10 tips to realize huge OPEX savings
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%.
Pipol has just taken a similar step into moving all our applications to the cloud, and we expect similar incremental gains. We are working in a very collaborative way with a high degree of specialization and our projects always require a high degree of teamwork with participation from all over the world. It makes total sense.
Of course, we are all interested in saving costs that are not contributing positively to the business. Based on the actual work done, we made a list of the significant IT OPEX savings points we found. We initially thought we were doing well – but jeez our assessment proved we could do so much better.
Try it – we can almost guarantee that you are quite high on IT spendings if you are on a traditional IT platform.
10 practical tips to minimize it-costs (OPEX savings)
Let us share with you a few tips about how you can go about it:
TIP #1: OPEX-2-CAPEX
If your company has a capitalization strategy, have a look at the costs associated with your project manager, as well as the salaries of full time employees (and payments to external consultants). Often stuck without an attached project code, the bills are recorded in accounting as OPEX instead of CAPEX (Capital Expenditures). By meeting regularly with your project managers you can check slips like these.
TIP #2: Do you overpay for your service portfolio?
Is your IT providing the right mix of internal services to the end-users and other stakeholders? Your service portfolio may include a number of activities that are there just because “That’s just the way things are”. Services that do not add business value should be discontinued, and the OPEX removed. Identify and understand non-value creating services by asking your end-users: “which of these services are you willing to pay for?” or “which service would your business miss the least?”
TIP #3: Do you fully exploit the functionality in the licenses you are paying for?
Are you sure you are not paying for functionality that is actually available for free on the internet? Our advice: carefully examine your license contracts, know your rights and possibilities. Why pay for licenses you can get for free – for example, backup, data storage, antivirus, antispam? And also, if some of your systems are following user-based licensing (e.g. Office365 and hosted frontend systems), check regularly that you don´t pay user licenses for users that are not working with you anymore.
TIP #4: Are you throwing money out of the window because of software overlaps?
We found that an incredible number of companies are paying for the same functionality twice – or even more – because of overlapping software. A simple example: If you use Symantec for anti-spam on your Office365 mail service, the money paid for Symantec is simply thrown out of the window. Antispam is a built-in function delivered by Office365. Could be the same for expensive antivirus software. We could come up with many more examples of the same kind – the list is endless and the savings opportunity huge!
TIP #5: Do your IT-contracts create value or add costs?
A classic OPEX hiding place is in the service and the software and hardware license maintenance contracts. Be diligent and check if your service contracts meet the correct/necessary service levels. Are all the services still relevant? Can the provider, a third party or even internal resources offer a service cheaper using other technology? Check if you need the upgrade option provided by your contract.
TIP #6: Do you pay too much for internal support processes?
Should you keep your support in-house, or automate or outsource it? Automation of some processes can free up FTE time, which can be rerouted to other tasks or enable a workforce reduction. Self-service portal software can be acquired rather inexpensively. In general, keeping complex processes in-house and outsourcing everyday ones (such as changing/resetting of passwords) could open the door for great OPEX savings.
TIP #7: In nine cases out of ten, you can save OPEX costs on backup
Too many companies pay too much because they backup all their data. You can realize attractive OPEX savings – and boost your backup speed – by not backing up all your file and application data. In our experience, up to 75% of the data is rarely critical, or can be recreated from other sources. You could instead divide your data into categories and use incremental backup facilities or store the data you rarely use on a slower media (such as tape). Some providers may even allow you to use file data backup services free of charge.
TIP #8: Reuse generic applications
You can significantly cut down on your license and support costs by creating corporate policies/rules that ensure employees use the same programs. A walkthrough of your application portfolio could easily reveal applications with similar functionality. While larger applications (such as ERP, CRM) are expensive and difficult to replace/align, smaller applications (such as, Adobe PDF Reader, Snagit, Dropbox and Evernote), can be aligned – or even substituted – with software you have already licensed and used in other parts of your business.
TIP #9: CAPEX services
If you already know your CAPEX service pipeline, use this volume to renegotiate your OPEX service pipeline with your current vendor(s). If you can guarantee a certain pipeline to your vendor during a period, you can often obtain a beneficial change in price. This is particularly relevant for basic consultancy services. For the vendor it does not matter whether it is CAPEX or OPEX it is just a matter of volume; for you it can often make a huge difference.
TIP #10: Are you receiving too many big IT consultancy bills?
This may indicate a need for a system architecture revision with your CIO. Updating or simply replacing systems with integration in mind can save you consultancy costs. A classic example is older Citrix versions, which often cause technology problems with newer Microsoft software. The result is a massive pile of invoices from different consultancy companies that quite often deliver short-term solutions. By replacing Citrix with a Microsoft Remote Desktop, OPEX savings can be realized by cutting down the number of bills.
In our experience, any company can achieve OPEX savings by following these simple, small dedicated efforts. The question is not whether your company can save on OPEX. The question is how much you can save and why wait?