Cost-cutting is a prudent strategy for small businesses struggling to survive the economic impact of the COVID-19 pandemic. However, overdoing it can run the risk of reducing productivity and losing business. It’s vital to have a deliberate approach in controlling costs, especially when it comes to technology.
As your IT team deals with the operational challenges of the crisis, it’s equally important that you strategically manage IT costs to keep your business afloat and prepare for the post-pandemic rebound.
How do you strategically manage IT costs?
The best way to manage costs is to optimize spending to ensure long-term success instead of settling for short-term fixes. Here are three things you can do to unlock savings that can ensure business continuity and be used to invest in resources that will align with new business priorities.
#1 Define cost targets and all feasible cost reduction measures
Gauge how much costs must be reduced to preserve production as well as profitability. Some IT costs can’t be cut, so it's important to classify these into good, bad, and best costs. Good costs are expenditures necessary to meet your customers’ needs and expectations, while bad costs are those that don’t directly align with your business growth strategies. Meanwhile, best costs are costs associated with how you make your company stand out from the competition.
After defining all your costs, you can assess which cuts are possible (as well as their potential risks), and when to make them (depending on how the business situation unfolds). The goal is to cut the bad costs, which can free up resources that you can use in other productive capacities.
Here are a few tips in determining your cost reduction options:
- Assess your entire technology portfolio and associated costs, assigning value to each product and service and accounting for related costs such as labor.
- Prioritize these cost categories according to potential savings and risks as well as their effects on the future of your business.
- Evaluate which of these costs can be reduced — and which can be optimized by making informed trade-offs — and consider when to implement them.
Bear in mind that knee-jerk reductions could cause you to incur even more costs in the long run, so this is not a time for blindly making cuts.
#2 Take advantage of IT’s flexibility
While technology is typically regarded as a fixed cost, most IT budgets have plenty of flexibility, enabling businesses to quickly adapt to the changing business environment and demands. This characteristic of IT budgets is especially beneficial in a crisis.
In fact, many businesses have turned to managed services to streamline IT costs while maintaining the same, sometimes even higher, level of output. Partnering with a managed IT services provider (MSP) will allow you to augment your IT team without having to make significant investments — you can gain access to the latest technologies, an expert pool of tech talent, and even cybersecurity solutions for a flat monthly fee that’s still less than the cost of running your own IT department.
#3 Reallocate costs to efforts that increase productivity
It's a good idea to invest in capabilities that focus on optimizing efficiency and productivity to maintain business continuity post-pandemic. Prioritize the following:
- Make your IT infrastructure more flexible by utilizing cloud environments. These let you save on substantial costs, as you won’t have to worry about hardware and associated maintenance and utility expenses.
- Increase digital resources and access to support the massive shift of customers and suppliers to online channels.
- Automate business processes and workflows. Doing away with time-consuming manual tasks will ease many working situations without compromising quality.
- Sustain and increase support for your distributed workers. Deploy stable and secure remote working capabilities to ensure that employees have access to company data, files, and programs that they need to remain productive wherever they may be.
It’s imperative that you reduce and control costs carefully, while also positioning your business to drive new growth and innovation to keep your company afloat and ready to thrive once the pandemic is over.
We at WDIT can provide your business with advanced yet affordable IT solutions that can alleviate the stress of technology management, procurement, and support so you can focus on running your business properly during these critical times. Call us today.