TAG Solutions has spent the last two decades working tirelessly to help our cherished customers get the most value from the money they invest or spend on information technology. We are very excited that you have read this executive report. You will discover some of our best practices and the most effective ways to reduce IT expenses without sacrificing functionality.
We’ve compiled a list of 8 ways to slash costs, 2 long-term money-saving strategies, and 4 areas in which you should never reduce spending immediately. Some of these may seem unorthodox, but we encourage you to be open-minded because the reality is that these Tips n’ Tricks are documented in this report for only one reason, we know they work.
We have hundreds and hundreds of customers who have already taken advantage of these easy and simple ways to optimize their previous Budgets, and we encourage you to do the same! Enjoy the read, and have a blast saving money.
TIP NUMBER ONE: YOU ARE SPENDING TOO MUCH MONEY ON DIAL TONE AND INTERNET
When did you last review the invoice from the phone company, cable provider, or internet provider? When did you last shop for a better deal and save your it budget? The reality is that there is almost always a better deal for you to take advantage of.
At TAG Solutions, we have had customers save 30% on carrier services AND end up with a plan that provided more bandwidth for them! When we ask clients why they have not shopped for a less expensive and more compelling internet/dial tone provider, we usually get one of four answers excuses:
- “I’m currently in a long term contract, so I’m stuck.”
- “I do not understand the technical jargon on my invoice and really have no clue what I’m even shopping for….”
- “I really do not have the time to deal with pushy salespeople harassing me to buy bandwidth from them, which is what happened the last time I shopped around..”
- “I’m nervous that if I change our current services, something will break in the budgeting process….”
Sound familiar? I implore you to look past these minor obstacles. The savings you can gain is actual. Imagine what else you could use those precious dollars for.
Shopping For A Dial Can Be Cumbersome
I understand the process could be more convenient, even obnoxious. It is similar to shopping for car insurance. One day you see a creative commercial about a man made of money which is enjoying a motorcycle ride and thinks to yourself, “I can donate 15 minutes of my time to save a few hundred bucks.”
Then, you start making a few phone calls or requesting competitive quotes from a website, and before you know it – you become the most famous person in town. Next, an onslaught of car insurance salespeople will begin calling you, harassing you, and begging you to sign their insurance proposal. Almost none of them take the time to explain the policy they are proposing.
There are drastic swings in prices from one policy to the next, and you are still determining if you would lose something by going with the least expensive option. The entire experience can be overwhelming.
YOU IGNORE THE POTENTIAL IT Budgets
Unfortunately, shopping for dial tone and Internet bandwidth can be daunting. One significant difference is that the salespeople will show up, in person, at your office to do their harassing! Many organizations ignore the potential savings because they do not want to deal with the process. But – we already mentioned that there is real money to be saved.
So, here are a few helpful tips n’ tricks:
Many believe that contracts are ironclad and can only be modified once the term ends. In some cases, this can be true. But, in other cases –and specific contracts with dial tone and Internet providers – there is almost always room for negotiating. Start by calling your account manager or dedicated sales representative.
I stress the importance of calling because it is much easier for them to say no or ignore an email request. Call the customer service number typically published on your monthly invoice if you do not have a dedicated representative or need to know who it is.
Start the discussion by telling your representative that their competition routinely contacts you and offers the same services for less money. Continue by informing your rep that you are very tempted to respond to their competitor’s request to meet because you are, in fact, under a great deal of pressure to reduce your IT budget and consider this to be a reasonable opportunity to do so. Then stop talking about the IT budget.
Some Questions By Your Sales Representative
Your sales representative is likely to respond with one of three questions. The questions and your responses are documented below:
- Sales Rep – “Can I speak with you about your current services and see if we can approve a price reduction?” You – “Yes, how quickly can we get that completed? I’m scheduled to meet with another provider early next week.”
- Sales Rep – “I’m sorry, but your contract does not term for another 16 months, and there is no adjustment I can make.”
- You – “Another provider has offered to pay for my cancellation fees if I switch to them, are you sure there are no concessions you can make? Are there any promotions our discounts you can offer to current customers? Or, is there an additional service that you can make available at no cost so that I can justify the expense?”
