technology cost saving strategies - it manager...

Copyright June 2003MDE Enterprises

TechnologyCost Saving Strategies

50 specific strategiesto save your companythousands !

Mike Sisco



by Mike Sisco


What’s all the fuss about cost savings?

• Companies need profits• IT has the leverage• Owners expect it• Expenses tend to get out of

line with revenues• It’s part of every Manager’s job


Companies burn money every day !


What this discussion contains

• Technology related cost saving opportunities from the “real world”

• Insight from actual experience• Any strategy has potential for

significant savings in most companies

• This is just the “first 50”, , , more to come in future releases



Technology cost savings can be grouped into the following categories:

• Direct cost reductions• Indirect cost savings• Cost avoidance• Productivity improvements• Expense offsets (revenue)



Direct cost reductions

Strategies that have a direct cost reduction effect within the IT Department



Indirect cost savings

Strategies that have a cost reduction effect in other departments within the company and outside of the IT Department



Cost avoidance

Future costs or expenses that may be avoided or reduced by applying one of the cost saving strategies



Productivity improvements

Quantifiable improvement in people productivity that can be measured and shown to allow people to do more work in the same amount of time.

Measurements will show that departments are able to avoid hiring as the company grows or can reduce headcount due to improved productivity.



Expense offsets (revenue)

Incremental revenue opportunities produced by a department that offsets expenses. This type of revenue is typically not budgeted.


Technology Cost Saving Strategies

Format used:– Strategy– Description– Category– Identifying (How to find the savings)– Quantifying (Estimating the savings)– Investment required (Y/N)– Tips (Tips on how to get the savings)



Cost Savings Strategy Checklist

A checklist tool is included to help you establish a cost savings strategy and to track your results against the goals set for individual strategies.

Included with the Cost Savings Strategy Checklist is a tool that prioritizes the strategies from my perspective as if I were walking into your company as a new CIO for the first time. This priority list will help you focus on the “low hanging fruit” opportunities first.



• Objectives:– Provide insight on opportunities

that exist– Give you the ammunition to find

enough savings in 90 days that saves your company several thousand dollars

– Position you to achieve moreand to increase your value in your company



1. Payroll 2. Recruiting3. Consulting / contractor fees4. Telecom (data) 5. Hardware and software maintenance6. Software license fees7. Travel8. Eliminate paper9. Postage 10. Projects without ROI11. Automate clerical processes12. Reduce employee downtime 13. Consolidate business applications14. Intranet opportunities15. Equipment purchases16. Server consolidation17. Capital request approval process18. Employee training 19. ISP fees20. Support desk FAQ’s



21. Management productivity22. Streamline operations23. LINUX 24. Temporary staff 25. Rent26. Advertising leverage with “pay per click”27. Wireless technology 28. Reengineer remote office applications29. Web enable data entry applications30. Supplies31. Negotiate better pricing on contract renewals32. Open Source applications33. Scanning & image retrieval34. Workflow35. Report distribution automation36. Network tools for software distribution37. Contracted employees / out-source services38. Cell phones39. Local & long distance phone service40. VoIP



41. Programmer productivity42. Online newsletter43. Out-source services44. Staff meetings45. Electronic documentation (PDF)46. Energy management services47. Virtual Private Network (VPN)48. Phone & network connection review49. Implement a cost saving reward program50. Revenue opportunities


1. Payroll Description: Excess IT staff can be eliminated or

reorganized by consolidating responsibilities into fewer positions. Salary, benefits and employee related expenses are eliminated.

Category: Direct cost reduction

Identifying: Analyze your staff roster for redundant staff or positions that are not really needed.

Quantifying: Sum up the positions to be eliminated, add a percentage for benefits (normally 15-25%). You can factor in other employee related expenses such as travel, training, etc. if you wish.

Investment: No

Tips:- Careful to avoid cutting “muscle”- Check with HR for company termination guidelines- Evaluate all “non-mission critical” positions


2. Recruiting Description: Recruiting expenses can be big hits

to an IT budget, especially for a small company. Avoid recruiting expenses by developing a working network to find new talent through peers, employees, and business associates. Another way to delay the recruiting expense is to develop a “contract to hire” program with your recruiter.

Category: Cost avoidance

Identifying: Recruiting is always an option to use or not to use. Preventing one unplanned employee turnover can save you thousands of dollars.

Quantifying: Look at previous year recruiting expenses incurred and gauge the savings based upon what can be a realistic achievement.

