WHAT IS THE BLOG ABOUT?
IT overhead cost reduction, IT consultancy, consolidation, innovation
OECD: THE GLOBAL ECONOMY COULD STILL HIT A RECESSION IN 2023
According to economic experts, a recession is expected. Inflation has already kicked in the door in our country in 2021, which they are trying to deal with, so everyone feels differently about it. On the other hand, businesses did not really get much from the price caps, and they may have a headache. So now the management of the companies has found themselves in a very difficult situation, they are undeniably facing serious decisions.
WHAT CAN COMPANIES DO?
Are they saving energy, consolidating the vehicle fleet and reducing private use? Are they looking for new markets or developing a new product / service? Do they go through the expenditure list and eliminate unnecessary cost centers?
In fact, everyone is now recouping costs where they can. That’s why we’ve collected a couple of commonplace pieces of advice and a couple of things that our business IT consultants recommend to company managers and decision makers.
WHAT DO BUSINESS ADVISORS RECOMMEND?
Overhead costs include fixed costs, such as employee salaries and leases, and variable costs, such as maintenance and utility bills. Some of these can be deducted, especially variable costs. We have collected a small batch from the Internet, which business professionals recommend the most. (Of course, if you don’t want to bore yourself to death, then jump to our suggestions instead!)
SWITCH TO REMOTE WORK
Surveys show that office workers are more efficient when they work remotely – and productivity improves, and telecommuting reduces office expenses. (The problem is that it is difficult to serve a production company or a logistics organization with remote work, but even a wholesale company cannot send everyone home.)
USE ENVIROMENTALLY FRIENDLY ALTERNATIVES
For example, going paperless reduces printing, electricity and paper costs. Most of the energy of smaller businesses is only used for lighting, so even “small” changes can have a noticeable effect. In the case of larger companies, the exploitation of alternative energies, such as solar energy in our country, can bring significant cost reductions. (For a foundry, a metalworking company, or a food industry cold store, a solar collector on the roof or turning off the electricity may not be enough.)
The cost of full-time wages and benefits increases every year. At the same time, recruitment costs also rise significantly – in some cases also due to the lack of specialists. An outsourced service can be especially valuable if, for example, they are looking for a part-time or fixed-term employee. (This is certainly a good idea if someone is looking for a specialist, consultant, or assistant for some kind of development, but there are no miracles, with a large amount of hired labor, you can save money only in seasonal jobs with varying workloads.)
RATIONALIZE YOUR OPERATING COSTS
Remote work can greatly reduce variable utility expenses, but larger companies can also save a lot by reducing travel and moving server parks to the cloud. (Well, yes, we already said that. The cloud can really reduce the need for local labor, and if they migrate without expertise, then also the monthly fees. And it’s also a fact that if traveling salespeople don’t use a car, then they don’t have such a large fuel bill, but unfortunately, for example, deliveries cannot be made via Webex.)
RENT THE COMPANY’S REAL ESTATE
The purchase of real estate not only ties up the working capital, but also generates additional overhead costs with the maintenance of the building. A rental property offers more flexibility if you need to relocate, expand or downsize. (This is also a suggestion taken from the hip hop feasible category, although it is undoubtedly good advice if, for example, someone is not engaged in animal husbandry or mining.)
The internet is an endless source of ideas, you have to admit that. However, it can also be seen that these can only really work in certain cases, since no two companies are the same, and no two needs are the same. But it is also almost certain that noticeable cost reductions can already be achieved with well-thought-out changes in the longer or even shorter term. For this, however, it is not enough to make suggestions, but to find out exactly what the given business needs.
If we turn to our own area, we can give general advice with more confidence, but basically they are not made with the aim of completeness either. IT advice does not apply to everyone in the same way, and here, too, an effective solution can be found after expert analysis.
If we examine the efforts aimed at reducing expenses from the IT and infrastructure side, we can state that, on the one hand, general overhead costs can be reduced with modern IT solutions, and on the other hand, IT expenses themselves can be reduced through consolidation and innovation. Our experts recommend the following to medium and large companies with a critical IT background:
REVIEW YOUR SOFTWARE SUBSCRIPTIONS
Today, more and more people are using cloud-based tools and software subscriptions – willy-nilly – even in smaller businesses. However, the monthly subscription costs for these systems add up quickly if they are used or not. That’s why it’s worth checking recurring subscriptions and switching to a plan that can be changed flexibly. With optimized subscriptions, we can save up to 20-30%, which in the case of large companies can also mean a significant reduction in expenses.
And where subscriptions and cloud-based solutions are not used, it is worth thinking about taking advantage of the advantages of the cloud as soon as possible. On the one hand, because the solution, as we have emphasized many times, does not require physical maintenance, device expansion, application updates, or a server room. On the other hand, the service can be changed much more flexibly, the configuration can be expanded or reduced in just a few clicks to suit your needs. It can be operated remotely or even in an outsourced service. With the latter approx. the cost of operation can be reduced by a tenth, which can result in savings of up to HUF 20-30 million in the case of an average medium-sized enterprise.
