The tech world has been on a rollercoaster since the COVID-19 pandemic. During the large-scale shift to remote work throughout 2020-21, big tech firms invested heavily in talent and infrastructure and there was plenty of growth in the IT space. Since the second half of 2022, however, high inflation, big tech layoffs, and the threat of an economic recession have organizations focused more on remaining cost-effective than investing in growth.
While plenty can be said about the interesting macro-level conditions—and if cutbacks in headcount are really the answer—we want to hone in on how IT teams and MSPs can weather current events.
Let’s explore what IT teams and MSPs can do to ensure they remain cost-effective without unnecessarily damaging end-user experience during uncertain economic times.
How to respond to the economic uncertainty
Reducing costs without compromising user experience isn’t easy. Even during boom periods, no responsible IT helpdesk or MSP is intentionally overspending. At a high level, getting it right boils down to prioritization, knowing your customers, and innovating.
Prioritize
Figuring out where to cut back starts with evaluating your current environment and prioritizing the “must haves” over the “nice to haves”.
For an MSP, at a minimum, you’ll have to invest in enough talent, hardware, and software to meet your SLAs. For an IT department, you must “keep the lights on” when enabling core business functions.
Precisely what that means in practice will vary across organizations. The key is being intentional about your priorities before you start cutting back, then cutting back where it makes sense.
Know Your Customers
Knowing your customers is integral to effective prioritization and can even help you innovate to drive more revenue during a downturn. Make sure you remain laser-focused on how they perceive the value you deliver, and optimize spending with that in mind.
If you’re an MSP, remember that your customers are also dealing with uncertain economic conditions. You might be able to help your clients reduce costs and bring in new revenue at the same time if you understand what their pain points are. A great example is the trend toward MSPs becoming managed security service providers (MSSPs).
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Innovate
Transitioning from an MSP to an MSSP is just one example of innovation that can help you overcome a recession. Another is leveraging new tech to your advantage. A.I. in general—and ChatGPT in particular—offers plenty of innovation opportunities. If you can quickly leverage tech to replace or supplement manual processes, you have a head start in the race to remain cost-effective.
And let’s not forget some of our favorites: automate, automate, automate! There may be plenty of hidden cost-savings among your operations you can always look at optimizing before resorting to cutting headcount, hours, or services.
Are you an MSP looking to navigate a potential economic recession? Check out our post on making your MSP a recession-proof business.
DOWNTIME, AKA “The 8 Wastes”
When I say downtime, you likely start thinking about SLAs and five nines (99.999%). But, that’s not what I mean this time. I mean the eight wastes of Lean, a system first developed by Toyota, which is often represented by the DOWNTIME mnemonic:
Defects
Overproduction
Waiting
Neglect of talent
Transportation
Inventory
Motion
Excess processing
While the eight wastes have their roots in manufacturing, it can be useful to analyze your IT processes through this lens. Here’s a breakdown with an IT focus to help you think about potential waste in your environment.
Defects
Defects in existing software and hardware can create significant waste. You cannot control defects in your chosen vendor’s software and hardware, you can control what you do about it. Analyze your existing infrastructure and workflows for time-wasting defects and address the ones that can drive efficiency.
🗝️Key question to ask: What software and hardware defects waste the most time?
Overproduction
Overproduction in manufacturing maps nicely to extraneous features and services in IT. One example of overproduction is offering white-glove service that is rarely used but expensive to maintain. So is overstaffing a helpdesk during off-peak hours. Look for opportunities to provide self-service solutions to cut back on “overproduction” where practical.
🗝️Key question to ask: What services do you offer that don’t deliver much customer value?
Waiting
Waiting to resolve downtime or address a helpdesk ticket is inherently wasteful. The more time an issue goes unresolved, the less productive you are. Manual processes naturally require some waiting as work gets passed on from one human to another. That’s why automation of routine operations and self-service for simple issues (like password resets) can be a great way to reduce waste.
Additionally, coupling zero trust and continuous security to proactively detect threats instead of waiting to respond to a breach or point-in-time audit is another example of how you can reduce “waiting waste.”
🗝️Key question to ask: What workflows have the highest “in progress” and “waiting” times?
Neglect of Talent
When layoffs are making headlines, it can be easy for staff to become nervous about their future, or feel overworked while they try to do more with less. That can lead to poor performance, which directly impacts your customers. Then, as the negative feedback rolls in, you get a nasty negative feedback loop that can be difficult to break.