- Sales Rep – “If you wish for us to reduce the price, we will have to also reduce services..”
- You – “Can you provide any reporting to help identify underutilized circuits or wasteful spending?
You would be surprised to learn that the first scenario is prevalent. The carrier service industry is so commoditized and competitive that many providers immediately offer a price concession if you ask for it. Some will play hard to get once you mention that their competitors are actively pursuing your business.
Once they perceive a threat, they are trained to respond with a concession. Amazing! In the second scenario, we see what I like to call the “hide behind the contract” defense mechanism. Legally speaking, carriers are within their rights not to make price adjustments while you are in the middle of a contract term.
Negotiating tactics should shift to try and find a middle ground. There may be temporary promotional pricing or an additional service or product you can benefit from instead of a price reduction. What about a donation to your organization? Sponsorship for the golf outing?
The answer is always no if you neglect to ask the question. Many dial tone and Internet providers have an obscene amount of bureaucracy to navigate if they wish to offer a price reduction. The restrictions of organizational policy make it almost impossible for a customer service rep or account manager to offer.
Contracts are easier to change when one side embraces the change. The strategy in this scenario is to get creative; if a price reduction is clearly off the table, you should look for other ways (promotional pricing, previous budgets, extra services, donations, sponsorships, etc.) to provide additional value.
- Use a Broker
Shopping for a dial tone and Internet provider can be time-consuming. You have to initiate the call and request a quote. You will likely engage multiple providers because you want a few proposals to compare. Let’s assume you proactively request pricing from three providers for argument’s sake.
Each provider will gladly entertain your request and begin to suck away your time. Think about it: they will need some information to provide a proposal. For them to be strategic and compelling, they will want even more information.
Information can vary from simple items such as your company’s name, mailing address, and current provider to comprehensive area network diagrams and detailed bandwidth utilization metrics.
Most providers will request an introductory meeting and require subsequent meetings or conference calls to collect this information. At a minimum, you can communicate by exchanging regular emails, but make no mistake; soliciting proposals will take up much of your time.
Then, once you have the proposals, you can ask for clarification and further explanation. It consequently leads to more time spent conversing with at least three providers. Next, revisions will be made to the original proposals, and more meetings to discuss the changes. Ultimately, you will arrive in a position to confidently select a provider.
Great. Now you have to tell the other two (or more) providers that you have yet to decide to move forward with them and start to prepare for the installation and cutover activities associated with the new services.
Have you ever had to manage the installation of new dial tones or Internet circuits? Some of these installations go incredibly well. Others, not so much. You see, dial tone and internet providers tend to operate their businesses in a vacuum with little consideration for anything outside their “domain.” The horror stories are real, and we have plenty to share with you if you’d like cheap entertainment – for now – accept this: There is an objective and quantifiable risk whenever you change your technology infrastructure.
Changing carrier services is no exception. Considering your agenda, the installation and cutover should be approached delicately.
What is your agenda? Yes, you wanted to save $$ by reducing your operating expenses, but you also want your network to function; you do not want outages, you do not want interruptions, and you do not want to incur additional expenses to get the new service up and running.
Your time is precious, and if you attack this alone, without IT leaders, you will probably reduce your expenses but sacrifice a significant amount of your time in the process.
Pump the brakes! Let’s rewind this discussion to the part where you call at least three providers and ask for proposals. Please do not take offence to this inquiry, but do you know what you are requesting?
Honestly, do you even understand the product(s) that are being offered to you? Are you even in a position to make an intelligent decision? Do you worry about getting lost in a sea of technical jargon?
I remember when I courageously ventured into a day spa to shop for a romantic anniversary gift for my wife. This was the first time I had been to a place like this; I had no clue what occurred at a day spa. I knew you could purchase a massage, and I knew you could get a manicure, and I also knew that many spas had a hair salon available to patrons.
