TAG Solutions has spent the last two decades working tirelessly to help our cherished customers get the absolute most value from the money they invest or spend on information technology. We are very excited that you have decided to read this executive report because you are about to discover some of the most effective ways to reduce IT expenses without sacrificing functionality.
We’ve compiled a list of 8 ways you can immediately slash costs, 2 long term money saving strategies and 4 areas that you should never reduce spending in. 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 IT spending 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 is the last time your reviewed the invoice from the phone company, cable provider or internet provider? More importantly, when is the last time you shopped around for a better deal? The reality is that there is almost always a better deal for you to take advantage of. I’ve had customers save 30% on carrier services AND end up with a plan that provided more bandwidth for them to use! When I ask clients why they have not shopped for a less expensive, and more compelling internet / dial tone provider I 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 process…”
Sound familiar? I implore you to look past these minor obstacles. The savings you can gain is real. Imagine what else you could use those precious dollars for?
I understand the process is cumbersome, even obnoxious. It is similar to shopping for car insurance. One day you see a creative commercial about a man made of money who is enjoying a motorcycle ride and think 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 popular person in town. Next, an onslaught of car insurance salespeople will begin calling you, harassing you, 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 really have no clue if you would lose something by going with the least expensive option. The entire experience can be overwhelming.
Unfortunately, shopping for dial tone and Internet bandwidth can be a very similar experience. One major difference is that the salespeople will actually show up, in person at your office to do their harassing! We find that many organizations simply ignore the potential savings because they just do not want to deal with the process. But – we already mentioned that there is real money to be saved. So, here are few helpful tips n’ tricks:
1) Negotiate – Many people are under the impression that contracts are iron clad and cannot be modified until the term ends. In some cases, this can be true. But, in other cases –and specifically 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 to, or even ignore, an email request. If you do not have a dedicated representative, or do not know who it is, then call the customer service number that is typically published on your monthly invoice. Start the discussion by telling your representative that you are routinely being contacted by their competition and they are offering to provide the same services for less money. Continue by informing your rep that you are very tempted to respond to their competitors request to meet because you are in fact under a great deal of pressure to reduce expenses and consider this to be a reasonable opportunity to do so. Then stop talking. 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 get a price reduction approved?”
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 that 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 that would help identify underutilized circuits or other wasteful spending?You would be surprised to learn that the first scenario is very common. The carrier service industry is so commoditized and competitive, that many of the providers will immediately offer a price concession if you simply ask for it. Some will play hard to get until you mention that their competitors are actively pursuing your business. Once they perceive a threat, they are actually 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 to not make price adjustments while you are in the middle of a contract term. Negotiating tactics at this point should shift to try and find middle ground. Perhaps there are temporary promotional pricing you can take advantage of, or maybe there is an additional service or product you can benefit from in lieu of a price reduction? What about a donation to your organization? A sponsorship for the golf outing? The answer is always no if you neglect to ask the question. Many of the 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, let alone approve a price reduction – but, they are empowered to make other decisions. Contracts are difficult to change when one side does not embrace the change. They 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, extra services, donations, sponsorships, etc) to provide additional value.2) 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. Chances are, your will engage more than one provider because you will certainly want a few proposals to compare. For arguments sake, let’s assume you proactively request pricing from three providers. Each provider will gladly entertain your request… they will also begin to suck away your time. Think about it, in order for them to provide a proposal they will need a certain amount of information. In order for them to be strategic and compelling they will want even more information.
Information can vary from simple items such as your companies name, mailing address, and current provider – all the way to – current wide area network diagrams and detailed bandwidth utilization metrics. Most providers will request an introductory meeting, and then require subsequent meetings or conference calls that are required to collect all of this information. At a minimum, you may be able to communicate by exchanging routine emails, but make no mistake about it; soliciting proposals will take up a good chunk of your time.