Investment: No

Tips:- Pay employee incentives for new hire referrals- Negotiate lower fees with your recruiter- Motivate your staff to avoid turnover


3. Consulting Description: Outside consulting services paid to

consulting companies for all types of assistance and advice.

Category: Direct and cost avoidance

Identifying: Look at existing consulting contracts for appropriate need based on current priorities. Cost justify future contract engagements based upon tangible value provided. Potential cost savings lie in both current and future contracts.

Quantifying: Calculate savings based upon reducing or eliminating engagements to estimate “direct” savings. Analyze upcoming projects to determine whether there is an ROI that can justify future consulting engagements.

Investment? No

Tips:- Consultants can also save you time and money !- Seek opportunities to renegotiate fees or scope.- Don’t eliminate critical services.


4. Telecom (data) Description: Systems connectivity costs

including WAN (wide area network) circuits, T1 type services, and other telecom services used for remote office connectivity.

Category: Direct

Identifying: Conduct an inventory of all telecom expenses from your telecom carrier invoice.

Quantifying: Total up the circuits/lines that are no longer in use or that can be eliminated along with the savings potential you have by reducing the bandwidth of certain remote office services but that still provides adequate response time.

Investment: No

Tips: Savings opportunity lies in:1. Lines, circuits no longer used or needed.2. Ability to consolidate remote operation services3. Ability to reduce bandwidth while maintaining

acceptable processing speeds


5. HW and SW maintenance Description: Maintenance support contracts related

to supporting hardware, systems and application software, and other equipment managed by the IT department such as generators, AC units, etc.

Category: Direct

Identifying: Inventory all outside vendor maintenance contracts and assess for opportunity.

Quantifying: Review contracts for possibilities of better rates, potential to eliminate altogether, or options for better rates from another vendor. Total up the cost saving opportunities you find.

Investment: No

Tips: - Eliminate PC/workstation maintenance contracts- Negotiate longer term for lower rate- Consolidate vendor contracts when possible- Review contracts annually for best options available- Take advantage of warranty terms- Consider reduced support level options


6. Software license fees Description: Fees associated with licensing

softwareCategory: Direct

Identifying: Inventory all vendor software. Determine if all are required or if alternative options are available. Review contracts to evaluate pricing and discount options available.

Quantifying: Total up each potential savings opportunity found by licensed software product.

Investment: No

Tips:- Evaluate alternatives, such as Open Source products- Negotiate with existing vendors; most have some level

of pricing flexibility, and some have considerable room for negotiation.

- Negotiate favorable pricing with new vendors.- Evaluate pricing options based on total users, “active”

users, etc. to strike the most cost effective setup.


7. Travel Description: Travel expenses charged to the

company by employees for business travelCategory: Cost avoidance

Identifying: Review travel expense trends and identify options for reducing the number of trips, or getting better hotel and airfare rates that reduces the overall monthly cost of travel to your IT organization.

Quantifying: Estimate the average cost per trip and multiply it by the number of trips you think you can avoid. Add to this number the additional savings gained by reducing the average trip cost by negotiating better rates, implementing travel policies, etc. that help control costs.

Investment: No

Tips:- Implement travel guidelines to manage travel costs.- Find alternative business approaches to avoid travel.- Negotiate company rates with hotel chains.- Coach employees on “conscientious travel”


8. Eliminate paper Description: Investing in systems, processes, and

project initiatives that eliminate paper and the associated costs in handling paper.

Category: Direct, indirect, productivity, cost avoidance

Identifying: Tour your company and inventory the large pockets of “paper handling” plus associated costs in all departments tied to handling paper in their operation.

Quantifying: List paper handling situation that present an opportunity. Estimate savings based on:

- improved cash flow, if appropriate- paper and supplies savings- postage and other distribution cost savings- improvement in people productivity- space savings for filing paper

Investment: Yes, typically programming

Tips:- Even small volumes of paper may offer big savings- Consider using duplex printers


9. Postage Description: Postage and mail related expenses

Category: Direct

Identifying: Conduct a review to identify mail related expenses. List potential opportunities to eliminate postage requirements by automating processes or using alternative means of distributing information.

Quantifying: Estimate potential savings by eliminating traditional mailing/shipping of information and items. Savings will include:

- postage- mail supplies- production costs of paper documents

Investment: Possibly (software development)

Tips:- Look at EDI and web based applications to reduce mail- Use email and Intranet for internal communication- Automate reporting processes that eliminate paper- Take advantage of bulk mail service companies


10. Eliminate projects w/o ROI Description: Project initiatives that do not have

tangible return on investment (ROI) or that do not provide quantifiable value to the company should be questioned.


