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IT Cost Reduction Strategies For Modern Enterprises

Mubarak Musthafa | Last Updated on : August 13, 2020

IT Cost Reduction Strategies

Although there were hints of another recession looming in the dark, for businesses, 2020 started strongly with a lot of hope and aspirations of high growth. And then came an unexpected surprise in the form of a microbe which pushed the global economy into recession. The COVID-19 or a variation or Coronavirus has wreaked havoc and many small businesses are on the verge of shutdown. As a response to cope with the situation, enterprises mostly are going to lay off people to stay afloat, especially the most hit ones in industries like F&B, hospitality, travel, and tourism. 

For many businesses, this may be an existential crisis, but for many profitable companies, it may be a preparation for what is to come. This article is not going to talk about coronavirus or recession, but some cost reduction strategies for businesses that would help them be prepared for what is to come. The more money that you can free up, the more secure your company will be and the freed up money can be invested in new product initiatives for maximizing profitability. 

Outsourcing your software maintenance

Outsourcing may sound expensive but finding a good technology partner to outsource your software maintenance will prove effective both economically as well as productivity-wise.

You can now make use of the best remote teams who will charge you very low as compared to what you may be spending on maintaining your in-house employees. This is much more risk-free as compared to hiring as a contract can be terminated any-time if you have a feeling that things may not be working out. Hiring an employee is the best when it compares to the long term.

You would also need to spend time in recruitment and replacements when an employee leaves. You may also be in a scenario where your inhouse team will be working in full-capacity and they may not be available for side projects that require tedious repetitive efforts like managing a maintenance activity. This ensures a fully-productive team working inhouse focusing on the things that matter the most.

Outsourcing will also be extremely helpful at least in the initial stages of a product release when the product teams will need to focus the maximum on the more important things like market validation, analysis, customer conversations, marketing, and most importantly sales. Considering this, it may prove a lot more cost-effective with faster turnaround time if the software development is outsourced. 

When the product initiative of the company has turned profitable or when the company or the startup has raised funds to grow further by hiring in house, the outsourcing company can be replaced with an in-house team. Many startups follow this approach and have found this highly effective as compared to hiring a full-technology team inhouse from day 1. 

Use SaaS instead of in-house infrastructure

By using the software as a service product, you don’t actually own software or its infrastructure, but just a license of usage during the subscription period. This makes SaaS products less expensive as compared to setting up or building your own software product for your in-house needs. While using a SaaS product, there is no need for ongoing maintenance as all such needs are taken care of by the SaaS vendor.

The traditional costs associated with software deployment are design costs, capital costs, deployment costs, training costs, ongoing maintenance costs, support cost, and infrastructure costs. All these become irrelevant with the implementation of the software as a service model. 

With SaaS, a customer can start the contract or end it anytime. SaaS vendors provide extremely good customer support as they know that customers will start leaving or churning if at any point the customers are not happy. As a SaaS product customer, you just need to login to their system/app and start using the product. Most SaaS providers also have API integration services which will help a company to integrate the software product to the other key services that are in use. 

For example, a customer support software may need integrations to an internal project management tool to assign tickets to employees. Availability of such easy integrations also makes SaaS very popular among adopters as, without this, any new feature addition or integration is going to cost the company more. 

Make the complete use of your existing subscriptions

Your company may be an existing user of subscription software and there is a high chance that you are not making use of its full potential. Illustrating this in an example, consider the subscription service of Microsoft like office 365 which has a whole suite of commonly used products like excel, word, PowerPoint, and outlook. Most businesses only use these tools.

But alongside these tools, there is also a lot of productivity and collaboration apps like teams, calendar, SharePoint, OneDrive, etc. So while you are paying for Microsoft Office 365, you don’t need to pay and use other similar services like slack which is a team collaboration tool that has the same features as Teams. The same goes for other subscription services like GSuite or Zoho One. As a business, for cutting costs, you need to identify the best subscription option that has it all and stick with it rather than spending multiple subscription fees on multiple SaaS vendors. 

Investing in RPA (Robotic Process Automation)

People familiar with Robotic Process Automation (RPA) should need no explanation as to how RPA reduces costs. RPA automates many of the tedious, mundane tasks done by low-cost labor. RPA bot runs 24*7*365 with minimal human intervention ensuring maximum work done during a given period of time as compared to a human team working on the same task. 

Conventional laborers may feel this could tamper with prospective job opportunities but in reality, the people working on tedious tasks can be upskilled and moved to more productive endeavors which would increase the output for a business. Implementing RPA comes with an initial investment that can yield high returns in just a couple of years. A properly implemented RPA will eliminate the need for dedicated QA processes and resources that becomes necessary when humans perform the same tasks. 

Switch to low-code for faster, low-cost software development

Several platforms have sprung up in the last decade that let people who are non-coders also to easily learn and build web and mobile apps through a visual platform with writing minimal lines of code. Many such platforms have a visual builder that lets its users drag and drop to create forms and screens. 

The major benefits of low code development is that it reduces dependency on high skilled developers and will enable companies to launch the software products at a faster pace and at a very low cost as compared to skilled developers writing code and building everything from scratch. 

Most of the startups in its early stage will have zero access to capital and the majority of founders may not be tech-savvy to write code on their own. No-code development suits such founders, they can quickly roll out apps and features to test out markets and onboard their early customers. 

Once they have enough money to scale up the business model, they can hire skilled developers. 

Maintaining a remote software development team

Work from home and remote work is the most popular buzzword this year owing to the social distancing campaigns due to the Corona scare. The truth of the matter is that companies reluctantly started implementing this out of desperation to keep the work unaffected. 

Before it became the new trend, there have been companies that had implemented a 100% remote work policy. The advantages are plenty but the most important one is the reduction in costs. People with skills are available globally and getting them to work with you by hiring them directly rather than through an offshoring company will help you save a lot. Hiring your workforce in the US versus hiring your workforce in Latin American countries, India, Africa; you do the math! 

Increasing team productivity by implementing the best practices

Be it remote teams or your in-house office teams, ensuring productivity is important to get the best results out of everyone and to keep the wheel turning. When it comes to enforcing it, having just the right tools won’t help you. Along with the tools, an apt process and people who can implement the process should be in place. 

Companies should also make sure that productivity enhancers in no way hamper employee morale or happiness. Employees should be motivated to achieve goals rather than spending more time in the office. Goals should be linked to a long term strategy or plan which the employees should be contributing to. This would give the employees a sense of purpose that would make them feel like a part of a long term vision. Productive employees, in turn, will help the businesses cut costs in the long run by achieving more.

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Mubarak MusthafaVP of Technology & Services at ClaySys Technologies
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