4 Ways CIOs Can Optimize Their IT Budget

The economic climate is the most turbulent it has been for many years.

Many business leaders are cautious about what’s ahead and may even be re-evaluating their budgets, urging departments to free up operational costs in favor of growth-oriented opportunities to protect against the volatile economic and business landscape.

But streamlining budgets in a targeted way, without compromising on key business priorities or growth outlook, is a difficult task.

This will ring especially true for CIOs, who are increasingly relied upon to assume responsibility for finding new opportunities for innovation, growth, and the adoption of new technologies – and all that is in addition to their regular roster of technical responsibilities.

So, how can CIOs and other IT leaders optimize their current budgets, streamline processes, and free up resources to focus on the projects that matter? Here are four cost optimization techniques to consider.

Switch to third-party software support

Support for your software ecosystems is not something you can cut. But if you’re using your vendor’s ready-made support package, you know it comes with a hefty price tag. Some enterprise software vendors, for example, charge approximately 17-22% of the original license costs for their ongoing support packages.

CIOs need the peace of mind that when something goes wrong with their software, they’ll get a resolution quickly. But often, they find that their teams are spending too much time chasing vendors for solutions or working through fixes themselves. Customers are understandably frustrated by inefficient, costly vendor support packages.

Fortunately, there’s another option. Third-party software support, which is what we here at Spinnaker Support specialize in, is an established, trusted alternative to your vendor’s pre-packaged support offering. And it’s cost effective.

In the Gartner^®, Market Guide for Independent Third-Party Support for IBM, Microsoft, Oracle and SAP Software, September 12, 2022, Gartner states “Software is the second-highest IT spend category industrywide, which drives sourcing, procurement and vendor management leaders to analyze cost-saving opportunities offered by third-party providers. Use this guide to identify options that can reduce your software maintenance costs by 50% or more.”

Third-party support typically costs less than half of your vendor’s support. But cost-effectiveness isn’t the only benefit. Third-party support also means faster response time with higher quality service.

Security is central to all IT leaders’ strategies. If a cost-cutting measure ultimately opens the door to cyber risks or breaches, then it’s not going to be worthwhile. If you have been using software for several years, to host your critical applications, you do not want to be forced to migrate to a new version or the cloud. But, if you don’t move, you will be downgraded to vendor support that offers no security updates and therefore puts your applications at risk. Third-party support contracts will not put your organization at unnecessary risk.  You can extend the life of your critical applications until you decide to update or migrate.

By breaking out of the continual upgrade cycle, many businesses will no longer have to worry about the risk inherent in perpetual updates. And with no forced upgrades or nudges to take on additional products, businesses are not subject to hidden price rises down the line.

Consider managed services

How much time do your people currently spend on updating, monitoring, and testing? It’s an integral part of maintaining any infrastructure, and often the task falls to internal IT teams.

For businesses eager to grow and expand, it’s difficult to allocate staff resources to strategic, innovative projects when software and infrastructure management is required.

Consider managed services, which will look after your Oracle, SAP, or Salesforce infrastructure by handing over the management to a third party.

Not only does this free up your salaried staff to work on business-critical projects, but opting for managed services grants your organization access to affordable engineers and experts 24/7, all year round. Combine this with a third-party support offering, and you’re looking at a complete, holistic approach to your software support and management.

This equates to constant monitoring of your software, daily maintenance, scheduled updates – all at a lower cost than an in-house equivalent.

Get on top of shadow IT                 

Shadow IT, especially in the age of widespread remote and hybrid working, is an ongoing headache for IT teams.

And as every CIO knows, the costs of managing shadow IT can be huge – from fixing issues on non-supported applications, software, or devices to remediation costs if the use of these unauthorized tools leads to a breach.

Streamlining the use of approved applications across an organization ensures less time is spent solving technical issues that are outside of the IT team’s purview. It also means IT leaders no longer must constantly monitor potential unknown threats from unauthorized IT usage. At the same time, that’s a win for organizational security.

Understand the use of cloud

Cloud services are usually favored for their scalability and flexibility, but organizations that opt for cloud-first ways of working often also see long-term cost-savings. Crucially, this involves using cloud services efficiently, with granular monitoring and continual operational assessing. Without it, businesses risk wasting cash on unused or bloated services – this year, a HashiCorp report revealed that of the organizations it surveyed, spending on cloud infrastructure is up, but over 90% are wasting part of this investment.

Cloud management and the costs associated with it shouldn’t just be left to IT teams to oversee. For an effective cloud strategy, and one that prioritizes cost effectiveness, teams must work collaboratively to align cloud costs with the business’s overall goals, targets, and ROI. When business leaders start interrogating how cloud usage relates to revenue, important decisions can be made about how to effectively divert and allocate budget to the most strategically important divisions, personnel, or growth projects – while minimizing waste.

A sizable proportion of IT budgets are still spent on daily business operations, with only a fraction allocated to innovation or growth initiatives. Yet this often feels at odds with the commitment of many firms in a challenging business climate to explore new technologies and prioritize growth instead of doubling down on procedural or operational activities.

To give your people the time and resources to work on the business projects that matter, consider employing these cost-optimization techniques – third-party support, managed services, advanced cloud, and shadow IT strategies. Your business can reap the rewards from streamlined operations, a renewed focus on innovation, and a better balanced and managed budget.

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

Spinnaker is the steady force entrusted by companies worldwide to solve their most pressing and essential software needs. Our experts provide an extensive services portfolio of third-party support, managed services, and consulting to optimize clients’ software ecosystems – freeing up valuable capital and resources so they can realize the full potential of their software and navigate their businesses with certainty. Learn more at SpinnakerSupport.com.

About the author

Spinnaker

As Spinnaker Support’s Chief Technology Officer, Mr. Saunderson is responsible for the internal and external facing technology leveraged at Spinnaker Support, as well as managing the security practice.

Iain Saunderson has over 30 years of experience implementing complex technologies across a wide variety of commercial and government verticals. He has served in leadership roles in organizations including Oracle Corporation, P2 Energy Solutions, and DBAK. Iain’s experience is in leading enterprise architecture, development, and managed services organizations. Mr. Saunderson lives in Colorado and enjoys spending time trail running and skiing in the mountains. He holds a Bachelor of Science in Computer Science and Business Information Systems from the University of Natal in South Africa.