SWITCH TO INNOVATION
Use as many cloud or online solutions as possible! But don’t just think about servers and office applications! Enterprise-class devices and innovative industrial equipment are all connected to the Internet and receive online manufacturer support. Since these are under continuous control, critical situations that could cause stoppages, emergencies or losses in operation and production can be prevented. For example, cloud-based, standardized network devices are not only more advantageous from a cyber protection point of view, but modern types are also capable of native management of IoT devices. These devices can perform many industrial, facility management, marketing or security functions, which can replace island solutions in centralized management, making their management simpler, faster and more cost-effective. Using online business collaboration technologies is also a great way to improve operational efficiency.
It is difficult to determine how much the cost efficiency achieved by innovation can be, but it can be deduced in the light of individual developments. The listed technologies are suitable for reducing costs because they require less human resources and working time during operation and maintenance, and they provide a remotely accessible service. In addition, a considerable increase can be expected both in productivity and in the field of operational safety or cyber security. These are also difficult to express in monetary terms, even just the effect of insurance, but they are important in the life of a company.
AUTOMATE BACKGROUND PROCESSES
Mainly for background processes, administration and analysis tasks, live labor may be more expensive than a software solution. In these cases, efforts should be made to digitize and automate processes as much as possible. There are many business services available, the cost of which is negligible compared to human resources expenses. As mentioned above, by consolidating and modernizing the IT infrastructure (network, servers, IoT devices, user endpoints, applications), a centralized, automation-based infrastructure can be created, which reduces the administrative requirements. This requires the standardization of systems and the connection of tools and services involved in the processes. Developments must therefore be carried out on a sound basis, – after assessing the risks – based on technological connections according to business needs.
With automation, processes can be accelerated and made more precise, and digitalization developments also reduce human resource needs.
USE OUTSOURCED SERVICE PACKAGES
When full-time employment is not required in a complex service area, or the task can even be performed remotely, the use of a fixed-price, outsourced service package can provide serious cost stability. This is especially true for IT support, where the wage costs of a specialist are significantly higher than the average, but their availability on the labor market is lower than the average. The workload of IT professionals working in different fields also varies. A cyber security specialist does not necessarily need to work more than 4 hours a day in the case of a well-designed cyber protection system. But even a general system administrator does not necessarily need to work 8 hours a day. However, it is certain that it is economically impossible to employ one instead of the two due to the different fields of expertise.
Outsourcing IT support is the most common form of cost reduction. IT training is expensive, and it is difficult and expensive to find IT professionals on the labor market. And IT is made up of a lot of specializations. Infrastructure development and operation require countless specialists, which should be solved most effectively by using a service package.
Az informatikai támogatás kiszervezése a leggyakoribb költségcsökkentő forma. Az informatikus képzések drágák, az informatikusok nehezen és drágán elérhetők a munkaerőpiacon. Az informatika pedig nagyon sok szakirányból tevődik össze. Az infrastruktúra fejlesztés és üzemeltetés számtalan szakembert követel meg, amit leghatékonyabban szolgáltatás csomag igénybe vételével érdemes megoldani.
(RE)EVALUATE YOUR BUSINESS STRATEGY
As a business grows or its revenues decrease, it is worth changing the sizes and contents of the various budgets. Make an assessment of the individual channels and do the math to determine the return on investment! If necessary, change the concept so that you can proceed with costs that match your strategy! It is conceivable that certain frameworks, such as the reallocation of marketing / PR costs and the surplus invested in infrastructure development, can give you a positional advantage over your competitors in the long term. By meeting international standards, you will be able to satisfy new, even foreign, markets.
Changing the business strategy and producing new concepts can be risky, just like not changing strategies in a new economic and market environment. However, it would be irresponsible to say that an external consulting firm would be the best solution for developing a business strategy. On the other hand, professional external teams in their field can play a major role in the construction of concepts. The development of the IT infrastructure is also a serious project, and our experience shows that comprehensive and effective changes can only be achieved with experts.
EXTRA HINT: NEGOTIATE WITH INFRASTRUCTURE PROVIDERS
By definition, this applies to those who have some kind of external service in the operation and maintenance of their infrastructure. Suppliers may even be willing to re-plan the content of services or the deadline for invoice payment within a reasonable framework, because they too cannot afford customers who drop out and loss of income. It is likely that another service provider can be found within a short time, who can serve the given tasks even under more favorable conditions. The current service provider is also aware of this, which is a compelling argument for customer retention.
There is also a fight in the IT market, and there are companies working with more favorable conditions or at a higher price. It is also worth having service providers competed, because it is easy for them to get comfortable with a seemingly guaranteed relationship. Competitive conditions usually encourage entrepreneurs, which is always positive for customers.
Change your business strategy, reduce operating costs even through improvements, because the recession will end one day. Who stays afloat and who can profit is just a matter of strategy. Ask the experts, but keep the decision to yourself!
On the IT front, Syswind’s three-in-one crisis management solution can have a positive effect on your business. A consultation cost nothing.
WHAT IS THE SYSWIND 3 IN 1 IT OVERHEAD COST REDUCTION PROGRAM?
- Consultation and technology recommendation >> We evaluate the systems and give suggestions for innovative developments
- Infrastructure design and implementation >> We design the ideal technology concepts for the business strategy and implement them using advanced methods
- Engineering support >> We provide competence development for the delivered system and support the operation and further development of the system throughout its life cycle
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