Cutting Costs in IT Departments

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IT Cost Saving Measures

In any economy, costs can be minimized for an IT department, with a bit of diligence.

Here are ten steps you can take to reduce or eliminate certain IT costs:

  1. Sell Unused Hardware

All too often, an IT department will contain some older servers, workstations, switches, routers and other outdated, unused devices, whose useful life has long since passed. Sometimes such equipment will be relegated to a place in your organization referred to affectionately as “the dungeon” or “the graveyard.” Review the locations where old equipment is stored. Take an inventory of hardware that is no longer needed. Sell that hardware at auction (eBay, for example) and reinvest the proceeds into your IT budget.

  1. Cancel any support you may still have on unused hardware

Surprisingly, if you don’t reconcile all your hardware maintenance contracts on a regular basis, you might find that you are paying maintenance on some hardware that hasn’t been used for quite some time. So take a good long look at canceling any left-over maintenance on unused hardware.

  1. Perform a Software Audit

Along a similar vein to identifying unused hardware, you also should identify any unused software for which you are still paying fees. Once identified, you can:

a. Cancel any on-going license fees for unused software

b. Cancel any on-going maintenance contracts for unused software

c. Sometimes you can still sell even outdated software to some educational institutions, churches, etc. Note: Be sure and check any licensing agreements before doing this, to ensure full license compliance and/or transfer requirements

  1. Institute Intelligent power use

a. Use more power-efficient lighting.

It is amazing how many companies still have inefficient, incandescent lighting. Swap out any exiting older lighting for newer, more efficient LED or fluorescent lighting.

b. Adjust power usage and heating/cooling

In areas outside the data center (i.e., the floor area where offices and cubicles reside), whenever practical, cut the power and lights during off-hours (i.e., after 6pm), and reduce the amount of heating and cooling - i.e., if it is winter, and you have the thermostat set at 72 degrees, reduce it to 68 degrees or, at night, to 65 degrees. Do the opposite in the summer: If the thermostat is at 65 degrees on the cool side, see if equipment constraints will allow you to reduce the cooling to 67.

WARNING: Inside the data center, cooling often must be maintained at a certain level so, generally speaking, there is no room for adjustment ‘within’ data centers, as regards adjusting heating and cooling.

c. Consolidate racks and monitor/adjust power usage

Companies often don’t pay attention to power use and power distribution as closely as they should. Review your power distribution and see if you can consolidate half-empty racks into completely-full racks. This will allow you to stop powering and cooling 2 half-used racks, for example and, instead, just power the one full rack; the power and cooling to the now-empty rack can then be shut off, until the rack is in use.

d. Use power-monitoring devices and heat/air-monitoring devices to find areas of inefficiency and improve those deficient areas.

  1. Get rid of duplicated and/or non-essential employees

This seems to be the cold, cruel task nobody wants to hear about, but work with your HR department and with upper management to identify any positions that can be eliminated. Review your project lists and see which projects might be sacrificed or put on hold and/or if you can spread work of a non-essential, newer employee, to the more essential employees that would remain with the company. Once non-essential employees are identified, you may be able to cost-justify terminating those employees.

  1. Consider pay cuts

This seems to be the second-most-taboo subject among employees. The bottom line is: It is better to have a job than to have no job at all. With this in mind, you can ply the ranks and say, “Look, we can terminate people, or we can have ‘pay reductions’ and keep people on - those are the choices - so, would you rather have jobs, or take reductions in pay?”

Make them aware that the potential employee talent pool now, due to unemployment and the economy, is ‘huge’ and that it would be a simple matter to replace an employee with another at a lower pay rate - since many people now are willing to sign on at lower rates, just to attain stable, long-term employment.

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  1. Haggle

Vendors know that there is competition. Potential employees know that there is competition. Bargain with them.

a. With vendors, try to renegotiate existing and upcoming contracts - get competing bids. Show the vendor that she has to match a competing price or you will go with the competition.

b. With employees, try to get them at the lowest rate they will accept, whenever possible - pointing out the many benefits of the company and the position, and the future potential of both.

  1. Consider consolidating multiple offices

If your firm has more than one office, do a cost analysis to see if consolidating offices would save money. In most cases, such consolidation (centralizing multiple offices into fewer offices, or into one office) will end up saving considerable money in the mid-term and the long-term; sometimes even in the short-term.

  1. Virtualize

A single physical server includes more overhead cost than implementing a virtual server environment. Imagine buying 10 physical computers - this effectively replicates multiple costs, in the form of the multiple devices needed for the multiple servers, such as disk drives, NICs, drive controllers, graphics cards, CPUs and memory.

By implementing a virtual server environment, you could potentially have 20 “virtual” servers (aka “guests”) all residing on a single physical server called a “virtual host.” This single virtual host houses multiple logical virtual servers, thus saving costs by sharing a NIC or NICs, a large pool of memory, a large pool of disk drives, and CPU resources. Those physical resources are allocated in ‘slices’ among the various logical guest servers created within the virtual host. In addition, management of virtual servers is accomplished using a central ‘virtual console’ to manage all the virtual servers from a single location. This saves money compared to having to manage multiple individual physical servers, possibly in different locations.

  1. Telecommute

This assumes the employees have VPN access to the office via high-speed Internet connection. Allow employees to stay home on a staggered basis, and telecommute in to the office via VPN. This is especially effective for jobs below management level who do not have to frequently attend meetings. This includes Help Desk personnel, who easily can answer phones and can direct support calls from virtually any location. To some degree, this also can include second- and third-level network and systems engineering personnel.

Telecommuting cuts the cost the company must spend for the employee to occupy the office, including electrical power, potential risk of workplace or commute injury, parking, etc. Theoretically, this also includes the cost per square foot of the office space, but that only would come into play if you allow the worker to become a permanent telecommuter, whereby you can use his office for other purposes.

Additionally, telecommuting often can allow for easier concentration on issues at hand vs. having to deal with office political issues and other office distractions. Even management workers who have to attend regular meetings need not be ruled out, due to the fact that telephone conferencing and videoconferencing will allow them to attend their necessary meetings.


Reduce software costs by knowing which licenses do not need to be re-purchased/renewed

PC Inventory Advisor - Agent-free Hardware & Software inventory tool

A Frost and Sullivan article on “Intelligent PDUs”

DOE article on cost savings related to thermostat adjustments

A Fenwick & West article regarding RIFs (Reductions in Force) - pay cuts and redundancy are mentioned

Yahoo Finance article regarding pay cuts as a cost-saving measure

Messaging News article on the cost-saving aspects of virtualization

Viewpoints on Telecommuting

An Augusta Chronicle article that includes information and a chart on Telecommuting Trends