20 Real-World IT Cost-Cutting Mistakes You Need to Avoid

Dozens of industry experts were asked, “What are the worst IT cost-cutting mistakes?” This is what they had to say.

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3: Consider the next service level down. “The difference between 99.9% availability and 99.8% availability is 87.6 hours in a year,” said Podowitz, “But that can mean a difference of tens of thousands of dollars of cost.”

15: We’ll save money by building it ourselves

Adam Haines (@Adam_Haines), Director, Systems Engineering at Federated Sample, admitted to making a mistake when he chose a home-grown solution to move his company’s Big Data warehouse from an on premise Microsoft SQL Server to the Amazon cloud.

"The scripts [on the data syncs] were constantly breaking because of schema changes, which meant I had to babysit the system. I literally could not take a vacation," said Haines who ultimately purchased an off the shelf program, Attunity Cloudbeam.

Based on just Haines’ salary the solution paid for itself in one month.

16: I’ll take the free software. It’s obviously cheaper than the expensive software.

“Some IT professionals don’t want to impact the IT budget, so they download unsecured, unauthorized free software,” said Nathan McNeill (@Bomgar), Co-Founder of Bomgar and now external consultant. “Ultimately, these free tools cost businesses more in security risk than the cost of their enterprise-grade equivalent.”

Deepak Kanwar (@zenoss), Innovative and Marketing Leader for Zenoss, conducted an analysis proving the free tools his company were using were negatively impacting the organization’s productivity.

“The hidden annual costs associated with their upkeep and inability to contain downtime easily ran into the millions," realized Kanwar.

Whenever Kanwar argued for a replacement due to the catastrophic productivity loss of using free software, the response would always be, “but they are free.”

“Less expensive or free security solutions make up the cost somewhere,” said Nigel Johnson (@ZixCorp), VP of Product Management and Business for ZixCorp. “There are three points on the product triangle: features, risk, and price. You can’t have lots of features, no risk, and a low price.” 

17: Where else could the problem be but in IT?

If IT costs are high, then you have to cut IT, right? Not always the case as Bruno Scap (@MaseratiGTSport), President of Galeas Consulting, discovered as a client was trying to outsource IT operations.

“The real reason the IT infrastructure costs were high was the lack of processes and procedures inside the IT organization,” said Scap. “Even with all the IT staff, providing services took a long time. The impression of internal buyers of IT services was that the IT department was disorganized. They often did not have a clear idea with whom to address which problem, or how to request a new service that was needed.”

18: This self-service portal will save so much money on the front end, but on the back end…

If we make users request IT service through a web portal, then it’s got to be cheaper, right? Problem is a web form on an antiquated IT process full of manual processes isn’t going to solve the actual process of fixing IT services. In fact, it may introduce new process levels that involve even more people.

“Things that used to be performed without any charge suddenly cost $50 or $99 or more in internal dollars,” said TAG-MC’s Jaludi who realized the pretty self-service web form they instituted launched a whole new host of unnecessary requests that didn’t exist before.

“If you're going to use a self-service web portal,” advised Jaludi. “Make sure it is easier and cheaper than what it's replacing and that it doesn't create additional work on the back end.”

19: We’ll save money with BYOD.

“The average price in the US, for a properly optimized smart device, with voice and data plans is between $65 and $80 per month,” noted Wayne DeCesaris (@Tangoe), SVP of MDM Solutions for Tangoe. “It’s very appealing for decision makers to implement a BYOD program with the hope of transferring this entire cost to the end user.”  

"What’s become apparent, though, is that with loss of ownership very often goes loss of control,” noted Tim Williams (@TimWilliamsABT), Product Manager for Absolute Software.

Combine loss of control with a quarter of employees who don’t think company data on their devices is their responsibility and you’re going to have to institute policies and find a mobile security solution that’s both acceptable by employees and works on all their phones.

“The cost of maintaining an appropriate level of data and device security can often equal or outweigh the savings from BYOD,” said Williams who is pro-BYOD, just not for cost-cutting reasons.

20: I sure hope cutting this service doesn’t have a ripple effect throughout the organization

“A single technical decision often has far reaching consequences that aren't immediately apparent,” said Shane Sargent (@goAgosto), Technical Account Manager for Agosto.

Sargent advises firms to clearly think through each cost cutting decision they make. For example, if you want to dump your phone service and go with a cheaper solution, you have to ask how that will affect other aspects of the business. Will it integrate well with the CRM so you can pursue sales, deliver excellent customer service? And can the new service allow employees to work from home?

"Each IT decision point is just that: a single point with few ties to every other IT decision point,” said Sargent. “A business doesn't want points, it wants lines or pathways that all lead to a single success outcome.”

Conclusion: Cutting costs is a big picture issue

IT cost cutting shouldn’t be a knee jerk or rash decision. Every decision has implications, and some cuts you can live with and others you can’t.

Dennis van der Veeke (@CTOSDL), CTO of SDL, advises that “CIOs work together with CMOs to outline the journey and the ‘bigger picture’ so the integrated approach to technology is aligned with the overall goals of the organization.”

While this article highly advises companies to not make quick decisions when it comes to IT cost cutting, sometimes a rash cut can bring out the best in your people.

Ten years ago David Mortman (@mortman) was a CISO for a large software company where his budget got completely demolished – down to a mere $64K (not counting headcount) and that was already earmarked for existing support contracts. The lack of budget forced Mortman and his team to be creative with what little they had.

“We learned to be even more process driven and to focus on doing things well rather than just throwing more technology up against the wall,” said Mortman who is now Chief Security Architect at Dell. “It was a painful lesson, but in the end very worthwhile.”

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Copyright © 2014 IDG Communications, Inc.

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