IT’s Biggest Moneywasters

In lean times, there is a need to save and we all need to check where money gets wasted. Businesses overspend on software licenses and other expenses where there are excess money going in, but not optimally used. Is it possible to have too much bandwidth at your disposal and to store too much email on the company servers, not to mention money wasted on paper and ink? Then there are those projects that ends up not being used dragging precious IT resoures behind it.

It doesn’t have to be this way. Though there’s no one-click solution to any of these money wasters, there are ways you can stanch the flow of money and use it on the items that will make your IT organization shine. Here are the secrets.

A. Dusty Software Licenses

We used to call these software as shelfware, for these are the software that we have paid but we are not using. For example, only 50% of the employees are using a specific software, but we are paying for it in full. It may mean that we only allow 50% of our employees to use the software, or we allow 100% to use the software, but we can only use 50% of it.

What companies can do is to review their named user licenses and re-negotiate agreements to remove unused or duplicate users from licenses. The difference between a 2,000 named user license and a 1,500 named user licenses can go as much as 2.5 million Pesos.

Small and midsized businesses may be able to get away with using an Excel spreadsheet and their accounts payable records to true-up their software needs. But larger, more complex operations need enterprise-level software that can track software assets, gauge their use, and optimize the licenses accordingly.

Every company should start by collecting information on the software they are paying for and what they actually use. For many companies, that tends to be a one-time event instead of a continual process. Asset tracking and license optimization need to account for such details as downgrade rights and second-machine use rights. Global companies may have concurrent agreements that allow them to use one license 24/7, shifting from one physical location to another as the day progresses. Even users of cloud apps need to closely monitor their usage levels — which can be hard to do manually.

A business may want to be able to combine that information in an intelligent and automated way so that you can make good decisions about optimizing..

The other option: Ditch those draconian licensing agreements and go open source. Open source software can’t solve every problem, but it’s come a long way in the past 10 years.

Outside of certification-driven fields like finance, health care, and the military, most ERP customers are overpaying massively for Unix and relational database capacity and features that are never used. The software licenses run to the millions, and once they have built on this foundation, the victims can never escape. The rationale was that you don’t entrust a big business infrastructure to open source hippies. It was wrong 10 years ago and it’s ludicrous today.

B. The Paper Chase

Sometime around five years ago, there was this IT concept called the “paperless office”. But five years after, it turns out to be a fantasy.

Despite the influx of digital technology over the past 30 years, office workers still consume an average of 10,000 pages per person every year — about Php 4,000 worth per employee per year. Nearly half of that paper ends up as trash before the day is out.

But the costs don’t end at paper. Ounce for ounce, the ink inside a typical printer cartridge is 15 times more expensive than champagne. Filing that paper, copying it, mailing it, storing it, and finding it again can add up to more than 30 times the original cost of printing

A paperless office is still not very likely. But a less-paper office is entirely doable. Step one: Get rid of forms that need to be processed by hand.

Companies often use paper forms to complete daily tasks or electronic forms that are then printed out (vacation requests, time sheets, bill-back spreadsheets, etc.). Copies of these are sent to another group of people, like HR, after that — the next step in a long, overly complicated approval cycle — and finally handed off to the department head. You multiply this by the hundreds of admin tasks that require approval every day, and you can practically see the trees frowning.

Simply converting required forms from paper to digital can instantly bring savings. .

Step two: Get employees to stop needlessly printing all or parts of emails, Web pages, or other electronic documents that don’t really need to be on paper.

There are no magic buttons that an organization can press to solve the print waste problem. In the end, individuals are responsible for creating print waste, and they have to be involved to make it go away. Once people are engaged, they have to be empowered with the right tools to solve the problem, and then the organization must enforce the print reduction targets it established.

C. Gold Plated Outsourcing

Whether it’s for help desk services, web hosting, or server uptime guarantees, too many IT organizations are paying for Mercedes Benz-level service when a Toyota Camry SLA is more than adequate.

Most sourcing agreements for IT services include amazingly high service levels. But how many businesses really require 99.999 uptime 24 hours a day, 7 days a week?

