When it comes to technology, lose the costs -- not the functionality

The whiff of a recession is in the air as some of the largest multinational organizations, from Google to Goldman Sachs, enact layoffs at a massive scale in an effort to shore up their finances. In this environment of economic uncertainty, organizations keep one eye glued to the bottom line while the other eye anxiously scans the organization, looking for areas to trim costs.

When it comes to technology, however, these cost-cutting efforts need to be approached carefully; otherwise, organizations risk losing functionality or compromising on application quality -- both of which can impact employee productivity and put the organization in even worse shape to weather any tough times that lie ahead. So, how best to approach this undertaking?

Clean house

IT would be well advised to start with a deep understanding of not just the technology that is deployed throughout the organization, but the actual value that that software is providing to the business.

In many cases, organizations will discover that there’s some software bloat across its operations. This bloat can take the form of several different tools that all perform the same task; tools that were tried out for a month or two and then abandoned; tools that are in use by the organization but only by a measly 1 percent of the workforce; and so on.

A little detective work will be necessary to figure out why some of these systems have the numbers they do. For example, were users provisioned onto a tool for a specific project or timeframe and then just never removed? Or, if there’s a tool that users should be using (e.g., for governance purposes) but they’re not, then what are the roadblocks preventing adoption?

With a careful systems audit and some gentle "housecleaning", organizations can rid themselves of the cost of tools that no longer best serve the interests of the organization -- helping to drive massive savings while not cutting any key functionality that their professionals depend upon.

Look to the cloud

After looking at which systems need to be put in the proverbial dustbin, organizations should explore which remaining systems that provide value to the organization can be moved to the cloud if they haven’t been already.

Why? Because cloud offers clear visibility into ongoing costs and predictability around spend. Unpredictable expenditures around maintenance, upgrades, and migrations are removed from the equation. Also, in the event that the organization needs to retire a cloud service, there is a significantly lower exit cost as compared to a system that the organization has taken the time and expense to deploy on-premises.

There are some best practices, of course, when it comes to managing costs around cloud services -- and organizations have more levers that they can pull in this area than they might at first realize.

For starters, by signing up for longer term agreements, organizations can secure better discounts. This is no different than your local bank agreeing to give you a higher rate of return if you agree to deposit a chunk of money with them for 24 months rather than 12 months. Commitment, generally speaking, is rewarded.

Once that agreement starts coming up for renewal, organizations should ensure that the number of licenses their subscription covers still aligns with the number of end users and adjust that number accordingly. Likewise, they should ensure that whatever tiers they’re subscribed to (e.g., "Silver", "Gold", and "Platinum," or other similar tier categorizations) are appropriate for the organization’s current and future needs. As part of this "future forecasting", organizations should also have a good sense of how long they want to commit to for the software moving forward. This is just smart business.

Read the fine print

One note here on controlling costs, particularly when it comes to cloud subscription agreements: Organizations should pay careful attention to what kind of price caps are built into the agreement.

For example, after the initial term of the agreement is up, how much of a price increase can the vendor saddle the customer with? 5 percent? 10 percent? A whopping 30 percent? If your vendor isn’t specifying what exactly the price cap is -- or even worse, is specifying that there is no price cap -- then organizations should proceed with caution. This uncertainty nullifies the primary benefit of subscription purchasing: cost predictability.

At the same time, organizations should keep an eye on inflation to see how it stacks up against any price cap increases. In an economy where inflation is running hot at 8 percent, meaningful cost reductions can be realized when vendors are capping price increases at 5 percent.

Strike the right balance

Whether the economy tips into full blown recession or not remains to be seen -- but as long as uncertainty continues to swirl around the economic environment, organizations would be wise to batten down the hatches and keep an eye on costs. Fortunately, when it comes to technology, a careful systems audit combined with a strategic embrace of the cloud can help organizations successfully strike the right balance when it comes to cutting costs without sacrificing the functionality their professionals depend on.

Image credit: ktsdesign/depositphotos.com

Paul Walker is EMEA Technical Director, iManage.