IT Strategy

7 Ways to Optimize Your IT Budget in 2019

It’s not a secret that IT costs can eat up a considerable chunk of your organization’s budget. At the same time, bringing down these expenses can be a massive challenge when you consider that fact that you have to manage other priorities along with your present and future business goals.

According to Gartner, global IT spending will grow by 3.2% this year and is expected to reach $3.8 trillion (an increase of 3.2% from 2018). The rise in IT spend can be attributed to businesses moving from a focus on ownership to services.  

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While most IT budgets may appear to be fixed without any wiggle room to cut costs, in reality, this is far from the truth. By employing some creative and critical thinking, businesses can find ways to reduce expenses without ever having to sacrifice innovation, quality, security, and potential opportunities.

No two businesses are exactly the same, so what works for one might not work for the other. However, if you keep reading, you should get a good idea about the options that are available to you.

1. Spend Time Prioritizing Your Expenses

The first step in optimizing your IT budget is to take some time and prioritize your spending. This will require IT leaders to sit down with their business counterparts and go through the budget line by line to determine what you can and can’t do without. This approach will help identify items that are critical to achieving overall business goals.

To ensure that this whole process is successful, it’s best to assign each technology related item to the professional that’s most knowledgeable about it. This is essential to ensure that you’re making an informed decision (about a potential expense).

2. Move Your Workloads to the Cloud

If you haven’t already, move your workloads to the cloud. This can help your business eliminate capital expenditure on physical infrastructure and much more.

For example, enterprises who leverage the cloud only pay for the resources that they use, save on operation costs (like air conditioning), utilities (like electricity), and on tech talent that would be required to configure, manage, and maintain on-premise data centers.

As cloud providers can scale resources up or down depending on present needs, your company won’t be wasting money on underutilized resources. At this juncture, your organization will also have the opportunity to adopt virtualization and extend this concept to containers (and micro-services technologies) to optimize your budget.

Beyond reducing enterprise IT expenses, the cloud also delivers speed and enhanced flexibility. According to Mark Gonzales, Senior Director of Customer Technology at Elicit, “...we had a client implement a new analytical customer data warehouse entirely in the cloud (having on-premise systems regularly deliver data to the cloud systems). The total cost to run the new system was less than $300k per year, and the entire application was developed and brought into production in under six months. Similar on-premise systems typically cost millions of dollars in capital expense and far more than a year to provision, install, architect, and implement.”

3. Embrace Agile DevOps Methodology

When there are traditional silos between developers, business strategists, and operations teams, your company will be losing money. By adopting an Agile DevOps approach, businesses can not only reduce IT expenses but also increase time-to-market of applications and services.

When you leverage Agile DevOps methodology, your organization will also be well placed to roll out updates, fix bugs in the system, effectively manage unexpected issues, and achieve an overall lower failure rate.

4. Use Open Source Software

Enterprise software licenses can quickly eat up a significant portion of your technology budget. However, if you go through each contract, you might find opportunities to renegotiate or find a better (cost-effective) solution.

Often, open source software is the answer for businesses trying to save money because it eliminates acquisition costs and recurring maintenance costs. As the source code can be accessed easily, you will also have the opportunity to customize it to better fit your business needs.

As updates are handled by a community of developers spread across industries and around the world, the software often improves much faster than their corporate counterparts. What’s even better is that you won’t be tied to any one company if you run into issues. As there is a world of options when it comes to assistance, you can pick and choose who you want to work with.

5. Leverage Automation

When businesses implement automated frameworks, they can access significant savings by reducing the amount of time it takes to configure and manage your data center infrastructure, data, and software.

The following tasks can also be automated to optimize your IT budget:

  • Application delivery
  • Application performance, system, workload monitoring and alerting
  • Job and process scheduling
  • Ongoing maintenance
  • On-demand resource scaling
  • Patching and updating
  • Workload and service configuration and provisioning

However, this approach doesn’t have to be limited to IT. Instead, it can be implemented across the organization to increase efficiency and cut costs.

According to Dan Kirk, Managing Director, Digital Labor/Robotic Process Automation at KPMG, “there’s no magic formula, or course. Every company has different needs and a different culture. Yet intelligent automation typically results in cost savings of 40% to 75%, with the payback ranging from several months to several years.”

6. Avoid Technical Debt

Companies can also incur significant costs when software engineers take shortcuts to meet deadlines. This scenario often results in technical debt which will cost your business a lot more at a later date.

This is because whenever there is technical debt, someone needs to come in and clean up the code. To minimize technical debt, you have to clearly define best practices and stick to it. When you consistently enforce best practices, you can improve your chances of reducing the regression rate.

For example, this can include the automation of every application lifecycle management process from end-to-end.

7. Outsource Software Development

If you take a look at IT budgets in North America, you’ll notice that personnel costs are often the predominant expense. This can be attributed to the continued shortage of top tech talent within the country (that drives up annual remuneration costs).

"The development of new IT products and services is constrained by the limited number of software/IT engineers available in the US, so work is moving overseas where the accessible talent is. If firms were able to bring more foreign engineers into the US, it’s likely they would expand activity here, too" said Lee Branstetter, Professor of Economics and Public Policy at Carnegie Mellon's Heinz College of Information Systems and Public Policy.

If you’re thinking of outsourcing your technology projects, you can choose to nearshore it or offshore it. For example, you can choose to offshore your project to Ukraine or to Canada to access significant savings. For this post, let’s focus on our neighbor up north.

Why Canada?

Canada boasts a similar culture, time zone, and language which makes it easy for US clients. It can be the perfect destination as it’s also a global powerhouse in artificial intelligence and home to some leading startups.

Potential of Canadian IT Outsourcing

Canadian universities offer some of the best computer science programs in the world so you can expect to work with developers who boast a high level of skills and knowledge.

At the same time, Canada’s immigration policies have also helped the country attract top tech talent from around the world. So when it comes to connecting with bright minds within this space, Canada is going to be a highly attractive nearshoring option for years to come.

The Primary Advantage of Nearshoring Development to Canada

While I can go over plenty of other reasons to nearshore software development to Canada, the primary reason for doing it is competitive costs. This means that your company can get the same quality digital product for less.

salaries Canada

Source: Glassdoor

For example, the average annual salary for a software engineer in the Chicago, Illinois area is approximately $90,754. At the same time, the average annual salary for a software engineer in Vancouver, BC area is CA$71,000 or $53,639.56 (at the time of writing this post).Vancouver salaries developers

Source: Glassdoor

To sum it all up, enterprises can reduce their overall IT budgets by spending some time analyzing, strategizing, and getting creative. Whether it’s moving to the cloud or nearshoring software development to Canada, there are plenty of options for IT and business leaders to explore and make informed decisions.

Intersog is in the business of turning your technology ideas into a viable opportunity. So if you’re planning to reduce your overall IT budget or looking for an application development solution, we can help.

If you have any questions about what was discussed in this blog or if you have a question about outsourcing your next software development project, get in touch with one of our in-house professionals.

IT Storyteller and Copywriter
Andrew's current undertaking is big data analytics and AI as well as digital design and branding. He is a contributor to various publications with the focus on emerging technology and digital marketing.