But trust me. I was clueless. After a brief consultation with a sales representative, I made a $200 purchase. My wife was very grateful for the gift, but she quickly informed me that she never goes to the day spa to get her hair done for two reasons
- The services are expensive, and
- Only her hairdresser is allowed to touch her hair
I could have spent $75 at the spa and used the rest to purchase a different gift. The point is when terms like algotherapy, exfoliation, facial, paraffin treatment, and eyebrow threading entered my conversation with the lovely and convincing sales representative… I could have used a “day spa broker” to help me make an informed decision.
Things Dial Tone and Internet Provider Brokers do
Dial Tone and Internet provider Brokers do two things well:
They protect your time by liaising between you and the provider for all pre-sale and post-sale activities. They get the quotes, gather and provide the info, negotiate the best deal, and manage all aspects of the installation and cutover. You sit back and read the weekly project status report.
They Know More
They know more than you do about this topic. Consider my experience at the day spa. The day spa did nothing wrong. They sold me what they thought would be a great gift. Brokers focus on your agenda. They leverage their expertise and shelter you from making uninformed decisions. Why would you not use a broker? “because they cost money” NO, THEY DO NOT!
Brokers are almost always paid commissions by the dial tone or internet service provider you select to do business with. The cost to you is $0. No tricks, no gimmicks; that is just how it works.TAG Solutions can offer brokerage services to you for free. Claim your FREE Telephone / Carrier Invoice Assessment by simply completing the request.
Do not wait for your current contract to end. It is a classic mistake. As mentioned, you will often secure price concessions regardless of the current contract terms. Sometimes, providers even offer to pay cancellation fees for switching to new services. It is ludicrous to think you must wait for your current contract to expire. Get busy now, and save money now.
TIP NUMBER TWO: TAKE ADVANTAGE OF DONATIONS
There are myriad reasons why an organization would purchase technology products or services. This computer is old; we need a new one. This router is broken; it needs to be fixed.
We changed our disaster recovery, strategic plan, and tech budgeting process and need more storage. The manufacturer no longer supports this piece of software. We need to upgrade. We hired ten new employees, and they all need telephones and laptops.
We were victims of a nasty computer virus and needed help with remediation. We want to offer a new service to our clients, but we need a dedicated server to do so. The list goes on and on.
There are countless reasons to buy something. This tip is relatively simple; before you purchase a piece of hardware or software or pay an IT professional for services, ask for a donation instead. There are a couple of ground rules when it comes to soliciting donations:
(1) Beggars Cannot Be Choosy
If someone is willing to give you something for free (like a computer), try not to be selective. The color of the computer does not matter. The size of the monitor does not matter. The internal components do not matter. A wireless keyboard is not necessary. You get the drift. Free is Free. Throw aesthetics out the window. Take what you can get. Remember, if “it” functions, you’ve accomplished your task.
(2) Be Prepared To Integrate
If you rely on donations, your network will likely become a proverbial land of misfit toys. It will become increasingly difficult to maintain a homogenous environment. You will have different makes and models or everything. Don’t panic. Just be prepared to integrate technologies using common standards and protocols.
(3) If You Do Not Ask, You Will Not Receive
If soliciting donations is a serious alternative to purchasing your products and services, you must put some effort into the cause. Always ask. Continue to ask. The worst thing that happens? You guessed it. You get a “no.” Many organizations – Vendors, Manufactures, Partners, and Even Clients of yours – are willing to donate. However, they rarely will advertise it! You have to ask.
(4) Explain What You Will Give In Return
You can request free stuff. This strategy can be effective at times. However, imagine how successful you would be if you provided something in return. Not money! That would defeat the purpose. But could you offer a lovely testimonial that a vendor can use in marketing materials in exchange for a few hours of labor?
Could you perhaps introduce that same vendor to some of your peers at different companies who could benefit from their services (a lead)? Could you deliver an informative speaking engagement in exchange for a discount?
Could you recommend the product or service to your client base via an endorsed mailing in exchange for a donation? Think this one through. It is potent to offer value in exchange for products and services. You will get more donations using this approach, guaranteed.
TAG Solutions will gladly donate gently used equipment for free. We will also provide cash or even credit that can be used for products and services if you refer us to new clients! See a copy of our Referral Program attached to the end of this report for more information.
