IT leaders are often caught in a tug-of-war between advancing technology and managing costs. In 2024, the state of the economy is only highlighting this divide. For business and IT leaders alike, this begs the common question: how can we reduce IT costs?  

Demands for IT continue to spike—especially as the cybersecurity landscape shifts and the appetite for remote work increases. However, a global CIO survey by Gartner reveals that most IT leaders are moving their primary focus away from technology growth to optimization. With this subtle shift in IT cost-optimization strategy, companies could achieve a 15 to 20% cost advantage over competitors. 

In this article, we’ll aim to bridge the gap between innovation and managing costs by providing 15 ideas on how to reduce IT costs in a company. If you want to optimize your IT spend without sacrificing progress or quality of service, consider these key strategies: 

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1. Streamline IT operations

Creating efficiency in IT is critical for cost control. Start by asking yourself this: where can we automate processes and centralize control over resources? 

Automate repetitive tasks

By employing automation tools, your organization can significantly reduce manpower costs. Network management tools are pivotal in this respect, automating tasks like monitoring and maintaining network infrastructure, which reduces the need for extensive manual oversight and employee training. Similarly, SaaS management tools streamline software deployment, updates, and license management, making resource usage more efficient and cutting down on labor costs.

Centralize IT management

Streamlining control over resources paves the way for more efficient operations. For example, consider a process as simple as rolling out a password policy. Often, these policies require users to meet complex criteria. If you don’t centralize those rules through a single password management platform, you’ll have to deploy the criteria across several systems, get buy-in from multiple stakeholders, and track down system owners every time a change is needed. With a centralized approach, the responsibility lies with one service owner—saving you time and money. 

2. Adopt cloud computing

By 2025, nearly two-thirds (65.9%) of application software spending is expected to go toward cloud technologies, up from 57.7% in 2022. So, what’s with this rapid rise in cloud-based spend? 

Minimize upfront costs

Cloud services are known to accommodate business growth without significant upfront investments. Because they typically operate on a SaaS model, cloud services are easy to scale up or down with your business needs. In comparison to on-premises architecture that may require significant expenditures upfront, cloud computing paves the way when it comes to flexibility and ease of adoption. 

Here’s our complete breakdown of the cost of cloud services.

Reallocate employee resources 

Because cloud providers manage the bones of the system, it alleviates the heavy lifting for your IT team. Offloading the maintenance, monitoring, and management of your architecture not only saves your team time and empowers them to focus on what matters most, but it saves costs in the long run. Cloud-based network monitoring and management tools like Auvik Network Management embody this advantage, offering efficient ways to oversee IT infrastructure anytime, anywhere.

3. Optimize software and hardware

The name of the game here is proactivity. A reactive approach means waiting for something to go wrong—and when that happens, things can get expensive. Instead, consider these proactive strategies. 

Regular software updates and maintenance

Failing to be proactive with software patching puts a target on your back for hackers. In fact, a Ponemon Institute study showed that 57% of cyberattacks could have been avoided by installing an available patch. With the rising costs of data breaches, it’s critical to proactively monitor and install software updates.  

Proactive hardware management

Gaining a clear line of sight into the lifecycle of your network hardware can help you optimize its performance and lifespan. For example, proactive network monitoring can pinpoint which devices are experiencing degraded performance, empowering you to administer maintenance or replace them before a costly outage occurs. 

4. Enhance cybersecurity measures

The global average cost of a data breach in 2023 was USD $4.45 million. The direct financial repercussions that come with a breach might include legal fees and the costs of organizational downtime—but the indirect costs such as lost revenue and reputational damage add up too.

Here’s how you can get ahead of it.  

Monitoring and threat detection 

Today, investing in cybersecurity is non-negotiable, and a solid place to start is with diligent monitoring. Network management tools are instrumental in setting a baseline for normal operations, making it easier to identify and mitigate security threats. On the other hand, SaaS management tools play a crucial role in ensuring that only authorized users access critical applications, while also monitoring usage to identify potential security risks.

Perform regular security audits

Regular security audits and penetration tests are essential for maintaining cybersecurity. They can identify vulnerabilities and gaps in your security infrastructure, allowing for timely risk mitigation. While security investments come with an upfront cost, they’ll pay dividends in the long run. 

5. Invest in employee training and awareness

Encourage a cost-aware culture 

Educating staff can significantly reduce the costs associated with common mistakes and misuse of IT resources. For example, consider an employee on the marketing team who has decided to invest in pricey project management software, not knowing that another department has already purchased a similar product. This rogue access to apps and information—often referred to as shadow IT—creates redundant systems that lead to excess spend. 

