Getting the most out of your IT budget
“Doing more with less” seems to be the order of the day at the moment. It seemed highly appropriate, therefore, that the National B2B Centre should highlight some ways to squeeze a little more out of your IT budget.
Martin King-Turner, MD of the B2B Centre, highlights some straightforward approaches to making best use of your money.
For many small and medium sized businesses IT can represent a significant but somewhat hidden cost. Your hardware and software, and the nice people who come out and fix things if they go wrong, may have sort of blended into the background.
Computing, more than most elements of the business seems to have retained sense of mystery (or perhaps fear). This means that many companies will simply pay any bill that comes in and not question whether it represents value for money or if there are better ways of doing things.
In our experience, however, there are some simple approaches you can take to get best value in both financial and functional terms.
Whatever you want the technology to achieve for you then here is the minimum you need to do.
- Write down what you want in as much detail as possible.
- Get at least three suppliers to quote against that brief
- Decide what the key decision criteria for choosing a supplier are and then compare all of the quotes against the criteria before making your choice.
This approach can save money in two ways.
One, because you may identify a new supplier who can do what you want for less than an incumbent.
Two, because you are more likely to get what you want the first time round. And before you accuse me of over-simplification I have a lot of examples of firms who have had to write off significant investments in, for example, websites and start from scratch to get something that actually worked properly!
The B2B Centre website has RFQ (Request for Quotation) and Vendor Selection guides and workbooks that could be of great help in this process.
Check the Small Print
Lots of studies have shown that companies waste a considerable of their hardware and software costs simply because they haven’t checked contracts and licence agreements recently.
It might be worth checking that everybody across the company is using your carefully negotiated supply or maintenance contract and then talk to your suppliers to ensure that you are getting the best deal.
Then check software licences to make sure that that you aren’t paying for more users (or seats) than ever log on to the system. Next time you need to upgrade you may be able to change to a cheaper band in the providers pricing structure.
Change the Technology
The B2B Centre has been talking about the benefits of “Cloud Computing” (or just “The Cloud”) for some time now. Essentially Cloud Computing is a just a way of accessing software applications over the web and there is a potential for savings to be had using this approach.
The direct cost of using Cloud applications may be cheaper than buying the equivalent software on a disc. For many businesses though savings are more likely to come from the reduction in maintenance, infrastructure and management costs of an in-house application. For some businesses Cloud Computing offers other attractive benefits such as the flexibility to add or subtract new users in line with business activity or the switch from capital to revenue expenditure.
For those of you who are unsure of whether to use Cloud Computing or not, my advice is to be optimistically cautious. There are issues to be taken into account when selecting Cloud applications but remember that you may have already experienced some of the advantages of these tools if you have used something like Google Docs for instance.
In larger organisations there is potential to change your hardware too. If you have some form of data centre then the terms “blade servers” and “virtualisation” might want to figure in your thinking. Blade servers are powerful, stripped down computers that take up less space (maybe allowing better use of facilities) and use less power. “Virtualisation” is the process of allowing more than one computer system to run on a physical machine at the same time that provides further space and power benefits.
It is now possible to outsource most aspects of both IT and telecommunications. If you operate your own infrastructure in the form of servers, email, or phone systems then there are people out there who could do it cheaper and better than you can. Basically you benefit from the supplier’s economies of scale and ability to invest in the latest technology.
The key to success with outsourcing is the contract. As the with quotation process it is vital to document what you want and what you expect a supplier to do. The more complex and business critical the service you propose to outsource then the more time and money should go into developing the contract.
The focus for this article is on reducing the cost of the technology itself. However I can’t finish it without a least highlighting how technology could reduce the cost of doing business for you.
One particular area to highlight are mobile and collaborative technologies (from 3G networks to video conferencing) that can provide all kinds of benefits.
- Less need for face to face meetings leading to lower travel costs.
- Reduced office space requirements
- Allow flexible working conditions to keep the team happy.
These may not be quick wins, of course, because they can involve culture change but there are plenty of people taking advantage of the technology in interesting and innovative ways to make a difference to the bottom line.
Making a Start
In the real world it is likely that you have already made various investments and that contracts and licence agreements are already in place. This means that you can’t wave a magic wand and cut IT costs overnight.
As a starting point, therefore, I recommend that you conduct a technology audit. Look around your office, shopfloor or warehouse and identify all of the hardware that’s in place, all of the different business applications that you are using and what agreements are in place to cover it all. You may be surprised at how much technology you have got, and you may be even more surprised when you start to research the costs of buying and maintaining it all.
Now you will be in a position to understand if there is any room for negotiation, new technologies or outsourcing. And, of course, you’ll then consider putting in place a quotation process to make the best investment decisions.
If you need help working out where you can get more out of your IT budget or where technology can help to improve the way you operate then don’t hesitate to get in contact.
Managing Director, the National B2B Centre