TIP NUMBER THREE: ASK ABOUT DISCOUNTS
Do you pay the list price when you purchase computers? Networking equipment? Microsoft software? If you need more time, find out. What I’m about to disclose is common knowledge in the IT industry. Yet, you would be amazed at how many nonprofit organizations must be made aware that it exists or (B) fail to take advantage of it.
Ready for the secret? Almost all major hardware and software manufacturers offer “special” or discounted pricing to nonprofit organizations. Some paperwork must be completed, but it takes a few minutes. Before you purchase any computer or networking hardware/software, inquire about special pricing for nonprofit organizations.
Depending on the type of organization you work for, you may find out that you qualify for special pricing on every occasion – or – you may find out that only certain purchases are applicable. Take the time to inquire, and take the time to complete the associated paperwork. It can save you lots of dough. If you ever feel like you are not getting a straight answer from your vendor, please call TAG Solutions… we do this all day and will know exactly how to guide you.
TIP NUMBER FOUR: FIRE YOUR COMPUTER GUY
Organizations often overlook a costly component of their IT budget – people. People are employees, and employees cost $$$$. We pay for salaries, taxes, benefit packages, cell phones, physical space, expenses, paid time off, training, etc. The cost of qualified IT professionals is at an all-time high (I employ a ton of them, they ARE NOT CHEAP). Loveable, yes – Cheap, no. Plan on spending – all in, loaded cost – anywhere from $75k to $150k a year on one IT employee. That is a lot of coin.
Now consider what they do to earn that money. The responsibilities vary from one organization to the next. Still, they may include helpdesk services, desktop support, and repair, server and network administration, liaison between your organization and telco, fixing printers, etc. They have a full plate. What about authoring a disaster recovery plan? Implementing security controls?
Writing policy? There is a lot of work for your IT department to get done, and it all has to get done yesterday. Do you hear regular employee complaints about the time it takes to respond to and resolve computer problems? Is your network “slow”? Are you optimistic that adequate backups of critical data are available?
Ok, ok. Enough with the interrogation. Yes, TAG Solutions provides a fantastic option to outsource your IT department, but I’m not trying to sell you. Outsourcing is only for some. But you would need more time to find a quicker way to reduce compensation costs. Assume you have one IT employee responsible for all IT functions and assume their loaded cost is low– say $65k annually.
You can outsource this function for as little as $25k a year. It could even be less. I won’t even get into the benefits of having an entire technical team available to assist your organization (because this report is about cutting costs). You should save tons of money by outsourcing. So if your goal is to reduce recurring expenses, start looking for a partner to outsource your IT support function.
TIP NUMBER FIVE: YOUR PRINTERS ARE NOT PRINTING MONEY
Printing expenses can often be considered “low hanging fruit” when executing a cost reduction exercise. There is often little to no organizational oversight, which results in common optimization problems, which cause you to pay as much as 8x more for printing than you should.
Printing is a commoditized, routine task that flies under the radar. In many organizations, it is categorized as a cost of doing business and often accepted at face value without consideration for doing it better.
It is easy to see how people can become so complacent concerning printing. Seriously, what could you do differently that would result in huge savings? I right-click, hover over the “Print” option, and hit “ok.” Then I promptly walk to the nearest printer to gather the document I just printed. It is a simple workflow that begs the question: How can you change it to save loads of cash?
Several contributing factors are associated with the cost of printing:
- The cost of the printer
- The cost of the paper
- The cost of the ink or toner
- Even the cost of repairs and service.
These incremental expenses can be challenging to quantify, but trust me – they add up! The printing industry will typically discuss the cost of print in terms of “per print cost.” Essentially, you add up all the contributing cost factors and divide by an activity multiple, and on average, the cost per color print is 10 cents, while the cost per black and white print is 2 cents. So if you print a document in color, you spend 10 cents per page. If you print in black and white, you are spending 2 cents per page.
Many printers will tell you exactly how many print jobs have occurred over time. So, to calculate the cost of printing, you can multiply the number of print jobs by the per print cost (10 cents for color and 2 cents for black and white). If only one person in your organization prints many documents, your printing costs are probably high.
