Tech & Work

Five ways to critically analyze your budget for possible cuts

We live in times that are unprecedented for the IT industry and IT leaders across the board are being asked to do more with less. Scott Lowe provides you with five ways you might be able to find some gold in your budget if you're asked to make some sacrifices.

If your IT budget isn't undergoing some downward activity, you're lucky!  These days, organizations of every size and shape are looking for ways to reduce costs while still maintaining a reasonable level of service.  Although an IT budget is often chock full of items that are extremely difficult to cut, such as software maintenance agreements, there are items that might be able to go.  Further, there may be ways that you can be creative in order to keep your service levels high.  The list below is not in any particular order and should not be construed as a list of recommendations, but just as items that could receive a second look.  Cutting projects and big items like that are not discussed here since those kinds of ideas are covered all over the place.

  • Hardware maintenance agreements. In order to keep IT staff involved in higher priority items, many organizations place certain hardware devices under maintenance contracts. It's common, for example, for printers and other peripheral devices to be placed under such contracts . Sometimes, depending on the age, servers might also be placed on these kinds of contracts. I would not recommend removing mission critical servers from support agreements, but consider giving hardware contracts a second look when it comes to the chopping block. Although not generally a good move for the long term, surviving the short term is of paramount importance right now. If you spend substantial dollars on hardware maintenance, you might be able to spend less by going to a break/fix model whereby you call repair people in as needed. While the individual service call can be pricey, you're only paying for the service you need.
  • Smartnet and similar agreements. Cisco Smartnet can be a life saver if you run into a problem or if you need a new software update for one of your devices. However, these kinds of agreements can be expensive. Go through such agreements with a discriminating eye and include only the minimum necessary to get the job done. Alternatively, as equipment comes due for replacement, consider using support contract dollars to purchase equipment that does not require pricey additional contracts for support and upgrades. For example, if you're currently a Cisco shop, give HP Procurve, along with their lower prices and lifetime warranties for both replacement and software updates, a look when it comes time to replace your gear.
  • Can some personnel be replaced by outsourced contracts? This might not be a "cut" per se... This is probably the most difficult cut to achieve and is most reasonably handled through attrition, but may have to come as a result of a forced layoff, too. If you are required to cut a position in your department, can you salvage at least a small portion of the salary to obtain third party assistance to cover some of the responsibilities that were once covered by the departed personnel? It's likely that remaining staff will have to handle the void, but being able to hold onto a little bit of the savings might help you go a long way toward maintaining service levels.
  • Reduction in services. No matter what happens, any cut will affect the ability for IT to do its job. However, you may have no choice but to scale back some of your services. Do you offer off-hours support or an evening help desk? Anything that could be argued as non-essential to the core business should be considered, depending on the depth of your budget cuts.
  • Extend the replacement cycle. Many organizations have implemented a "planned obsolescence plan" that is basically a hardware replacement cycle. Given the current economic climate, that three or four year old desktop PC may need to be kept in service for an additional year or two. Quite frankly, from a processing perspective, that shouldn't be a problem, although the likelihood of equipment failure will increase. You may need to add RAM to the PC, but that is far less expensive than replacing the whole unit. On the server side, you might even be able to extend the life of your servers beyond their warranty period by adding them to third party support contracts. Yes, this somewhat contradicts one of the items I listed earlier but if that maintenance agreement is substantially less than a new server and the existing server can still do the job, it might be a worthy direction. Alternatively, do you have a virtual infrastructure in place? If that server has to come out of service, can its workload be transferred to that environment instead?
What are some of your ideas for getting through this financial mess we're in?

About Scott Lowe

Since 1994, Scott Lowe has been providing technology solutions to a variety of organizations. After spending 10 years in multiple CIO roles, Scott is now an independent consultant, blogger, author, owner of The 1610 Group, and a Senior IT Executive w...

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