Then, once you have the proposals it is very common for you to ask for clarification and further explanation. This consequently leads to more time spent conversating with –at least three – providers. Next, there will be revisions made to the original proposals, and more meetings to discuss the changes. Ultimately, you will arrive in a position where you can confidently select a provider. Great. Now you have to tell the other two (or more) providers that you have not decided 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 tone or Internet circuits? Some of these installations go incredibly well. Others.. not so much. You see dial tone and internet providers have a tendency to operate in a vacuum with little to no consideration for anything outside of their “domain”. The horror stories are real, and we have plenty to share with you if you’d like the cheap entertainment – for now – just accept this: There is real and quantifiable risk whenever you make a change to your technology infrastructure.
Changing carrier services is no exception. The installation and cutover should be approached delicately, with your agenda in mind. What is your agenda? Yes, you wanted to save $$ by reducing your 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 chances are you will reduce your expenses, but will sacrifice a significant amount of your time in the process.
Pump the brakes… lets rewind this discussion back to the part where you are calling at least three providers and asking for proposals. Please do not take offense to this inquiry, but do you even 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. I had never been to a place like this before, I really had no clue what things occurred at a day spa. I mean, I knew you could purchase a massage, and I knew you could get a manicure, and I knew that many spas had a hair salon available to patrons as well. But trust me, I really was clueless. After a brief consultation from a sales representative, I confidently 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 (1) The services are expensive and (2) only her hair dresser is allowed to touch her hair. It turns out I could have spent $75 at the spa and used the rest of the money 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 really used a “day spa broker” to help me make an informed decision.
Dial Tone and Internet provider Brokers do two things really well:
- They protect your time by acting as a liaison between you and the provider for all pre sale activities and post-sale activities. They get the quotes, they gather and provide the info, they negotiate the best deal, they manage all aspects of the installation and cutover. You sit back, and read the weekly project status report.
- 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 uniformed 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 that 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 now by simply filling out the request form on this page – or – download a request form here that can be mailed or faxed back to us – or – Call us at (518) 207-2742 – or – email your request to carrier@tagsolutions.wpengine.com.3) Start Early – Do not wait for your current contract to end. It is a classic mistake. As mentioned before, many times you will secure price concessions regardless of the current contract terms. Sometimes, providers will even offer to pay cancellation fees associated with switching to new services. It really is ludacris to think that you have to wait for your current contract to expire. Get busy now, 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 plan and now 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 need help with remediation. We’d like 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, 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 for example), 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, then you’ve accomplished your task.
(2) Be prepared to integrate – If you rely on donations, chances are your network will 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 your do not ask, you will not receive – If soliciting donations is a serious alternative to purchasing your own products and services, then you have to 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, 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 simply request free stuff. This strategy can be effective at times. However, imagine how much more successful you would be if your provided something in return? Not money! That would defeat the purpose. But, could you offer a nice testimonial that a vendor can use in marketing materials in exchange for a few hours of labor? Could you perhaps give that same vendor an introduction to some of your peers at different companies who could benefit from his/ her 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. I can tell you it is incredibly powerful to offer something of 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 list price when you purchase computers? Networking equipment? Microsoft software? If you are not sure, find out. What I’m about to disclose is considered to be common knowledge in the IT industry, yet you would be amazed at how many nonprofit organizations are either (A) unaware 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. Yes, there is usually some paperwork that needs to be completed, but honestly it takes a few minutes to accomplish. 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, take the time to complete the associated paper work. 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 long and will know exactly how to guide you.
TIP NUMBER FOUR: FIRE YOUR COMPUTER GUY
Many times organizations overlook a very expensive 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 employee 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, but may include helpdesk services, desktop support and repair, server and network administration, liaison between your organization and telco, fixes 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 seems like it all has to get done yesterday. Do you hear regular complaints from employees about the time it takes to respond to and resolve computer problems? Is your network “slow”? Are you positive that effective backups of critical data are available?