However, not all “per print costs” are created equal. Local printers (the small form factor printers on someone’s desk) are much more expensive than Multi-Function Printers (the large copier machine that copies, scans, prints, and faxes.)
Multi-Function Printers can offer per-print costs as low as 5 cents per color copy and a fraction of a penny for a black-and-white copy. You read that correctly; local small form factor printers are a great way to double your printing costs!
So why do you see local printers scattered everywhere in a typical office? The most common answer is convenience. If the printer is on your desk, you do not have to walk to the copy machine to retrieve your print job. Very convenient, but twice as expensive! Do employees need their printers? Segway into Tip number two.
1) Reduce your Physical Footprint
The answer to the cliffhanger question above (Do employees need their printer?) is typically no. There are circumstances where a local printer is advantageous. For example, if the employee is physically disabled and struggles to walk to a copy machine – or – if the employee prints sensitive information that others cannot see. Yes, these two circumstances and a few others would warrant a local printer, but trust me when I tell you that you can save a boatload of money by eliminating as many local printers as possible!
Do not pay for convenience. It will not kill your employees to walk to the copier, which is half the cost of a local printer, to retrieve a pint job! Let’s pretend that you are expected to provide transportation for your employees. Would you (A) Purchase each employee their car? Or (B) Purchase a company bus for all employees to use? Remember that the object is to reduce expenses, so the correct option is (B) to get a bus.
You only have one vehicle to insure, fuel, clean, and maintain. The overall cost increases as you add more vehicles to the equation. Now replace the cars with printers. The more printers you own, the more money you will spend on printing. Reduce your physical footprint, and get rid of local printers.
2) Change Default Printer
Effortless advice; the “default printer” for all employees should be configured as the least expensive printer. End users often have more than one printer that they can choose to send a print job. They may have permission to print to the local printer at their desk, the color printer in the mail room, the black and white copy machine in the hallway, and the accounting department’s local printer.
When the user decides to click “print,” the print job will be sent to the “default printer” unless the end user explicitly selects an alternative. Can you start to see where money is possibly circling the drain? What if the default printer is configured as the color printer in the mail room?
We are then, by default, prepared to pay 10 cents a copy – because – we are, by default, using a local color printer. The end user often does not have a preference for what printer is used to complete the print job. They want something printed! So, it is in your best, cost-cutting interest to change all employees’ “default printer” set to be the least expensive printing option (in this example, it is most likely the black and white copy machine in the hallway, less than a penny per print!).
3) Call an Expert
Many companies will do this optimization, cost-saving work for a nominal fee. They will send “print experts” to your office and complete a detailed assessment that provides specific ways to drive down the cost of printing. However, if you’d like to have this assessment completed at no charge, please request firstname.lastname@example.org.
We are printer experts, but we have very close friends who are and get you the friends and family discount (FREE!). There is no obligation at all to purchase anything. You get a $2,000 assessment for free. The typical IT budget savings are between 20- 25%!!
TIP NUMBER SIX: GADGETS ARE UNNECESSARY
Gadgets are so desirable. Look how many people will line up and wait hours to purchase the next iPhone. Every year, during the holiday season, consumers flood the local BestBuy to purchase a new TV when they have a perfectly functional one at home.
Runners are replacing their traditional headphones with wireless headphones because, let’s face it, the wire that connects your earbuds to your MP3 player always prevents you from RUNNING! I’ve even witnessed people replacing excellent laptops with new laptops that are a 1/64 of an inch thinner. We live in a society that is enamored with electronic gadgets. Worse yet, our society loves instant gratification.
If a new model, feature, or upgrade is available, we must have it NOW. Unfortunately, we see this trend bleed into our corporate environments regularly. Employees request the purchase of new technology, not because it is NEEDED, but because it is WANTED. And just like your personal finances, things that are NEEDED are, well… necessary – and – things that are WANTED are discretionary.
