How to optimize technology costs in organizations?

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In the IT area of any type of company, it is important to optimize costs as part of the strategies and best practices of its CTO's and technology leaders. To achieve this, it is important to consider that some expenses can be reduced, paused or eliminated depending on the state of a company. Here are some tips to optimize technology costs efficiently.

1. Evaluate based on immediate objectives

The first step in optimizing digital technology costs is to reduce, suspend or eliminate some technology services or projects that cannot produce an immediate economic impact. On the other hand, if it is advisable to enhance technological services in which payment is on demand and that deliver a return from the first moment they are contracted, such as cloud services for companies.

2. Reduce costs, rather than eliminate

Today, 25% of the average IT budget is spent on capital, according to Gartner data. Although some technology costs such as licenses, software, or equipment rental are more likely to be eliminated for spending distribution, in certain projects it should be assessed if this does not affect the level of IT operation. If they are really needed, they can be reduced or kept in “standby mode” depending on the flows and future projection of the business.

3. Consider cash flow

Constant cash inflows into a company are critical to maintaining cash flow. Therefore, it may be advisable to keep an inventory of both the internal products and the provision of technological services that are contracted and assess the impact they have on the financial statements, taking into account in the case of gains and losses recorded.

For example, reducing software licenses or proprietary assets (hardware) can help reduce an enterprise's IT spending. On the other hand, certain technology services such as virtual servers in the cloud are ideal for optimizing infrastructure-related technology costs because they offer a wide range of solutions and services, achieve savings in operating costs, and there is faster capital recovery.

AWS's broad portfolio of solutions and services enables organizations to drive measurable business success. With AWS, savings of 75% up to 90% can be realized over on-demand fees. They therefore help them boost growth and reduce costs significantly over the long term.

4. Controlling expenses

Once you have identified the inflows and outflows of money through an inventory, it is advisable to continue your control. Now it is necessary to point out which costs are already committed to suppliers or anticipated, and which could be returned or suspended if the occasion warrants, seeking that it does not affect the cash or the operations of the company.

In the case of fixed costs, it may be considered to be phased out if they are not absolutely necessary. Or, for variable expenses, a reduction, suspension or elimination strategy can be established for a set time.

5. Spend efficiently

Some business expenses are more expensive when it comes to own infrastructure, and due to the use, operation and constant updating of technology, they turn out to be inefficient.

For example, one way to optimize costs would be to work with providers specialized in the provision of technological services that have serverless platforms, as they are a very efficient solution against physical server costs. This is due to some factors such as:

They are charged per invoked request; that is, an expense is generated only for their use.

They scale based on growth by the number of requests made.

They run services without the need for an expense for their administration.

It should not be forgotten that the costs of digital technology should not necessarily be eliminated, and it is always better to optimize costs based on the available budget and the goals that are set.

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