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Cost Reduction

Streamline tech portfolios for reducing costs whilst maintaining morale

Within the current environment, organisations will be paying even closer attention to their finances. The current pandemic-induced recession is, experts have claimed, likely to have a greater economic impact than the Great Depression of the 1930s. Little surprise then that the unpleasant topic of redundancies has been so prominent in recent weeks. Some of Britain’s most iconic brands including M&S, John Lewis and Boots have all needed to condense their workforces. Google’s Trends tool also shows that searches for the term ‘redundancy process’ have almost doubled since May.1

At times, the need to balance books will clash with the desire to retain employees. This is simply a sad reality of business. When the possibility of redundancies is discussed, though, workforce morale inevitably drops. As a direct result, the implementation of such procedures can be counterproductive: The need to reduce outgoings leads to actions that diminish output. A workplace affected by redundancies is a workplace that is mired in stress. Employees suffering from stress are proven to have higher levels of absenteeism. They also struggle to maintain relationships with colleagues and perform their roles less effectively.2

Wherever possible, excess spend should be trimmed from other areas. Reviewing technology portfolios, ensuring they are closely aligned with business goals and optimising your outlay accordingly is an effective cost reduction strategy that can negate the need for redundancies. Here are five changes and practices that are proven to bring about cost reduction:

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Author:

Laura Steele
Laura Steele Chief Financial Officer

Migrating to the Cloud

Physical on-site infrastructure is expensive. This is not only because the equipment itself is costly, but because overprovisioning is commonplace. In fact, when an organisation does not make use of virtualised digital resources, it is a vital means of countering downtime. 

Cloud infrastructure is agile. If an organisation using a virtual server discovers that they need a device with more processing power or storage, for example, they can upgrade their service and begin using it immediately. Alternatively, if resources are exclusively physical, disruption is certain if a change is required and the relevant equipment is not immediately accessible. With downtime typically generating considerable losses, the decision to overprovision once made fiscal sense. Today, though, it highly inefficient.

Businesses that migrate to the cloud are likely to see their infrastructural costs plummet. Studies comparing on to off-site servers have concluded that the SMEs can expect to save an average of 36% on their operating costs.3

Audit software licences

In 2019, the total value of all enterprise software sold exceeded £363 billion – a more than 100% increase on the total of £171 billion reported in 2009.4 Applications play a vital role in day-to-day operations, regularly enhancing productivity and output. Whilst vital, though, they are also a common cause of overspend in the era of software as a service (SaaS).

Just as private consumers regularly allow insurance policies to renew automatically rather than seeking better deals, companies regularly fail to audit and optimise software licenses. It is far from uncommon for organisations to purchase a license and stop using it after a few months, only to continue paying for it for several years.

Organisations should ensure that they maintain a record of all of the licences they purchase and all renewal dates. This will ensure that decision makers are aware of the need to determine whether a more cost-effective licence can be sourced or if the subscription should be cancelled.

Review license features

As well as determining whether licenses are needed or if more cost-effective options are available before their renewal dates, it is vitally important that organisations consider exactly what their existing subscriptions provide, too.

In recent months, there’s been an upsurge in businesses purchasing subscriptions for video conferencing solutions. A large portion, however, were already in receipt of license bundles including such software.  

By understanding all of the various features included with their subscription, organisations can ensure that they don’t find themselves making multiple payments for the same services. This will also make it easy to identify subscriptions that can be cancelled, thus generating further savings.

Improve your computer network

Organisation’s computer networks are typically amongst their most important assets. Without them, they would be unable to connect to the digital world and leverage all of the advantages doing so brings. So important is it, in fact, that failing to invest in it can very quickly lead to financial loss.

An unreliable network is likely to result in periods of time where staff are unable to operate. Every minute of downtime, studies have shown, costs organisations £4,250.5 Slow networks, too, are highly detrimental where performance is concerned: the average employee loses 38 hours of productivity each year due to slow connections.6 This means that organisations typically lose one week’s worth of work per employee every 12 months.

As counterproductive as discussing investment within an article centred on cost reduction may seem, it is entirely justified when discussing this particular resource. A robust network offering speed will help to keep employees productive and stave off the threat – and considerable consequences – of downtime. Furthermore, slow internet can have a significant adverse effect on employee morale.

Developing network infrastructure, sourcing a competitively priced leased line and implementing procedures that result in effective management of networks are all effective means of enhancing this vital resource.

Leverage abandoned IT projects

Surveys have shown that half of all IT projects are abandoned before they are completed.7 Such failures, though, leave behind remnants of change that can, if reviewed, be leveraged to deliver improvements with minimal costs.

Consider alterations to infrastructure, training that has been provided to employees, assets that were acquired and not used, etc. because of abandoned projects. Determining how they can be leveraged is both an innovative and thrifty approach capable of developing organisations considerable without comparable levels of investment.

Conclusion

Technology is capable of driving exceptional performance. It can, if not aligned with an organisation’s objectives, also bring about substantial fiscal waste. Furthermore, failing to invest in the right technology can severely hinder operations, resulting in lost income.

There can be little doubt that a comprehensive review of an organisation’s tech and practices can provide the kind of cost reduction strategies that so many businesses will need to thrive in today’s testing environments. Such audits are more than capable of negating the need for redundancies, allowing organisations to avoid the dips in morale and productivity they inevitably bring.

To find out how ROCK can help your organisation reduce your operational costs whilst simultaneously developing your tech strategies and portfolio, get in touch with us today.

References:
  1. Google Trends (search for ‘redundancy process conducted on 26th August 2020) https://trends.google.com/trends/explore?geo=GB&q=redundancy%20process
  2. Business.com (2020) Stress and Productivity: What the Numbers Say, https://www.business.com/articles/stress-and-productivity-what-the-numbers-say/
  3. Directive (2017) For the Average SMB, a Cost Savings of 36% Makes Cloud Migration Worth It (sic), https://www.directive.com/blog/for-the-average-smb-a-cost-savings-of-36-makes-cloud-migration-worth-it
  4. Statista (2020) Information technology (IT) spending on enterprise software worldwide from 2009 to 2021, https://www.statista.com/statistics/203428/total-enterprise-software-revenue-forecast/
  5. Gartner (2014) The Cost of Downtime, https://blogs.gartner.com/andrew-lerner/2014/07/16/the-cost-of-downtime/
  6. Synextra (2020) Is a Slow Internet Connection Costing Your Business Money?, https://www.synextra.co.uk/is-a-slow-internet-connection-costing-you-money/
  7. CIO (2016) More than half of all IT projects still failing, https://www.cio.com/article/3068502/more-than-half-of-it-projects-still-failing.html

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