Running a successful IT operation is always a tradeoff between delivering exceptional service and keeping everything within budget. Here are five ways to help IT leadership and CIOs lower their costs without reducing services. From lowering personnel costs to better managing contractors and consultants, to increasing the use of the cloud, to decommissioning software and adding automation, CTOs and CIOs have multiple ways to lower their IT costs today.

Many of these ideas are useful alone but work best when in conjunction with each other but they should be seen holistically. Labor and personnel costs can be decreased by utilizing a cloud solution, which could also help decommission software that is going unused. Automation can also help reduce employee count, but it can also reduce the need for a particular software.

For example, AIOps can reduce the need for other monitoring software as well as helping provide the capacity planning solution with information that helps reduce an IT estate’s footprint. All of this work could also reveal areas where outside consultant work isn’t as necessary as once thought, which helps reduce costly specialists, as well as lowering security risks.

1. Automation

Robotic Process Automation (RPA), AIOps, hyperautomation, and capacity planning solutions can help substantially reduce IT costs. RPA tools can turn a computer into a “functioning human”, carrying out coded instructions on structured data, either through the GUI interface or via an API. It can considerably reduce employee hours, while also cutting out work that humans would probably prefer not to do.

Whereas RPA works externally, AIOps works internally. It has been called ‘The next big thing in IT operations’, the word ‘AIOps’ is a combination of ‘Artificial Intelligence’ (AI) and operations (Ops), and it refers to the way data and information from an IT environment are managed by an IT team,

AIOps utilizes AI and machine learning to collect and analyze data, speeding up problem resolution in IT operations. AIOPs tools can infer the probable root causes of issues, then proactively work to prevent future issues.

Utilizing real-time intelligence, hyperautomation goes beyond noise reduction, error detection, deep root cause analysis, towards system self-healing. Gartner sees a cost reduction of 30% within four years for companies that can combine hyperautomation with redeveloped operational processes.

Capacity planning or capacity management can determine the production needed by an organization to meet changing demands for its products and services. The key to capacity management is to counterbalance the right number of users, the right number of potential users, and the right performance at peak usage to ensure a great end-user experience.

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2. Cloud up

Hardware, software, and even storage no longer need to be onsite and the cost of renting computer equipment is far lower than the cost of ownership, especially with complex resources that can be spun up and then shut down quickly, and as needed. Adding a cloud component to a company’s IT system is a common practice these days because hardware resources can be brought online at highly competitive rates. The systems are also highly secure, and the onus of performance and tech support is on the cloud provider, thereby reducing the need for the company to have IT personnel at the ready should problems arise.

Two of Big Data’s 7 v’s are ‘Velocity’ and ‘Variability’ and the cloud is the only place where businesses can address these two unique attributes of Big Data. In a world saturated with structured, unstructured, and semi-structured data, the cloud is the best place to utilize this data. It would be almost impossible to build analytical models on real-time streaming data coming in from social media, mobile apps, website clickstreams, and a company’s CRM systems without utilizing and modeling all that data in the cloud.

A good option to keep costs low is cloud bursting – the process of running an application on a company’s own private IT estate and then bursting into the public cloud to access additional resources when needed. This can be a great way to utilize the cloud only when computational demand or service load requires it.

3. Decommission software

Today’s software is nothing like the software of just a few short years ago. Data integration tools have added visualization layers that produce more than acceptable dashboards. Visualization tools have added in-memory database functionalities as well as some quite sophisticated analytics components that reduce the need for expensive analytical software.

CRM and digital marketing systems have also added complex analytics capabilities that were available to only a select few just a few short years ago. For its part, highly sophisticated analytics software suites like R and Python have seen their use explode over the past decade and a large community of users has grown up around them, which means finding consultants who know the software is easy and libraries of scripts are available for free use.

A considerable amount of money could probably be saved by not renewing unnecessary software licenses or even doling out unused ones to departments in need of them. Business intelligence tools all have their unique advantages but, in many cases, adding a BI tool that does 100% of what one department wants could be cost-prohibitive.

Sometimes it’s preferable to add licenses of a tool you might already own that fulfills 90% of a department requirement, then discuss your needs and roadmap with the vendor to see if new iterations will bring that 90% closer to 100%. Remember most software products are on a yearly, if not a quarterly, development cycle, and many vendors like to hear from their customers and are open to listening to what their clients need. After all, if it’s a problem one company is facing, several others are probably experiencing it, too.

4. Manage outside vendors and contractors

Outside contractors are a necessary part of the business. Software and hardware tools have become so sophisticated that it can take a team of skilled consultants weeks, if not months, to get a complex project up and running properly. This can, unfortunately, mean costs quickly spiral out of control. Contractor costs are often separated from in-house IT personnel expenses, so they aren’t always subject to the same scrutiny.

Demand strict schedules and hold contractors accountable to them. Review all outstanding contracts and understand the skills involved in those contracts. Some highly specific skills are not easy to eliminate or even trim down. Keep a tally of the number of contractors under hire, how much their salary, overtime, and expenses cost. Remember to factor in these numbers when making software purchasing decisions.

Don’t be afraid to look abroad for contractors as well. Offshoring can be a great way to reduce consulting costs while still hiring highly skilled consultants. In some cases, offshore rates can be 30% of what a home country’s rates are, so that’s a substantial saving, while the downside is limited to small things like a different set of working hours. With secure VPN access and the fact that many companies are now moving their IT estate into the cloud, the importance of having IT staff onsite diminishes by the day.

5. Use open-source software

Open-source software is software that is distributed with its source code and it eliminates both the initial licensing costs that software products normally come with as well as the recurring yearly maintenance or upgrade costs. Open source products are chosen over commercial software not only for the reason of cost but also because of security reasons. Open source products don’t have any vendor ‘lock-ins’ either, and open source can, paradoxically, be of better quality than similar commercial software. Open-source software gives users access to the source code so anyone can make modifications to it and many do, which tends to improve the software faster than typical commercial software companies that have strict release data for upgrades and new releases.

Open-source software exists for all kinds of solutions, including operating systems (Linux), website hosting (Apache HTTP Server), content management systems (WordPress, Drupal, and Joomla), CRM (SuiteCRM, Hubspot), digital marketing (MailChimp), analytics (R and Python), data warehousing (Hadoop), word processing (LibreOffice), and project management (Monday, Trello, Zoho). Many of these products are completely free, while others are free up to a certain point and start charging for extended use. Because large communities have grown up around these open-source software products, finding consultants to work on them is often easier than finding highly specific commercial software experts.


The sophistication of today’s hardware and software tools are helping companies create a holistic view of their entire IT estate, down to the process level. By understanding the cost of each CPU, each core, each piece of hardware and software, CIOs can itemize and catalog their spend in ways that were impossible just a few short years ago. Tools like RPA, AIOps, and hyperautomation can reveal exactly what’s going on under the hood, while capacity planning can show CIOs where costs can be substantially reduced.

However, companies should be aware that any cost-cutting endeavor should be embarked upon company-wide. Understanding the big picture is important. One man’s cost-saving might be another man’s must-have hardware or software solution. But in a world that is trying to go green, lowering your company’s IT spend should be something everyone gets behind.

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