Identifying: Review all current and planned project initiatives. Analyze each to determine whether there is sufficient cost or other justification to proceed.

Quantifying: Estimate savings based upon budgeted or estimated project cost of projects eliminated or reduced in scope. Review for related savings that are a byproduct of project changes.

Investment: No

Tips:- Potential may be available by reducing project scope- Reassigning resources may have other benefits such

as avoiding hiring and training costs


11. Automate clerical processes Description: Eliminate clerical work by automating

tasks and processes performed by low skill workers.Category: Indirect, productivity

Identifying: Review all clerical processes, typically in handling paper, data entry, production line processes, etc.

Quantifying: Define the automation opportunity and estimate the people savings possible by automating the process or task. Include employee benefits factor and other employee related expenses such as recruiting, training, administrative costs, etc.

Investment: Yes, typically programming or process control equipment and implementation

Tips:- Gain support from upper management and especially

the Department Head of a targeted area- Clerical workers usually have high turnover rates so

eliminating positions can be accomplished through attrition rather than “downsizing”


12. Reduce employee downtime Description: Systems that are “unavailable” to

employees to do their jobs create expensive “downtime” issues.

Category: Cost avoidance, productivity

Identifying: Review systems downtime occurrences for the past two years and establish a “downtime occurrence trend”. Determine options available that reduce downtime occurrences and length of time.

Quantifying: Estimate the cost per hour of typical groups of employees in your company. Estimate the percentage of “productivity hit” each group takes when critical systems are unavailable. Total the calculated cost impacts for all groups. This is your company’s estimated “employee downtime cost per hour”. Multiply this number by the number of hours downtime you can eliminate.

Investment: Yes, usually infrastructure related

Tips:- Certain levels of downtime may be acceptable- May have an IT staff savings impact as well


13. Consolidate business applications

Description: Eliminating duplicate or similar business applications by standardizing software and hardware platforms.

Category: Direct

Identifying: Review your company for similar software applications being used in different organizations.

Quantifying: Estimate the savings in these areas:- hardware and software maintenance and related

expenses that are eliminated- IT resources leverage to support fewer systems- Employee related expenses tied to less headcount

Investment: Yes, project implementation and potentially additional hardware and/or software capacity.

Tips:- Companies that have acquired other companies

usually have opportunities in this area.- Standardize software applications


14. Intranet opportunities Description: A company’s internal Intranet offers

many possibilities to reduce paper, improve communications, and provide employee services at a much lower cost.

Category: Indirect, cost avoidance

Identifying: Seek out internal communications and paper flow to remote offices to determine if an Intranet application can replace or streamline.

Quantifying: List each project or process that an Intranet application can replace and estimate the cost components for each such as materials production, assembly, distribution, employee productivity improvement, etc.


Tips:- Employee Guides from HR are great targets- Policies & Procedures books are targets- Can be used for internal company change

management processes of all types


15. Equipment purchases Description: Expenses related to buying

equipment. Lower prices can be achieved by standardizing platforms and taking advantage of volume purchases.

Category: Direct

Identifying: Inspect the technology equipment you are buying. If you have no PC standards, create one to take advantage of volume and service opportunities that reduce overall cost.

Quantifying: List the possible cost savings you discover for each equipment group

Investment: No

Tips:- Leverage vendors with your volume potential- Take advantage of services and freebies offered with

equipment (upgrades, software, O/S, etc.)- Negotiate standard PC platforms already configured

with software


16. Server consolidation Description: Consolidate applications to fewer

servers to improve cost effectiveness and lower support costs

Category: Direct

Identifying: Inventory all software applications and servers. Identify consolidation opportunities that allow you to eliminate servers. Evaluate large server options to replace

Quantifying: Estimate cost savings for each server eliminated including:- Operating systems and other software costs- Maintenance- Support staff

Investment: Possibly, larger servers

Tips:- Consider the overall cost structure when evaluating

options, possible savings, and investment costs- Consider porting to existing mainframe platform- Consider centralizing servers


17. Capital request approval process

Description: Establish a cost justification and approval process to help control costs.


Identifying: The point to setting up a process to justify and approve all capital equipment/item purchases is to screen purchases which results in lower purchases that provide more value to the company.

Quantifying: Estimate the decrease in capital equipment/item purchases based on new guidelines being implemented.

