How to Cut Costs by 20+%: Lessons from Managing $34B in IT Spend

Evaluating and managing billions of dollars in IT spending across 400 tech providers in 200 countries provides valuable experience in verified ways to cut costs and accelerate IT financial management tasks. Want to tap into a wealth of cost-cutting knowledge gleaned from 60 IT cost management consultants who are engaged in hundreds of cost-reduction projects each year, saving companies as much as 20% or more on their IT spend? Here are the top lessons learned according to Tangoe’s cost management consultants. 

Companies Can Cut Costs by 10-40% Across Multiple IT Domains 

Creating an effective methodology for IT expense management and optimization is no longer a strategy used only by large enterprises in specific use cases. It’s an approach used widely by companies of all sizes and applied to the entire IT environment—cloud, mobile, network, and security. Although savings vary across each IT domain, an effective cost optimization program typically produces significant savings.  

At Tangoe, we commonly see companies: 

• Save 20% on their IT costs overall 
• Save 10-15% in telecom costs through service optimization and as much as 20-25% or more when combined with an effective contract negotiation consultancy 
• Cut mobility costs by 15-30% while improving both IT productivity and the end-user experience  
• Save 15-40% in cloud costs, eliminating unnecessary services and reallocating underutilized IaaS and SaaS resources 
• When investing in an IT expense management platform, on average new clients see triple-digit ROI within the first year 

While cloud cost optimization and FinOps may seem like a post-pandemic trend, the IT expense management (ITEM) industry is a mature market with more than 20 years of historically proven results. Known results allow ITEM providers to offer clients the advantage of a savings guarantee, and with the market heating up, providers are actually making guarantees a contractual commitment. 

Acting on Cost Savings Is Harder Than Simply Identifying Them 

In today’s information age, AI-powered analytic tools make it easier to crunch data and pinpoint millions of dollars in potential IT cost efficiencies. But then what? Opportunities are worth nothing if you can’t capitalize on them quickly. Actioning identified opportunities is where the real work begins and where speed to savings is key, as every month that goes by is a lost opportunity that increases the savings you’ll never see.   

With staffing tight and other priorities taking precedence, all too often we see identified savings go unrealized for months if not years.  

Given the criticality of quick response, leveraging a firm to implement identified savings makes sense. Better yet, the firm should be able to automate the process to confirm those savings are actually realized and continue to be achieved on an ongoing basis. For these reasons, we recommend asking about professional services (staff augmentation) when your IT team is too overstretched. 

To cut costs faster you also need an automated IT expense management platform integrated with the service portals and dashboards of the technology service providers themselves. This way, modifications and service changes can be made faster and with less manual work.  

Secret to Avoiding Waste: An Accurate Inventory of Services 

Rapidly changing times make for a rapidly changing corporate IT environment. It’s critical to ensure you know what IT assets you have now, understand how efficiently they’re being used, and then charge back those costs to the departments using the most resources.  

Cloud cost management is top of mind today because companies are wasting as much as 30% of their cloud resources and overspending in the cloud by as much as 50%—even 70%, according to Gartner. And it’s not just the cloud creating IT waste. Mergers, divestitures, corporate rightsizing, a return to travel and hybrid work environments are all contributing factors to misalignment between IT resources and business needs. Any time the company evolves, IT services need to come into alignment, and when assets aren’t right-sized waste, inefficiencies, and overpayments are the result. 

To get rid of IT waste, you must first identify it. Knowing what you have, where you are paying too much, and where assets are going unused requires gleaning intelligence from an accurate inventory of all mobile, cloud, and network services. Visibility is only as good as your system for tracking and categorizing costs. A disciplined inventory and vendor management program establishes a corporate catalog of providers and uses automation to collect granular account information, invoices, and service data. Insights can shed light on current trends in usage and efficiency as well as serve as a launchpad for cost control, policy decision-making, and security risk reductions.  

Migration Mismanagement Slows Technology ROI 

Change is the new normal. Whether it involves moving services to the cloud, shifting employees to more secure corporate-owned mobile devices, or transitioning services to optimize and modernize a network, the management and administration of technology migrations is everything.  

At Tangoe, we see the ROI on digital transformation initiatives decline (and even turn negative) because companies underestimate the time and resources needed to carry out change. Designing, managing, and monitoring transitions becomes a full-time job that can distract internal teams from more meaningful work. In the end, it’s more efficient and less expensive to augment those internal teams with outside resources or outsource enterprise-wide deployments together. Mismanaged technology migrations can significantly hinder a company’s digital innovation strategy. 

Careful consideration is needed when it comes to deciding how corporate resources are allocated. We see network service transitions, SD-WAN implementations, as well as migrations to cloud-unified communications as areas that benefit from staff augmentation. While we all know outsourcing can help curb costs, this is where we see consultancies payout in significant ways.  

Insider Knowledge Provides a Level of Confidence That Is Priceless 

A highly dynamic mobile, cloud, and network environment highlights the importance of obtaining insider intelligence. When corporate service transformation is on the line, IT spending decisions shouldn’t be made in a vacuum. IT budgeting decisions are far easier when consulting an authority on the latest pricing benchmarks for services or tips for negotiating telecom contracts in your favor. They evaluate how millions of dollars are spent (and misspent) every year, and they bring with them valuable insights into tech spending trends that can help you compare your corporate strategies against hundreds of other companies. Consultants are versed in helping tackle the big stuff: 

• Fiduciary responsibility when IT budgets and spending are rising despite slow economic growth 
• Reigning in cloud sprawl and cloud costs all while strengthening cloud security  
• Establishing governance after innovation has run amok  

After all, it’s the insider intelligence that helps CIOs and CTOs sleep at night. That confidence is worth its weight in gold. 

To learn more about IT expense and asset management services, visit us here.