Staying in the game Featured

7:00pm EDT December 26, 2009

If you don’t do an annual review of your IT use to find ways to cut costs, you’re going to go out of business.

“It’s just a matter of time,” says John Grismore, vice president of InsightBusiness Services, the commercial services arm of Insight Communications. “If you don’t take the time to look at these things, you’re not going to have the margins you need to drive your business into the future.”

You might be looking at two or three of the components, adds Grismore, but you need to look at all six at least once a year to keep pace.

Smart Business spoke with Grismore about the six things every business owner should evaluate to help cut IT costs and create efficiencies.

What is the first thing to consider when looking for ways to cut IT costs?

Electricity. IT is a big user of electricity. Businesses need to power off their servers, deploy power-saving software and turn off the lights. Doing these things can cut your electric bill by 10 to 20 percent, and those are real dollars that fall to the bottom line.

How else can you cut costs?

You need to have a mobile device policy, evaluate each position and not give every position access to all technology. More than 50 percent of all minutes in business plans are never used, so you need to review your plan for long-distance usage at the employee level. Companies are being oversold, and they need to review their contracts.

Renegotiate your plan every year, because the price of minutes continues to fall. Too many companies get locked into a contract. People get caught up in running the business and they think they don’t have time to look at these things. But business is down right now, making it an ideal time to review your plans with your vendor and cut waste — and costs — where you can.

In addition, consider the features you’ve been sold and look at whether employees are really using those, because most features sold on business plans are never used.

How can using in-house talent save you money on IT?

Reconsider using a consultant versus using someone in-house. And that cuts both ways. Too often, companies are working with consultants and just keep giving them projects, or they may have people doing things in-house that would be better served by a consultant. Survey your staff on their expertise. Often, companies have the expertise in-house and are unaware of it; they have people who could do the job for much less than a consultant, because billable hours really stack up.

With a consultant, a lot of billable hours are just getting a feel for the scope of the work, the culture, what is needed to do the job, whereas you have people on staff who already have that knowledge. Get your scope of work, establish what you’re trying to accomplish, and then ask your in-house team to respond to your request for proposal.

Should companies re-evaluate their Internet service and policies to save money?

Absolutely. All the time. It’s important to have your IT fit your business model throughout the organization. That can mean making sure each department has the right hardware and software, but also that Internet access, for insistence, is the right speed and bandwidth for the people who are using it. Why should a company be paying for more bandwidth than it needs? Technology for technology’s sake doesn’t make any money. It has to clearly save you money or improve your processes, and if you can’t quantify it there, then it just doesn’t belong.

How can buying the right hardware decrease your long-term costs?

You need to consider that the price of the hardware is only one piece of the equation. One option might, over the life of the machine, cost you more in power than the savings you thought you were getting with a lower price.

Also consider maintenance costs and understand that the maintenance agreement might cost more because the cost of the box is a loss leader. A lower initial price doesn’t necessarily mean a lower cost over the life of the equipment. Make sure you consider all costs when making those hardware-buying decisions.

How can re-evaluating your bandwidth get you the most for your money?

The cost of transport and Internet access is a declining proposition. Every year, you should expect to get more speed for less money. When negotiating a contract, make sure there are provisions for the future and that you can scale up or down with more or less bandwidth as your business changes. Make sure there is clear cancellation language that you can live with, because if they’re not willing to lower the price and provide better service, you need to search for a new service provider.

Also, when purchasing bandwidth, make sure there’s a clear escalation process so if there’s any problem with the bandwidth, you’ve got the names and phone numbers of everyone from the person who sold it to you to the CEO so you can make sure your business doesn’t suffer because of an outage.

John Grismore is the vice president of InsightBusiness Services, the commercial services arm of Insight Communications. Reach him at (502) 410-7208 or grismore.j@insightcom.com.