Most small to midsize businesses are under constant pressure to upgrade their information technology (IT). Whether it’s new software, a better way to use the cloud, or a means to strengthen cybersecurity, there’s always something to spend money on.

If your business keeps exceeding its IT budget, rest assured — you’re not alone. The good news is that you and your leadership team may be able to control these costs better through various proactive measures.

Set A Philosophy & Exercise Governance

Assuming your business hasn’t already, establish a coherent IT philosophy. Depending on its industry and mission, your business may need to spend relatively aggressively on technology to keep up with competitors. Or maybe it doesn’t. You could decide to follow a more cautious spending approach until these costs are under control.

Once you’ve set your philosophy, develop clear IT governance policies and procedures for purchases, upgrades, and usage. These should, for example, mandate and establish approval workflows and budgetary oversight. You want to make sure that every dollar spent aligns with current strategic objectives and will likely result in a positive return on investment (ROI).

Beware of shiny new toys! Many businesses exceed their IT budgets when one or two decision-makers can’t control their enthusiasm for the latest and greatest solutions. Grant final approval for major purchases, or even a series of minor ones, only after carefully analyzing the technology you have in place and identifying legitimate gaps or shortcomings.

Also, remember that overspending on technology is often driven by undertrained employees. Teach and remind your users to adhere to your IT policies and follow procedures. Doing so can help prevent costly operational mistakes and cybersecurity breaches.

Conduct Regular Audits

You can’t control costs in any business area unless you know precisely what they are. To get the information you need, regularly conduct IT audits. These are formal, systematic reviews of your IT infrastructure, policies, procedures, and usage. IT audits often reveal budget drainers such as:

• Redundant subscriptions for software or other tech services
• Underused or forgotten software licenses
• Outdated or abandoned hardware

 
You may discover, for instance, that you’re paying for several different software products with overlapping functionalities. Choosing one and discarding the others could generate substantial savings.

As you search for overspending, also look for examples of IT expenditures delivering a good ROI. You want to be able to refine and repeat whatever decision-making process led you to those wins.

Keep An Eye On The Cloud

One specific type of IT expense that plagues many businesses relates to cloud services. Like many businesses, yours probably uses a “pay as you go” subscription model that includes discounts or rate reductions for lower usage. However, if you don’t monitor your actual cloud usage and claim those discounts or cheaper rates, you can wind up overpaying for months or even years without realizing it.

To avoid this sad fate, make sure that at least one person within your business is well-acquainted with your cloud services contract. Assign this individual (usually a technology executive) the responsibility of making sure the business claims all discounts or rate adjustments it’s entitled to.

One best practice to strongly consider is setting up weekly cloud cost reports that go to the leadership team. Also, be prepared to occasionally renegotiate your cloud services contract so it’s as straightforward as possible and optimally suited to your business’s needs.

Don’t Give Up

To be clear, controlling IT costs should never mean cutting corners or scrimping on mission-critical technology expenses — particularly those related to cybersecurity. That said, you also should never give up on managing your IT budget. Contact us and we can help you develop a tailored cost-control strategy that keeps your technology current and supports your business objectives.