Difference between IT Cost Cutting and IT Cost Optimization

Businesses appear to spend 4-6% of their income on IT, which is within the level that CIO Magazine advises. When planning your resource allocation, keep in mind that the size of your company normally has a significant impact on the amount of your budget.  cost optimization

IT Cost Cutting

Gartner defines IT cost cutting as a one-time undertaking aimed at reducing expense levels. The most effective IT cost-cutting efforts are structured by identifying a precise amount (not percentage) of money to be saved and identifying a date by which the savings must be completed.  Companies implement various measures to reduce expenses, and accordingly, improve profitability.

Accenture estimates that, as a proportion of total corporate spending, IT ranges from less than one percent to around 15 percent; a significant component of sales, general and administrative cost.

Many IT cost-cutting alternatives are linked to human resources, such as lowering compensation, letting go of some employees, switching to a less expensive health insurance, and so forth. It seems reasonable that firms first decrease costs associated with people because, according to Gartner, 37% of IT budget is tied to staff.

Cost cutting refers to immediate, direct actions, but Gartner also strongly recommends to invest in a Telecom Expense Management (TEM) service. It’s worth the inquiry, it will pay for itself, and most importantly, provides an opportunity to increase savings. This service will automate many tasks related to IT and Telecom, giving you the opportunity to save money and time by allowing your employees to focus on more important projects while maintaining an accurate inventory, ensuring you don’t overspend on IT services and assets.

IT Cost Optimization

According to Gartner again, IT cost optimization is a business-focused, continuous discipline to drive spending and cost reduction while maximizing business value.

Effective IT cost optimization often adheres to programs and policies that are based on time-tested best practices and procedures. Activities included in IT cost optimization would be:

All business purchases have the best pricing and terms: Alert Telecom outsourcing eliminates the hassle of managing multiple carriers, multiple vendors, and having to navigate through complex technologies and solutions.
IT and business operations are automated and digitalized: Telecom rates and promotions change all the time, but many companies are stuck wasting money on outdated plans, being billed for service overages or unused usage, and even disconnected services. Telecom consultants can review your current bills and make sure you’re in the right plan for your business needs.
Platforms, services and processes are standardized, simplified, integrated and rationalized: By applying the discipline of Total Telecom Cost Management, companies can reduce their telecom costs by up to 40%!

You should think about using our Telecom Expense Management Solution to help you save money, time, and have an accurate inventory in both cost cutting and cost optimization scenarios.


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