When a recession threatens, most companies’ knee-jerk reaction is to cut costs, usually starting with headcount. Companies from Google to Microsoft and Amazon to Wayfair have already announced plans to lay off as much as 13% of their workforce in 2023.
Ask these same executives if they plan to reduce their tech spending and the answer is not as clear. Companies realize they need technology, during an upturn, a downturn, and anytime. Especially with the explosion of AI capabilities and security threats, most companies would be ill-advised to start slashing their tech budgets – that is unless they did so to remove waste and inefficiencies.
Rather than make blind cuts to technology, LinkedIn co-founder and Greylock partner Reid Hoffman, said, when recession looms, “firms need to in the least stay on a learning curve with the technology and revisit it down the road.”
I say they need to revisit their technology spending now – and then again down the road – to make it more efficient. It’s been my experience working with hundreds of enterprise leaders that most C-Suite executives don’t know how much they could potentially save on their technology spending without sacrificing innovation, performance, or quality. They don’t know how much tech debt they have, nor do they know how many processes and applications can be optimized to run faster, using fewer resources—especially cloud resources—thereby reducing their Total Cost of Ownership.
Another important factor that is often not considered as more companies increase their data retention policies and acquire more data every minute is the Total Cost of Data. This practice, if considered at all, usually resides with technology teams that are on the front lines every day. The problem is that these teams are usually so focused on keeping the system running day-to-day or building the next great feature for the application, that assessing their technology implementations for efficiency gains is seldom a priority. (The emerging field of FinOps for Data shows promise for improving this situation.)
This needs to change.
There is a way to help enterprises understand the potential efficiencies of cost takeouts with minimal risk to their data environment so they can evaluate and make smarter decisions on where to save money. And every company is looking to save money today thanks to the “R” word.
Do more with less – how do you decide “less”?
Where can you have the largest cost takeout with minimal effort and risk, right now? The easiest way to determine this is with a technology assessment. As organizations are facing pressure to save money, an assessment can help you identify the opportunities you have right in front of you.
Every company wants to optimize its investment in technology to create value and grow the business. But just because the system is operating doesn’t mean your technology environment is healthy and efficient. How can you know if your technology systems are delivering value? How efficient are your applications and what potential savings could you find if you optimized the systems? What could those savings add up to over five or ten years? How can you measure the success of your technology investments?
By completing a technology assessment, you will gain a clearer picture of the health of your technology system and learn how to move toward a defined set of metrics that will ensure ongoing success.
How can a technology assessment help save costs?
First, you need to review your current situation and honestly assess your goals and objectives. Then, you need to determine whether your metrics are reflective of your KPIs.
For example, what are your KPIs surrounding your system’s health and performance? If you don’t have any, an assessment can identify the need to create meaningful, measurable objectives around how you use data. Are you spending too much on infrastructure? This may seem counterintuitive, but companies like to buy more than they need in terms of server capacity because they typically do not know what applications require to host them. Are your systems capable of supporting your peak workloads or busy season? If you work in a retail setting, you cannot kick back and assume everything will be just fine on Black Friday. Workload friction (i.e., traffic jams on your servers) can cost a retailer millions of dollars by causing an outage during that critical minute when every user is trying to make their last-minute holiday purchase. If you can mitigate even a fraction of this expense related to workload friction or gain 20% in efficiencies, you will have created a healthier system.
When it comes to IT, our starting perception can make all the difference in how we design and maintain the systems that deliver our technology, and ultimately value to the organization. If you’re already focused on optimizing the availability of your tech stack, the scalability of critical technologies, maintaining rigorous performance standards, maximizing the operational capacity of your servers, the financial viability of the tech you deliver, and the overall security of your system, the trick then becomes how can you set your technology infrastructure up for long-term success? Establishing a level of transparency and communication between the technology teams and executive leadership becomes pivotal to this pursuit.
To ensure that technology health remains a priority within your organization you need buy-in from leadership, and to gain that buy-in you need to regularly communicate value and present data that’s understandable and actionable. If you really want to take the next steps to ensure the technology health of your organization, anchor success metrics to KPIs that directly impact value and efficiency—this will help you reduce costs without sacrificing quality or performance. It all comes down to finding ways to make your IT stack more efficient. Priorities like this will show up on the bottom line and help your technology infrastructure shine.
Ready to see how your tech stack stacks up? Take our technology assessment.