Unless that downtime puts you at a competitive disadvantage or causes revenue to slip through the cracks, it probably won’t make a difference. There are exceptions, of course. If you’re a county government, you don’t want to reduce the uptime for your 911 emergency service, but your accounting data probably doesn’t need to be accessible 24/7/365.

Even IT departments where labor and outsourcing budgets have been trimmed to the bone can still save money by taking a hard look at their service-level agreements, especially in the area of help desk support.

The hardest part here is deciding what services are essential and which are merely optional.

D. The E-Mail Monster

E-mails are known to be anti-productivity and it also sucks money out of your organization in terms of storage, maintenance, software licenses, server upkeep, and the constant battle against spam, malware, and data leaks. It’s a problem that will only get worse.

Netizens have sent 247 billion emails a day in 2009, per research studies, with enterprise email accounting for roughly a quarter of that total. By 2013, email volume will double — creating a big storage headache for enterprises. .

Resources consumed by email messages and their attachments are a major concern for many companies. Roughly, a 10,000-user organization without mailbox policies consumes an average of 30GB of storage per day from email messages alone.

Using software configurations or an enterprise email management tool in conjunction with an email archive policy can cut storage costs by managing retention, enforcing limits on the size of file attachments, and redirecting users to third-party collaboration tools .

Monitoring and understanding the habits of email users and helping them find alternate ways to send, store, and retrieve information can result in significant storage cost reductions and, as an added bonus, increased email performance.

But others argue that the proper place for email is the cloud, where the rising storage, maintenance, and security concerns are somebody else’s problem.

For companies with up to 1,000 people, having an in-house email architecture is a huge waste. Email is definitely one of those things that should be outsourced to the cloud. You no longer have to worry about the costs associated with hardware and software licenses, downtime, combating viruses, or emergency calls to IT admins at 3 a.m. A hosted email platform is backed up automatically, has a 24/7 staff, is more up to date on security patches, and is staffed by email experts instead of tech generalists. If you want to save some money, host your email.

E. Excess Bandwidth

A person can’t be too rich or too thin, nor can you have too much bandwidth at your disposal — at least, that’s the common belief. But many companies are wasting their money on bandwidth they don’t really need instead of doing a better job managing the bandwidth they already have.

If a problem arises anywhere on the network, IT’s first response is almost always to throw more bandwidth at it.

If you’ve got a T1 line, then it’s time for a T3. Still too slow? Then go for a 100Mb pipe. But when they look at their actual bandwidth usage they find out they’ve got a 100Mb pipe but are only using 1 percent of it.

Companies that have overbuilt their networks shrug and say they’ll eventually grow into it. A better approach is to build a little ahead of the 8-ball, but manage it as tightly as humanly possible. Understanding what’s happening and having great visibility and control is how you can get the most out of your investment.

At a certain point, bandwidth becomes a status symbol; if a company buys Tier 1 bandwidth, they think it makes them a Tier 1 player. That’s not necessarily the case.

Deep down, ambitious executives believe they will be the next YouTube, and that’s a good thing. So when it comes a time to build, small companies buy expensive servers or managed hosting (‘to grow into’) when a cloud service will serve them surpassingly well. Medium-sized companies buy elaborate blade infrastructures and Tier 1 bandwidth, when they only need downmarket hardware and more affordable hosting solutions. And they will never meet a salesperson who doesn’t agree.”

Honestly, we have managed to do a complete Internet based architecture before with just 1 MBPS of connection, with a 516 kbps of connection as a backup.

F. IT projects gone wild.

Ambitious, big-budget IT projects often seem to have failure built in from the start. In survey after survey, IT organizations have reported project failure rates of 30 to 70 percent. Trust me, been there, done that.

The tech industry is rife with stories of multi-million-dollar projects that are late, overbudget, or simply abandoned. According to research reports, one out of four IT projects is never completed, collectively costing companies millions to billions in Pesos.

The most common root causes of IT waste I see follows a theme of poor IT project management. The biggest problems? Failure to adopt a standard way to measure a project’s success (or lack thereof) and a hands-off approach from management.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s