Investment: No

Tips:- Just because you budget an item doesn’t mean you

have to buy it- Approval processes increase an understanding of

“value for payment”


18. Employee trainingDescription: Expenses associated with employee

training and education.Category: Direct

Identifying: Take a close look at your employee training planned or budgeted. Conduct an employee skills assessment and develop an employee training plan to determine specific training needed and that is critical to support the business.

Quantifying: List the training activities that are not critical and total up the expense reduction potential.

Investment: No

Tips:- Targeted training will improve productivity.- Management training can actually help reduce costs.- Training & education motivates employees and can

reduce turnover.


19. ISP fees Description: Costs associated with Internet Service

Providers.Category: Direct, Indirect

Identifying: Look for individual employee ISP services for email and access to the Internet paid by your company. In addition, check the domain hosting fee for company web sites for competitive pricing.

Quantifying: Itemize the individual plans that can be eliminated as well as company domain hosting fees that may be reduced.

Investment: No

Tips:- A small company should be able to host a web site

domain and set up 50 - 100 or more email accounts for about $50.00 per month (or less).


20. Support Desk FAQ’s Description: Develop a set of web or Intranet

based Support Faq’s that answer common questions posed to your Help Desk.

Category: Productivity, Cost avoidance

Identifying: Review your Help Desk call trends and identify the volume questions that can be easily answered by a FAQ sheet and without a “live” Help Desk person.

Quantifying: Calculate the number of calls you can eliminate by setting up a FAQ (assume only half for a particular question to start). Calculate your growth trend and the number of resources required to answer and respond to calls before and after implementing FAQ’s. The gap is new productivity to do other things, to avoid hiring new staff when growing, or an ability to reduce staff.

Investment: No

Tips:- Take an approach that 80% of all calls can be

answered in a FAQ.


21. Management productivity Description: Providing information that helps

improve management’s productivity and effectiveness. Typically called “Management Information Systems” (MIS), exception and trend information allows management to focus on critical issues quickly.

Category: Productivity, Indirect

Identifying: Sit down with the senior management team and define the type of information and timing of having it that provides them an advantage and helps in managing their operation.

Quantifying: As the MIS application is defined, quantify with each manager the specific cost savings it will give them or the productivity improvement it will provide. Convert the information to dollars saved or avoided for each manager to receive the data.

Investment: Yes, programming or software applications purchase

Tips:- Include all departments, no matter how small.


22. Streamline operations Description: Every industry has “levers” that improves

profitability by lowering costs in a “core competency” area of the business. Here are a few:- Retail - improving inventory turns & sales analysis- Healthcare - getting paid for services and improving

the timing of receiving payment. - Convenience store - managing accounts payable

and gasoline sales- Manufacturing - materials requirements planning

Category: Indirect

Identifying: Define the key element that improves the bottom line.

Quantifying: Target specific steps that will improve the key element and estimate the savings based upon the improvement you can make.

Investment: Yes, normally programming

Tips:- Take advantage of other company experiences- Automating processes creates cost savings


23. LINUX Description: The LINUX operating system is

challenging Microsoft for a share of the server operating system space and has a significantly lower price tag.

Category: Direct

Identifying: Inventory all servers, PC’s and computer systems that have potential to operate on LINUX versus Microsoft NT or other traditional operating systems.

Quantifying: Calculate the cost of licensing multiple OS licenses from Microsoft versus one license for LINUX.

Investment: Yes, a LINUX license (nominal)

Tips:- Start with “non-critical” application servers.- Test LINUX stability until you are satisfied.- Start with a small group of IT users for LINUX on PC.


24. Temporary staff Description: Costs associated with using temporary

staff for extra projects, peak periods, etc.Category: Direct, Indirect, Cost avoidance

Identifying: Work with department managers to determine when and how temporary staff is used. Determine if automating processes can improve productivity of full-time staff to avoid the need for temporary staff. Another approach is to reassess priorities in such a way to avoid bringing in temporary staff.

Quantifying: Review the trend for all departments that use temporary staff and determine whether a decrease can be achieved by improving productivity or by altering priorities in peak times. The estimated decrease in temporary staff times the average hourly rate is the estimated cost savings.

Investment: No

Tips:- Calculate training time and management involvement


25. Rent Description: Costs associated with building and

office rent.Category: Direct, Indirect, Cost avoidance

Identifying: Rent is typically associated with people and their distribution. Look for office consolidation or elimination possibilities, means to avoid having to acquire more space by improving productivity or doing things that can free up existing space. Negotiating better rates is also a strategy.

