Published: 27 May 2020
Analyst(s): Michael Silver, Stephen Kleynhans, Rafael Benitez, Dan Wilson, Chris Silva, Leif-Olof Wallin, Stuart Downes
Amid the COVID-19 crisis, IT leaders responsible for digital workplace infrastructure and operations are looking to cut costs and, where possible, save jobs. We present more than 20 suggestions to cut costs of hardware, software and services.
In a recent Gartner survey, over 60% of CFOs expect to have to cut SG&A budgets by more than 10% (see ). For most organizations, cutting costs and improving efficiency has been business as usual for years and they have already addressed many opportunities for reducing costs. Further, the move to SaaS and software subscriptions made by many organizations over the past five years has significantly increased the nondiscretionary portion of IT spending. Finding new opportunities to cut costs quickly while ensuring people can do their jobs and meet business goals will be a challenge.
Unfortunately, I&O leaders will have no choice but to cut costs, given the economic situation in which many organizations will find themselves. Every expense must be analyzed. Expenses that were thought to be minimal, upon further investigation, may be found to be higher than expected and worth eliminating. Programs organizations instituted over the past few years to try to encourage users to solve problems innovatively may need to be suspended to make the required cuts. Organizations that have focused on user satisfaction by offering more hardware and software choices or more frequent device refreshes to attract and retain certain types of employees must calculate the costs and benefits of these programs in light of growing unemployment and the reduced likelihood that such benefits will be relevant or needed to retain talent.
Gartner believes that many priorities and projects will change over the next 24 months (see Figure 1). The current requirement is for organizations to reduce costs quickly to “keep the lights on.” In the (hopefully) not too distant future, as organizations prepare for recovery and growth, IT leaders will be required to reevaluate every tactic and strategy that was in place before this crisis and they may decide that some relatively conservative projects to slowly evolve the digital workplace infrastructure should be replaced with more aggressive ones to reimagine the infrastructure faster, as they are tasked with preparing the organization for recovery and growth. Communicate changes that may be temporary as such, and continue to tie reductions in programs that are “nice to have” with the desire to maximize employment.
Infrastructure and operations leaders should also use and
The downloadable spreadsheet that attends this research note includes a long list of cost-cutting ideas for IT leaders responsible for the digital workplace infrastructure. We have organizations them into three categories:
Digital Workplace and End-User Hardware
Digital Workplace and End-User Software
Services: Including ones performed by third parties and ones performed by the IT organization
IT leaders can rate each idea based on its feasibility and the potential level of savings (see Figure 2 for a screenshot of the spreadsheet). You are encouraged to replace our ideas with your own or add additional ideas to the list. At the bottom of the list is a summary of how many ideas are included in each rating.
The section below includes all the ideas that are in the spreadsheet and also includes additional context and explanation.
Some ideas here will not be applicable to all organizations based on their current state, the way contracts are timed and written, or whether there are any business downturn clauses in your favor (consult legal counsel to determine this). But even if a contract does not appear to be changeable, vendors may be more lenient now in the hope of retaining customers for the long term. Be creative; you won’t get concessions that you don’t ask for.
If you can’t delay PC purchases, lease or finance them to reduce upfront cash outlays
Reduce choose yourown PC (CYOPC) choices. Many organizations began allowing users to choose different devices, often at higher costs for both hardware and support, to respond to user preferences and improve their ability to attract and retain certain employees. Analyze the costs and suspend the program if warranted.
Enable bring your own PC (BYOPC). Organizations have been using BYOD for phones and tablets for years, but PCs, where problems with local applications and data present problems, have usually been excluded. To maintain business continuity during COVID-19, many organizations were forced to allow employees to use their own devices and they made it work. As organizations extend PC life cycles, allowing users that really want a new device to use their own (without providing a stipend to launch the program and change the culture) becomes a possibility. This could help mitigate some issues of suspending a CYOPC program. A prerequisite for a BYOPC program would be the implementation of zero trust security measures.
Review current device eligibility for mobile devices, aiming to reduce the number of employees eligible for company-liable mobile devices, in favor of enabling bring your own (BYO) or employee-liable devices. This will not be a viable approach for all users and due to legal requirements for stipends or reimbursement for voice and data service in some locations, legal and HR teams should drive any decision to reduce or eliminate phone payments. This may depend on the employee’s role and local laws.
