Some time ago one of our clients decided to harmonize and streamline their entire infrastructure and application landscape. The OPEX savings were mind-blowing. By this initiative they achieved 42% in it cost savings over three years and increased operational efficiency with 25%.
At Pipol, we’ve recently taken the significant step of moving all our applications to the cloud, and we’re already seeing incremental gains. Our projects require a high level of collaboration, with contributions from team members around the globe, making cloud-based solutions a perfect fit. Of course, like any organization, we’re keen to cut costs that don’t add value to the business. After conducting an in-depth assessment, we realized that there was much more we could do to optimize our IT spending.
If you’re still relying on a traditional IT platform, chances are you’re overspending. Here are 10 practical tips to help you minimize your IT costs and achieve significant OPEX savings:
TIP #1: Shift from OPEX to CAPEX
If your company has a capitalization strategy, scrutinize the costs associated with project management and employee salaries, including payments to external consultants. Often, these expenses are recorded as OPEX (Operational Expenditures) instead of CAPEX (Capital Expenditures) due to a lack of attached project codes. Regular meetings with your project managers can help identify and correct these misclassifications.
TIP #2: Evaluate Your Service Portfolio
Is your IT department delivering the right mix of internal services? Some services may be there simply because "that's how it's always been done." If a service doesn’t add business value, consider discontinuing it to remove unnecessary OPEX. To identify non-value-adding services, ask your end-users questions like, "Which of these services are you willing to pay for?" or "Which service would your business miss the least?"
TIP #3: Maximize the Functionality of Your Licenses
Are you paying for functionality that’s available for free elsewhere? Carefully review your license contracts to ensure you’re not overspending on software. For example, backup, data storage, antivirus, and antispam services might be available for free or at a lower cost. Additionally, if you’re using user-based licensing (e.g., Office365), regularly check to ensure you’re not paying for licenses for users who no longer work with you.
TIP #4: Avoid Software Overlaps
Many companies unknowingly pay for the same functionality multiple times due to overlapping software. For instance, if you’re using Symantec for antispam on your Office365 mail service, you’re wasting money—Office365 already includes antispam functionality. Review your software to eliminate redundancies and realize substantial savings.
TIP #5: Assess the Value of IT Contracts
Service and maintenance contracts for software and hardware can hide significant OPEX costs. Regularly review these contracts to ensure they still meet your needs. Are all the services relevant? Could a third party or internal resources provide a similar service at a lower cost? Also, evaluate whether you truly need the upgrade options included in your contracts.
TIP #6: Optimize Internal Support Processes
Consider whether it’s more cost-effective to keep your support in-house, automate it, or outsource it. Automation can free up full-time employee (FTE) time for other tasks or enable workforce reductions. For example, acquiring self-service portal software can automate routine tasks like password resets, leading to significant OPEX savings.
TIP #7: Optimize Backup Strategies
Many companies overspend by backing up all their data. In reality, up to 75% of this data may not be critical and can be recreated from other sources. By categorizing your data and using incremental backups or slower storage media (like tape) for less critical data, you can reduce backup costs and improve efficiency.
TIP #8: Standardize and Reuse Applications
Reduce license and support costs by implementing corporate policies that standardize the software used across your organization. A review of your application portfolio may reveal similar applications with overlapping functionality. While large applications like ERP and CRM systems are costly and challenging to replace, smaller ones (like Adobe PDF Reader, Snagit, Dropbox, and Evernote) can often be standardized or substituted with existing software.
TIP #9: Leverage CAPEX Service Pipelines
If you’re aware of your CAPEX service pipeline, use this information to renegotiate your OPEX service pipeline with your vendors. By guaranteeing a certain volume of business over a period, you can often secure a better price. This strategy is particularly effective for basic consultancy services, where volume can drive cost savings.
TIP #10: Reduce IT Consultancy Bills
If you’re receiving frequent, high consultancy bills, it might be time to reassess your system architecture. Updating or replacing systems with integration in mind can reduce consultancy costs. For example, older Citrix versions can cause compatibility issues with newer Microsoft software, leading to increased consultancy expenses. Replacing Citrix with a Microsoft Remote Desktop solution could help cut down these costs and achieve OPEX savings.
In our experience, any company can achieve OPEX savings by following these straightforward tips. The question isn’t whether your company can save on OPEX—the question is how much you can save, and why wait?
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