How to Optimize IT Costs During Difficult Economic Times

by | September 8, 2022

It goes without saying, but inflation is still omnipresent despite some easing in a few key areas, and the dark cloud of an economic downturn is an approaching threat. While this is a tremendous strain on individuals, businesses feel the pain from both sides. Coupled with supply chain disruption and the pressures of geopolitical stability, we’re seeing a perfect storm of challenges that are impacting the bottom line of many—if not most—businesses across the globe.

Dark Clouds

On the supply side, costs are rising from every direction. Energy, shipping, raw materials, wages… it might be easier to name the costs that are stable. On the demand side, we are already seeing a slowdown in discretionary spending which will only be exacerbated by a continued decline in macroeconomic conditions (e.g., recession and stagflation are both possibilities).

Many businesses are anticipating the impact and preparing for the worst. At some point, cutting costs will be necessary, and when budget cuts are on the table, IT budgets are often the first to be re-evaluated. The impulse to cut back on technology is a risky one. In today’s fast-paced world, technology is the lifeblood of many businesses. It keeps them connected to customers, gives them an edge in the market, and protects them from cybersecurity threats or the damage to their brand that can come with not being able to run operations efficiently. Despite that, many businesses continue to look at IT as a cost center rather than a value center.

A Silver Lining

For IT leaders that anticipate they may feel the pinch, there are proactive steps that can be taken to reduce costs, get more for the budget you have, and keep the integrity of your technology infrastructure intact. This is especially true for certain vertical markets that will be hit hard by tough economic times and reduction in consumption or discretionary spending—such as Hospitality, Manufacturing, and Retail.

Your IT infrastructure and department can emerge leaner, more efficient, and more nimble than ever before. This may be the impetus you need to prioritize some modernization efforts that can have positive ripple effects into the future.

4 Ways to Optimize IT Costs

UPSTACK recommends these ways any business can optimize its IT budget:

1. Upgrade Telephony

If you’re still managing a legacy PBX, it’s time to upgrade because its days are numbered anyway. The cost of managing, maintaining, and finding parts for your phone system is like an anchor dragging down your budget. Making a move to the cloud will increase productivity while dropping costs across the board. Modern alternatives that are based on VoIP and/or cloud-based technology like UCaaS and CCaaS have more features, enable collaboration, and improve productivity while having a drastically reduced total cost of ownership (TCO).

It’s not uncommon to find businesses that are still using traditional telephony connectivity options like T-1s, PRIs, and POTS lines despite them being decades behind the adoption curve. With the adoption of more modern phone system options, the door is open to leveraging more cost-effective connectivity like broadband or other DIA (dedicated internet access) options that can also keep you connected to the cloud applications that drive your business.

2. Migrate Your WAN

Chances are, if you have a need to have a fully meshed wide area network with Quality of Service, you’re paying a comparatively exorbitant cost for MPLS when you could have better performance, redundancy, and flexibility/scalability with SD-WAN. SD-WAN can use existing DIA or broadband connections, lowering the connectivity costs and eliminating the need for redundant circuits (e.g., use the broadband at one location for internet and WAN access instead of having a dedicated local loop for the MPLS circuit). Businesses often have reduced equipment and port costs when migrating to SD-WAN.

3. Leverage Managed Services

Your IT team has to balance strategic projects with the day-to-day transactional type of work like helpdesk/support, monitoring, updating, etc. By leveraging managed services, you can free up more of your resources to focus on the strategic work or, if necessary for the financial health of the company, implement a hiring freeze or eliminate some positions. You can ensure the network is running optimally and is protected while you deal with optimizing headcount. Further, managed security services, for example, can save you from having to hire full-time personnel. You may be able to hire two generalists for the price you’d pay for a security expert in today’s competitive job market. The same goes for other specialized skills you may need to hire for.

4. Leverage Automation

Looking outside of your department, one key area for most businesses to find efficiency, cost savings, and potentially saving on headcount is in their contact center. By implementing a smart CCaaS (Contact Center as a Service) solution with automation, you can create significant efficiency in call/contact handling, operations, and ultimately require fewer agents. Check out our recent post about how automation in your contact center can create more value than just cost savings.


The First Step

Navigating the challenges ahead will be difficult enough, and that can be compounded by the urgency, pressure from above, and the need to fit cost-reduction projects into an already packed work funnel. These projects are low-hanging fruit that will move the needle, but they still take time and expertise to do right. Oftentimes, IT leaders like yourself do not have time to evaluate vendors and look at new solutions. At UPSTACK, we help streamline IT procurement by tapping into a single source for mission-critical technology services from hundreds of proven providers along with the professional guidance to identify and evaluate the best solutions for your business.