You do not need an accounting degree to know that one of the easiest and fastest ways to reduce any tech budget is to work to eliminate all discretionary expenses vigorously. I know it can be tricky to identify discretionary and recurring expenses associated with your IT budget, so here are a few budgeting tips for where to look first:
You can purchase inexpensive monitors (as low as $75 per unit) or get tricked into buying a widescreen high definition might as well sell tickets to view the Sunday football game kind of monitor for upwards of $500 per unit. I say “swindled” to be extreme and make a point. Still, the conversation I’m referring to is something like this “But I need the more expensive monitor because it is 2 inches wider and I always have at least seven spreadsheets open, so I could really use the extra space on my desktop”. If you want to reduce your annual budget further, stop buying expensive monitors.
2) Phones And Headsets
We use telephones at work can be costly. Regardless of the phone system brand, there are almost always different makes and models of telephones. The phone system that we (TAG Solutions) provide has phones that range from $100 per unit up to $1,000 per unit. That is a pretty significant discrepancy. Why not provide employees with the $100 model? They can still make and take phone calls and access standard feature sets like conferencing, redial, and transfer.
Everyone wants a lightweight, small form factor, touchscreen laptop, preferably with a silver tint and an Apple decal plastered. Those are expensive. Most people need a simple computing device to access email, office applications, and the Internet. I’m not advocating purchasing the least expensive laptop for your employees.
Still, I suggest you understand what specific business units and functions must be satisfied and select something that aligns with those needs. A “small” laptop is typically not required to get work done unless you work inside the trunk of a Vespa 400. A “lightweight” laptop is not much lighter than a “heavy” laptop; most people can handle the extra 1-2 lbs. You get the point; work devices are meant for work. If you start to cave to users’ personal preferences, you can sit back and watch the cost skyrocket.
Who needs a wireless mouse? An HD Webcam? A pair of high-end speakers? Is a USB Beverage Warmer? Almost nobody. Yet, when I stroll through office spaces, I routinely notice an absurd amount of “Accessories” littered throughout the environment. I’m not saying that USB beverage warmers should be outlawed, but they should certainly not be allocated to your corporate IT budget! Once again, users want gadgets. Refrain from ever buying accessories unless there is a legit business case to support the expense.
How many employees have a licensed copy of Adobe Professional? At $450 a rip, I hope the answer is only the ones who need it! This philosophy should be applied across your entire suite of computer software licenses. One of the fastest ways we identify wasteful spending when onboarding a new client is by auditing the installed software’s current computer and network environment.
We routinely find users with an entire suite of licensed and expensive budgeting software installed on their computers, and they do not need 75% of it. Not every employee must have the same software programs installed on their computer. If they never use the program, please do not pay for a license and install it. Plenty of scanning tools are available to determine your installed software inventory. I encourage you to look at specific job functions and, for each one, determine
(1) What software programs are needed
(2) What software programs are currently installed that are not used or not needed, and
(3) Get rid of the waste.
TIP NUMBER SEVEN: GET RID OF MAINTENANCE CONTRACTS
Eliminating hardware expenditures, software warranties, and maintenance agreements can reduce an incredible amount of expenses from your IT budget. It is your spot in dire situations where you need to cut costs, no matter how risky it may be. For simplicity’s sake, I will refer to “Extended Warranties,” “Maintenance Agreements,” and “Support Agreements” as maintenance contracts because these terms are very close to being synonyms, and it is easier to address them under one umbrella.
Maintenance contracts can offer a variety of values to an organization – in most instances. It comes in the format of a vehicle to transfer or mitigate risk. Like an insurance policy, most maintenance contracts will assume the liability of replacing faulty hardware or software during the contract term. You pay a fee or premium.
If the assets (equipment) covered under the contract fail or function incorrectly, they will typically be replaced at no further cost to your organization. If the assets fail, you are not afforded a refund – you paid for “peace of mind.” So at the very minimum, maintenance contracts protect against the risk of equipment failure.
However, some contracts will offer more than just equipment replacement. It is common for vendors to include access to software and firmware upgrades, manufacturer technical support, and even some “preventative maintenance” components in their maintenance contracts. The reassurance you may gain by executing one of these agreements can feel nice, but if you are serious about cutting costs, you need to look closely at the expense of these contracts and determine if you can live without them.
