| Reduce IT spending |
| Friday, 27 February 2009 02:21 |
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Outsourcing in the recession can benefit operational costs
Outsourcing in the recession can benefit operational costs Now that the UK is in recession all businesses need to seriously look at their operational costs to make sure that they are delivering the highest levels of efficiency and productivity to help them ride out what will undoubtedly be a challenging time. However, there will always be potential customers for the right products and services and there are sensible measures that companies can take to help themselves reduce costs and make their resources as efficient and effective as possible. The IT infrastructure can account for a considerable portion of an organisations operating budget and it is inevitable that this will be heavily scrutinised when cost-cutting measures are being evaluated in order to reduce overheads. The dilemma facing such organisations is the delicate balance between effective IT (such as emails, CRM, E-commerce and databases) and finding the most cost-effective methods for providing these. Reaching a balance is the key. The biggest costs in the majority of IT department are staff, training and system upgrades. A large SME is likely to need a dedicated IT person who can offer basic user support, but a company with less than 100 people may not need this and can easily rely on an outsourced support resource. Even for an SME with over 100 people, having somebody who covers all IT aspects may not be cost effective. The cost of training a dedicated IT Manager can be substantial and they are likely to command a substantial salary to do so (they will also take holiday and occasionally be off sick leaving the organisation without the IT support it needs). Utilising IT outsourcing specialists can take this burden from both larger companies and SMEs by offering specific, targeted support, which often gives better value for money and a greater bank of expertise, experience and knowledge. With regards to the IT systems, including hardware and software, the opportunity to make savings is less dramatic. Since IT is the key to many business operations, it is essential to maintain the right level of investment. However, there are sensible ways of making the most of these resources. A server, for example, is likely to last about five years, subject to its role and the growth of the business. But running a server past its fifth birthday can be expensive in terms of maintenance, and increases the risk of data loss or downtime, which can also be very costly. Similarly it is easy to be enticed by supposed bargains, particularly when IT providers are so keen to capture new business. Being rash with IT purchasing can lead to poor products, or being tied into long contracts, which initially appear attractive but can prove to be costly in the long-term. The key to reducing costs should therefore be best value rather than the cheapest option, to make the most of the IT budget. In tough economic times it is also easy to only see the short-term IT objectives. Whilst it is sensible to reduce unnecessary spending as soon as possible, a long-term plan for economic recovery also needs to be in place. Companies need to remain competitive but also consider the implications of their spending on the infrastructure of the business in the future. Conversely, it may not be worth dedicating large amounts of resource on schemes that do not offer any immediate savings. Whilst adopting measures such as virtualisation (which uses the IT facilities across the network as a ‘whole’, utilising all the resources to whichever parts need it most) make sound financial sense, the cost of implementing it can be substantial and is likely to only give long-term savings that may be unhelpful for struggling businesses. Making immediate, but sensible changes to the way IT is run is the best way to alleviate some of the budgetary pressures. Outsourcing gives a high degree of flexibility both in terms of cost and the needs of the company and helps to achieve ‘rightsizing’ as opposed to blanket ‘downsizing’, which may not be ideal for the overall direction of the business. Newer news items:
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