10 most common ways businesses waste money on IT

23/01/20

Having spent a lot of time optimising people’s IT systems, Jude knows a thing or two about the main areas where people waste money on IT.

It’s important to regularly review your organisation’s spend on IT services, perhaps more so than other services within the business due to the ever-changing nature of technology.

We have put together a list of the 10 most common ways businesses waste money on IT, which will hopefully help you when it comes to sitting down and assessing your spend on technology.

Whilst this isn’t an exhaustive list, we think it covers some of the most common issues, a lot of which are relatively painless to put into action.

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1. Holding on to and overpaying on unnecessary software licensing fees

If you use technology in any capacity, there’s no doubt that you’ll have paid for, or be paying for software and licensing fees that come with it. There are generally two types of payment methods for software:

- One-off purchases: often referred to as ‘perpetual licenses’ are licenses that do not expire. 
- Recurring payments: usually known as ‘subscription licenses’ are where you pay for what you use for as long as you use it.

Perpetual licensing used to be the norm before the use of cloud applications really took off. Usually these types of licenses are sold with a subscription of some sort, often in the way of support or access to the software’s latest updates.

Subscription payments are becoming more and more popular and for good reason, but it’s very easy to start overpaying without realising it. In the case of services such as Microsoft Office 365, many small payments can quickly add-up and so it’s important to routinely audit your license usage.

What can I do about it today?

2. Holding onto old IT infrastructure hardware

In the last few years, the advent of cloud technology and virtualization has meant that significantly less hardware is required to host your critical business applications and databases. It used to be the case that a physical server was required to run each workload – but not anymore. Today, it’s possible to host multiple servers on a single piece of hardware.

Using multiple physical servers only costs you money and is more expensive just about every way you look at it. Power, cooling, licensing, downtime risk, backup and support costs all see huge gains.

What can I do about it today?

3. Hosting and running your own software and applications

Over the last five years, global improvements in internet connectivity has led to the rise of cloud technology. One of the largest uses of the cloud is software deployed over the internet without the need for anything onsite, other than an internet connection. Notable business services that have been very successful in this type of delivery include Microsoft Office 365, SalesForce CRM, GSuite, NetSuite, Slack and Zoom.

If you’re still hosting your own software on servers within your premises, there’s a good possibility you can significantly lower your spend.

As time goes on, and cloud services continue to improve, there’s a very good chance that all common workloads run by businesses will have a ‘software as a service’ offering, and their on-premises counterparts could die out.

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4. Backing up unwanted and unnecessary data

If you’re like most businesses today, you probably utilise the cloud for your disaster recovery process in some way. Cloud backup is by far the most common method, in which your key IT workloads are backed up routinely to an offsite datacentre.

Whilst this is a great use of cloud technology, it’s crucial to ensure that your costs aren’t running away. The key here is to remember that your costs are directly linked to your usage; the more your backup, the higher your costs, down to the single GB of data.

What can I do about it today?

5. Over provisioning your cloud servers

If you are a business that utilises one of the many cloud platforms for hosting your servers, then you’ll understand the nature of subscription payments and how important it is to keep on top of things.

We managed to reduce an organisation’s cloud infrastructure costs by a whopping 50% by moving them to a more competitive platform from a provider who hadn’t been offering any due diligence on their usage.

All good cloud providers, including the three big public cloud providers Microsoft, Amazon and Google, have intricately detailed usage reports available from your account. Bandwidth, storage and the incorrect server specification are some of the most common ways that customers using their services over spend.

What can I do about it today?

6. Running old servers

This one is a favourite of ours, as it’s everywhere! Many organisations don’t realise the cost/benefits of replacing their old server infrastructure when the time comes, and instead favour the ‘if it ain’t broke’ approach. Whilst it’s an admirable approach, the key is always to remember that technology evolves faster than any other market sector. A top of line piece of IT hardware from five years ago will often under perform against an entry level piece today.

The same applies with servers and the consequence is lost revenue. If you’re experiencing slow applications, file open times, crashes, bad file transfer speeds or other similar symptoms, there is a very good chance it’s caused by the software and systems you’re using outdating what the hardware in your server room is capable of.

What can I do about it today?

7. Running old computers

Often harder to detect without monitoring and tracking tools, but potentially just as costly for your organisation. Using workstations past their recommended shelf-life date (typically around four to five years) will be detrimental to the productivity of your staff and ultimately your bottom line.

What can I do about it today?

8. Purchasing unnecessarily powerful workstations

When it comes to buying a new laptop or desktop for your staff, it’s important to make sure it’s an informed purchase. Many times, staff with roles in the company that only require a basic level of technology end up with a powerful computer that’s capable of handling much more than necessary. There aren’t any performance gains for unused resources on the computer, so ensure you work with your IT team on making the best purchase decision.

What can I do about it today?

9. Taking on and retaining expensive IT staff

Highly skilled IT staff can be an attractive prospect for your business, but at a significant cost. An experienced and highly qualified IT systems administrator’s salary can easily run into six figures. Whilst there is certainly not a ‘one size fits all’ structure for an organisation’s IT support provision, it’s important to think very carefully about taking on staff, particularly recruits demanding a top salary.

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10. Not using the correct internet connectivity

Many organisations are spending needlessly on outdated connectivity contracts. Furthermore, often the type of internet connection isn’t appropriate for the organisations demands – from ADSL connectivity delivered at very low cost over your telephone line, to dedicated high-speed gigabit fibre straight into the building, it’s crucial to establish usage and adjust your contracts accordingly.

What can I do about it today?

Conclusion

Whilst this isn’t an exhaustive list, we’ve found these 10 points to be incredibly effective at bringing IT operational costs under control. We’ve spent many years working with businesses like yours and have a good understanding of where the most common holes are – and how to patch them up!

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