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For any type of business — small or medium, and large enterprise, the question of how to reduce IT infrastructure costs is thorny. The average IT spend is 7.5% of revenue. For many businesses, this number is too high as the expenses are impressively big.
Still, 49% expect an increase in IT spend during the next year. And only 32% expect a decrease. It's explained by the fact that most businesses prefer development and growth to maintenance and support of the current business situations. In fact, many of these companies can still optimize their expenses by optimization of the processes.
IT infrastructure is one of few flexible business aspects that allows cutting costs. Let's first understand the components that affect spendings. These are software (all business applications), hardware (physical equipment), and networking (components that enable network operations, provider, firework, security).
All the components can be used to reduce IT infrastructure costs: for example, after analysis and optimization, you may notice that you no longer need some expensive applications.
There are three basic types of IT infrastructure:
- traditional (when a business owns and operates all facilities)
- hyper-converged (allows to manage resources from a single interface)
- cloud (separates resources from physical hardware and pulls them into clouds for further usage)
Cloud IT infrastructures are the most popular ones, so we will use them as an example to explain how to eliminate IT infrastructure costs. Also, we will tell you how to use outsourcing for IT infrastructure cost reduction, things to optimize, and give you some useful tips on running or growing a business saving money.
Things to Outsource to Reduce IT Infrastructure Costs
IT infrastructure is a zone of responsibility for DevOps engineers. RedHat explains the duties of this position as 'introduces processes, tools, and methodologies to balance needs throughout the software development life cycle, from coding and deployment to maintenance and updates.'
In short, a DevOps engineer is the person who is responsible for all software and hardware in your business, as well as the networks, servers, and firewalls. Optimization of IT infrastructure costs is also among these responsibilities.
Small businesses with a limited budget frequently ignore the DevOps position and try to do everything on their own. However, if you're not ready to hire a full-time in-house specialist, you can outsource this service.
Why is this a better option to reduce IT infrastructure costs? First of all, outsourcing gives you more flexibility with the time you're ready to spend on IT infrastructure creation or optimization. Secondly, you get a bigger tool of talent to choose from. And the most important — outsourcing also helps in cutting IT infrastructure costs.
Let's compare. On average, a DevOps engineer from the US expects to get $103,253 per year. The expectations of the DevOps engineer from the UK are almost twice lower — $65,210 per year. Eastern European countries, known for high quality for more than a reasonable price, are surprised by the salaries: in Ukraine, a DevOps engineer expects to earn about $19,200.
DevOps engineer salaries depending on the region (Source: Glassdoor)
Reducing IT infrastructure costs should start with outsourcing DevOps engineers. You can find specialists on job boards (Indeed, Glassdoor), freelance staff services (Upwork, Fiverr), or online databases like Clutch.
If you're not sure what kind of specialist you need, you can always contact web development studios for a consultation. At Softermii, we regularly consult companies on what kind of services they need now and what type of specialists they need to hire. We can also give additional advice on cost optimization for your IT infrastructure, if you need it.
5 Ways for reducing the cost of IT infrastructure
Let's imagine that you've already hired a DevOps engineer. So what are ways to lower IT infrastructure costs? We're going to explain to you where to store data, what technology to use, how to monitor the processes so you could know what happens behind the scenes of this position.
DevOps engineers deal with several challenges such as a huge number of manual processes, understanding the money you spend on delivered services, and increased prices from vendors.
However, there are some that a DevOps engineer can affect directly, and we're going to explain how exactly this happens.
Switch to cloud
In 2021, this is the major tendency and the key destination for many businesses. According to the State of Tech Spend Report, almost 50% of companies demonstrated increased willingness to move to the cloud. Moreover, 62% are planning to reduce their use of data centers in the next 24 months. 7% are already planning to eliminate them. Of course, this is a fundamental change for optimizing IT infrastructure costs, but it's really effective.
Cloud-based solutions are more flexible; they require less effort to maintain, the scaling is easier as server capacities can be increased on the go.
Switching to the cloud is an investment that will have a huge impact on business. The following cloud services are:
- Microsoft Azure (84% of businesses prefer it to others)
- Amazon Web Services
- Google Cloud
- Alibaba Cloud
- Oracle Cloud
- IBM Cloud
Understand your needs about reducing the cost of IT infrastructure
When reducing the cost of IT infrastructure, always start with understanding what point you are at now and what you are planning to get. There are some basic services that you cannot eliminate, like server and storage architecture, security, optimization, and visualization, etc. You should be ready to pay for them.