Quantifying: List each office situation and quantify the potential savings available to you or the cost avoidance you can achieve by improving productivity or freeing up space. Include postponing or avoiding the need to acquire new office space as it applies.

Investment: No

Tips:- Consider “virtual” employees if you can monitor and

measure performance- Consider office consolidation- Negotiate better rates with long term leases


26. Advertising leverage with “pay per click”

Description: Internet awareness of your products and services is becoming more important. “Pay per click” advertising is using a service to get your web site listed near the top of a key word or phrase searches and you pay the service provider a set fee when the person doing the search clicks onto your link and visits your web site.

Category: Indirect, Expense offset

Identifying: Look for departments with advertising budgets and determine if “pay per click” is a good strategy for creating marketing awareness.

Quantifying: Calculate estimated additional sales revenue less the “pay per click” advertising cost per month. The difference is additional revenue you wouldn’t normally have and offsets other expenses.

Investment: Yes, “Pay per Click” service and potentially an e-commerce strategy and implementation.

Tips:- I use Overture, Ah-HA, and Kanoodle


27. Wireless technology Description: Costs and benefits associated with

wireless technology.Category: Indirect, Cost avoidance

Identifying: Look for situations where wireless technology can benefit an operation, especially if you can avoid laying cable” for a new office.

Quantifying: Calculate the cost of cabling versus installing wireless technology and the difference is a cost avoidance or saving. Other situations that allow users access to wireless laptops or other devices may decrease the cost of PC equipment.

Investment: Yes, wireless technology equipment and software

Tips:- Evaluate security needs for sensitive data and

applications- Cabling includes labor, cable, connection supplies,

and carpentry.- Some industries (hotel, etc.) have revenue

sources with wireless technology


28. Re-engineer remote office applications

Description: Remote applications can often be modified to eliminate the need for online connectivity to host servers located in different locations.

Category: Direct

Identifying: Review remote applications used by the company and determine if alternative approaches can be used for users other than online connectivity to the primary servers. (Example, State Farm’s “store and forward” application). You can also use the Internet for application access.

Quantifying: Total the online telecom savings for each remote office.


Tips: Candidate savings includes:- Reduced data telecom costs- Improved uptime for local users (productivity)


29. “Web enable” data entryapplications

Description: Develop a “front end” Internet data entry approach to collect data for your business application.

Category: Direct, Indirect

Identifying: Evaluate all your data entry applications to determine if a web enabled approach improves accessibility, reduces online connectivity costs, or provides other tangible benefits.

Quantifying: Quantify the cost savings in eliminating online connectivity, reduction in equipment purchases, or improved access/productivity with a web enabled approach.


Tips:- Heavy data entry applications for remote offices are big

opportunities.- Build in security measures for sensitive data


30. Supplies Description: Costs associated with computer

related supplies, miscellaneous PC software products, and office supplies.

Category: Direct

Identifying: Evaluate supplies expense trends and assess whether you can decrease spending by buying less or by negotiating price discounts with key vendors. Also consider implementing a PC software policy to manage the purchase and use of miscellaneous PC software products.

Quantifying: Estimate the savings potential you have by reducing purchase expenses below recent trends.

Investment: No

Tips:- Set up national vendor accounts for remote offices- Take advantage of specials and volume discounts- Establish purchasing policies


31. Negotiate better pricing on contract renewals

Description: Contracted services have cost saving opportunities.

Category: Direct

Identifying: Inventory all your current contracts and review them at least annually to identify renewal discount opportunities. Opportunities lie in straight negotiation, opting for fewer services, reducing service scope, and renewing for longer term.

Quantifying: List each possibility for lowering contracted rates at contract renewal time. Total the opportunities and include in your estimated cost savings strategy.

Investment: No

Tips:- Most vendors have negotiating flexibility- Take advantage of size and volume where possible- Identify “win-win” opportunities with vendors that

create incentive for them to negotiate


32. Open Source applications Description: Alternatives to traditional vendor

supported software programs are “open source” programs enhanced and supported by a non-affiliated collective group of contributors.

Category: Direct, cost avoidance

Identifying: Evaluate current and planned software applications and operating systems to determine if an open source approach is viable. Open source approaches are normally less costly if you can handle the software support yourself.

Quantifying: List potential software applications that can be replaced or that you are about to purchase and do a price comparison to determine the cost savings opportunity.

