How to Reduce IT Spending in Your Small Business (2021)

According to a new study, 62% of business directors said because of COVID-19, they would have to decrease their technology budgets in 2021.

The impact and uncertainty of lockdown have clearly impacted our local economy in innumerable ways. Small to medium-sized businesses (SMBs) are some of the hardest hit.

Whether trying to recover from lockdown or simply increase profit margins, the good news is that SMBs almost always have room for improvement for cutting costs in their IT budget.

In this article, we cover our top tips for reducing your IT expenses in 2021 and beyond.

Five (Actionable) Ways to Cut Your IT Budget

(1) Encourage Remote Work

Remote employees can save your business money on multiple fronts.

Some savings are direct, such as reduced overheads and operating costs. You’ll have a smaller office and a cheaper lease, less rates, and lower electricity and water bills. You can downgrade your internet package and reduce purchasing and repair for cabling, routers, printers, projectors, and other ICT equipment.

Additionally, multiple studies indicate that remote work correlates with improved employee productivity.

A global study by Vodafone found that 83% of companies report greater employee productivity after adopting flexible work, entailing both remote work and flexible hours. Specifically, other studies indicate productivity boosts between 13-35% for remote employees.

Companies with remote work policies also report increased employee retention, decreased sick leave, as well as better-performing salesman.

(2) Adopt Cloud Computing

The cloud is the modern method for data storage and business computing. It’s reliable, secure, minimizes downtime, and it also makes great fiscal sense.

Primarily, it eliminates the need for significant upfront investment.

Operating traditional on-premise servers, on the other hand, is a major endeavour that involves physical infrastructure and heavy installation fees. There’s IT equipment, software licenses, labour costs, and even construction work all required as a capital outlay.

Cloud computing has minimal upfront investment and capital costs. There’s no physical infrastructure or massive server room involved. In fact, many SMBs already have the physical technology they need to get started with the cloud almost immediately.

Here are four more ways the cloud helps reduce IT spending for SMBs:

1. Scalable infrastructure. It’s inexpensive, instant, and easy to upgrade or downgrade based on your current business needs. You only pay for what you need.
2. Decreased downtime and disruption. Thanks to its redundancy and automatic-failover technology, your systems will remain fully accessible despite any internet, hardware, cybersecurity, or power issues on the cloud side.
3. No costly surprises. Cloud services are purchased on a subscription model. Because the cloud vendor handles all maintenance and upgrades for you, your business never has to worry about sudden expenses on your monthly IT spending. It’s thus ideal for cashflow.
4. Supports remote work. As above, remote work brings direct savings to hardware and operating costs. The cloud is the ultimate support for remote employees, ensuring seamless file sharing, cybersecurity, and VPN capabilities.

To learn more about how the cloud may help your South African SMB, view our resources on cloud computing and cloud storage:

• The Pros and Cons of Cloud Storage for Your Small Business
• Multi-Layered Security: The 5 Must–Have Solutions for SMB Cyber Protection
• On Premise vs Cloud Computing: Which is best for your business?

(3) Renegotiate (or Cancel) Vendor Contracts

Vendor contracts tend to eat away at IT budgets unless they’re actively managed. It’s all too easy to keep a debit order running without stopping to question a long-time, trusted vendor.

Ask yourself:

Is this software or IT service truly necessary?

Is it underutilized or made redundant by another free or cheaper service?

For example, your company has a paid subscription to Skype for Business. You also have Office 365 which includes MS Teams. The virtual conferencing features of Skype and MS Teams largely overlap, thus making Skype a redundant expense.

If the software or service is required, don’t automatically agree to the price or package when the contract is up for renewal. In fact, IT experts strongly discourage vendor contracts with auto-renew clauses.

Renegotiate your vendor contract to try to agree on costs that work better for your budget and current requirements. You can, for example, downsize on VoIP if most employees are now working from home due to lockdown restrictions.

Related:

Hints to Negotiating Technology Contracts – Paul Hasiman, MBA

(4) Purchase Refurbished Computers

IT equipment should serve your business productively and cost-effectively. To avoid expensive repairs and technical problems, you may be tempted to invest in brand-new devices every time.

However, this will cost you much more upfront with very little payoff. Refurbished devices, in contrast, cost 30-50% percent less than the retail price of a new computer.

Understand that many myths around refurbished computers simply don’t hold up. For instance, ‘refurbished’ is not the same as ‘used’. When purchasing from reliable suppliers, refurbished computers are tested, repaired, and fully restored to a like-new condition. This is very different from ‘used’ devices that are simply sold as-is.

Refurbished computers generally include strong support from third-party maintenance companies. Always ensure the devices include a minimum 12-month warranty and after-sales support.

(5) Outsource to a Managed IT Services Provider (MSP)

Traditionally, SMBs either employ in-house IT staff or adopt a break/fix approach.

The first method costs ample time, effort, and money to hire, manage, and train multiple in-house IT professionals on a full-time salary. Even then, your business still has to hire costly external consultants for complex issues and strategic consulting.

The second method involves contacting an IT company whenever something goes wrong. They will send out a technician, fix the issue, and return if something breaks again. This approach becomes an expensive problem because break/fix providers are not financially incentivised to treat your IT holistically or fix foundational issues. Their primary focus is on treating the symptoms. This leaves your SMB with constant expenses and no overall understanding of your infrastructure for long-term improvement.

Another alternative is the managed IT services provider (MSP).

The MSP is a professional IT services company to which SMBs outsource their IT needs. They deliver end-to-end, fully managed services and support across the entire application and IT infrastructure environment.

MSPs mostly operate through remote monitoring services, which allows them to keep tabs on the health of their clients’ IT environments, change and update systems, and troubleshoot problems across any connected device company-wide.

Rather than waiting for something to break or shut down, MSPs ensure a customer’s IT can avoid most tech issues in the first place. This is pivotal because IT-related downtime can have a devastating impact on revenue and reputation – especially for smaller businesses trying to grow.

Need some extra help with cutting IT costs?

Get started today with a free consultation from the IT experts.

iSite Computers is an MSP and managed IT services company in South Africa. Since 2008, we’ve helped SMBs save money by taking an actionable and comprehensive approach to managing and reducing their IT expenses.

We look forward to hearing from you. Call us on +27 31 812 9650, or submit the free consultation request and we will call you back soon.