Tuesday, January 31, 2023

IT Cost-cutting Strategies to Avoid Business Downfall

By Chandni U - June 24, 2021 3 Mins Read

Under pressure, several CIOs make certain budget cuts that can disrupt business operations. Experts recommend optimal strategies for a seamless transition

Companies worldwide are still looking to eliminate excess costs to get their businesses back on track. Even successful CIOs want to cut down on IT waste but in the process, they fall into traps that might damage their IT and company business operations. Experts suggest enterprises know what to cut down, how deep the cost cuttings should be done, and avoid some common but critical mistakes that usually get overlooked.

Independent cost-cutting decisions within the department will most likely cause a domino effect of complications in the entire organization. Pressurized to cut costs within a target range, some CIOs find it fit to ask executives from different verticals to cut down up to a certain percentage. It may seem like a logical approach to let internal departments come up with their own budget cuts but the decisions might backfire and misalign with the company operation itself. It is also possible for the various department executives to make cost-cutting choices without considering the impact on the other verticals.

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For instance, one department’s decision to cut down on the cloud system might cause another to not be able to meet customer expectations. Such individual decisions can put the company at a greater risk of revenue loss.

A proactive approach is much more suitable than last-minute reactive measures that can also harm brand perception. Experts consider denial, inattention, and an over-optimistic attitude to be some of the most common pitfalls. A proactive strategy of optimizing IT infrastructure and business operations can offer a seamless cost-effective approach.

While CIOs understand the dangers of cutting costs without in-depth insights and information, they decide to cut data center budgets quite often with an understanding that cloud migration might decrease its need. On the contrary, experts state that IT economics constantly evolves and the cloud does not guarantee financial stability.

Meanwhile, many CIOs understand the variables of new technology and decide to slow down or temporarily halt investments. IT experts do not think it is a smart move. Delayed investments lead to a massive, compounded investment in the future. Along with the technology investment, which might be higher now, there will be a significant rise in up-skilling, training, and on-boarding costs. It is recommended to make regular and layered investments while monitoring the market. Effective cost management can definitely lead to significant savings without having to cut down during a temporary dip in business and create ripples in critical operations.

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When it comes to optimization, a detailed review of all relevant costs including the expiration dates of contracts can provide better insights and help optimize the system without duplications and idle services. Additionally, during the toughest of times, these reviews will act as a dependable medium for company cost-cutting decisions.

To avoid stress, it is vital to view cost-saving decisions as a combined process of strategic budget moderation and business optimization.  CIOs can create an efficient IT organizational framework that includes IT spending poured into core capabilities, which align with business initiatives. It will bring a clear perspective on budget cut opportunities.

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Chandni U

Assistant Editor

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