Reduce IT costs in a strategic way, without jeopardizing the company growth.
Amidst growing inflation, big and small businesses are looking to cut costs to stay competitive.
According to Gartner, reducing IT costs is a top priority for 40% of CFOs.
Cost-saving initiatives usually focus on firing people or getting rid of un(der)used technology.
This might work in the short term. For example, the IT cost reduction strategy of renegotiating service level agreements and software licenses with your service providers can impact the bottom line.
Unfortunately, these cost-cutting initiatives don’t consider the business growth effects in the long term. IT spending often fuels business growth. And it’s important to know where to cut so you can avoid accidentally severing a cash flow stream.
In this blog, you will learn the 9 steps you can take to cut operating costs in a strategic way, without jeopardizing the company growth.
Many IT leaders suffer from premature cost optimization.
Without knowing what causes inefficiencies in your IT infrastructure and IT operations, it doesn’t make sense to cut expenditures and streamline IT department costs.
Start by measuring the cost of your data assets (tables, workflows, etc.) throughout their lifecycle. You need to create metrics that answer:
This will help you identify historical data dumps not being used by any business process and random EC2 instances running without any jobs on them. Those IT services that cause costs but are not linked to any cash flow can be cut without questions.
Use the TCO as a benchmark to prioritize cost-cutting for other data assets.
Pro tip: Building TCO benchmarks and metrics can be extremely hard and time-consuming. Especially when you operate over a fragmented tech stack where each app has a different method of reporting usage and costs. Instead, rely on tools like Keboola that expose telemetry across your entire data stack, that tell you exactly which tool is running and how much data, storage, and compute it used, so you can quickly build your own TCO insights for building effective cost reduction strategies.
According to Boston Consultancy Group, re-architecting your data infrastructure brings cost savings in the long run: the right tools can bring 15-40% cost reductions.
The future IT architecture is decoupled, federated, and oriented towards self-service. And we agree.
The thing is that architecture redesign can be time-consuming and therefore increases your labor costs.
However, there are some low-hanging fruits that you can start implementing today.
Running data centers in-house can be expensive. Beyond the procurement of IT infrastructure, you need to devote engineering resources to monitor, maintain, and upgrade your on-premise shop.
Instead, migrate your existing data assets to the cloud. Cloud providers offer features that help you achieve cost reductions with advanced automations such as cloud computing on demand. No need to reserve and upscale compute resources manually, the cloud infrastructure does it for you, so you only pay for the resources you actually need.
Recommended reading: Check our step-by-step guide that demystifies migrating from on-premise to the cloud.
CIOs used to devote large amounts of IT budgets to state-of-the-art hardware.
With the proliferation of new products, advanced hardware is not the battlefield where the competitive edge is gained.
Today, open-source software uses low-cost hardware to achieve state-of-the-art results in:
Take a look at your IT infrastructure use cases and see where old hardware can be brought to life with new technologies.
With the explosion of new products that solve niche IT problems, the tech stack of IT departments has become progressively fragmented.
On the one hand, this is expected. Each tool is specialized in solving a niche problem, so you need more tools.
On the other hand, this brings management hiccups (and increased engineering costs) when trying to make the tools work together.
The new products charge you twice - once for purchasing/using them and once for integrating them. Increasing your TCO.
In the previous section, we addressed how to repurpose your existing architecture for cost optimization. Here, we'll examine how to make the architecture more effective through better processes that drive cost reductions across the board.
Data operations (DataOps) often increase company expenditures. They require a lot of manual work, building, maintaining, and validating ETL data pipelines and associated tasks.
Luckily, you can automate the majority of the heavy lifting with the right tools. For example, instead of manually coding an Airflow DAG to perform an analysis, use tools specialized in DataOps automation like Keboola.
Keboola offers many features that streamline and automate your DataOps:
Case study: Harri built and launched an AI product in 3 months with 3x fewer people by leveraging Keboola automations. Read the full story.
Companies go into cost-cutting initiatives because the balance sheets cannot compensate for the high costs given the small cash flows.
Instead of optimizing costs, you can rethink this equation as increasing cash flow streams.
Automations don’t just save time. They also liberate IT resources to prototype and develop new products that are revenue-generating and help lower the need for cost-cutting.
Case study: Mall Group launched 400 new products within a single year by using Keboola powerful process automations. Check the entire story here.
Data management and data governance help you establish tools and processes that take control over data flow by tracing its lineage through its lifecycle - from collecting raw data to driving insights.
Tracking data lineage helps you save costs on three levels:
One tool that makes tracking data lineage a breeze is Keboola.
Not only can you automate your entire data pipeline: from collecting structured and unstructured data to transforming and storing it for analysis. At each step, Keboola automatically tracks all relevant metadata and constructs logs, which gives you a granular view of data lineage so you can identify the root cause of errors immediately.
Schedule a call with our data professionals and learn how you can save time and money by tracking data lineage as you build.
People are often viewed as labor costs on the P&L sheets. However, firing people often leads to distrusting and overburdened people left behind, which worsens the situation in the long run.
Instead, think of how to use your human resources to bring value.
You should always upskill your workforce to keep the competitive edge. As new technology proliferates, upskilling your engineering workforce might not be sufficient.
Instead, invest in data literacy and technological know-how by teaching your workforce to self-serve their IT needs.
By teaching non-IT experts to self-serve their own needs, you also lower the burden on the IT department and cut costs serving other departments.
Pick tools that make the self-serving transition easier, for example by offering Visual Flow Builders that let you effortlessly design and deploy any type of data pipeline using visual drag ‘n’ drop user interface.
Self-service tools and features like this democratize data access, empower everyone at your company to tackle data challenges independently, and liberate your engineering resources from spending hours answering technical requests.
Your IT department does not have to be an expert in every tech stack it uses. Often, you can save costs by hiring external IT services that offer concierge packages and build part of your IT infrastructure for you.
To understand if outsourcing saves costs, look at the TCO from step 1. If the labor costs for upskilling and building the tool yourself surpass those of hiring a concierge service, outsource your tech needs.
Keboola can help you save costs across all the steps above without compromising on business growth:
Schedule a call and let’s talk about how to reduce IT costs with Keboola.