Investment: Yes, the open source software

Tips:- New utility products are excellent candidates.- Any new application need should be evaluated for an

open source application.- Provides new interests for IT staff


33. Scanning & image retrieval Description: Using scanning and image retrieval to

reduce paper and paper handling costs.Category: Indirect

Identifying: Meet with department managers to determine where the paper intensive processes are and what the benefits would be by scanning paper documents and providing online image retrieval for users that need access to the data.

Quantifying: Savings are achieved by:- reducing paper- improving productivity in handling and retrieving- reducing space required to file paper- faster processing

Investment: Yes, scanning and imaging equipment and/or services

Tips:- Target HR, Payroll, Billing, and Accounts

Payable departments


34. Workflow Description: Develop automated workflow processes

that streamlines the completion of certain jobs.Category: Productivity

Identifying: Review the processes in the company that require the same paper document to be routed and approved, or processes that require multiple resources to handle. Workflow can automate the flow, que up the review tasks, and ultimately allow you to complete the entire set of tasks much faster.

Quantifying: List the potential applications for workflow, perform a cost study, and evaluate the potential savings or improvement in productivity.

Investment: Yes, workflow software and implementation services

Tips:- Examine all work steps to verify they are necessary- Target processes that require several review steps and

approval such as purchase approval, salary increase approval, order processing, etc.


35. Report distribution automation

Description: Automate report distribution via email, file transfer, or posting to a web site versus printing and distributing paper reports.

Category: Direct

Identifying: Reports and printed paper applications can be enhanced to print to files, posting to inquiry file folders, or distributing by email to eliminate the need to print and distribute standard reports and documents.

Quantifying: List the paper creation applications and estimate the cost reduction opportunities by eliminating paper production and distribution efforts.

Investment: Yes, report distribution software and implementation services

Tips:- Anything from monthly P&L reports to daily

production reports can be virtually eliminated.- Savings lie in paper and supplies reduction, improved

people productivity, reduced distribution costs, etc.


36. Network tools for software distribution

Description: Using network tools to automatically distribute software updates to remote systems eliminates travel and improves administrative productivity.

Category: Direct

Identifying: Review opportunities you have to automate software upgrades and reduce the labor required of your team. You can also use tools that determine whether PC’s in the enterprise are in compliance with company policies regarding PC software. Improved user productivity can be achieved with quicker troubleshooting action.

Quantifying: Estimate the cost of upgrading software releases on systems across the enterprise versus the cost in using network tools that automate the process. Add estimated productivity savings.

Investment: Yes, network tools

Tips:- Don’t forget user productivity improvements


37. Contracted employees and out-source services

Description: Expenses associated with contracted employees and vendors contracted to out-source support services.

Category: Direct

Identifying: Review all out-source contracts and individuals contracted to help your IT organization.

Quantifying: Analyze each contract and determine whether contracts can be eliminated altogether or reduced by changing scope of service.

Investment: No

Tips:- Evaluate total cost of contracted employees or out-

sourced services and compare to need for “in-house” expertise for mission critical functions


38. Cell phones and pagers Description: Costs associated with cell phones and

pagers.Category: Direct, Indirect

Identifying: Review your cell phone expenses and determine whether savings are available by implementing a cell phone usage policy, reducing the number of cell phones, etc. Audit cell phone and pager distribution to ensure you have cancelled services for employees no longer with the company.

Quantifying: Estimate savings based on the audit identifying services that should be cancelled and reduced monthly usage charges based upon implementing a cell phone usage policy.

Investment: No

Tips:- Negotiate national contracts and standardize

services for maximum cost effectiveness- Take advantage of national and regional incentives- Maintain strict inventory of cell phone and

pager users


39. Local & long distance phone service

Description: Expense associated with local and long distance phone services for voice, fax, and modem connections.


Identifying: Audit your phone bills to determine that you have appropriate billing for the services you actually use.

Quantifying: An audit of your phone bill will almost always turn up savings opportunity. Total up the savings found in lines that are no longer used, lines that can be reduced or eliminated, and estimate reduced expenses based upon implementing a phone policy.

Investment: No

Tips:- There are companies that audit phone expenses for

you and charge based totally upon the savings or reimbursed dollars they achieve for you.

- If you aren’t auditing your phone bill, you are almost always overpaying for what you use


40. VoIPDescription: Using “voice over internet protocol”

telephony to reduce your company’s long distance voice expenses.


Identifying: Evaluate the potential for VoIP services for your company, especially in handling internal phone calls between remote offices.