2. Digital Workplace and End-User Software — Opportunities for savings here will largely depend on when contracts are coming up for renewal or whether the terms allow changes at other times
Reassess non-standard collaboration or other software that was purchased for specific groups or requirements. In recent years organizations have responded to user and group requests for alternative software to the organization’s standards. In some cases, this was done to satisfy user preferences and standard software could suffice, even if it does not address 100% of requirements. If non-standard software is underutilized, rightsize the licensing if possible. Decommission the software if appropriate to reduce software costs, labor tasks, and hardware requirements. Reducing software costs rather than laying people off will be the better decision and the unemployment market will make it less likely that people will leave because of suboptimal IT tools. However, ensure software under consideration for removal will not break business processes.
Reassess the use of any large bundles of software and analyze whether additional components are being used and if not, if plans for their implementation have been scuttled. For example, if Office 365 E5 is being licensed but only E3 functionality is being used, perhaps licensing can be changed. If Office 365 E3 is provided to all users, examine whether E1 could suffice (see). This has a significant reliance on contract dates of course, and most private sector organizations can only reduce Microsoft purchases at renewal.
Accelerate implementation of large bundles of software you’ve licensed, like Microsoft 365, assuming they will allow you to reduce payments to third parties that provide similar functions. Microsoft 365 includes a wide range of security and management software, including rights management, cloud application security, and unified endpoint management, that many organizations planned to replace point products with.
3. Services: Including cloud, telecommunications, managed, or internal labor — Many services agreements include clauses that provide termination, or reduction of minimum revenue commitment in the case of business downturn, force majeure, or, change-in-control. If there are contracted services (e.g., telecom or cloud services) that are low in priority to the organization, and which can provide significant immediate savings if reduced or eliminated, then: (a) retrieve the agreement for this service, (b) consult with your legal department to determine if the criteria for business downturn are met, and if so, (c) reduce or terminate the service to realize the cost savings. For every service, analyze whether the contract is optimized for the new way of work, where users are working from home. Consider whether users working from home will continue, at least to some degree, as you contemplate service changes.
Reassess programs that pay for employee home phone or internet services. This may also be governed by union rules or local laws.
Review all telecommunications contracts as discussed above.
Ensure contracts are optimized for the current situation where WAN links between sites are not being used. This could include removing or reducing commitments for unneeded international roaming plans as discussed above.
Provide guidance to end users for most efficient use of mobile phones, landlines and cellular data for phone calls, audio and video meetings. Apply policies and controls where possible.
Use existing software entitlements for collaboration and meetings if possible. For example, if an organization is paying for a unified communications platform but still hosts meetings on another service or internal servers, accelerate shutting down the on-premises services. If other collaboration products are being used and can be eliminated, accelerate the move to a single product, especially one whose contract cannot be terminated or where functionality is bundled with other products that must be used.
Evaluate whether external calling capabilities included in unified communications collaboration platforms are being used and are required. The cost of this is $3 to $4 PUPM and many users get it by default despite extremely low use. People that are using these services could use their mobile phones instead.
Replace costly proprietary private network links with consumer-grade broadband service where acceptable
Shut down unused, underused, or unnecessary cloud services, such as those for testing and development where projects are being paused. Use a SaaS management platform (SMP) to identify SaaS tools in use and identify duplicate or redundant services. Ensure the SMP tool can undertake discovery of SaaS app usage (usually combining feeds from expense systems, network traffic analysis and browser usage) to ensure the tool drives immediate returns in providing new information about SaaS tools in use. If you don’t have an SMP, subscribe to one with a minimal commitment.
Eliminate or pause nonessential tasks. Shelve long-term projects that are “nice to have” but not urgent or critical. It is likely that these projects will be reassessed at a later date and may be changed based on other business requirements. Instead, verify that security vulnerabilities were not created as the organization was trying to get people working when they were ordered to work from home and implement what’s necessary to comply with security policies. Plan to deploy security and other mission-critical software and updates only. Work with software vendors to identify new policies around support and end of life to decide which updates and upgrades are truly critical.
Work with software and services providers to identify free services or to allow deferred payments.
Analyze subscription tools and other contracts to learn if any components are usage-based and not required by contract (e.g., high levels of logging for error tracking) and reduce consumption by turning off unnecessary features.
Reduce contractor services, if possible, and replace them with employees.
Reassess service to users, including service-level agreement and negotiate a temporary reduction in SLAs that will allow other more critical tasks to be done. For example, many organizations created walk-up support bars, which are very expensive, over the past few years. Move to appointment-based models for remote support.
Cancel all fee-based technical training for IT staff and end users. Leverage training included in vendor contracts such as ELAs or support (e.g., Microsoft Unified Support).
Offer cash bonuses for identifying areas to save money. Leverage existing programs if they exist. May be limited
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