, such as emergency repairs or unplanned upgrades, can put a dent in your predicted costs. Audits help to spot these disruptions before they occur, while contingency planning allows you to set aside a portion of the IT budget for unforeseen costs.
- Inaccurate Scope: If your IT project isn’t clearly defined, it can lead to scope creep. Changes in scope require more costs and resources.
- Measuring ROI: Quantifying the return on investment (ROI) for IT projects can be challenging. However, clear metrics and KPIs will help measure the success of your IT investments.
Cost management can feel overwhelming, but there is a reason why it is top of the mind for all major companies across all industries. Managing IT costs effectively ensures that the business is gaining maximum value from its IT investments and promotes a culture of cost optimisation across all departments in the business.
£300,000/yr Reduction In Costs
PSP has partnered with businesses, schools and awarding bodies for the past 15 years. In that time, we have delivered tangible IT strategies to help them optimise the value of their IT investments.
When a professional body asked us to review their IT costs, one of our IT Directors discovered unused servers, expensive contracts, multiple systems performing similar tasks, and more. In total, we saved the awarding body £300,000 per year in IT costs.
Read more here: IT Review Saves Client £300k/yr in IT Costs
Book IT Consultation
Our IT directors are available for your business to outsource. Whether you’re looking for a one-off review or require a part-time IT Director to oversee the creation and execution of your IT strategy, our agile approach to outsourcing means you only pay for the resources you need. Outsourcing an agile IT professional gives you the output of an expert professional for less than the full-time cost.
For more information, fill out this short contact form or phone: 01775 722377 to speak to our award-winning customer service team.
