With the global COVID-19 pandemic running wild, the economy has taken a dip. The World Trade Organisation
estimates that global trade volume could plummet by 13% and 32% in 2020. The uncertain economic climate means that fewer customers are buying, which means that businesses have to take steps to reduce costs.
However, there is a right way and a wrong way to do this. Trying to cut costs isn’t about throwing away everything but the bare minimum, it’s about finding ways to make your infrastructure leaner with a targeted IT investment.
As an IT Consultant and Managed IT Service Provider, the Network Overdrive team has a wealth of experience helping clients to manage their IT investments. That experience has enabled us to assist many clients in prioritising their spending during a recession. When trying to cut costs, there are some key areas we recommend that companies take a look at:
- Overspending on subscriptions
- Freeze long term projects with no immediate short term results
- Review IT leasing terms – printing, phones, etc.
- Review IT contracts (particularly SLA terms)
- Change staff expectations of support/assistance – offer IT training instead
- Alternative technology – VoIP vs fixed line
- Change the mix of cloud/on-premise infrastructure (Some will save by moving to the cloud and others will be better off moving back to on-premise)
- Automate repetitive IT tasks
- Outsource/hybrid IT teams
Each of these areas should be looked at to determine where you’re going to cut spending. You also want to reconsider your general IT spending strategy, so you’re not handcuffing your growth and leaving your company open to instability.
Tips for Reducing IT Spending Rapidly
To maintain your financial stability, you need to reduce your spending fast. It’s no good cutting spending that’s going to make you a saving next year. Instead, it is important to cut expenditures that are going to have a financial impact in 1-6 months. More than a year is too long.
You also don’t want to fall into the trap of deferring costs. If you reduce spending, make sure it’s through cuts because deferred costs will remerge later. With so much uncertainty about how long the pandemic will last, and the amount of time economic recovery will take, cutting spending is the safest option.
Lastly, don’t worry about the sunken costs of your current tech. If you’ve spent a fortune on solutions that are no longer right for your company’s situation, it can be frustrating to abandon them, but sometimes it’s to move forward.
The pandemic has changed the market, and making difficult decisions is key to making it through. Remember that when the economy returns to normal, you can then start to reinvest in more experimental and ambitious technology.
Align Cost with Strategy and Aim High
While cutting costs is necessary during the pandemic, it’s essential to have the right mentality when you’re spending. You can’t fall into the trap of cutting spending just to survive – you should be aiming to grow rather than simply minimising your losses. If avoiding losses is your goal, then you’re setting up for failure.
Instead, align cost reduction with your overall business strategy and aim high. That means not just trying to make it through economic instability with minuscule savings, but reallocating resources toward investments that stimulate growth.
Aiming high will enable you to stay competitive in the market more effectively than cutting back to the bare minimum. To stay competitive, try to make your overall operation leaner while attempting to maximise the value you provide to your customers. Cost reduction is just one tool you can use to make that happen amid the pandemic.
Use Cost Cutting to Stay Safe Amid COVID-19
Making the decision to cut spending on infrastructure is never an easy decision, but sometimes it’s a necessary one. The best way to insulate yourself against the uncertainty of the economy is to pull back your spending until it recovers. After all, doing so could be the difference between keeping or letting go of employees.
While reducing your operations may force you to scrap some of the initial plans you had for this year, you can revisit these once the economy starts to recover. If you’re unsure about how to reduce your IT spending, our expert team is here to help you find what infrastructure is essential to your business, and help you manage your costs.
If you’d like to find out how to control your costs and stay profitable during the global pandemic, contact our team today.