COVID-19 has impacted organizations in multiple ways in their ability to serve customers while ensuring the well-being of its employees and will continue to do so into the 2nd half of 2020 and even 2021. In response, most IT leaders made rapid cost reductions while addressing a new reality for both its employees and customers.
As the economy slowly starts to rebound and businesses not considered essential start to cautiously reopen, we’ve learned more about the impact on IT organizations.
CIO recently did a COVID Impact Survey which revealed, not surprisingly, that 2020 IT budgets saw an impact from COVID-19 and Cost Control/Expense Management is now a top priority for IT Leaders. Prior to COVID-19, 59% of IT Leaders expected an increase and 34% expected a flat budget in 2020, but post COVID-19 only 25% expected budgets to be higher than 2019 levels.
The analyst community also expects contraction in spending in technology. IDC expects a decline of 2.7% in worldwide IT spending with every industry impacted. Hospitality, tourism-related industries, and personal and consumer services are expected to decline by 5% or more.
Gartner paints a more grim outlook, declaring they expect an 8% decline in global IT spending. According to John-David Lovelock, Distinguished VP Analyst at Gartner, “CIOs have moved into emergency cost optimization which means that investments will be minimized and prioritized on operations that keep the business running, which will be the top priority for most organizations through 2020.”
As we go into the second half of 2020, we wanted to share 5 ways to reduce or keep your IT infrastructure costs under control amid a COVID-19 response.
1. Prioritize Optimization Programs
Organizations should ensure that they have optimization programs in place to make sure that they are not wasting resources. Often, major programs are put into place and little is done to ensure that they are running optimally and are as cost-effective as possible. Cloud Spend Optimization is a great example of how organizations can save up to 30% on their monthly cloud costs. Storage performance assessments can help optimize and improve performance and reliability and identify options to extend the life of existing storage assets by deferring hardware purchases
2. Speed up Transformation with Cloud Migrations
Many organizations had planned cloud migrations in 2020 or beyond and these remained in the budget. This is a great time to speed these transformation projects up in order to receive the cost-benefit from an accelerated implementation plan.
3. Utilize On-Demand Resources
Many organizations had to make changes to existing staffing levels – particularly in non-critical roles or areas outside major headquarters or key technology hubs. However, this did not change the need to support critical hardware in other areas around the globe. Instead of hiring additional staff later, it may be a good idea to look at project or ad hoc staffing options for break/fix, remote hands or IMAC projects that are still necessary.
4. Limit New Assets or Extend Lifecycle of Current Assets
Hardware refreshes should be limited to needed hardware to assist in changes to the working environment such as working remotely or implementing new products/services. Third-party maintenance options can extend the lifecycle of server, network, and storage hardware post OEM warranty/support. You can also consider purchasing pre-owned used hardware, when additional capacity is required or even gain additional revenue from ITAD programs if necessary too.
5. Partner with Key Vendors, Control Costs and Gain Flexibility
As you make cost control adjustments, it’s important to ensure the health of key vendors and utilize partnerships in order to create win-win opportunities. For example, perhaps a managed service provider or third-party maintenance provider will allow greater flexibility in terms of service level agreements. You may be able to even alter the SLAs by location when an OEM may not be able to do so. Partnering can often provide new cost-saving opportunities when both parties tackle a challenge or goal with a win-win mentality.
The impact of COVID-19 will be felt throughout 2020 and into 2021. Businesses still have customers and employees to serve – although it may be different than in the past. In many cases, this has accelerated digital transformation. However, the business reality is that IT Leaders will have to adjust while also being diligent about cost control.