Mitigate risk with cybersecurity training

As the old adage goes: an ounce of prevention is worth a pound of cure.

In a world where up to 88% of corporate data breaches are caused by an employee error, it’s more critical than ever to ensure your staff are appropriately trained to recognize the risks and best practices of cybersecurity. 

6. Leverage data analytics

Use analytics to identify savings

Network management tools can gather and analyze data on network usage, performance, and efficiency, helping identify underutilized resources or bottlenecks that increase costs. A SaaS management platform provides insights into software usage patterns, facilitating more informed decisions about software subscriptions and licenses, potentially reducing costs.

Predictive maintenance

Predictive maintenance, informed by analytics, can prevent expensive downtime and extend the life of your IT assets. For example, using trends from historical data, you may be able to predict when your hard drives will reach maximum capacity. Rather than waiting for that to happen, which may result in downtime, you can remediate the issue in advance. 

7. Consolidate or negotiating with vendors

Reduce complexity and overhead

Consolidating vendors can lead to significant cost savings. Gaining a clear view of your network infrastructure and SaaS ecosystems is key to identifying redundancies and cutting costs. That clear view starts with utilizing centralized network and SaaS management tools to gain visibility.

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Effective vendor management

As your business evolves over time, it’s important to regularly review vendor contracts to ensure that services and prices align with your current IT needs. Whenever possible, negotiate better rates and terms to maximize your return on investment. 

8. Utilize IT Asset Management (ITAM)

Efficient use of existing resources

Maximizing the use of current IT assets is a tried and true way to cut costs. In fact, some research shows that when existing IT assets and software licenses are fully leveraged, you can see savings up to 30%. This can also boost productivity by ensuring your employees have the right tools.

Asset lifecycle management

Understanding when it’s time to upgrade or retire hardware and software plays a crucial role in IT cost reduction. That understanding starts with measuring and monitoring. ITAM best practices are to develop a centralized management system for network visibility and SaaS inventory.

Ideally, this repository enables better tracking of the age, performance, and maintenance costs of your IT assets. The end goal? Efficient lifecycle management that ensures your IT budgets are fully optimized.

9. Explore sustainable IT initiatives

Cut electricity consumption

Implementing efficient hardware solutions and leveraging technologies like cloud computing can substantially reduce your organization’s energy bills. Take your data center as an example. It’s been shown that 15 to 20% of all servers go unused, yet an idle server still consumes about three quarters of the energy of a fully utilized server. Network management tools can help you monitor equipment usage to effectively eliminate waste. 

Another example is with collectors. Collectors used in network management software often require investing in a dedicated windows machine/server or a VM, which operate on x86_64 architecture. While x86_64 systems are versatile and high performing, they’re also more expensive to procure and operate (higher power consumption). One way to reduce these costs is to use software that lets you run the collector on ARM64 architected devices instead, such as Raspberry Pi. ARM64 CPUs are typically less expensive per unit due to simpler design and manufacturing, which can lead to lower total cost of ownership (TCO) for large-scale deployments. Auvik users, for example, can either run the collector as a docker image or as a native Debian/Ubuntu package, giving your department more deployment and cost-saving options.

Recycle and upcycle IT equipment

The world produced a staggering 57.4 million metric tons of e-waste in 2022, a number that is expected to rise to 75 million tons by 2030. A significant portion of this e-waste comes from IT and telecom equipment. By transforming old IT equipment into new products or repurposing them for different uses, you can significantly cut down on the costs associated with IT equipment disposal, while also contributing to environmental sustainability.

10. Outsource non-core IT functions

The IT managed services market is projected to reach $425.19 billion by 2026—and the reason for this rapid growth is directly tied to the potential cost savings. Here’s how outsourcing can help you cut costs. 

Reduce in-house hiring expenses  

Outsourcing allows your business to avoid the high costs associated with recruiting, training, and growing your in-house IT team. Instead, you can access highly specialized skills and technologies through outsourcing partners, often at a lower cost than it would take to hire them internally.

Enhance overall efficiency 

MSPs (Managed Services Providers) bring with them streamlined processes, robust risk management systems, and advanced technologies—all conveniently baked into a simple, predictable service agreement. As a result, MSP costs allow you to eliminate spend sprawl by consolidating your services centrally and reducing the need for your team to build its own processes from ground zero. 

