Cost savings quick win: Could business services save around 15% on some categories of IT spend?
09 August 2019
By Rachael Joyce, Forensic Services Business Services Industry Lead and Jill Powell, IT Cost Optimisation & Strategy Lead
Cost savings programmes are a frequent topic of conversation across business services, but as the latest rounds are being kicked off it’s worth asking if your firm could be paying as much as 10-15% more on some categories of IT spend than it should - or could - be? And if you are, why?
With profit margins squeezed and the ever present need to find ways to take costs out, focusing in on areas such as budgeted software, support and maintenance costs, could reap rich rewards.
When speaking to clients and other sector specialists, we are often amazed to find that IT spend is regularly overlooked as a target for cost reduction. This could be because higher IT spend is viewed as a necessary bi-product of introducing new technologies and automation. According to Gartner, IT spend is now the third most significant CEO priority, and yet it is still seen as a tactical requirement and managed largely ad hoc.
The world of IT is changing rapidly, and as such, the complexities around licensing and asset management are constantly evolving, with some key factors making this increasingly complex in the Business Services industry.
We’ve identified a few distinctive characteristics which can result in escalating IT spend going unnoticed, in particular software, support and maintenance costs, including:
- Major events such as mergers and acquisitions, particularly without realignment to the existing business;
- Shift towards cloud computing;Project-driven delivery, which can see fluctuating team sizes and technology needs; and
- Separate bid teams and operational delivery teams.
In this fast moving environment it may be that CIOs simply don’t have the time, resources or visibility of costs to identify what is deployed and areas where costs can be reduced.
But the risks of planning IT needs incorrectly, or negotiating a long term software contract based on large discounts, that isn’t necessarily future proofed for evolving needs, can turn out to be a costly error in the longer term.
According to our analysis, firms could often deliver savings of around 10-15 % on budgeted software, support and maintenance costs, as well as significant avoidance of future unbudgeted IT spend - a figure not to be sniffed at.
If you recognise some of the traits noted above or are now wondering if your IT cost optimisation and future strategy is at running at peak performance, then get in touch.