Annual State of Tech Spend Report emphasizes that the companies underestimate wasted IT spend at 12%. Analysts disagree: according to them, wasted spend is about 30%.
Fortunately, cloud-based solutions allow you to redistribute expenses and spend money on the services that you actually use.
Therefore, before you start the reduction, estimate the project costs:
- describe your current situation
- recall all services you use now
- describe the current load on the server and try to predict it in 6 months-one year
- define business goals and strategy
- understand the services you may need in the nearest future
The number of services you can implement in your IT infrastructure is huge. There are so many of them that sometimes businesses do not notice that they use almost the same services and pay for them. Moreover, if your team has been working on their own previously, there can be a mess with the selected services as well.
For a DevOps engineer, it's important to monitor billings to understand the expenses on infrastructure. The easiest way to do that is to use cost management tool apps for business, like:
- Easy Projects
Reduce manual processes
According to research, one of the biggest problems of DevOps engineers (even the biggest one) is the abundance of manual processes. The more time specialists spend fixing everything manually, the less time they have to optimize or find a better solution for your business.
If you are not ready to automate DevOps engineer function responsibilities, you can hire a Junior level specialist or a System Administrator to help with manual tasks.
Regular review of services
Among other cost saving ideas for the IT department, it is worth considering review of services. Services are constantly changing: new features are added, prices get higher, new options appear. It's important to monitor the service market to understand what's better for the business now.
By regularly reviewing services (the ones you use now and the ones you don't use), you always know where you pay more for poor quality and what decisions are better for you.
How much should your company spend on IT infrastructure?
Cost-saving for IT infrastructure is a complex issue that requires an analysis of the current business situation, competitor research, business goals and expectations, and many other factors that directly influence the expenses. We believe that there's no one-size-fits-all solution when it comes to spending. However, it's always possible to predict costs by using market expertise and best practice.
We will use the State of Tech Spend Report materials to explain how much the organization should spend on IT infrastructure (in %).
First of all, let's recall an average spent on IT: 7.5% of revenue. However, this is an average number, so that it will be different in regions (8.5% for Americas and 6.0% for Europe). The company's size also affects the spending: companies with 2,000 - 5,000 employees spend 8.0% of revenue, while companies with over 10,000 spend about 5%.
It differs according to industries as well. Software-related industries spend 15% of revenue, while consumer products only 3.5%.
According to the report, the IT infrastructure cost breakdown is the following. The companies spend more than 50% on software: on-premises, SaaS, and the mix of Saas and IaaS. More and more companies are switching to cloud-based solutions, so these numbers are expected to grow.
Covid19 has had a huge impact on IT infrastructure costs as well. The spending on data centers and servers decreased while the spending on SaaS and public clouds increased.
As you can see, various factors affect the spending on IT infrastructure. Even the social aspects are important: pre-pandemic IT architecture was different from what we see now.
Read also: Most Important SaaS Metrics to Measure
How to reduce IT infrastructure costs for my business?
The first step towards IT infrastructure has already been taken. You've started to investigate the problem of IT spending. Now, you will look for the best options for you, trying to understand how to apply them to your business.
What cloud to choose? What services do you need now? What services don’t you need? What services duplicate each other? How to choose DevOps who can help with business needs? You can spend hours trying to answer all these questions. Or you can just ask us for help.
We at Softermii understand the importance of DevOps engineer services like no one else does. We also work with DevOps engineers who help us keep all information safe and ensure the trouble-free work of our team.
We always focus on delivering the most effective solutions for you: considering your business type, team size, and expectations. If you have decided to outsource IT, specialists you want to work with have to be Middle and Senior levels. Of course, we know that you want to feel free to communicate with the outsource team — we all speak English.
Let us know if you have any questions about minimizing the costs for IT infrastructure, and we'll gladly help you. Contact us any time!
Frequently Asked Questions
What are the cost-saving ideas for the IT department?
To reduce IT infrastructure costs, consider moving to the cloud, keep track of payments, and remember to plan for unspent and unfinished expenses.
How much can you save on IT infrastructure optimization?
It can be tens of thousands of dollars, depending on the structure of your IT company, how many people are in it, what technologies you use, etc.
How to optimize IT infrastructure if your company has a lot of expenses?
If the tips that we have talked about do not help, try contacting specialists with experience in this area. For example, our team can advise you on the right way to reduce IT infrastructure costs as we work on this all the time.
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