The decision between MSPs vs internal IT should taken into consideration all of the benefits and challenges before moving forward.

11. Perform regular IT audits and reviews

Identify redundancies and inefficiencies

Regular IT audits help your organization pinpoint areas where expenses can be optimized. For example, if your servers aren’t operating at peak performance, upgrading them could reduce downtime and improve efficiency, ultimately leading to savings. As always, monitoring performance is a great place to start in determining a baseline for improvement. 

You could also implement a SaaS spend management strategy. According to a recent Gartner report, up to 25% of provisioned licenses go unused by employees, resulting in significant waste. With the average SaaS spend per employee at $2,623, this inefficiency can quickly add up. By identifying and eliminating these unused licenses, organizations can substantially cut IT costs without compromising productivity.

Automate network documentation 

Automating network documentation not only reduces the time and effort required by your team to perform data entry and analysis, but it also enhances accuracy and reduces the risk of human error. The overall result is a more efficient auditing process, with lower labor costs that improve your bottom line. Tools like Auvik Network Management give you real-time access to documentation, so you’re constantly in the know about your network. 

12. Adopt a proactive maintenance approach

According to Gartner, every minute of downtime can cost your business between $5,600 and $9,000 in lost productivity and revenue. So how can you minimize the impact of outages? 

Avoid costly downtime and repairs

Proactive maintenance identifies and resolves potential issues before they can escalate into more significant, costlier problems for your business. Monitoring tools like Auvik can alert your IT team to potential issues quickly and efficiently, allowing you to get ahead of remediation before an outage occurs. 

Ensure efficient issue resolution

When an outage does occur, time is precious. That’s why it’s critical to have a comprehensive plan for remediation to get the business back up and running. Consider developing a remediation plan that includes the following:

  • Identification procedures to outline the type of outage, its scope, and its impact on operations
  • Communications protocols for informing stakeholders, including IT staff and management
  • A designated response team outline with clearly defined roles and responsibilities 
  • Resolution procedures that detail steps for diagnosing the root cause and implementing fixes
  • Backup and recovery strategies to minimize data loss and restore systems as quick as possible 
  • Documentation processes for recording the outage, response actions and lessons learned 

13. Engage IT cost management experts

Evaluate significant IT investments 

Hiring an external IT consultant may provide you with the specialized knowledge needed to evaluate your significant investments and optimize ROI.

For example, while entirely necessary, your cybersecurity program can require a significant amount of upfront investment. Without specialized expertise in this area, it can be difficult to determine where your budget is best spent. A consultant can help you do just that. Their insight into the tools, technologies, and systems you’ll need to keep costs at bay is sure to pay off in the long run.   

14. Review and adjust IT strategies regularly

Adapt to technological advancements

Regular updates to IT strategies help your business to adopt new, cost-effective technologies and replace expensive, outdated systems. A 2023 Harvard Business Review study revealed that organizations leading with digital transformation saw their operating expenses grow at nearly half the rate compared to companies that were slower to adopt technological change. That’s huge potential cost savings! 

Optimize resource allocation

By analyzing your IT operations regularly, you can identify waste, reduce redundant tools, and reallocate resources efficiently. It all starts with gaining visibility into your current state, which is easier than ever with network management and SaaS management tools that effortlessly monitor resource usage. 

15. Utilize IT budgeting and forecasting tools

Plan IT expenditures 

If you’re wondering how to reduce IT costs in a company, budget forecasting is a great place to start.

It’s a strategy based on logic: if you can measure your spend today, you can plan accordingly for the future. By tracking things like software and hardware expenses, departmental requirements, and resource performance, you can fine tune your investments for the year ahead. Evaluating the ROI of your network investments and developing a SaaS spend management strategy can help you determine where to cut back spending and where to go all in. 

Reduce IT costs with Auvik 

Your journey to reduce IT costs in 2024 doesn’t have to compromise quality or innovation. By looking at your organization’s IT through a holistic lens and adopting these cost-saving strategies, your business can operate more efficiently and stay well within budget. 

Remember this: IT cost management takes more than a one-and-done approach. It’s an ongoing effort toward continuous improvement. And luckily, you don’t have to go it alone.

Tools like Auvik Network Management and Auvik SaaS Management can seamlessly enhance your visibility and control of IT assets, empowering you to cut costs and realize ROI. 

Discover how cost savings with Auvik could empower your IT team. Start a free trial today.

Written with contributions from Nick Hilderman, Information Security Manager at Auvik.

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