Quantifying: Estimate the impact VoIP will have in reducing your company’s long distance phone bill.

Investment: Yes, equipment and implementation services

Tips:- Find a local VoIP specialist with proven track record

of implementing VoIP for cost savings to help you evaluate, plan, and implement this capability.

- Test small company segments before diving in fully to evaluate cost savings, quality, and fit for your company.


41. Programmer productivity Description: Software development standards,

common routines, and development tools can improve programming productivity.

Category: Cost avoidance, productivity

Identifying: Standards reduce programming errors, improve Help Desk support and user training, and ultimately lowers the cost of developing software. Review your programming approach for standards that will improve the quality and delivery of programming development and support.

Quantifying: Estimate the productivity improvement by calculating a reduction in errors and rework. You won’t necessarily get an expense reduction but you should incur higher output with less rework that will help prevent having to hire more staff in the long run.

Investment: Yes, possibly SW development tools

Tips:- Newer software development tools offer big benefits.- Emphasize standards for consistency and cost

savings related to training and support.


42. Online newsletter Description: Costs associated with company

newsletters.Category: Direct, Indirect

Identifying: Any newsletter that the company produces in paper can be developed and placed on the Internet or company Intranet much cheaper.

Quantifying: Total up the production and distribution costs for producing paper newsletters and assume you will eliminate 80% of the cost by placing the newsletter on the Internet or Intranet.

Investment: Yes, programming and web domain hosting

Tips:- Online newsletters offer excellent training forums and

can be archived for new employees to access.- The only effort for an online newsletter is the

development of the content, not producing and distributing. You may find you are able to publish them more frequently.


43. Out-source services Description: Hire outside vendors to provide

services that are more cost effective than providing them yourself.

Category: Direct

Identifying: Analyze the advantages potentially offered by out-sourcing certain technology support services. Use out-source companies for adding depth to your organization without having to hire new employees, especially in technical disciplines.

Quantifying: Develop a cost comparison of providing support internally versus from an out-source company.

Investment: No

Tips:- Infrastructure is a great target- Specific technology skills where an out-source

company can maintain more depth and expertise- Programming support- Help desk


44. Staff meetingsDescription: Expenses associated with employee

staff meetings.Category: Direct, Indirect

Identifying: Look at meetings planned by the company and determine if any can be held via teleconference versus travelling to a meeting site.

Quantifying: List meetings that can be reduced in scope, eliminated, or held in such a way to reduce travel and hotel requirements. Total the savings estimates.

Investment: Possibly, teleconferencing services.

Tips:- Online conference capabilities are better than ever- Presentations can be saved and made available

online for future reference- Frequent project status meetings help manage cost

effectiveness and productivity of the project


45. Electronic documentation (PDF)Description: Use Adobe PDF file formats or other

electronic files for all your documentation versus producing them in paper versions. Production costs and distribution costs are essentially eliminated and maintenance costs are reduced significantly.

Category: Direct, Indirect, Cost avoidance

Identifying: List all the documentation items in your company that can be converted to PDF format. The list will include employee guides, policy and procedure manuals, software application user guides, and almost any document used frequently and distributed to many recipients.

Quantifying: List all documents and estimate an 80% savings over production and distribution costs for paper versions of the document.

Investment: Yes, Adobe Acrobat or shareware software to convert documents to PDF format.

Tips:- Procedural manuals with pictures are great targets- Updates are essentially free and quick


46. Energy management servicesDescription: Large facilities offer significant cost

saving advantages with energy management systems that manage peak load requirements and many other controllable energy consumption devices.


Identifying: If your company owns large buildings with considerable heating and cooling bills, you probably have an opportunity.

Quantifying: Call in a qualified energy management consultant to analyze your heating & cooling bills and evaluate your environment to determine the type of opportunity you have.

Investment: Yes, energy management systems and equipment, software, and implementation services

Tips:- Hospitals, universities, schools, manufacturing plants,

large buildings are good targets- Corporate campus facilities can benefit- Typically a quick payback


47. Virtual Private Network (VPN)Description: Use of the Internet for remote office

and vendor partner systems network connectivity.Category: Direct, Indirect

Identifying: Evaluate your systems connectivity architecture and use experienced consulting help to determine whether a VPN is viable for your business.

Quantifying: When evaluating viability, develop a savings estimate based upon savings achieved by eliminating leased lines, frame relay, circuits, etc.

Investment: Yes, telecom equipment and software

Tips:- Security and reliability are key issues.- Use a knowledgeable & reputable VPN consultant.- Start small with a test segment of your company.


