The 3 Most Important Goals of IT Cost Optimization

    December 1, 2016
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    By Dino Balafas

    IT cost optimization is always a balancing act between minimizing costs and risk while maximizing business value. These strategies can help your business find steady footing.

    Here’s a thought experiment: imagine you’re an amusement park manager trying to optimize costs. You know that you can reduce costs by removing safety precautions on your roller coasters, but doing so will put your customers and business at risk. Alternatively, you can save operational costs by discontinuing most of your rides, but this will greatly diminish your business value. What are you to do?

    IT administrators oftentimes find themselves in a similar situation. For amusement park managers and IT administrators alike, proper cost optimization is always a balancing act: minimizing risk and costs while maximizing business value. Doing all three at once isn’t easy, but it’s necessary — neglecting costs, business value, or risk will quickly drive a business into the ground.

    Minimizing Risk

    Mark Zuckerberg once claimed that “The biggest risk is not taking any risk.” While we agree with the sentiment, the truth is that unnecessary risk should still be avoided. To avoid costs and embarrassing mishaps, IT needs to plan for a secure future.

    One way to do so is by investing in capacity prediction software. Without such a service, you may end up like ESPN’s fantasy football app on opening day: crashing because of a server shortage during a usage spike. As an added benefit, capacity planning software minimizes costs by identifying when cloud spend can be reduced — that way, your IT budget will never be invested in redundant servers or unnecessary infrastructure.

    Minimizing Cost

    All too often, IT cost optimization is considered synonymous with cost reduction. In reality, the two processes require entirely different mindsets, and confusion of the two can lead to lost profits: IT spend will always be necessary for business growth, and some companies could actually optimize costs across the business by increasing IT spend.

    That being said, cost minimization is still an important component of any IT cost optimization strategy, and business shouldn’t spend unnecessary amounts for limited benefits. There are some simple ways to decrease costs that come with their share of risks to profit and workplace morale: outsourcing, salary reductions, downsizing. While some companies may benefit from a little trimming down, there are usually better ways to limit costs while maintaining a happy workplace.

    One way to do so is by making smart decisions with regard to app-hosting location. While some apps demand less spend when hosted on the cloud, roughly one-fifth of all cloud-hosted apps would cost less if hosted on traditional servers. By using a performance analytics service, you can understand where apps run best.

    Maximizing Business Value

    The third leg of any IT cost optimization initiative should be maximizing business value. While this may seem incongruous with minimizing cost, the truth is that it really isn’t — companies just need to make smart investments that deliver high returns.

    Development methodologies like DevOps, Agile, and Lean can increase productivity within IT and — if scaled properly — the entire business. These methodologies can lead to increased revenue by increasing procedural efficiency. Furthermore, they may help your business stay one step ahead of the competition by reducing time to market and promoting innovation.

    Together, this approach can optimize IT cost for any business. Since the role of IT is always growing in importance, now is the perfect time to implement these strategies.