Ensure that even in uncertain economic times, you keep your staff motivated, engaged, and protected. Happy team members are more likely to develop the innovative ideas you need to excel in tough economic times.
🗝️Key question to ask: How does your staff feel about the work environment?
Transportation
If you manage IT infrastructure at multiple locations, how often do you have to “roll a truck” to fix something with IT personnel? Every trip is inherently a form of waste. Ask yourself if you can reduce this waste via remote support, automation, or self-service.
🗝️Key question to ask: How much time does IT personnel spend getting from one place to another?
Inventory
When budgets are tight, cutting back on hardware spending is often a quick way to save. For IT teams, that can mean delaying or scaling back hardware refreshes. Similarly, it can mean reducing the number of cloud services you subscribe to and on-prem software licenses you pay for.
🗝️Key question to ask: What inventory spending — including software subscriptions — can you cut back on or eliminate?
Motion
Cutting back on extra steps in a process can drastically reduce wasted time and effort. We’ve already touched on a few examples such as reducing truck rolls, automation and providing self-service solutions to your customers. An effective process audit may also uncover wasted motion, such as “rubber stamp” approvals where you could empower staff to take action immediately and help desk tickets that are tedious to escalate and assign.
🗝️Key question to ask: What steps in your existing processes are unnecessary?
Excess processing
If you’ve ever put together IT process documentation or manually created a network diagram, you probably know that what gets written might not get read. Unread documentation is an excellent example of excess processing and waste in IT. So are knowledge silos where multiple teams create different solutions for the same problem.
User onboarding and offboarding are often low-hanging fruit here. In many cases, onboarding and offboarding are full of manual steps that could be eliminated or reduced without negatively impacting user or business outcomes.
🗝️Key question to ask: What work outputs are duplicated across teams or outright ignored upon completion?
Don’t go too far in the wrong direction
Remaining cost-effective and eliminating waste is important, but running a successful MSP or IT department is as much art as science. If you’re not careful, you can over-optimize for near-term savings at the expense of customer experience. In the long run, that can lead to lost customers (for MSPs) and unproductive business units (for IT departments).
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Similarly, cutting back on too much on your cybersecurity efforts can be expensive. A single breach could far exceed savings on licensing and security staff, and tarnish your reputation. And, unfortunately, there are risks everywhere. Even in a boom cycle, you could go broke addressing every possible threat. The key to getting it right is making an informed business decision on where to invest. That’s where a risk-based cybersecurity strategy can help.
Unlike compliance-based strategies — which don’t offer much leeway for context — risk-based strategies take impact and probability into account. They empower decision-makers to make an informed choice on what controls to implement.
How visibility helps you identify waste and spot smart investments
Clearly, remaining cost-effective is a balancing act. Every decision requires context. Network visibility through effective discovery and monitoring provides the context IT departments and MPSs need to make cost-effective choices. Specifically, visibility helps businesses identify waste and find smart investments that can be game changers in tough economic times.
Identifying “Pure Waste” in IT
When you need to cut spending, eliminating pure waste is a no-brainer. By “pure waste” we mean processes, services, and assets that are either unnecessarily duplicated or completely unused. Of course, you wouldn’t have pure waste if you knew about it. Effective network visibility helps you find it so you can get rid of it.
SaaS discovery management is a great way to get some quick wins here. Not only can it help you detect shadow IT and eliminate insecure services, but it also enables you to uncover redundant spending. Just how big of an opportunity is there? A Flexera report found that, on average, 33% of SaaS spend is wasted.
For each SaaS (and on-prem!) app you discover, ask yourself:
- Is another service already fulfilling this purpose?
- Does the license cost justify the business value?
- Does the service meet security requirements?
Spotting smart investments
Even in a full-blown recession, your spending won’t go to zero. Holding off on a hardware refresh can be smart, but it also increases the likelihood of break/fix calls. Being reactive and only replacing hardware once it fails can get expensive fast, particularly when failure means downtime, sourcing new hardware on short notice, and deploying a service technician immediately.
Network and server monitoring helps you detect unhealthy devices before they completely fail. That allows you to be more strategic about planning for replacement and scheduling site visits. Instead of deploying a tech immediately, you might be able to schedule the replacement during the next maintenance visit.
Weather the IT storm with a mix of discipline and innovation
Running a cost-effective IT department or MSP isn’t easy. It takes a mix of discipline to implement Lean practices and innovation to find new creative solutions to problems.
If you want to improve your network visibility while reducing network spending, give Auvik a try (for free!) and see how Auvik can help you drive more lean, efficient practices across your IT team.