Ok, ok. Enough with the interrogation. Yes, TAG Solutions does provide a fantastic option to outsource your IT department, but I’m really not trying to sell you. Outsourcing is not for everyone. But you would be hard pressed to find an quicker way to reduce your costs. Assume you have one IT employee, who is responsible for all IT functions and assume their loaded cost is on the low side – lets say $65k annually.
The reality is, you can probably outsource this function for as low 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) I’ll merely suggest that you can save tons of money by outsourcing. So if your goals is to reduce expenses, start looking for partner to outsource your IT support function to.
TIP NUMBER FIVE: YOUR PRINTERS ARE NOT PRINTING MONEY
Printing expenses can often be considered “low hanging fruit” when executing a cost reduction exercise. Many times there is 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 happens to be one of the commoditized, routine tasks that fly under the radar. In many organizations it is simply 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 with respect to printing, I mean seriously – what could you possibly 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 pretty simple workflow which begs the question – How can you possibly change it to save loads of cash?
1) Understand the cost- There are several
contributing factors associated with the cost to print. The cost of the printer, the cost of the paper, the cost of the ink or toner, even the cost of repairs and service. All of these incremental expenses can be difficult 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 thecontributing 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 are spending 10 cents per page. If you choose to print in black and white, you are spending 2 cents per page.
Many printers will tell you exactly how many print jobs have taken place over time. So, to calculate the cost of printing, you can simply multiply the number of print jobs by the per print cost (10 cents for color and 2 cents for black and white). The bottom line is this, if your organization prints a lot of documents, then your printing costs are probably pretty significant. However, not all “per print costs” are created equal. Local printers (the small form factor printers that sit 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 cost that are as low as 5 cents per color copy and a fraction of a penny for a black and white copy. You read that correctly, using local small form factor printers is a great way to double your printing costs! So why then when you walk into a typical office you see local printers scattered everywhere? The most common answer is convenience. If the printer is sitting on your desk then you do not have to walk to the copy machine to retrieve your print job. Very convenient, but twice as expensive! Do employees really need their own personal printer? Segway into Tip number two…
1) Reduce your Physical Footprint – The answer to the cliffhanger question above (Do employees really need their own personal printer?) is typically no. There are circumstances where a local printer is advantageous. For example, if the employee is physically handicapped and struggles to walk to a copy machine – or – if the employee prints sensitive information that cannot be seen by others. Yes, these two circumstances – as well as 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 all of your employees. Would you (A) Purchase each employee their own personal car? Or (B) Purchase a company bus for all employees to use? Remember the object is to reduce expenses… so the correct option is (B), get a bus. You only have one vehicle to insure, fuel, clean and maintain. The overall cost increases as you start to 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, get rid of local printers.
2) Change Default Printer – Very simple piece of advice, the “default printer” for all employees should be configured to be
the least expensive printer. End users often have more than one printer that they can choose to send a print job too. 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 local printer in the accounting department. When the user decides to click “print” the print job will be sent to the “default printer” unless the end user specifically selects an alternative. Can you start to see where money is possibly circling the drain? What if the default printer is configured to be 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. Many times the end user does not have a preference as to what printer is used to complete the print job… they just want something printed! So, it is your best, cost cutting interest, to change all employees “default printer” setting 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 – There are many companies that 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 send a request to freeassessment@tagsolutions.wpengine.com . 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 just get a $2,000 assessment for free. The typical savings are between 20- 25%!!