48. Phone & network connection review

Description: Companies that have downsized often have many phone and network connections still active. Eliminating connections can save significant technology dollars by using the available pool of vacant connections for those that need them versus having to upgrade and buy new equipment.

Category: Direct, Cost avoidance

Identifying: Ask each department to inventory active and inactive phones and network connections at least once a year.

Quantifying: The opportunity lies in the inactive phones and network connections by reclaiming these connections, extra phones, etc. and re-deploying from a “central pool” as needed.

Investment: No

Tips:- phones and phone connections- faxes and modems - PC’s and desktop printers


49. Implement a cost saving reward program

Description: Employees know where the waste occurs and can help you identify many cost savings opportunities. Empower them with a bonus reward system that pays for their conscientious input to help reduce company expenses.


Identifying: Your employees will find the opportunity if the incentives are there.

Quantifying: Structure the program to pay a percentage of the quantifiable quantifiable savings over a period of time. It’s a “win-win”.

Investment: No

Tips:- Be specific with your program details.- Be liberal in your incentives; it pays off.- Develop clear criteria for measuring the savings.


50. Revenue opportunities Description: Products or services sold by the IT

Department that generates revenue for the company.

Category: Expense offset

Identifying: Evaluate opportunities your IT organization has in providing goods and services for sale. Opportunities exist in software applications, support services, white papers, informational products, consulting services, etc. that are extensions of your primary mission, not diversions.

Quantifying: Develop a sales projection for the services you plan to offer.

Investment: Yes. Programming, possibly e-commerce services, and marketing expenses.

Tips:- Contact me at [email protected] and I can help get you

started.


Technology Cost Saving StrategyChecklist

- Strategy- Responsibility- Target Date- Estimated savings- Actual savings

Identify, quantify, and go after it !!



PRIORITIES

How do I look at cost saving potential in a new company?

One thing I know is that every company has plenty of cost saving opportunities and most have some real “low hanging fruit” opportunities.

The following pages list the priorities that I would use in mostsituations. They tend to give me the quickest savings with the least amount of investment first.

Every company is different so always be aware that the best opportunity may be one well down on this list and that has a large investment requirement. Take advantage of what can benefit your company the most and the quickest.

I will tackle several strategies concurrently but will gravitatetoward where I find the best opportunities with the lowest effort to start with and get to the bigger projects later.



PRIORITIES

1. #1 - Payroll2. #2 - Recruiting3. #4 - Telecom (data)4. #38 - Cell phones and pagers5. #10 - Projects with no ROI6. #15 - Equipment purchases7. #19 - ISP fees8. #24 - Temporary staff9. #3 - Consulting and contractor fees10. #5 - Hardware and software maintenance



PRIORITIES

11. #6 - Software license fees12. #7 - Travel13. #39 - Local and LD phone service (voice)14. #12 - Reduce employee downtime15. #30 - Supplies16. #31 - Negotiate pricing on contracts17. #37 - Contracted employees and out-sourcing18. #42 - Online newsletter19. #45 - Electronic documentation 20. #48 - Phone and network connections



PRIORITIES

21. #17 - Capital request approval process22. #26 - Advertising with “pay per click”23. #9 - Postage24. #14 - Intranet opportunities25. #20 - Support Desk FAQs26. #43 - Out-source support services27. #32 - Open Source applications28. #36 - Automate software distribution29. #41 - Programmer productivity30. #35 - Report distribution automation



PRIORITIES

31. #44 - Staff meetings32. #49 - Cost saving reward program33. #25 - Rent34. #8 - Eliminate paper35. #23 - LINUX36. #11 - Automate clerical processes37. #13 - Consolidate business applications38. #16 - Server consolidation39. #18 - Employee training40. #50 - New revenue



PRIORITIES

41. #27 - Wireless technology42. #28 - Reengineer remote office applications43. #29 - Web enable data entry applications44. #33 - Scanning and image retrieval45. #34 - Workflow46. #47 - Virtual Private Network (VPN)47. #40 - Voice over IP (VoIP)48. #22 - Streamline operations49. #21 - Management productivity50. #46 - Energy management services


The bottom line

Within 90 days you should be able to:- find considerable cost savings opportunity- quantify the opportunity- and go after more than enough savings to:

1. Save several thousands of dollars/year2. Positively impact your company3. Position you for greater achievement

Best of success,Mike Sisco

technology cost saving strategies - it manager...

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