I could be radical and extreme and suggest that you cancel all such contracts immediately, and chances are you would see immediate savings. I will refrain from being that bold. I must admit that in certain circumstances, you should have a maintenance contract in place. So, to help you determine when you should execute a contract and when you should not, please consider the following tips:
If you are presented with an option to purchase a maintenance contract for a specific asset (hardware, software, etc.), understand what the manufacturer provides for a warranty by default. The asset is often covered after the initial purchase (90 days, 1 year, etc.) It would be silly to purchase additional coverage.
For each maintenance contract, determine the actual scope of the contract. As mentioned before, many contracts provide equipment replacement. Others can be richer and offer software upgrades and preventative activities. It is critical to understand what exactly is included. Only then can you begin to determine if the contract is necessary.
3) Risk Assessment
Once you understand basic warranty coverage and the maintenance contract scope, you should complete a quick risk assessment of the covered asset. Start by listing all of the risks or bad things that could happen. Then, for each risk, determine the likelihood of occurrence and the impact associated with that occurrence.
For example, a risk associated with a Network Switch may be that the power supply dies and renders the device useless. The likelihood of this happening is incredibly rare (by the way – most hardware manufacturers will publish an MTF or Mean Time Between Failures). If the power supply did fail, the impact would be 24 users with no network connectivity.
You will quickly notice that the impact associated with technology failure can be significant, but the likelihood of recognizing that impact is pretty slim. So – now you have to determine what your risk appetite is. Remember that many maintenance contracts are sold by leveraging your fear and anxiety. Are you willing to roll the dice and assume the risk of equipment failure? In many instances, it can save you a boatload of cash.
4) Get a Spare
If you are still nervous about canceling maintenance contracts, consider the cost of purchasing a spare piece of equipment. If you have 3 Network Switches that are all the same model, is it less expensive to buy a fourth to keep as a spare than purchasing maintenance agreements for all three switches? Ask this question about the rest of your assets; you would be surprised to see the potential cost reduction in housing spare equipment.
5) Historical Usage
Lastly, if you have already been paying for a separate maintenance agreement for a time, look at the actual usage. Have you had to replace equipment? Get an upgrade? Use any of the benefits of the contract? Or were you paying for “peace of mind”? If you routinely use the benefits of the contract, then keep it. If you pay someone a premium for an insurance policy, you will never benefit from its strategy – cancel it.
TIP NUMBER EIGHT: WAIT ANOTHER YEAR
Let me apologize ahead of time for just how remedial this last suggestion for reducing IT expenses is. I’m not trying to be fatuous; this is a real opportunity to cut the budget. And it is by far the most straightforward and accessible of all the suggestions in this report.
Extend that lifecycle to five years if you are used to buying new computers, switches, phones, routers, and servers every three years. No matter what your refresh cycle is, extend it. Make your technology last. I do not care if it has already been fully depreciated. Keep it around for an extra year or two.
Simple. If there is empirical evidence that an asset is on the verge of implosion, then by all means, make an exception to this rule. But if you are replacing an asset just because “it is time to replace it,” stop immediately. Extend the refresh cycle and wait another year. I know that this sounds like common sense.
Still, you would be amazed at how many organizations have fallen prisoner to the routine and thoughtless process of replacing IT assets according to a “Refresh Schedule.” Don’t get me wrong, it is nice to have new things, and it can be risky to fall too far behind the curve, but trust me – an extra year or two will be just fine.
The more “stuff” you have, the more money you will spend. For every piece of equipment or software you own, not only will you incur the initial cost of purchase, but the ongoing cost of warranties, support, maintenance, and eventual replacement will all be multiplied by the amount of “stuff” you own.
An excellent long-term strategy to implement is to eliminate “stuff.” Consolidate everything. Many tactical approaches exist to accomplish this and drastically reduce your IT expenses. Virtualization technologies allow us to take hundreds of physical servers and replace them with one physical server.
Many times, some applications are currently running on “dedicated” hardware, with “dedicated” computing resources, but often, these applications can co-exist on one hardware platform and share resources. There are other areas where we can consolidate to save $$ – think about bundling services with one provider to take advantage of discount pricing. Think about centralizing system management and administration tools for one-time expenses.
