I need to reduce my ICT costs
Budget is often the major driving factor of any digital transformation project. The need to reduce ICT costs lies at the heart of a good ICT strategy. For many organisations, particularly those in the public sector, budgets are tightening, and the focus is on achieving more with less. In general terms, spending on frontline services in any public sector organisation is where the priority lies, which makes justifying spend on ICT and other back offices functions more of a challenge.
This has left many ICT professionals shifting their thinking toward cost reduction and efficiency savings rather than more complex ICT procurement and implementation. It is now widely acknowledged that investing in the right ICT solutions and technologies can help reduce ICT costs in the long-term, without compromising service delivery. However, if you are looking to bring about the digital transformation of your organisation to ensure your ICT serves your purpose and objectives, then getting the right foundations in place is crucial.
If your ICT infrastructure is wrong, then what it’s built upon it will not serve your requirements in the best way. Typically, to achieve digital transformation, your organisation will need solid on-premise ICT architecture and connectivity to the cloud, along with solid cloud foundations. Here’s how you can achieve this.
Understanding your ICT costs
To achieve digital transformation through an ICT strategy with cost reduction at its core, you first need to understand your organisation’s ICT costs. For organisations with large, on-premise ICT environments, ICT budgets are usually longstanding and built around past procurement and activities.
For example, budgets typically assume fixed costs for product renewal and that maintenance costs will stay broadly the same, with any discretionary spend or additional investment built-in, depending on the business case. This presents a budget challenge as maintenance costs generally rise over the life of a product. By choosing ‘new wave’ vendors which offer predictable maintenance costs that are fixed over the life of the product, overall total cost of ownership can fall.
However, cloud-based environments allow for a more variable and flexible approach to budgeting and cost modelling, as you pay only for what you need and can scale up or down accordingly. That said, there is still your investment in hardware and ongoing maintenance to consider, to ensure your system keeps running as it should.
Offering remote and virtual working options can relieve the pressures of paying for a larger workspace. It can bring additional benefits such as shortening the time to market for new products and services, the ability to try and fail with less impact commercially, better AI-driven detection of faults, improved monitoring, improved ICT service business continuity and improved security.
And investing in cloud technologies can remove the need for bulky and expensive physical ICT infrastructure, as if you build your organisation’s ICT foundations in the right way, you can take advantage of any cloud-based solution you want to enable your digital transformation journey at minimal risk and low cost. Cloud solutions are available for servers, storage, networking, AI, big data, devops, and automation, reducing the need for on-premise hardware.
Other ICT considerations
When it comes to reducing your organisation’s ICT costs, your focus should always be on the end goal, rather than the initial cost-saving. Digital transformation shouldn’t just be about making your ICT function better; it should be on making your ICT serve your organisation better.
In these terms, while achieving a £300,000 cost reduction in ICT spend is great, it may make more sense to invest an additional £300,000 in technology that could save your organisation £2m in the long run.
That’s why a more holistic approach to your ICT strategy and cost modelling is essential.
There are some key questions your organisation will need to ask itself to help define what it is looking to get from its ICT, both now and in the future. These include:
- What budget do you already have for your ICT strategy, and how have you arrived at that budget?
- Are you able to increase your staffing, or is there pressure to reduce staffing?
- Do you prefer to spend money as capital upfront, or spend as revenue?
- What in-house expertise/resource do you have at present and what will you need to deliver the service?
- Which elements of your ICT delivery are the costliest, in terms of both staffing and vendor
- Which elements of your ICT delivery offer the most benefit?
A common issue in the public sector is that many ICT estates have been built up over time in a siloed manner, to meet departmental requirements, with no thought given to their integration with existing technology and hardware. This results in organisations having multiple applications supporting similar business functions, which are difficult to operate and expensive to maintain.
Mapping these out at the beginning of your project, getting rid of any unnecessary software licences and unused or under-used applications, and replacing them with a smaller number of standard technologies can help reduce your ICT spend and also streamline your organisation’s service delivery.
Next steps to reduce your ICT costs
To make your digital transformation project a success, there are a few essential things to bear in mind. A structured approach is essential. It’s important to target the quick wins first, as these are easy gains which will help you achieve your longer-term targets faster. So, a clear timeline identifying the steps you need to implement in the short, medium and long terms should serve as your roadmap to success.
It’s important to define specific objectives from the outset and gain the buy-in of your key stakeholders with a solid business case. Determining what ICT you should invest in needs to be coupled with what costs the organisation the most to do. Set out what you are looking to achieve and the potential benefits, in terms of both cost savings and organisational improvements, that digital transformation will bring.
Remember, while ICT can represent a big investment, investing in the right technologies, skills and expertise can help you achieve significant cost savings in the long run.
Find out more
To find out more about our ICT strategy and cost modelling solutions and how AMDH Services can help your organisation get the most out of its technology, reduce costs and do ICT better, get in touch for an informal chat and a free consultation.