TIP NUMBER SIX: GADGETS ARE UNESSECARY
Gadgets are sooooo desirable. Look how many people will line up and wait hours to purchase the next iPhone. Every
year, during the holiday season, consumers will flood the local BestBuy to purchase a new TV when the have a perfectly functional one at home. Runners are replacing their traditional headphones with… wireless headphones, because lets face it, the wire that connects your ear buds to your MP3 player always prevents you from RUNNING! I’ve even witnessed people replacing perfectly good laptops with new laptops that are a 1/64 of an inch thinner. We live in a society that is enamored with gadgets, specifically electronic gadgets. Worse yet, our society loves instant gratification. If there is a new model, feature or upgrade available then we must have it NOW. Unfortunately, we see this trend bleed into our corporate environments on a regular basis. 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 budget is to vigorously work to eliminate all discretionary expenses. I know it can be tricky to identify discretionary expenses associated with your IT budget, so here are few tips for where to look first:
1) Monitors – You can purchase really inexpensive monitors (as low as $75 per unit) – or – you can get swindled 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, but the conversation I’m referring to typically goes 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 budget, stop buying expensive monitors.
2) Phones and headsets – The telephones that we use at work can be incredibly expensive. Regardless of the phone system brand, there are almost always different makes and models of telephones available for purchase. The phone system that we, (TAG Solutions) provide has phones that range from $100 per unit, all the way up to $1,000 per unit. That is pretty big discrepancy. Why not provide employees with the $100 model? They can still make and take phone calls, still have access to common feature sets like conferencing, redial, and transfer.
3) Laptops – Everyone wants a lightweight, small form factor, touchscreen laptop… preferably with a silver tint and an apple decal plastered on it. Those are expensive. Most people need a simple computing device that they can access email, office applications and the Internet with. I’m not
advocating to purchase the least expensive laptop for your employees, but I am suggesting that you understand exactly what business functions need to 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 of the trunk of a Vespa 400. A “lightweight” laptop is really not much lighter than a “heavy” laptop; most people can handle the extra 1-2lbs. You get the point, work devices are meant for work. If you start to cave to the personal preferences of users then you can sit back watch the cost skyrocket.
4) Accessories – Who needs a wireless mouse? A HD Webcam? A pair of high end speakers? 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.
5) Software – How many employees have a licensed copy of Adobe Professional? At $450 a rip, I hope the answer is only the ones who absolutely need it! This philosophy should be applied across your entire suite of computer software. One of the fastest ways we identify wasteful spending when we onboard a new client is by auditing the current computer and network environment for installed software. We routinely find users that have an entire suite of licensed and expensive software installed on their computer and they do not have a need for 75% of it. Not every employee needs to have the same software programs installed on their computer. If they are never going to use the program, please do not pay for a license and install it. There are plenty of scanning tools that 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 absolutely needed (2) What software programs are currently installed that are not used or not needed (3) Get rid of the waste.
TIP NUMBER SEVEN: GET RID OF MAINTENANCE CONTRACTS
Eliminating the cost associated with hardware and software warranties and/or maintenance agreements has the potential to reduce and incredible amount of expenses from your IT budget. In dire situations, where you absolutely need to cut costs, no matter how risky it may be, this is your spot to do so. For simplicity 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 value to an organization – in most instances this comes in the format of a vehicle to transfer or mitigate risk. Similar to an insurance policy, most maintenance contracts will assume the liability of replacing faulty hardware or software during the term of the contract. You pay a fee, or premium and 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 do not fail, then you are not afforded a refund of any kind – you simply paid for “peace of mind”. So at the very minimum, maintenance contracts provide protection against the risk or equipment failure.
However, there are some contracts that 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 to 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 absolutely need to take a close look 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 an immediate savings. I will refrain from being that bold. I must admit that in certain circumstances – you should absolutely 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:
1) Warranty – If you are presented with an option to purchase a maintenance contract for a specific asset (hardware, software, etc.) be sure to understand what the manufacturer provides for a warranty by default. Many times the asset is covered for a period of time after the initial purchase (90 days, 1 year, etc.) It would be silly to purchase additional coverage.
2) Scope – For each maintenance contract, determine what the actual scope of the contract provides. As mentioned before, many contracts simply provide equipment replacement. Others can be richer and offer software upgrade, 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 scope of the maintenance contract you should complete a quick risk assessment of the asset being covered. 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 a MTF or Mean Time between Failure) and 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. Keep in mind 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 boatload of cash.