Whenever there are multiple instances of the same thing, why not just have one instance? You will reduce your physical footprint, make operational savings, optimize the use of remaining assets, and keep a good amount of money in your wallet. When you are ready to execute this concept, call TAG Solutions if you’d like some guidance. Consolidation is typically an exercise that must be carefully planned and will take some time, but the cost-reduction benefits can be massive.
There is a popular trend developing amongst CIOs and IT executives and one that we sincerely believe offers cost reduction benefits, among others. Simplify IT. The information technology budget is inherently complex and needs to be clarified. This concept intends to create a focus to simplify your organization’s complex and confusing function. The philosophy is that complexity intrinsically increases expenses. So how can you start to simplify your IT?
- No Overkill
Systems should serve the organization’s minimum requirements. Become a minimalist.
- Less Integration
The closer you change it to a single, all-encompassing platform, the better. The interoperability of proprietary systems is not simple.
- Make It Easy To Use
People forget that people use systems. Select technologies that are easy to design, implement, administer, maintain, and use.
If you have a homogenous environment, using it becomes very easy. Imagine an IT infrastructure that is composed of identical hardware and software. There are few things to learn, and it is straightforward to support and administer.
- Create structure & Governance
We desperately need policies and procedures. They provide the reference architecture to keep things simple.
FOUR AREAS WHERE YOU SHOULD NEVER, EVER REDUCE EXPENSES
Information Security is an absolute must. Many organizations consider all their assets’ “crown jewels” digital data. That information is typically stored within your private computer network. The question you need to ask yourself is whether or not you are doing an adequate job protecting it.
At home, we protect our assets by locking the front and back doors, keeping valuables inside fireproof safes, and installing sophisticated alarm systems. Are you protecting your organization’s most prized assets with the same diligence? It can be tempting to slash your IT expenses by eliminating security controls.
I strongly urge you not to cut costs associated with protecting your network. Not only can a security incident create immediate chaos within your organization – it also carries the threat of imposing significant financial penalties and can immediately damage your reputation. For example, the penalty for PCI noncompliance can range from
$5k to $100k per company size month. The penalty for HIPAA noncompliance can reach an annual maximum of $1.5 Million! Then you are still subject to civil lawsuits and hostile public relations. It can get ugly quickly. But never mind the federal and state regulations – let’s not forget that armies of cybercriminals are trying to steal your stuff.
Your money, your client’s money, social security numbers, bank account credentials, patents, and a slew of other confidential and sensitive information. You will take a dangerous gamble if you cut expenses associated with securing your network.
2) Support for Critical Systems and Apps
You should know what your “critical” systems and applications are. These are the tools that your organization depends on to survive. Without them, production comes to a sudden halt. Do not reduce expenses associated with keeping these systems alive and well. Instead, reduce costs in areas less critical to your organization’s daily operations.
3) Disaster Recovery (DR)
Bad things happen. There could be a storm that floods your building, a fire that burns it to the ground, a power outage that lasts for weeks, a meteor that demolishes everything, or a zombie apocalypse. Ok – you get the drift. We call these terrible events “disasters,” and organizations should be prepared to recover from disasters.
If you do not have a documented Disaster Recovery Plan/budget planning, write one – today. More importantly, do not cut expenses that support your ability as an organization to recover from a terrible and unpredictable event. Spend money on an effective backup strategy. Spend money on technologies that are needed to recover and restore data backups. Spend expenses related to your unique Disaster Recovery Plan and make a budget calendar—offsite storage, spare equipment, tabletop testing, insurance, etc.
In most organizations, the power to be productive, the power to accomplish goals, and the power to conquer dreams are within the hands of your employees. In the IT world, we commonly refer to employees as “End Users” because they are the people who use the technologies that we install and support.
Suppose end users cannot complete daily work activities because of an issue or problem with their technology it budgets. In that case, they become powerless, and so does your organization. Make sure you can fix computer and networking issues fast. For more information, contact us today.