Immediate cost savings are imperative for the future of any business. From natural disasters to terrorist attacks there may be various reasons that might require you to have a contingency plan in place. Cost optimization and strategic investments are both necessary for a business. Assessing the IT cost reduction options require some rules to be kept in mind. Here are some of the rules:
- Immediate impact – Reduce, suspend, or eliminate the items that can leave an impact in one, six, or even nine months, not the ones that might affect yearly. Some of such expenses are incurred and paid either monthly or quarterly.
- Reduce, don’t freeze – Focus on the cost that can reduce or eliminate and not the one that just freezes for the current period, and might occur later.
- Monetary support – The items that have an impact on the real cash, future profit or an impending loss, rather than the items that are depreciation or amortization are the ones to target. For instance, cloud services are cost saving services that can have an impact on the cash and reduce the on-premises software licenses that are owned assets like hardware.
- Target uncommitted and avoidable expenses – Unless payments can be recovered or returned most of the immediate impact would be unspent. Evaluate your contract and termination clause.
- Plan once and do it – Most organizations don’t usually cut deep enough in the first time. This essentially means that they need to revisit the cost and do it again. This is in particular relevant for the cycles of all the ongoing reductions that can be especially dangerous.
- Consider sunk costs – Saving money is said to be sunk costs that are irrelevant. This means the future spendings should be without any relation to the past spending. From a cost reduction standpoint this holds true, however, considering whether the saving will be more than the benefit can be a point of trouble.
- Address optional and nondiscretionary cost – Optional spending, for example, for new ventures, extra ability or administrations, is frequently an apparently simpler spot to cut. Be that as it may, even nondiscretionary “maintain the business” costs, for example, IT framework and tasks can be cut by decreasing utilization or administration levels.
- Tackle both variable and fixed expenses – Fixed expenses will be costs that stay consistent, paying little mind to movement or volume, for example, office lease, memberships and finance. For fixed costs, center around disposal. Variable costs change with movement or volume, for instance, broadcast communications, temporary workers and consumables. For variable costs, center around both decrease and end.
- Inspect records – Work with your money accomplice to get a strong perspective on the cost level detail, for example, business ledgers, and the key asset report accounts, including cost collections and prepayments. Utilize this view to recognize explicit money decreases that will quickly have an effect.
Cutting or stopping projects or services where the cost is already spent or incurred. Be sure to cut down on all the irrational costs.
Single Point of Contact is one of the top Managed Security Service Providers in North America. Founded in 1999, our main objective were two important components to all businesses. Provide excellent customer service and reduce IT overhead. Our proactive approach to information technology (IT) solutions and services gives our clients the freedom to focus on their business instead of worrying about fixing and maintaining computers and mobile devices. We’re qualified to assist with all phases of IT management, including procurement services and complex projects. To learn more about how our services can benefit your organization, don’t hesitate to contact us any time.