4) Get a Spare – If you are still nervous about cancelling 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 it is to purchase 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 particular maintenance agreement for a period of time, take a 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 just paying for “peace of mind”. If you routinely use the benefits of the contract, then keep it. If you are simply paying someone a premium for an insurance policy you will never benefit from – 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 really not trying to be fatuous, this is a real opportunity to cut budget. And it is by far the most simple and easy of all the suggestions in this report to execute. If you are used to buying new computers… switches… phones… routers… servers every three years – extend that lifecycle to five 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, but 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.
1) Consolidation
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. A great long term strategy to implement is to eliminate “stuff”. Consolidate everything. There are soooo many tactical approaches to accomplishing this and drastically reducing your IT expenses. Virtualization technologies give us the ability to take hundreds of physical servers and replace them with one physical server. Many times, there are applications that 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 further 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. Whenever there are multiple instances of the same thing… you should ask, why not just have one instance. You will reduce your physical footprint, optimize the use of remaining assets and keep a good amount of money in your wallet. When you are ready to execute this concept, give TAG Solutions a call if you’d like some guidance. Consolidation is typically an exercise that needs to be carefully planned and will take some time to complete, but the cost reduction benefits can be massive.
2) Simplification
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. Information technology is inherently complex and confusing. This concept is intended to create a focus designed to simplify that complex and confusing function of your organization. The philosophy is that complexity intrinsically increases expenses. So how would you start to simplify your IT?
- Nooverkill–systemsshouldfunctiontoservethe minimum requirements of the organization. Become a minimalist.
- Lessintegration–thecloseryoucangettoasingle,allencompassingIT platform the better. Interoperability of proprietary systems is not simple.
- Makeiteasytouse–Peopleforgetthatsystemsareusedbypeople.Select technologies that are easy to design, implement, administer, maintain and use.
- Standardize–Ifyouhaveahomogenousenvironment,usingitbecomesvery easy. Imagine an IT infrastructure that is composed of identical hardware and software. There are very few things to learn and it is very easy to support and administer.
- Createstructure&governance–Wedesperatelyneedpolicyandprocedures. They provide the reference architecture to keep things simple.
FOUR AREAS WHERE YOU SHOULD NEVER, EVER REDUCE EXPENSES:
1) Security
Information Security is an absolute must. Many organizations consider the “crown jewels” of all their assets to be some type of 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 effective job protecting it. At home, we protect our assets by locking the front and back doors, keeping valuables inside of fireproof safes
and even installing sophisticated alarm systems. Are you protecting your organizations most prized assets with the same diligence? It can be tempting to slash your IT expenses by eliminating security controls. I must strongly urge you to not 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 month. The penalty for HIPAA noncompliance can reach an annual maximum of $1.5 Million! Then you are still subject to civil lawsuits and negative public relations. It can get ugly quick. But never mind the federal and state
regulations – let’s not forget that there are armies of cybercriminals who are trying to steal your stuff. Your money, your clients money, social security numbers, bank account credentials, patents, and a slew of other confidential and sensitive information. If you decide to cut expenses associated with securing your network, then you will be taking a very risky gamble.
2) Support for Critical Systems and Apps
You should know what your “critical” systems and applications are. These are the tools that your organization absolutely 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, look to reduce costs in other areas that are less critical to the daily operations of your organization.
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, 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, then 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 back up strategy. Spend money on technologies that are needed to recover and restore data backups. Spend money on anything related to your unique Disaster Recovery Plan. Offsite storage, spare equipment, table top testing, insurance, etc. T
4) Helpdesk
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. If end users are not able to complete daily work activities because of an issue or problem with the technology they use – then they become powerless and so does your organization. Make sure you have the ability to fix computer and networking issues fast.